A recent president was reported to have said, “You can fool some of the people all the time, and those are the ones you want to concentrate on.”

Some in the mortgage business feel that FHA loans are the new subprime, and the taxpayer will be the one to absorb the hit. Currently over 10% of borrowers who took out FHA-backed loans in the first quarter of 2008 had missed at least two consecutive monthly payments within the first 10 months. (In 2007 it was 9.4 %.) Granted, loans that are 60-days delinquent aren’t necessarily headed to foreclosure, and the FHA has robust loss-mitigation programs, but the rising default rate indicates that the agency has its hands full with problems on low down payment loans.

VIDEO: Suddenly it seems that loan modification businesses have sprung up, with or without effective regulation. Here is a summary of Geithner’s explanation of how the administration is going to crack down on fraud loan modification and foreclosure prevention programs.  Hint: it encourages people not to pay for a loan mod since there are government employees doing loan modifications for free.

Geithner Addresses Mortgage Fraud - Bloomberg

Did your apps drop last week? Join the crowd: apps industry-wide were down 11%, falling for the first time in more than a month. Refinancing and purchases were both down 11%.

Is wholesale lending actually making a come back? As companies like Citi and Chase have scaled back, others have taken up the slack. One example is Plaza Mortgage, who in California alone has four full service offices in California and is doing hundreds of millions nationwide. (One correction to a previous e-mail about wholesale lending - Guild Mortgage apparently is not primarily a wholesale lender.  They are a retail net branch lender doing a very respectable volume – profit margin unknown since they are privately owned.)

GMAC, for its correspondents, has implemented new mortgage history requirements for VA Interest Rate Reduction Refinance Loans (IRRRLS) and Cash-Out/Rate and Term Refinance transactions, beginning on the 17th. “It may be necessary to verify the current and previous mortgage to establish a 12 month mortgage payment history. Interest Rate Reduction Refinance Loans (IRRRLS) 0 x 30 during the previous 12 months or life of loan if property is owned less than 12 months Cash-Out/Rate and Term Refinance: AUS Approved: Mortgage payment history evaluated by AUS, AUS Refer or Manual Underwrite: 0 x 30 during the previous 12 months or life of loan if property is owned less than 12 months.”

In the market, Wall Street dealers saw light origination again yesterday. So it definitely helps mortgage rates, in comparison to 5- or 10-yr Treasury yields, when the US government is in buying MBS’s. Besides UBS cutting several thousand jobs, we did have some news out this morning. The Consumer Price Index fell .1% in March, led by lower energy prices. This was about as expected. Energy prices decreased 3% in March, and food prices fell 0.1%. The core CPI, which excludes food and energy prices, rose 0.2% for the third consecutive month. Later on we’ll see the Empire Manufacturing Index, along with Industrial Production and Capacity Utilization, but for now the 5-yr Treasury is at 1.78%, the 10-yr is 2.79%, and mortgages are about unchanged from yesterday afternoon.

I will apologize in advance for these…

A hole has been found in the nudist camp wall - the police are looking into it.

Atheism is a non-prophet organization.

Two hats were hanging on a hat rack in the hallway - one hat said to the other, “You stay here; I’ll go on a head.”

I wondered why the baseball kept getting bigger. Then it hit me.

Rob

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