Tracking Warehouse Lenders, $729k Loan Rates

I was very disappointed to find out from the National Inquirer that Cher only has 3 years to live. (They even had a photo of a distraught Cher on the cover, which must have been taken right after she received the news.) I mention this because I knew a loan agent who would play “If I Could Turn Back Time” every time a borrower didn’t lock before rates moved up.

According to the Financial Times, Barack Obama is moving towards Swedish models of banking. A president moving towards Swedish models? That hasn’t happened since the Clinton Administration. Speaking of Sweden, Saab filed for bankruptcy today.

Weeks Before $729k Pricing
The ASF has favorably weighed in on the high-balance loans. “The American Securitization Forum (ASF) clarified that GSE and FHA loans originated in 2009 in amounts between $625,500 and $729,750, pursuant to the increases in loan limits enacted by the stimulus package, will be eligible for delivery into the TBA market subject to the existing de-minimis limits for superconforming loans to borrowers in high-cost areas.” This is a good step, but remember that the agencies need to determine their stance and pricing, relay that to investors such as Chase and Citi, who then make their own pricing determinations. Weeks…

Where To Invest?
Where is the “smart money” going these days? If you believe that debt is being nationalized around the world, increasing its percentage of GDP’s to take it off the consumer’s back. That shifting the leverage to government balance sheets will be a drag on the world economy for years to come. That corporate earnings are heading down, since they no longer have the leverage available to them to increase their income. That forcing banks to lend money on assets that may depreciate just leads to outcomes like we are enduring now. That besides refinancing mortgages, most consumers would be better off reducing their debt, not increasing it, and will be better off spending less and saving more – and this will take years. If you believe all that, please let me know where to put my money, because I sure as heck don’t know.

Mortgage Bond Pricing
Here is a decent MBS site for pricing.

Warehouse Lender Tracking
Which warehouse banks are open for new business? That is a good question. See this site for updated warehouse information. Comerica is taking applications, but don’t apply unless your net worth is over $1.5 million and you’ve been around for a couple profitable years. Chase will entertain extending lines to their own members, and Countrywide/BofA will also extend lines to bankers hoping to send more business toward their correspondent group. (Yes, they are crafty.) Rumor has it that Flagstar, US Bank, Guarantee Bank, and Nat City are all offering lines. (And no, I don’t know who to contact there.) Rumor also has it that GMAC, Southwest Securities, 1st Tennessee, Texas Capital, and Natty Mac are not taking applications.

Mortgage Insurance Companies Endorsed by FHFA
MI companies have to be overjoyed to hear that James Lockhart, chief of the Federal Housing Finance Agency, says, “They’re very important.”

Mortgage Bond Buys
Speaking of the government, the latest stats show that the Fed is focusing on buying 4.5% securities, which typically include 4.75-5.125% conventional mortgages. And lastly, if you’re watching the Financial Stability Plan.

Reports on LEI and CPI
Yesterday we saw some news in the late morning that pushed rates. The Philly Fed slumped, which was no big surprise, but we had Leading Economic Indicators moved higher – which was unexpected. Over the last six months the LEI is down almost 2%, but in this last month the positive contributors were items such as real money supply, the interest rate spread, and the index of consumer expectations. And the minutes released on the last Fed meeting show that they are keeping an eye on inflation (did you see that gold hit $1,000 an ounce?) in spite of all the signs of a downturn. But folks seem to be focused on the supply coming out next week. This morning the bond market was actually happy to see some signs of inflation – go figure. U.S. consumer prices were up in January .3%. This is their first increase since July! Our friend “core prices”, which are for hunter gatherers off the grid and exclude food and energy items, was +.2%. On a year-over-year basis, consumer prices were flat, the weakest reading since August 1955. After this we find mortgages better by about .250 in price and the 10-yr at 2.75%.

Daily Humor
Several men are in the locker room of a golf club. A cell phone on a bench rings and a man engages the hands free speaker-function and begins to talk. Everyone else in the room stops to listen.
MAN: “Hello”
WOMAN: “Honey, it’s me. Are you at the club?”
MAN: “Yes.”
WOMAN: “I am at the mall now and found this beautiful leather coat. It’s only $1,000. Is it OK if I buy it?”
MAN: “Sure, go ahead if you like it that much.”
WOMAN: “I also stopped by the Mercedes dealership and saw the new 2009 models. I saw one I really liked.”
MAN: “How much?”
WOMAN: “$90,000.”
MAN: “OK, but for that price I want it with all the options.”
WOMAN: “Great! Oh, and one more thing… The house I wanted last year is back on the market. They’re asking $950,000.”
MAN: “Well, then go ahead and give them an offer of $900,000. They will probably take it. If not, we can go the extra 50 thousand. It’s really a pretty good price.”
WOMAN: “OK. I’ll see you later! I love you so much!!”
MAN: “Bye! I love you, too.” The man hangs up.
The other men in the locker room are staring at him in astonishment, mouths agape…..
He smiles and asks: “Anyone know who this phone belongs to?”