Women and cats will do as they please, and men and dogs should relax and get used to the idea. Many believe that Fannie and Freddie will do as they please, and everyone else had better relax and get used to the idea. What did I learn at the Western Secondary conference here in San Francisco? Well, F&F set the guidelines, but besides them there are five primary investors, in alphabetical order: Bank of America, Chase, CitiMortgage, GMAC, and Wells Fargo. (GNMA, of course, doesn’t buy loans, but insures them – see note below.) And, aside from a few exceptions, other lenders ranging from Taylor Bean, Flagstar, AmTrust, Franklin American, etc., down to small brokers, sell to them or directly to Freddie & Fannie, using the Fannie/Freddie guidelines. That about sums it up!

In an effort to save some trees, and maybe make some money, next week Flagstar “for all eligible refinance loans that close…will begin charging a $50 Paper Handling Fee to help offset some of the cost associated to traditional closings.”

According to the MBAA, the government-insured (FHA and VA loans) share of mortgage applications was nearly 36% last month, the highest level since November 1990, and accounted for almost 40% of purchase applications. Could it be because these loans require a lower down payment? Of course – and it is easy to see why many are hoping that they aren’t the next subprime nightmare:http://www.mbaa.org/NewsandMedia/PressCenter/69541.htm

The Fed purchased $17.05bn net in agency MBS over the past week, bringing its total net purchase to $638.6bn. “What happens when they run out of money?” my 86-year old Dad asked me yesterday. (He grew up during the Depression, and visits his savings in the safe deposit box every few weeks.) I replied, “Dad, you obviously don’t know anything about high level finance. They’ll just print more!”

This, no doubt accounted for the strong performance recently of mortgage securities, relative to Treasury prices. Wall Street traders say that buyers from Asia, money managers, and the Fed have all been in buying MBS’s – even the higher coupon mortgage product. And yesterday was another light news day, with initial Jobless Claims being much lower than expected at 565K, but continuing Jobless Claims were much higher than expected at 683K. The 30-yr auction of $11 billion was pretty good (4.30% yield, 50.2% indirect bids), for lack of a better term, but the market is glad to have the auctions behind it. Ahead of the open the stock market appears to be heading for negative territory. We will have some trade data this morning, but for now the yield on the 10-yr is 3.34% and mortgages are roughly unchanged – again. It has been a quiet week.

For today’s joke, go to:  http://www.robchrisman.com/

Rob

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