This is Black (African-American) History Month. The event began as Black History Week in 1926. For many years, the second week of February was set aside for this celebration to coincide with the birthdays of abolitionist/editor Frederick Douglass and Abraham Lincoln but then expanded in 1976 into Black History Month. The 2010 census counted 42 million black (either a single ethnicity or a combination of races) people in the U.S., nearly 14% of the population. Looking at the states, New York had the highest population with 3.3 million blacks, followed by Florida, Texas, Georgia, California, North Carolina, Illinois, Maryland, Virginia and Ohio. In terms of percentages of overall state population, Mississippi led the nation with 38%, followed by Louisiana (33), Georgia (32), Maryland (31), South Carolina (29) and Alabama (27).

When NASA first started sending up astronauts, they quickly discovered that ballpoint pens would not work in zero gravity.  To combat the problem, NASA scientists spent a decade and $12 billion to develop a pen that writes in zero gravity, upside down, underwater, on almost any surface including glass and at temperatures ranging from below freezing to 300 centigrade. The Russians used a pencil. There's a lesson in that amusing tale for mortgage bankers and Realtors - I just don't know what it is. I do know that the definition of "deleveraging" is, "The process or practice of reducing the level of one's debt by rapidly selling one's assets." As it turns out, Equifax reported that U.S. consumers sharply reduced their debts by 11% last year, from $12.4 trillion to $11.1 trillion.

This news will prompt many lenders to throw a ticker-tape parade that will rival the NY Giants football event today. HUD and the FHA have long promoted the FHA Streamline Refinance as a useful tool to allow responsible homeowners to save thousands of dollars by refinancing at today's low interest rates. FHA-insured borrowers must be current, and in theory they can refinance into today's lower rates without requiring additional underwriting. "However, it has become apparent that some of our lending partners are reluctant to offer this product widely because of concerns about taking on the risk of a loan which they may not have underwritten and the potential adverse impact such a loan may have on their FHA Compare Ratio. In order to expand the availability of this product for eligible borrowers, FHA will make changes to the way in which FHA Streamline Refinance loans are displayed in the Neighborhood Watch Early Warning System (Neighborhood Watch). Streamline Refinances will be removed from the public compare ratio in Neighborhood Watch, but lenders will still be able to view their own traditional compare ratio (with streamlines included)." The Announcement

All eyes are on California as the deadline approaches for state officials to sign onto the multibillion-dollar foreclosure abuse settlement.  As the largest remaining holdout, California appears to leaning towards signing, which could potentially increase the settlement from $19 billion to upward of $25 billion. New York seems to be acting on the same lines. (Do you think the AG's are texting with each other?) Part of the deal for these two states would be the preservation of the right to investigate banks' past misdeeds and adding regulation to ensure that financial institutions adhere to the deal and that the money actually reaches struggling homeowners.  As it stands now, the deal would allocate $17 billion specifically for principal reductions and other relief for up to one million borrowers whose homes are underwater. The 750,000 families whose homes have been foreclosed would receive checks for about $2,000. A deal has been in the making for the past 13 months, as the settlement has been delayed on multiple occasions, so a lot is riding on the decisions of the California and New York Attorneys General - if they do sign on, a finalized deal will come much sooner than later.

As the foreclosure abuses settlement deal finalizes people are getting a better idea of the numbers involved.  The amount that home mortgage securities investors will have to pay is now projected to be up to $40 billion, which, according to the government, would act as a "down payment" for future principal reduction initiatives from future settlements. The White House plans to litigation as a key tool for procuring additional sums from large financial institutions that will be used to further aid for struggling borrowers.  This is part of a trend that has seen the Obama administration escalate efforts to help US borrowers-in addition to the finalization of the foreclosure and loan abuses settlements, a new state and federal unit has been created to investigate mortgage-related fraud.

I will never be an internet mortgage marketing whiz kid. And I guess Google thinks something similar - on the heels of several office closures, Google has discontinued its mortgage rate advertising platform Google Mortgage Advisor after two years of operation.  Apparently the decision was based on the product's poor performance and a company initiative to de-clutter by shutting down programs that aren't as successful as projected. From the Google website: "Google Advisor mortgages has been discontinued We’ve been prioritizing our product efforts across Google, which means taking a hard look at products that haven’t been as successful as we would have hoped. To that end, we’ve closed down the mortgage search feature of Google Advisor and are focused on building continued improvements into the rest of the product."

"Recent changes to the Home Affordable Refinance Program (HARP) present both opportunities and challenges to lenders and services. DataQuick, a provider of advanced real estate information solutions powered by data, analytics and decisioning, has already responded with timely new offerings that quickly identify eligible loan modification candidates. Through the application of proprietary analytics on its nationwide property database, DataQuick has identified 6.7 million borrowers who meet the new eligibility requirements and will most likely benefit from the revised program. Lenders and servicers can easily match their current portfolio to the database to identify the best candidates for loan modification. HARP eligibility requires that candidates have no late mortgage payments in the past six months and no more than one late payment in the past 12 months." Sounds pretty nifty - for more information contact your DataQuick sales representative or Wendy Barnett at wbarnett@dataquick.com. (And nope, this wasn't a paid ad.)

I am not an expert in compliance, but this caught my eye: in the January 24th Federal Register, HUD has proposed a rule  (ECOA/Reg B) that prohibits banks from discriminating against borrowers based on ethnicity, religion, national origin, gender, marital status, age (provided the applicant has the capacity to contract), income from public assistance, or the exercise of any Consumer Credit Protection Act.  The Fair Housing Act prohibits discrimination on account of familial status or handicaps. These are very, very recent developments-both rules go into effect on March 5.  It boggles the mind a bit, but better late than never, one supposes. The January 24th Federal Register entry can be read by clicking http://edocket.access.gpo.gov/2011/pdf/2011-1346.pdf.

The markets certainly don't care about marital status or gender, and yesterday we saw a nice little half-point rally (improvement) in the U.S.10-yr with it closing at 1.90%. With no scheduled news in this country, Treasuries gained today as "risk aversion" was back on worries about Greece. MBS prices improved from nearly .5 on 30-year 3.0% coupons to just roughly unchanged on 4.5's through 6.5's, as one would expect. And then overnight Greece's main political parties reportedly missed a deadline for responding to demands for more austerity measures. Negotiations between Greece and its private creditors are on hold while officials work on a rescue program with the EU, the International Monetary Fund and the European Central Bank. Greece faces a 14.5 billion euro bond repayment in less than six weeks. It won't be able to make the payment without international help.

Here in the states, once again there is no news of substance although we do have a $32 billion 3-yr note auction at 1PM EST. Chairman Bernanke is scheduled to repeat his recent testimony before the House Budget Committee to the Senate Budget Committee beginning at 10AM EST, but don't look for anything new. MBS Prices are down.

HIGH SCHOOL -- 1957 vs. 2010 (Part 2 of 2)
Scenario 5:
Mark gets a headache and takes some aspirin to school.
1957 - Mark shares his aspirin with the Principal out on the smoking dock.
2010 - The police are called and Mark is expelled from school for drug violations. His car is then searched for drugs and weapons.
Scenario 6:
Pedro fails high school English.
1957 - Pedro goes to summer school, passes English and goes to college.
2010 - Pedro's cause is taken up by state. Newspaper articles appear nationally explaining that teaching English as a requirement for graduation is racist. ACLU files class action lawsuit against the state school system and Pedro's English teacher. English is then banned from core curriculum. Pedro is given his diploma anyway but ends up mowing lawns for a living because he cannot speak English.
Scenario 7:
Johnny takes apart leftover firecrackers from the Fourth of July, puts them in a model airplane paint bottle and blows up a red ant bed.
1957 - Ants die.
2010 - ATF, Homeland Security and the FBI are all called. Johnny is charged with domestic terrorism. The FBI investigates his parents - and all siblings are removed from their home and all computers are confiscated. Johnny's dad is placed on a terror watch list and is never allowed to fly again.
Scenario 8:
Johnny falls while running during recess and scrapes his knee. He is found crying by his teacher, Mary. Mary hugs him to comfort him.
1957 - In a short time, Johnny feels better and goes on playing.
2010 - Mary is accused of being a sexual predator and loses her job. She faces 3 years in State Prison. Johnny undergoes 5 years of therapy.

If you're interested, visit my twice-a-month blog at the STRATMOR Group web site located at www.stratmorgroup.com. The current blog discusses residential lending and mortgage programs around the world, part 2. If you have both the time and inclination, make a comment on what I have written, or on other comments so that folks can learn what's going on out there from the other readers.

View the original article here

The e-mail wires here in Miami have been burning up with...e-mails.

PHH clients received a note from Norm Fitzgerald, explaining the recent restructuring. "I am writing to let you know we recently decided to reallocate resources from our Correspondent Lending channel to our Private Label Solutions and Real Estate Field Sales distribution channels. Although this action will reduce our Correspondent Lending volume, I want to be clear that we are committed to Correspondent Lending and will continue to participate in the business with a renewed focus on our high quality and long term customers. We made this decision in response to ongoing challenges posed by the volatility in the global economy, the capital markets and the housing markets. We believe these market uncertainties require an increased emphasis on liquidity and cash-generation. While our company focus may shift and adapt with the current market environment, our priorities remain the same, including an unwavering commitment to customer service."

Lenders One clients also received a note about PHH, recently downgraded by S&P (join the club!), under investigation by the CFPB, and which carried out significant layoffs earlier this week. "Given the potentially serious nature of the situation, we have endeavored to find out as much as possible so that we could share tangible information with the Members.  However, we also want to avoid spreading rumors or providing misinformation. To that end, we can think of no better way to ensure the most accurate distribution of information than to invite each of you to participate in the upcoming PHH earnings call which, fortuitously, is scheduled for next week...'PHH announced plans to release its fourth quarter 2011 results on Monday, February 6, 2012, after the market closes. The Company will host a conference call at 10AM EST on Tuesday, February 7, to discuss its fourth quarter 2011 results. You can access the conference call by dialing (888) 510-1762 or (719) 457-2634 and using the conference ID 4120134 approximately 10 minutes prior to the call. The conference call will also be webcast, which can be accessed at www.phh.com/invest under webcasts and presentations.'"

Not to be outdone in sending notes, Wells Fargo's wholesale management (Kevin Sexton, Bill Trees, and Jim Wyble) sent out a note to brokers. "As the competitive landscape for third party lending continues to evolve, we wanted to take this opportunity to confirm our commitment to Wholesale lending and our broker community. As other lenders exit the Wholesale business, we believe 2012 promises to be a great year with ample opportunity as we continue to work together and remain focused on quality. Wells Fargo Wholesale Lending is committed to serving you and your customers. For more than 15 years, Wells Fargo has been an industry leader in the Wholesale channel. As we've demonstrated time and again, Wells Fargo is invested in the long-term success of you, your borrowers and the wholesale business. You can count on our dedicated team to partner with you to provide valuable products and programs to American homebuyers in a fair and responsible way."

Back in September the FHFA, the overseer of Fannie & Freddie, released a "white paper" suggesting a change to the way servicers are compensated. FHFA's goal was to propose a new servicing compensation structure to (i) improve service for borrowers; (ii) reduce financial risk to servicers; and (iii) provide flexibility for guarantors to better manager non-performing loans while promoting continued liquidity in the TBA market. It asked for comments on reducing the Minimum Servicing Fee (MSF) from 25bp to 12.5bp to 20bp. (The proposal established a separate account within the trust structure of the MBS which is funded by reallocating around 5bp from the borrowers payments, and would be available to pay for non-performing loan servicing.) Under this proposal, servicers were to move from receiving 25bp of servicing to receiving a fixed dollar amount based of compensation if the loan is current ($10/loan). And in order to protect investors from churning, the enterprises were to do the following: implement a net tangible benefit test for streamline refi programs, enhance monitoring and tracking of prepayment speeds for each servicer, and restrict the amount of excess IO in a pool. But lacking was a plan for guidance on what a servicer might earn should a loan go delinquent.

We've come to learn that the FHFA is preparing to back away from this plan to overhaul the minimum servicing fees paid on Fannie Mae and Freddie Mac loans, after intense, across-the-board industry opposition to the idea. "Sources" say it's pretty much over and done with, and in a non-descript message FHFA spokeswoman Corinne Russell e-mailed, "Considering changes to the structure of mortgage servicing compensation is an important component of improving the operations of the future mortgage market. We received useful input on the discussion paper, and will provide an update on next steps in the near future." Most servicing advisory firms came out against any radical changes to compensation, as did the MBA. (Editor's note: haven't we had enough change and uncertainty from outside the industry - why do we need more from within it?)

Live and learn. There are a lot of learning opportunities from our MBA for mortgage folks out there. (Probably even a few where this might happen). For example from Feb 13-15, "Collections and Early Intervention: Regulatory Requirements and Implementation Strategies is for all the collections and customer service managers, leads, and supervisors out there to help design compliant strategies and processes for handling collections" - Link.
Continuing on, for asset managers, relationship managers, servicing managers, and commercial real estate primary services who service CMBS loans, "CMBS Restructures: How to Work with Customers on Non-Performing Loans" outlines the specific details of the responsibilities, standards, and circumstances associated with CMBS loans. More information for the Feb 16 course. And anyone who works in REO and is interested in asset management protection should look into "REO and Property Preservation," which will help participants with strategy, managing remediation costs and timetables, and calculating return on the repair dollar and its influence on the markets.  This one will take place from March 12-13.

The FDIC will host a national conference on "The Future of Community Banking" on February 16 in Arlington, Virginia. The conference will provide a forum for community bank stakeholders to explore the unique role community banks play in the country's economy and the challenges and opportunities this segment of the banking industry faces. Ben Bernanke and FDIC Director Tom Curry are scheduled to deliver the keynote addresses at the conference. FDIC Acting Chairman Martin J. Gruenberg will also make remarks -  additional information. Before you book your flight, attendance at the conference is by invitation and will be open to credentialed members of the media - so the conference will be broadcast live and archived through a publicly available webcast on the FDIC's Web site here.

In keeping with regulation trends, the US Sentencing Commission has proposed harsher sentencing guidelines for securities and mortgage fraud violations. (Who knew our government had a sentencing commission - but these days who is surprised?) It is seeking comment on whether or not the current guidelines under Dodd-Frank account for potential and actual harm to the public and financial markets from securities, mortgage and financial institution fraud.  Regarding securities, the Commission is focusing on insider trading, while for mortgage fraud, they're looking to amend the way loan fraud loss is calculated. The latter would be assessed by taking into account the amount recovered from the foreclosure sale where the collateral is disposed as well as reasonably predicted administrative costs incurred by the lending institution associated with the foreclosure of the mortgaged property. The Commission also wishes to amend the sentencing for specific financial harms such as "jeopardizing the financial institution."  To view the proposal in full, see http://www.ussc.gov/Legal/Federal_Register_Notices/20120119_FR_Proposed_Amendments.pdf.  Note as well that they are accepting public comments until March 19th!

The California Department of Real Estate (DRE) is constantly asked, regarding short sale transactions, whether a buy can be charged to compensate either the sale negotiator or the broker.  As of July 2011, California state law prohibits the charging of additional fees in exchange for the written consent of the sale.  Under the Real Estate Law, short sale fees may still be charged, but, to maintain a certain level of transparency, the negotiator must be properly licensed under California law, and there must be full written disclosure to all parties involved, including the short sale and originating lenders.  The compensation fees must be disclosed in the purchase agreements, escrow instructions, and HUD 1 statement.  Any "special fees" charged must be authorized by the DRE via an advance fee contract; Additionally, the Real Estate Settlement Procedures Act (RESPA) requires these fees to correspond to an actual service performed-in other words, the buyer must be getting work done for any money paid.  Any "junk" or "special" fees and they'll be on you like a ton of bricks.

Yup, rates are good, and should be for quite some time. Like Ground Hog Day, yesterday was more of the same: good supply/selling from mortgage bankers (maybe locks are picking up with these record low rates?) met by more demand by the Fed, hedge funds, banks, and money managers. Investors are piling into agency MBS in anticipation of a QE3 round from the Fed - officials have been hinting lately about plans to potentially launch another round of QE (w/this one focused on mortgages instead of Treasuries). The Fed's appetite continues to be a constant $1-1.2 billion a day, so any selling above or below that by originators tends to tilt the scale. (Bernanke, who testified yesterday in Washington, said nothing new to move the markets.) Yesterday, by the close, MBS prices were better by almost .250 and the 10-yr T-note closed at 1.83%.

We've had the 1st-Friday-of-every-month jobs numbers this morning. January's Nonfarm Payrolls, expected +150k, down from +203k in December, came out at +243k. The Unemployment Rate dropped from 8.5% to 8.3% (the lowest in almost 3 years). With no substantive news from Europe, this will probably determine trading for today, and soon after the strong jobs number the 10-yr worsened from 1.82% to 1.92%, and MBS prices appear worse by .375-.50.

For more weekly insight into MBS / secondary markets, make sure to read and subscribe to: Calculating Current Coupon in a Record Low Rate Environment by Bill Berliner.

A guy took his blonde girlfriend to her first football game.
They had great seats right behind their team's bench.
After the game, he asked her how she liked it.
"Oh, I really liked it," she replied, "especially the tight pants and all the big muscles, but I just couldn't understand why they were killing each other over 25 cents."
Dumbfounded, her boyfriend asked, "What do you mean?"
"Well, they flipped a coin, one team got it and then for the rest of the game, all they kept screaming was, 'Get the quarterback! Get the quarterback!' I'm like...Helloooooo? It's only 25 cents!!!!"

If you're interested, visit my twice-a-month blog at the STRATMOR Group web site located at www.stratmorgroup.com. The current blog discusses residential lending and mortgage programs around the world, part 2. If you have both the time and inclination, make a comment on what I have written, or on other comments so that folks can learn what's going on out there from the other readers.

View the original article here

Here we are in February already, which has Valentine's Day. Some guys out there look forward to that day with about as much anticipation as hugging their girlfriend's cat, or picking out a costume at Halloween. Comparisons aside, the most popular theory is that Valentine was a clergyman who was executed for secretly marrying couples in ancient Rome. Per the census bureau, there are 1,177 U.S. manufacturing establishments that produced chocolate and cocoa products in 2009 (it is its own food group, right?), employing 34,252 people. California led the nation in the number of chocolate and cocoa manufacturing establishments, with 135, followed by Pennsylvania, with 111, with the total value of shipments totaling nearly $13 billion. And Americans consumed almost 25 pounds of candy per capita.

As much as the government talks about staying out of housing, it can't. President Obama is expected to unveil a new refi plan today in Virginia at 11AM CST. Whatever plan it is, no one expects it to pass through Congress, IF Congressional approval is required. Recall that this plan was previewed by Obama during his SOTU address last week.  The plan would allow non-agency mortgage holders (so those mortgages not backed by Fannie/Freddie) who are current to refinance into a lower-interest federally insured mortgage (via the FHA).  Borrowers could qualify even if they had negative equity.  The plan could help as many as 3.5M homeowners refinance.  The plan is expected to cost ~$5-10B and Obama will call for a new fee to be charged to banks to pay for the proposal - because they have all the money, right?  Watch his speech live here.

Rates can do whatever they want, but if large investors go away, and the government does away with Fannie & Freddie, is the borrower better off? (Remember borrowers?) As was mentioned in this commentary earlier this week, there have been rumors about PHH Mortgage and SunTrust. PHH especially, after the S&P downgrade and the CFPB probe being revealed, was rumored to be having funding problems and being forced to downsize.  Sources indicate that those rumors are true, and that PHH Mortgage has eliminated twelve account rep positions and retained only six.  In addition, clients are suggesting that PHH is cutting back on pricing and increasing internal requirements for loan purchases. And at SunTrust, the entire mortgage channel is indeed going through reorganization, making the business "flatter" and cutting costs.

"In reaction to the Federal Housing Finance Agency statement released December 29, 2011 regarding guarantee fee increases, Chase Lock Extension fees will increase by 0.25% for all extension terms." So reads the latest release from Chase. So, for example, a 7 day extension will cost .625 instead of .375 (which many viewed as steep to begin with); 30 days will now cost a point.

Needless to say with all this, the mortgage herd (especially those companies that sell to them) is spooked. Competitors are warily watching, not really wanting a huge increase in volume coming their way. And smaller shops are wondering, "When is this going to end?" Or "What am I supposed to do?" Some lenders with a minimum net worth of $2.5 million have begun selling loans directly to Fannie and Freddie, with the servicing either being retained (in house or with a subservicer) or sold released to a servicing counterparty of F&F (such as Central, USB, PHH, and so on). But that is not a sure thing either, as the FHFA, not content to leave well enough alone, has offered two options to revamp the economics of mortgage servicing rights - which brings up the issue of how the market values servicing versus how the lender values servicing.

Retaining mortgage servicing isn't a matter of just saying, "Sounds good, let's crank it up." CFO's and owners need to be fully aware of the capital it requires, both in pricing the loans, in carrying them on the books, and in setting aside reserves for delinquencies. Depending on the arrangement (actual-actual or scheduled-actual) the servicer must fund principal and interest payments to investors, which can quickly eat up cash.

(By the way, SunTrust will buy FirstAgain LLC for an undisclosed sum, as it seeks to increase direct online lending. FirstAgain specializes in providing direct unsecured loans to super-prime borrowers via the Internet and operates proprietary technology offering clients' completely digital and paperless origination, underwriting and servicing.)

It can't be any fun to be a large financial institution any more - not like the old days. A new federal task group set up to investigate residential mortgage-backed securities (RMBS) fraud signed off on subpoenas for 11 undisclosed financial institutions. New York Attorney General and co-chair Eric Schneiderman did not name any of the financial institutions subpoenaed by the group but said that the group has "jurisdiction to go after every aspect of the artificial inflation... and the crash that brought down the economy" over the last several years. He said that the group would levy "appropriate civil and criminal charges" against financial institutions as investigations moved forward under the auspices of the Financial Fraud Enforcement Task Force. (What about the borrowers who abused the system?) Of course the SEC has already "issued scores" of their own subpoenas, obtained millions of documents, and interviewed dozens and dozens of key witnesses related to mortgage-backed securities. Officials said that the unit will include in its ranks more than 55 Justice Department attorneys and investigators, 15 civil and criminal attorneys, and 10 agents and analysts with the Federal Bureau of Investigation. Thirty more attorneys and personnel will take up positions in the group in the weeks ahead. Critics point to job growth at the Federal level rather than the private sector - our tax money at work!

I received this note. "Rob, who is going to regulate the regulators? They must be tripping over each other with the confusing jurisdictions and responsibilities. I have been in the real estate and mortgage business for years, and I am feeling like one of those floats in the Macy's parade and everyone shooting at it because it is such a big target." President Obama did indeed create yet another regulatory body noted above to investigate financial institutions. He directed Attorney General Eric Holder to create a new office on Mortgage Origination and Securitization Abuses.  The President said, "The American people deserve a robust and comprehensive investigation into the global financial meltdown to ensure nothing like it ever happens again." According to the Huffington Post, the new office will take a three-pronged approach to the issue, holding financial institutions accountable for abuses, compensating victims, and providing relief for homeowners, and will operate as part of the existing Financial Fraud Enforcement Task Force. Good luck working with the state Attorneys General, the Department of Justice, the SEC, the OCC, the FBI...

But we may not have Treasury Secretary Timothy Geithner to kick around much longer. He said President Barack Obama is likely to be re-elected, but he isn't likely to stay for a second term. "I'm confident he'll be president. But I'm also confident he's going to have the privilege of having another secretary of the Treasury."

Remember the little thing in NPR about Freddie betting against homeowners? "Freddie Mac stopped making investments in derivatives known as inverse floaters last year after a regulatory exam raised questions about the mortgage company's controls, the Federal Housing Finance Agency said. An FHFA examination "identified concerns regarding the controls, including risk management, surrounding the inverse floaters," the oversight agency said in a statement. 'FHFA and Freddie Mac agreed that these transactions would not resume.'"
Read all about it.

Above I mentioned the U.S. becoming a nation of renters - but often times investors and lenders do not have sufficient insight into distressed property trends at the national and local level which reduces their ability to effectively manage collateral risk and establish effective loss mitigation strategies and accurate loss projections. DataQuick has developed a Distress Property Analysis Tool called RiskFinder Distress to come up with monthly statistics for the past 10 years to help track trends and help identify geography, down to a neighborhood level, that most negatively impacted by distressed property trends. For more information contact your DataQuick representative or Wendy Barnett at wbarnett@dataquick.com.

The MBA reported that apps last week dropped about 3% after dropping 5% the week before. (Refi's dropped 3.6%, purchases down 1.7%, with refi's accounting for an even 80% of nationwide retail applications.) But at least the "Bernanke freight train bond market," as one MBS salesman noted, is rolling along. "With the Fed potentially on hold thru 2014 and QE3 being discussed," Fannie 3.5's are nearly at a price of 104 - that is a 4 point premium for 3.75-4.125% 30-yr loans, not even including the servicing! Yesterday we had a slew of news: the Employment Cost Index rose 0.4% in 4Q 2011, the S&P/Case-Shiller index showed that home prices continued to decline in November, the ISM Chicago Purchasing Managers Index fell, and the Conference Board's Consumer Confidence Index dropped as well. Most of the news out yesterday points to a slow economy in this country, and a slowing economy generally leads to lower rates.

So are LO's excited about a continued refi boom? Perhaps - but rates haven't been an issue in a long time. Investors are not necessarily excited about more refinancing - they'd like to keep the existing MBS's on their books a while longer. Thomson Reuters noted, "Traders have cautioned of the potential for increased supply in coming days as originator pipelines have been building up in response to the decline in rates." But the U.S. 10-yr T-note hit 1.80% and rate sheet MBS prices improved by another .125.

Today we've already had the MBA apps numbers out, noted above. And we've also had the ADP Employment report for January, always of questionable predictive ability for the actual government numbers Friday. The number was +170k for January, with a downward revision for December but still this is the 24th straight gain in private payrolls. Later we'll have another ISM Index and Construction Spending at 10AM EST, along with the Treasury announcing the size of next week's 3, 10, and 30-yr auctions (estimated unchanged at $72 billion). So far rates are flat to Tuesday's close with the 10-yr at 1.81% and MBS prices unchanged.

CONFUCIUS DIDN'T SAY:
Man who eats many prunes get good run for money.
War does not determine who is right, it determines who is left.
Man who fight with wife all day get no piece at night.
It takes many nails to build a crib, but one screw to fill it.
Man who drives like hell is bound to get there.
Man who stands on toilet is high on pot.
Man who live in glass house should change clothes in basement.
Man who fish in other man's well often catch crabs.
Finally CONFUCIUS SAY -
"A lion will not cheat on his wife, but a Tiger Wood!"

If you're interested, visit my twice-a-month blog at the STRATMOR Group web site located at www.stratmorgroup.com. The current blog discusses residential lending and mortgage programs around the world. If you have both the time and inclination, make a comment on what I have written, or on other comments so that folks can learn what's going on out there from the other readers.

View the original article here