Study Shows Credit Card Debt Getting Paid Before Mortgages – By Robin Cassella – A recent trend of consumers paying off their credit card bills before their mortgages is gaining steam, according to a study released by TransUnion.  The phenomenon first appeared in early 2008. The reversal is representative of the change in conventional thought surrounding the payment hierarchy, or which debt consumers decide to pay off first. – FOXBusiness

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S&P: US banks back from the brink but mortgages still a problem – …“We believe that smaller and regional banks–those most exposed to depressed local economies–will be most likely to succumb eventually to these conditions. Regulators might ultimately nudge many of them into the corporate arms of stronger competitors, as happened to approximately 140 such banks in 2009. But we think it’s unlikely that any major bank (with more than $100 billion in assets) will fail this year.” … – Research Recap

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When refinancing, people now often cash-in rather than cash-out – Ken Harney – … Now the pendulum in consumer psychology appears to be swinging toward reduction of household debt – whether credit cards or mortgages. In Freddie Mac’s latest quarterly survey of refinancings, 33 percent of homeowners put cash into the deal to lower their mortgage balances, which was the highest ever. By contrast, only 27 percent of refinancers took cash out – the lowest percentage on record. … – Chicago Daily Herald

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Reverse Mortgage Origination Volume Grows to $30.2 Billion in 2009, Up 25% – … Despite only a slight increase in units endorsed in FY 2009, max claim volume grew 25% compared to the prior FY total of $24.2 billion.  According to data from Reverse Market Insight, 22% of the increase in volume comes from the lending limit increase and the remaining 3% stems from the additional units in FY 2009.  In addition, the shift to the fixed rate product has also been a factor. … – Reverse Mortgage Daily

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GMAC Continues To Pare Down Loan Portfolio – by Daniel Indiviglio – Troubled U.S.-owned lender GMAC continues to shrink its investment holdings, preparing to sell another $6.5 billion in mortgage assets. – The Atlantic

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Fifth Third targets mortgage modifications – Fifth Third Mortgage Co. says it has achieved four times the national average in mortgage modifications.  Of the 89 percent of the company’s portfolio eligible for Home Affordable Modification Program consideration, nearly 35 percent of trial modifications have been converted to permanent modifications. -   Charlotte Business Journal

Do We Need A Dow 2.0? – By Peter G. Miller – It’s likely true that home values have stayed level for 20 years at a time. However, the context is that real estate is not alone. Securities values have also stayed level for 20 years at a time. As to what will happen in the future, no one knows — not even Suze Orman…. – hattip   Peter Miller  -   Our Broker
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on securitization – In the Packaging of Loans, a Bust With Precedent – By FLOYD NORRIS – NY Times
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Seeking a Safer Way to Securitization - By FLOYD NORRIS – … There are several essential elements to any fix. The underlying loans have to be of better quality. The investors have to believe that is the case and that they are being compensated for risks that were much higher than they previously believed. Another 30 percent collapse in home prices is unlikely, but it will be a while before anyone’s models deem such a thing impossible.  There are two ways being suggested to deal with the quality issue. Mr. Dugan favors using government edicts to set lending standards. Other officials want to find ways to use the market system to promote better lending. … – NY Times

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Wells Fargo Shuns Carry-Trade, Braces for Risk of Higher Rates – By Dakin Campbell -  Wells Fargo & Co., unlike its three biggest competitors, is so convinced interest rates will rise that it sacrificed as much as $1 billion last year cutting back on fixed-income investments. – BusinessWeek

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Default Risk For Financials Shoots Up – Bespoke Investment Group

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The Goldman Sachs Guide To Surviving 2010 – Vincent Fernando – Here’s a cut of key slides we pulled from Goldman’s massive February ‘Global Themes and Risks’ presentation pack – Money Game at Business Insider

Bill Gross: The Sovereign Debt Crisis Is "Subprime" All Over Again - Joe Weisenthal – … As for the question of magnitude, in a way it’s not about the size of the defaults. Subprime loans were never that big. Lehman wasn’t that big. Greece and Portugal aren’t huge countries. But it’s about nervousness and contagion. Who owns what, and what will they sell to raise cash? … text and video – - Money Game at Business Insider

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Nonperforming Loans in China Rise to "Trillions of Renminbi" – MISH’S Global Economic Trend Analysis   
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Taleb Says ‘Every Human’ Should Short U.S. Treasuries – By Michael Patterson and Cordell Eddings – … “Deficits are like putting dynamite in the hands of children,” Taleb said in an interview with Bloomberg Television. “They can get out of control very quickly.” … –
Bloomberg

I thought about taking today off from the commentary to celebrate, since yesterday I won all 4 quarters of my office’s Super Bowl pool! And then I remembered that I was the only one in the pool, don’t really have an office, and that the net effect of my $50 a square winnings was about the same as the US Government buying back their own securities. Oh well.

Those dues that you pay to the Mortgage Bankers Association – where does the money go? Education, lobbying, etc., but some probably went into buying the MBAA its $90 million headquarters in downtown Washington which it sold last week for $41 million after 3 years. Ouch! CoStar Group, who is moving its headquarters from Maryland to DC, also received a $6 million property tax break – hats off to them. Not only did the MBAA’s interest rate expense increase, but it had trouble finding tenants for its additional office space. To make matters worse, and this should be of no surprise, according to the MBAA their membership has been noticeably falling off, resulting in less revenue.

Secondary marketing employees, especially those that sell loans, are notorious for splitting off the CRA loans (Community Reinvestment Act, designed to meet local credit needs) and selling them to investors for a point or two more than the broker or agent was paid for them without a rate sheet adjustment. That entirely aside, as it turns out, the FDIC monitors institutions and their compliance with CRA regulations. The FDIC announced that it has come out with a new drug to treat small banker heart palpitations. Okay, I was just kidding to see if anyone reads this stuff. Late last week, however, the FDIC did issue its list of state nonmember banks recently evaluated for compliance with the Community Reinvestment Act (CRA).

I ain’t no tax expert, so when a broker from Idaho wrote to me and asked, “How long do I have to keep statements from banks that don’t exist anymore?” I was flummoxed.

“Only” one bank was shut down by the FDIC on Friday. It was in Minnesota (1st American State Bank of Minnesota), and Community Development Bank, also in Minnesota, agreed to assume the assets and deposits of the failed bank. The loss of $11.7 million will be shared, with the taxpayer, picking up about $3 million of the expense.

Fannie Mae and Freddie MAC both updated their Home Affordable Modification Program (HAMP) program, addressing issues that primarily concern servicers of the product. Previously Fannie & Freddie had set forth eligibility, underwriting and servicing requirements for the Home Affordable Modification Program (HAMP), and last week amended key features of the program. For example, starting June 1 (how do you like that for advance notice?) F&F changed the verified income documentation “for all HAMP trial period plans.” F&F’s amendments, which can be viewed on their respective websites, concern the process of modifying a loan, the initial package, income & asset documentation, timelines, making a modification permanent, eliminating the stated income trial plans, etc.

Investors in mortgage securities usually are betting on how long they will hold a particular pool of loans. Some want them to be paid off quickly; others would prefer that the loans stay on their books for a long time. When either group sees unexpected prepayments, for whatever reason, that is cause for concern. Last week prepayment information was released showing that fixed rate prepayments declined 15% in the latest survey, due to a lower day count and weaker housing “seasonals”. Higher coupons saw some buyouts, although the new SFAS 166/167 implementation (where the delinquent loans that are bought out by the GSEs no longer have to be marked at their market values, and possibly requiring the agencies to issue short-term debt in order to accomplish the buyouts) did not appear to be a driving force. Of interest to originators, however, is the expectation that with rates steady, and the percent of refi’s expected to drop, prepayment speeds are also expected to drop.

more news on GMAC correspondent, Franklin American, Bernanke speaking on Wednesday, Fed support of mortgages, soverign debt crisis, markets, treasury auctions, and joke of the day … <<< CLICK HERE TO CONTINUE

CHART OF THE DAY: US debt vs. GDP in 2009 – The Prudent Investor Blog

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Unemployment: The Government’s Scary Projections – Tom Lindmark – … What do they think happens to U-6? If it follows the same trends then we’re talking about millions of working Americans consigned to marginal existence for the foreseeable future. … – But Then What

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Census Bureau: 130.6 Million Housing Units in the US; 18.9 Million are Vacant – by Adam Quinones – The Census Bureau today released the Report on Residential Vacancies and Homeownership. This data covered fourth quarter 2009. – has summary – Mortgage News Daily
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Biggest Bubble in History Is Growing Every Day: William Pesek – Real estate, stocks, credit. China sure has its share of bubbles. Oddly, little attention is paid to the biggest one of all.  China’s currency reserves grew by more than the gross domestic product of Norway in 2009. Its $2.4 trillion of reserves is a bubble all its own, one growing before our eyes with nary a peep out of those searching for the next big one. – Bloomberg
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Chart of the Day – Today, the Labor Department reported that nonfarm payrolls (jobs) decreased by 20,000 in January. Today’s chart puts that decline into perspective by comparing job losses following the beginning of the current economic recession (solid red line) to that of the last recession (dashed gold line) and the average recession from 1950-1999 (dashed blue line). …
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7 interesting charts: The Seven Faces of Malaise – Paper Economy Blog

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Conversation With My 14 Year Old Son – I do not have a son, nor daughters. However, I did receive an email from "Clyde" who does.  Clyde Writes … I had an interesting moment with my 14 year old son the other day. I had gone to the US Debt Clock website and was taking a minute to just watch the numbers roll up and down in the various amounts. … My 14 year old son walked by and I had him take a look at it all, explaining that someday my son, all this will be yours.  His first words were "Why the hell should I have to pay that back?" -   MISH’S Global Economic Trend Analysis   

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Foreigners Caused America’s Financial Crisis? A Closer Look – By Dian L. Chu -  … In the end, foreigners demand did not bring about the systemic risk. It is the lack of check-and-balance in our system allowing a concentration of risk into the hands of a few that almost brought the world to an utter collapse.  … Endgame and checkmate could come when unfettered financial institutions again push the economy to the brink, and there is no resources left for another bailout or rescue. … – Economic Forecasts & Opinions