Marc's Mortgage Matter's

Although they won two weekends ago...

The Texas State Police are cracking down on speeders heading into Dallas.
For the first offense, they give you 2 Dallas Cowboy tickets. If you get stopped a second time, they make you use them.
Q. What do you call 47 millionaires around a TV watching the Super Bowl?
A. The Dallas Cowboys
Q. What's the difference between the Dallas Cowboys and a dollar bill?
A. You can still get four quarters out of a dollar bill.
Q. How many Dallas Cowboys does it take to win a Super Bowl?
A. Nobody remembers.
Q. What do the Cowboys and a possums have in common?
A. Both play dead at home and get killed on the road!

Basel 3, Quantitative Easing 2 - it is easy to get confused. (At least the government programs during the Depression in the 1930's had individual names.) If you have 6 minutes to kill until your next meeting, you can listen to this humorous explanation of QE2 that is making the rounds: QE2=PrintingMoney?

With all this talk about who can legally foreclose, where are the documents, MERS, custodians, servicers, and so forth, it is easy to become confused. Kate Berry, with American Banker, offers up this tidy explanation: "New Century, the originator, funds some loans and sells the servicing rights on them to GMAC, but the loans are bundled into a security sponsored by Lehman, which acts as the interim servicer. (Lehman also is moving the debt around its balance sheet or transferring it to BNC Mortgage). Another firm is appointed the trustee. Lehman is packaging the loans and because it is a broker, has traders sell the pool to investors. New Century's post-closing department is supposed to send the documents to their collateral custodian, Bankers Trust. (The note is the collateral, the trading instrument.) Bankers Trust is supposed to review the documents for completeness and then approve the collateral package. They literally put the loan package into a manila file that is stored in a fireproof vault. The loan has been sold into an MBS pool and the collateral package is supposed to be reviewed by a custodial agent (which is likely another department at Bankers Trust). In the best-case scenario, the trustee reviews or certifies the files." Good luck!

The Federal Reserve has a new bulletin explaining credit reports, and scores, to the masses. It is worth a skim to either learn something new about credit reports, or see what borrowers tend to see. "The Consumer's Guide to Credit Reports and Credit Scores" describes the content of a credit report, explains how a credit score is used, and discusses the role of credit bureaus in collecting and disseminating this information. FedReserveCreditReport .

Housing markets continue to stumble along, with home purchasing remaining at poor levels. Economic fundamentals, most notably employment, continue to exert their influence, keeping the market from making headway. For months, the financial health of banks and borrowers alike has been improved by refinancing of old, higher-rate mortgages. For banks, refinancing activity brings in fee income and profits on sales, contributing to the bottom line; for households, a change in the composition of monthly obligations can bring welcome financial breathing room. Low and especially declining rates have been a catalyst for these benefits, but this week, low rates took a step backwards.

Mortgage interest rates bounced higher this week the average rate for 30-year fixed-rate mortgages climbed to 4.75, the highest such rate since the middle of September. The rise in interest rates is largely due to the Federal Reserve's new program of buying up Treasury securities in an attempt to spur the economy. Some analysts have speculated that the market got a little ahead of itself in preparation for the beginning of the program, and has been forced to back off a little bit. That, coupled with mildly improving economic signals relative to the summer months has pressed rates higher.

Among the signs of economic improvement improvement was a 1.2% rise in Retail Sales in October, a fourth consecutive gain. As well, some retailers marked up their expectations for holiday sales, a welcome change after several years of gloom and steep discounts. Rising gas and auto costs contributed to the gain in spending, but even excluding them left a 0.4% improvement in 'core' retail sales, the same rise as September.

Perhaps more important was that claims for new unemployment benefits came in at "only" 439,000 for the week ending November 13. While still elevated, the last four weeks are much improved over summer levels, and have moved to their most encouraging levels of 2010. This lends some credence to the argument that the economy is starting to move forward on its own and perhaps might not need all of the Fed's additional boost. It also suggests that the November employment report might come in better than expected for the first time in a while. While we remain a long, long way from labor market recovery, even small steps will be cheered, since they can become self-reinforcing improvements over time. 

After a long decline, mortgage rates have nudged higher. It's worth noting that conforming rates have risen the most, strongly influenced by the Federal government's cost of money as they are. ARM rates especially if they can be funded by ultra-cheap deposits, will be less influenced by changes in the price of Treasury obligations and should move in a softer fashion. Mortgage rates have firmed, but seem to have leveled. We expect them to remain firm next week, which has a holiday-shortened calendar packed with fresh data. Home Sales, FOMC minutes, GDP revision and more are featured. Even subtly better news might nudge them a little higher.

A man goes to see the Rabbi. "Rabbi, something terrible is happening and I have to talk to you about it."
The Rabbi asked, "What's wrong?"
The man replied, "My wife is poisoning me."
The Rabbi, very surprised by this, asks, "How can that be?"
The man pleads, "I'm telling you, I'm certain she's poisoning me - what should I do?"
The Rabbi then offers, "Tell you what. Let me talk to her, I'll see what I can find out and I'll let you know."
A week later the Rabbi calls the man and says, "I spoke to her on the phone for three hours. You want my advice?"
The man said yes and the Rabbi replied, "Take the poison."