THE BASIS POINT

Stimulus By State, Countrywide On Simpsons, Rates OK, Warehouse Lending Disappearing

TALF Q&A
Here’s everything that you wanted to know about TALF but was afraid to ask.

Stimulus By State
And here’s everything you wanted to know about how the stimulus activity impacts your state.

Countrywide (“Countryfine”) On the Simpson’s

Warehouse Lending Getting Smaller
Banks in the warehouse lending business are making difficult decisions with regard to the best use of their capital, especially when it involves TARP monies. A few weeks ago Guaranty Bank exited the business, and now it is Nat City’s (PNC) turn to exit warehouse lending. Their clients were apparently notified yesterday that they would be closing this channel down, and not extending contracts. I had also heard that between Guaranty and Nat City they controlled almost 30% of the existing warehouse business. Obviously the news leaves existing warehouse lenders either wondering if they want to stay in the business or licking their chops at the lowered competition. Unfortunately for small to midsize lenders, they are left with fewer, and probably more expensive, warehouse options.

GMAC Bank Correspondent Funding approved Correspondents please note that effective yesterday they changed the Loan Level Pricing Adjustment for CA properties only: -.375 adjustment for all Jumbo Fixed and ARM Products.

Come next Monday, Radian will have a different set of guidelines that apply to all markets as Radian is retiring their Declining Markets policy. (For Radian, markets will no longer be classified as stable or declining.) The changes include a Maximum LTV – 90%, Maximum Loan amount – $417,000, Minimum Fico Score – 720, Maximum DTI- 41% (Regardless of AUS decision), and Occupancy- Primary Residence, 1 Unit Only. Ineligible Property types include Attached Condo’s, Attached PUD’s, Construction- to-perm, Interest Only, and Cooperatives or Manufactured housing.

Rates OK
OK, back to today’s interest rate market. Yesterday rates improved slightly after the 10-yr note auction went fairly well, and our stock markets were roughly unchanged after Tuesday’s run up. Overseas stock markets, however, have fallen. Chinese industrial production came in below expectations. (China is considering a huge stimulus plan as its economic woes continue to grow. The Chinese have been caught off guard as the global recession has surprisingly killed demand for faulty electronics and poisonous toys.)

Bond Auctions, Retail Sales Better
Today we have an $11 billion 30-yr bond auction to get through. We have already seen Retail Sales and Jobless Claims. Retails Sales, expected to drop .5%, were “only” down .1% after being up 1.8% last month. In addition, the number of U.S. workers filing new claims for jobless benefits rose 9,000 last week to 654,000, a shade higher than expected, and the four-week average of new jobless claims rose to 650,000 from 643,250 the week before. (This was the highest reading since October 1982.) After this news we find mortgage prices a tad better than yesterday afternoon, and the yield on the new 10-yr at 2.93%.

Daily Humor
Reasons Why Alcohol Should Be Served At Work:

1. It’s an incentive to show up.

2. It leads to more honest communications.

3. It reduces complaints about low pay

4. It eliminates vacations because people would rather come to work.

5. It makes fellow employees look better.

6. It makes the cafeteria food taste better.

7. Bosses are more likely to hand out raises when they are wasted.

8. Salary negotiations are a lot more profitable.

9. Employees work later since there’s no longer a need to relax at the bar.

10. Employees no longer need coffee to sober up.