MND NewsWire

Housing Starts Decline, Permits Rise. Builders Leading Home Prices Across Tightrope

Wed, 20 Jan 2010 21:16:23 GMT

The Commerce Department released December New Residential Construction: Building Permits, Housing Starts, and Housing Completions data this morning. Housing Starts data estimates how much new residential real estate construction occurred in the previous month. New construction means digging has begun. Adding rooms or renovating old ones does not count, the builder must be constructing a new home (can be on old foundation if re-building). Although the report offers up single family housing, 2-4 unit housing, and 5 unit and above housing data... single family housing is by far the most important as it accounts for the majority of total home building. Building Permits data provides an estimate on the number of homes planning on being built. The number of permits issued gauges how much construction...(read more)

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Refinance Demand Likely Boosted By Nervous Fencesitters

Wed, 20 Jan 2010 21:16:23 GMT

The Mortgage Bankers Association today released the Weekly Survey on Mortgage Application Activity for the week ending January 15, 2010. The MBA survey covers over 50 percent of all US residential mortgage loan applications taken by mortgage bankers, commercial banks, and thrifts. The data gives economists a look into consumer demand for mortgage loans. A rising trend of mortgage applications indicates an increase in home buying interest, a positive for the housing industry and economy as a whole. Furthermore, in a low mortgage rate environment, such a trend implies consumers are seeking out lower monthly payments which can result in increased disposable income and therefore more money to spend on discretionary items or to pay down other debt. In the previous release, which covered the ending...(read more)

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FHA Increases Upfront MIP Fee; Raises Credit Score Requirement; Reduces Seller Concessions

Wed, 20 Jan 2010 21:16:24 GMT

As promised in December, the Federal Housing Administration has announced the details of changes intended to strengthen its capital reserves which were reported to be headed into dangerously low territory late last year. The changes are designed to increase the FHA's income from customers while reducing its portfolio's risk. FHA Commissioner David Stevens comments: "Striking the right balance between managing the FHA's risk, continuing to provide access to underserved communities, and supporting the nation's economic recovery is critically important," "When combined with the risk management measures announced in September of last year, these changes are among the most significant steps to address risk in the agency's history. Additionally, by continuing to...(read more)

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The Day Ahead: Housing Starts, PPI, FHA to Increase Upfront Insurance Fee

Wed, 20 Jan 2010 21:16:24 GMT

Equity futures are sharply lower this morning as Bank of America reported it had lost $5.2 billion in the fourth quarter. The Republican upset in the Massachusetts election may also be causing some investor anxiety as the Democrats no longer have 60 seats in the Senate, which makes the future of healthcare reform more uncertain. 90 minutes before the bell, the benchmark S&P 500 is down 4.40 points to 1,141.30 and futures on the Dow are off 33 points to 10,637. Weak commodities confirm that that risk is off the table. WTI Crude oil is down $1.10 to $77.92 per barrel and Spot Gold is $10.00 lower to $1,130.00. Key Events Today: 8:30 ― Housing Starts are expected to inch up to an annual pace of 579k in December. The past two months have been volatile; in November the pace jumped 8.9% ― including...(read more)

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Home Builders Waiting for Labor Market to Improve. Nervous About Foreclosures

Wed, 20 Jan 2010 21:16:24 GMT

From the National Association of Home Builders: Builder confidence in the market for newly built, single-family homes declined one point to 15 in January on continuing concerns about the poor job market and large number of foreclosed homes for sale . Derived from a monthly survey that NAHB has been conducting for more than 20 years, the NAHB/Wells Fargo Housing Market Index gauges builder perceptions of current single-family home sales and sales expectations for the next six months as "good," "fair" or "poor." The survey also asks builders to rate traffic of prospective buyers as "high to very high," "average" or "low to very low." Scores for each component are then used to calculate a seasonally adjusted index where any number over...(read more)

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The Week Ahead: Q4 Earnings, Builder Confidence, Housing Starts, PPI

Wed, 20 Jan 2010 21:16:24 GMT

Equities are mixed around the globe but clearly downward in the US. Following a 3-day weekend, one hour before the opening bell, Dow futures are off 28 points to 10,535 and S&P 500 futures are down 4.00 points to 1128.30. Commodities are also weaker with WTI Crude oil down 64 cents to $77.36 per barrel and Gold down 3.30 cents to $1130.40. The week ahead is relatively light on data but financial markets will be active as the Q4 earnings season speeds up. Kicking off Tuesday is the earnings report from Citigroup. Wednesday will see results from rivals Morgan Stanley, Bank of America, and Wells Fargo. Thursday will see Goldman Sachs. Economists from BMO Capital Markets note that equity investors “have reacted negatively to recent reports and appear to have set a high bar for further...(read more)

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Treasury Reports Big Jump in Permanent Loan Modifications

Wed, 20 Jan 2010 21:16:24 GMT

The Treasury Department reported Friday that 66,500 of the 902,620 homeowners who had started the trial modification period for its Home Affordable Mortgage Program (HAMP) had completed the three month trial and entered into a permanent modification by the end of December. Another 46,000 have satisfactorily completed the trial and have been given final documents but have not yet signed and returned them. Although only a 7.4% conversion rate, this is more than double the 32,400 signed permanent modifications reported at the end of November. The below chart from the REPORT provides a snapshot of HAMP progress since inception. The primary goal of the HAMP program is to reduce the monthly payment of the borrower to no more than 31 percent of monthly income. This has been accomplished for all participants...(read more)

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A Different Perspective on Obama's Bank Fee: An Indirect Attack on Inflation

Wed, 20 Jan 2010 21:16:24 GMT

Yesterday the President announced his intention to propose a Financial Crisis Responsibility Fee that would require the largest and most highly levered Wall Street firms to pay back taxpayers for the extraordinary assistance provided so that the TARP program does not add to the deficit. The fee the President is proposing would: Require the Financial Sector to Pay Back For the Extraordinary Benefits Received Responsibility Fee Would Remain in Place for 10 Years or Longer if Necessary to Fully Pay Back TARP Raise Up to $117 Billion to Repay Projected Cost of TARP: President Obama is Fulfilling His Commitment to Provide a Plan for Taxpayer Repayment Three Years Earlier Than Required Apply to the Largest and Most Highly Levered Firms The immediate reaction from market watchers: THIS WILL INHIBIT...(read more)

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Fed Heading Towards Mortgage Market Exits? GSEs Need Explicit Government Guarantee First

Wed, 20 Jan 2010 21:16:24 GMT

Many people believe, because the GSEs were placed into conservatorship in 2008, that Fannie and Freddie MBS cash flows are explicitly guaranteed by the US government. This is NOT THE CASE . From the Fannie Mae MBS prospectus : "We guarantee to the MBS trust that we will supplement amounts received by the MBS trust as required to permit timely payments of principal and interest on the certificates. We alone are responsible for making payments under our guaranty. The certificates and payments of principal and interest on the certificates are not guaranteed by the United States and do not constitute a debt or obligation of the United States or any of its agencies or instrumentalities other than Fannie Mae." While that statement is pretty clear, there is still much confusion surrounding...(read more)

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Freddie Mac Says Mortgage Rates Rebounded from Year-End Highs

Wed, 20 Jan 2010 21:16:24 GMT

Mortgage interest rates declined slightly during the week, easing further off of the sudden increases in rates the last week of the year. Freddie Mac reported that the average rate for a 30-year fixed-rate (FRM) mortgage during the week ended January 14 was 5.06 percent with 0.7 point compared to 5.09 percent and 0.7 point a week earlier. During the week ended December 31 the rate had jumped 9 basis points to 5.24 percent. This week the 15-year FRM dropped five basis points to 4.45 percent with 0.6 point. During the week ended January 7, the average rate was 4.50 percent with 0.7 point. The 15-year had also experienced a surge between Christmas and New Year, rising 9 basis points to 4.54 percent. The weekly Primary Mortgage Market Survey reported that 5-year Treasury-indexed hybrid adjustable...(read more)

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The Day Ahead: Stocks Lower Before Inflation Data

Wed, 20 Jan 2010 21:16:24 GMT

The US dollar is strong and equities are weak ahead of a deluge of fresh data. Just over an hour before the opening bell, Dow futures are down 40 points to 10,623, nearly erasing the 29-point gain seen yesterday, while S&P 500 Futures are 5.90 off points to 1,139.30 after gaining 2.78 points yesterday. WTI Crude oil is down 51 cents to $78.88 per barrel and Spot Gold is $9.30 lower at $1,133.55 per ounce. In earnings news, JPMorgan Chase reported that fourth-quarter profit “more than quadrupled on higher revenue from investment-banking fees,” according to Bloomberg News. The nation’s second-largest bank posted a profit of $3.3 billion versus $702 million in the prior quarter. Shares of the company, however, fell “as the retail bank posted a loss and credit provisions...(read more)

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Fed President Puts Timeline on Rates Policy. Raises Doubts on Mortgage Purchase Program

Wed, 20 Jan 2010 21:16:24 GMT

Last night New York Federal Reserve Bank President Bill Dudley appeared on the PBS Nightly Business Report . Before going into detail about what he discussed I think its important to point out that the New York Fed President has more influence than his counterparts. The New York Fed president serves as the FOMC's vice chairman and is a permanent voting member of the Federal Open Market Committee. It is also interesting to note that the NY Fed President is usually expected to keep a low profile, with that in mind, Dudley's willingness to share insight and perspective should be taken as an "out of the ordinary" event. MORE ON THE NY FEDERAL RESERVE BANK Dudley made several comments that need to be called to your attention. Here are a few: ON THE ECONOMY.. . "We are in the...(read more)

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Foreclosure Filings Still on the Rise. Labor Market is Major Influence on Outlook

Wed, 20 Jan 2010 21:16:24 GMT

One in every 45 housing units in the United States was the subject of a foreclosure notice during the year just ended, and the number may still be heading up according to data released today by RealtyTrac. Over 3.95 million foreclosure filings of all types were served against U.S. homeowners, a 21 percent increase in foreclosure notices over 2008 and a 120 percent increase over 2007. The number of properties against whose owners the actions were served represented 2.21 percent of all U.S. housing units compared to 1.84 percent in 2008 and 1.03 percent in 2007. In December a total of 349,519 properties were involved in some foreclosure action, 14 percent higher than in November and a 15 percent increase over the previous December. December 2008 had shown a similar jump over the previous month...(read more)

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The Day Ahead: Equity Markets Improving Ahead of Retail Sales

Wed, 20 Jan 2010 21:16:24 GMT

Investors are mildly optimistic ahead of the retail sales report, the week’s most important data. A little over an hour before the opening bell futures are on the Dow are up 17 points to 10,645 and S&P 500 futures are trading 1.90 points higher at 1,143.50. The US dollar is broadly stronger but commodities are mixed. WTI Crude oil is up 14 cents to $79.79 per barrel Spot Gold down $2.19 to $1,136.01. Aside from data today, President Obama is expected to deliver details on the much talked about bank tax just before Noon, according to Bloomberg News. “As many as 50 financial firms with assets greater than $50 billion each would be hit by a levy President Obama will announce today to help recoup taxpayer bailout money and trim the federal budget deficit,” Bloomberg reports...(read more)

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Payment Shock Concerns Grow as Billions in Interest Only Loans Face Recast Date

Wed, 20 Jan 2010 21:16:24 GMT

Fitch Ratings warned today that billions of prime and Alt-A mortgages that were written as interest-only (IO) loans are due to recast over the next two years. $47 billion of these loans convert to fully amortizing loans in the next 12 months and a total of $80 billion in Prime and Alt-A loans and another $50 billion Subprime loans will recast by the end of 2011. These conversions will result in substantially higher monthly payments. While IO options were written into both fixed rate (FRM) and adjustable rate mortgages (ARM), over 90 percent of the loans in each category, prime, Alt-A, and subprime, are ARMs because those offered borrowers the lowest payments and many borrowers qualified only because of these artificially low payments. In addition, 63% of Prime and Alt-A loans qualified based...(read more)

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The Week Ahead: Treasury Auctions, Retail Sales, Inflation, Production Data

Tue, 12 Jan 2010 02:36:07 GMT

Equity futures are firmly higher this morning as global markets react to December data from China showed exports jumping 17.7% compared to one year ago (versus forecasts for only 5%). With the data China surpassed Germany to become world’s largest exporter. Moreover, imports surged by 55.9% y-o-y in December. One hour before the bell Dow futures are 41.00 points higher at 10,607 and S&P 500 futures are up 4.80 points to 1,146. Commodities are also on the rise with WTI Crude oil trading $1.04 higher at $83.79 per barrel and Spot Gold $20.27 higher at $1158.52. The broad gains signify investor confidence as the Q4 earnings season kicks off. Key Events This Week: Monday: 12:30 ― Dennis Lockhart, president of the Atlanta Fed, speaks on the economy to the Rotary Club of Atlanta. Treasury...(read more)

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The Week Ahead: Treasury Auctions, Retail Sales, Inflation, Production Data

Tue, 12 Jan 2010 02:35:32 GMT

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GSE Portfolio Update: Delinquencies Up, Refinances Down, Loan Mods a Function of Labor Market

Tue, 12 Jan 2010 02:36:07 GMT

The FHFA today released the Foreclosure Prevention & Refinance Report for the Third Quarter 2009. This report is intended to provide disclosure and analysis of Fannie Mae and Freddie Mac loan data. It discusses the GSE's loan portfolio size and composition, the performance of the portfolio, and provides an update of foreclosure prevention objectives. Mortgage Portfolio Size and Composition The Enterprises’ aggregate mortgage portfolio increased by approximately 218,000 loans or 0.7 percent during the third quarter of 2009 as new purchases and issuances outpaced loan liquidations. The number of first-lien residential mortgages with credit score at origination of 660 or higher increased by 1.2 percent, while mortgages with less than 660 credit score at origination decreased 2.2...(read more)

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GSE Portfolio Update: Delinquencies Up, Refinances Down, Loan Mods a Function of Labor Market

Tue, 12 Jan 2010 02:35:32 GMT

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REMINDER: Many Eyes Watching Over the Mortgage Industry

Tue, 12 Jan 2010 02:36:08 GMT

This just came across my Reuters newsfeed: WASHINGTON, Jan 8 ( Reuters ) - U.S. Attorney General Eric Holder said a new inter-agency task force was focusing on halting fraud involving mortgages , securities, economic stimulus programs and the government's bailout programs. In remarks prepared for delivery at a civic group meeting in West Palm Beach, Florida, Holder said the task force was also targeting financial discrimination. "To those who see victimization of others as an avenue to wealth, take notice: If you fabricate a financial statement, if you propagate an investment scheme, if you are complicit in an act of financial fraud, you are writing your ticket to jail," Holder said. ----------------------------------------------------------------------- This is not new news....(read more)

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REMINDER: Many Eyes Watching Over the Mortgage Industry

Tue, 12 Jan 2010 02:35:32 GMT

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NFP: 85,000 JOBS LOST IN DECEMBER. MUCH MORE THAN EXPECTED

Tue, 12 Jan 2010 02:36:08 GMT

The December Employment Situation Report has been released. 85,000 jobs were lost in December, much worse than expected. The unemployment rate was unchanged at 10.0%. The November report was revised to 4,000 jobs created vs. the original print of 11,000 jobs lost. HERE IS WHAT TICKED ACROSS MY NEWS FEED: U.S. DEC NONFARM PAYROLLS -85,000 (CONSENSUS UNCH) VS NOV +4,000 (PREV -11,000) DEC JOBLESS RATE 10.0 PCT (CONS 10.1 PCT) VS NOV 10.0 PCT (PREV 10.0) DEC AVERAGE HOURLY EARNINGS +0.2 PCT (CONS +0.2) VS NOV +0.2 PCT, TO $18.80 VS NOV $18.77 DEC YEAR-ON-YEAR AVERAGE HOURLY EARNINGS +2.2 PCT DEC AVERAGE WORKWK 33.2 HRS (CONS 33.2) VS NOV 33.2, FACTORY 40.4 VS 40.4, OVERTIME 3.4 VS 3.4 OCT NONFARM PAYROLLS REVISED TO -127,000 FROM -111,000, SEPT UNREVISED AT -139,000 The broader measure of unemployment...(read more)

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NFP: 85,000 JOBS LOST IN DECEMBER. MUCH MORE THAN EXPECTED

Tue, 12 Jan 2010 02:35:33 GMT

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The Day Ahead: Global Markets Await US Jobs Data

Tue, 12 Jan 2010 02:36:08 GMT

Anxious investors haven’t known what to do with stocks over the last three days but it’s a virtual certainty that equities will find some direction after the December employment numbers are released an hour before the opening bell. “Rarely has a piece of data ever been so eagerly awaited,” said David Buik, senior partner at BCG Partners in London, according to the Journal. “Today may well hold the key to the Kingdom for the next few months.” An hour before the data comes out, futures on the Dow are up 13 points to 10,558 and the S&P 500 looks to open 1.25 points higher at 1,138.75. Global stocks have also been trading modestly higher and Treasuries are a bit weaker. WTI Crude oil down 14 cents to $82.52 per barrel and Spot Gold is $7.78 by to $1123.82...(read more)

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The Day Ahead: Global Markets Await US Jobs Data

Tue, 12 Jan 2010 02:35:33 GMT

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Fed MBS Program Update: 89% of Funding Used

Tue, 12 Jan 2010 02:36:09 GMT

The Federal Reserve today reported on their weekly purchases of agency mortgage-backed securities (MBS). In the holiday shortened work week between December 31, 2009 and January 6, 2010, the Federal Reserve purchased $14.50 billion agency MBS. In those four days the Federal Reserve sold $2.50 billion (supported the roll market) for a net total of $12 billion purchases. The goal of the Federal Reserve's agency MBS program is to provide support to mortgage and housing markets and to foster improved conditions in financial markets more generally. Only fixed-rate agency MBS securities guaranteed by Fannie Mae, Freddie Mac and Ginnie Mae are eligible assets for the program. The program includes, but is not limited to, 30-year, 20-year and 15-year securities of these issuers. Since the inception...(read more)

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Fed MBS Program Update: 89% of Funding Used

Tue, 12 Jan 2010 02:35:33 GMT

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The Day Ahead: Markets Antsy Ahead of Jobless Claims

Tue, 12 Jan 2010 02:36:09 GMT

Just one day before the all-important nonfarm payrolls and unemployment numbers, markets are decidedly looking sour this morning after another mixed session yesterday. A little more than one hours before the opening bell, Dow futures are off by 28 points to 10,491 and S&P 500 futures are trading 3.75 points lower to 1,129.25. Commodities are also weaker with WTI Crude oil down 76 cents to $82.42 per barrel, and Spot Gold down $8.85 to $1129.55. “China’s central bank raised the yield on its 3-month bill auction, triggering some fear over further tightening down the road,” noted Robert Kavcic from BMO before the bell. “As a result, commodity prices are also under pressure with oil, copper and gold all down, while natural gas is bucking the trend, holding steady as...(read more)

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The Day Ahead: Markets Antsy Ahead of Jobless Claims

Tue, 12 Jan 2010 02:35:33 GMT

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FOMC Hints at MBS Purchase Program Extension. GSE Reform is Real Issue

Tue, 12 Jan 2010 02:36:09 GMT

The Federal Reserve released the Minutes of the Federal Open Market Committee meeting which took place on December 15th and 16th of 2009. Before I go into the much anticipated housing/mortgage market related details of the text, let me just say that reading all 11 pages of the document will bring you up to speed on economic conditions in a hurry. So obviously everyone is all excited about recent HINTS of a possible extension to the Fed's MBS Purchase Program. Here is the statement that has many feeling hopeful: "S ome participants remained concerned about the economy’s ability to generate a self-sustaining recovery without government support. In particular,they noted the risk that improvements in the housing sector might be undercut next year as the Federal Reserve’s purchases...(read more)

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