Record High Housing Affordability,GMAC Quarterly Loss, Pending Home Sales +3.2%

Although this has nothing to do with mortgage banking, in mid-April I noted a website to track the money in their wallet. (The government also tracks cell phones, by the way.) It would appear that health officials are using the site to estimate the spread of Swine Flu. Computers are amazing things.

Can Loan Agents Order Appraisals For FHA Loans?
HVCC for FHA loans? Let’s hope not, but we have heard some rumblings from some investors that they believe that the market is heading that direction and that the industry would be well served to implement it sooner than later. Having said that, I can’t find anyone requiring it yet, but with the concern about the quality of FHA loans don’t be surprised…

Veterans Affairs Refis
VA Streamlines – are investors requiring an appraisal? Wells Correspondent, for example, “in an effort to mitigate the risk of declining home values on VA IRRRL transactions on May 18th will require the seller to obtain and deliver a conventional appraisal to Wells Fargo. Please Note: VA has indicated this appraisal should not be submitted to the VA with the guaranty package.” Some originators feel that requiring an appraisal on a VA Streamline loan pretty much “kills the deal”. GMAC and Citi still purchase them, but to the best of my knowledge BofA does not. At least one investor is saying that if the existing loan is already with them, then the appraisal will be waived. Anyone heard anything?

GMAC Quarterly Loss
GMAC Financial Services reported a first quarter 2009 net loss of $675 million, compared to a net loss of $589 million in the first quarter of 2008. They attributed the losses to “continued pressure in mortgage operations related to valuation adjustments on mortgage servicing assets, weaker credit performance on both auto and mortgage assets, mark-to-market adjustments on derivatives, and an original issue discount related to the fourth quarter debt exchange.” In similar fashion, Radian Group (the #2 mortgage insurer) posted a first-quarter loss of $217 million, hurt by unrealized loss on derivatives and continued increase in mortgage-insurance defaults.

Fed Mortgage Bond Buying
As long as the Federal Reserve Bank of New York keeps buying agency MBS’s, everything is ok, right? Let’s hope so, since they continue to be the dominant buyer by far. Last week they had “net purchases” of $23.1 billion, gross purchases of $59.6 billion. 97% of purchase activity is limited to 4.0% and 4.5% MBS’s, which typically encompass 4.25-5.125% mortgages – and only 7% of the securities are Ginnies comprised of FHA and VA loans. The Basis Point writes mortgage bond updates weekly.

Pending Home Sales Up, Record High Affordability
Yesterday we had some good economic news, and the markets moved accordingly. Pending Home Sales rose 3.2%, and the Housing Affordability Index remained near record highs – certainly much higher than it was a year ago. Construction Spending was +.3% in March, which is the first increase in six months. Yes, most of it was increases in commercial and government projects, but we’ll take what we can get. Today we have the small issue of selling $35 billion in 3-yr Treasury notes, which may keep rates a little high in spite of the market being technically oversold. Currently the 3-yr yield is 1.39%, the 10-yr is 3.15%, and mortgage prices are better by .125-.250.

Daily Humor
Most people don’t know that in 1912, Hellmann’s mayonnaise was manufactured in England. In fact, the Titanic was carrying 12,000 jars of the condiment scheduled for delivery in Vera Cruz, Mexico, which was to have been the next port of call for the great ship after its stop in New York.

This would have been the largest single shipment of mayonnaise ever delivered to Mexico. But as we know, the great ship did not make it to New York. The ship hit an iceberg and sank, and the cargo was lost forever.

The people of Mexico, who were crazy about mayonnaise, and were eagerly awaiting its delivery, were disconsolate at the loss. Their anguish was so great that they declared a National Day of Mourning, which they still observe to this day.

The National Day of Mourning occurs each year on May 5th and is known, of course, as Sinko de Mayo.