Top Lenders 2008 YTD, Annual Top 50 Volume Down 21.6% to $2.2t

Last Thursday rates worsened, when perhaps they shouldn’t have. Why? Securities firms and investors often “hunker down” early ahead of holiday weekends, and often markets close early. The news that came out didn’t warrant the sell-off. The ISM nonmanufacturing index dropped to 48.2, with orders, business activity, and employment all falling. Apparently, the stimulus has not been enough to offset the other problems in the nonmanufacturing sector. The number was much lower than expectations, and the fact that the largest decline came in employment continues to indicate that our economy is stalling. This, combined with the further increase in initial claims, could be setting us up for a very weak employment report in early August, and although the unemployment data Thursday was as expected it still showed more weakness.

Is Countrywide Securities gone? Thursday the CitiMortgage Mandatory desk announced that they will not be taking trade assignments done with Countrywide Securities as a dealer.

Who were the top 3 originators in the first half of 2008? Countrywide, who has been #1, is now part of BofA. Wells Fargo’s volumes have dropped 32% but Wells is still #2 at $272 billion. (Do they chant that at sales meetings? “We’re #2! We’re #2!”) Chase is now #3 saw their volumes increase 22% and is now #3. WaMu, who was #3, dropped to #6 after losing 27% of its volume, to $142 billion. According to National Mortgage News, overall the combined loan volume for the top 50 residential lenders was down 21.6% last year, to $2.2 trillion.

We only have two economic reports for the bond market to digest. The first piece of economic news that may affect mortgage rates is Thursday’s weekly unemployment figures from the Labor Department. Friday morning is May’s Goods and Services Trade Balance report, which measures the size of the U.S. trade deficit, and also the University of Michigan’s Index of Consumer Sentiment. Also worth mentioning are a couple of public speeches by Fed members including Fed Chairman Bernanke and a 10-year Treasury auction of inflation protected notes. The Treasury’s 10-yr note is still below 4.0%, barely, and 30-yr mortgage prices are off by about .125 from Thursday’s levels.

The Bacon Tree
Two fellows are stuck in the desert, wandering aimlessly and close to death. They are close to just lying down and waiting for the inevitable, when all of a sudden…
“Hey Jose, do you smell what I smell? It’s bacon I am sure of it.”
“Si, Luis. It smells like bacon to me.”
So, with renewed strength, they struggle up the next sand dune, and there, in the distance, is a tree loaded with bacon. There’s raw bacon, dripping with moisture, there’s fried bacon, back bacon, double smoked bacon – every imaginable kind of cured pig meat.
“Jose! Jose, we is saved. It’s a bacon tree.”
“Luis, are you sure it’s not a mirage? We it’s in the desert don’t forget.”
“Jose when deed you ever hear of a mirage that smell like bacon… it’s no mirage, it’s a bacon tree.”
And with that, Luis races towards the tree. He gets to within 5 yards, Jose following closely behind, when all of a sudden, a machine gun opens up, and Luis is cut down in his tracks. It is clear he is mortally wounded, but, a true friend that he is, he manages to warn Jose with his dying breath.
“Jose, go back man! You was right; it’s not a bacon tree.”
“Luis Luis mi amigo… what is it?”
“Jose, it’s not a bacon tree…it’s, it’s, it’s, it’s a ham bush.”