Free Republic

The Dodd-Frank banking bill is slowly unraveling. “Concerned that tougher mortgage rules could hamper the housing recovery, regulators are preparing to relax a key plank of the rules proposed after the financial crisis (Dodd-Frank). The watchdogs, which include the Federal Reserve and Federal Deposit Insurance Corp., want to loosen a proposed requirement that banks retain a portion of the mortgage securities they sell to investors, according to people familiar with the situation.“ Dodd-Frank required that issuers should retain 5% of all mortgage-backed securities issued without government backing. So, regultors are considering lowering the skin in the game requirement). Congress directed...

I am speaking at the Cleveland Fed on September 19th concerning “The New Housing Finance System: Are We There Yet?” But with the mortgage market shrinking, I may not have to speak at the conference. mbastats072413 According to the Mortgage Bankers Association weekly survey, mortgage purchase applications fell 2.07% from the preceding week. mbapurchase072413 Mortgage rates (using Bankrate’s 30 year fixed-rate index) have been generally rising since May 1st (pink box), but falling since July 5th (red box). But even with falling mortgage rates, mortgage purchase applications fell last week and have been generally falling since July 5th. mbapurchmayday1 The...

Bank of America Corp.’s shareholder equity declined in the second quarter as the company’s bond portfolio sustained the biggest hit from rising interest rates among top lenders. The second-biggest U.S. bank by assets reported a $4.22 billion drop in a measure of equity that includes changes in bond holdings, currency translations and pension adjustments. The bulk was from unrealized losses in the securities portfolio, including a $5.73 billion decline in the value of government-backed mortgage securities. It is no mystery as to why BofA lost money. Between April 1st and June 30th, agency MBS took a beating (particularly after May...

U.S. housing starts unexpectedly fell in June to the lowest level in almost a year. hs071713 Mortgage applications dropped 2.61% from the preceding week. However, mortgage PURCHASE applications actually rose slightly 0.5%. mbapurchase071713 And as you can see, the Bankrate 30 year fixed-rate average mortgage rate fell last week. Over the long term, we are still stuck at purchase application levels from the mid 1990s. mbaprchlt071713 Of course, median household income in real terms has been falling which doesn’t bode well for the size of the pool of good quality borrowers. household-income-real1-13a Mortgage refinancing fell 4.19% from the preceding week...

Fed Chairman Ben S. Bernanke will have a Q&A following the release on the Fed’s FOMC minutes today at 2pm EST. Here are the minutes. Quick summary of the last FOMC meeting: half the voting members want to stop asset purchases later this year. The other half, wait for improving economic conditions. The reaction in the 10 year Treasury yield? t10reaction But prior to his Q&A session, the 10 year Treasury auction went off as expected. trreas10yraux The 10 Year High Yield continues to climb. ust10ihg The 30 year auction is tomorrow. Stay tuned!

Rising Treasury and mortgage rates have been in the news quite a bit recently. Banks have suffered capital losses with the recent rises in rates. According to the Federal Reserve, unrealized gains in bank portfolios plummeted from more than $40 billion at the beginning of the year to about $6 billion, with the most precipitous declines over the past few weeks amid mounting market concern about the “tapering” of the central bank’s bond-buying program. The bright spot in the economy? Rising pending home sales! Pending home sales have been rising quite a bit in recent months. But at the same...

Investors apparently liked today’s jobs report of +195,000 non-farm employment, despite full-time jobs falling by -240,000. wbm070513 And the US Treasury 10 year yield rose about 20 basis points. ust10070513 The Fannie Mae 4% MBS took a dive with the rise in Treasury yields. fn4pr And the duration of the Fannie Mae 4% MBS continues to climb. fn4dur All this does not bode well for mortgage rates. Let’s see how the Freddie Mac US Mortgage Market Survey 30 Year Homeowner Commitment rate does this week. fredconf The US dollar spot rate is up. usdollr070513 Commodities? Gold and silver way down,...

Since May 1st, both US Treasury yields and Japanese sovereign yields have risen, but mostly the US Treasury yields. usjapyc063013 And with the rise in sovereign yields, mortgage rates in both the US and Japan have risen. japausmortgagerates Both US and Japanese house prices were deflating since 2008, but Japan (in red) continues to deflate while the US house prices (in blue) are showing a sudden increase … again. usjaphouse In Japan, mortgages secured by housing has been declining since 1992, but started to stabilize in 2007 when US mortgage volume started to fall. mortgvoljapanuse So, how will rising mortgage...

There are two factors that determine mortgage affordability. One is house price levels and the other is mortgage interest rates. Both are rising rapidly translating into lower housing affordability. First, here is a chart of housing prices since February 2012. Whether its the FHFA Purchase Only Index, the Case-Shiller 20, the Loan Performance HP or the NAR’s median home price index for existing home sales, they are all rising. Second, Treasury and mortgage rates have risen around 63 basis points since May 2nd. And Fannie Mae’s current coupon rate has risen from 2.296% on May 2nd to 3.270% as on...

The Mortgage Refinancing Boom Is Evaporating Before Our Eyes Mamta Badkar and Matthew Boesler June 14, 2013, 1:29 PM Mortgage rates have been climbing for five straight weeks, and the latest data from the Mortgage Banker's Association shows that the average 30-year fixed rate is now at 4.15%, up from 3.59% in the first week of May. Meanwhile, the MBA's refinancings index is down 36% from its peak at the beginning of May. The rise in mortgage rates has been driven by concerns about when the Federal Reserve will begin to slow its $85-billion-a-month bond purchase program, which is designed...

Fannie And Freddie Are Getting Smoked — Down 40% Today Sam Ro May 29, 2013, 11:48 AM Shares of Fannie Mae and Freddie Mac are getting destroyed today. Stifel Nicolaus' Dave Lutz points us to reports that Senator Bob Corker will push to wind down Fannie and Freddie as part of housing finance reform. Fannie and Freddie are government sponsored enterprises (GSE) that were created to boost liquidity in the mortgage markets buy packaging mortgages and selling them off to investors as bonds (or mortgage-back securities). These MBS also came with implicit guarantees, which got the them into trouble when...

Cash And Tarry: Mortgage Applications Plunge At Fastest Rate Since 2009 Tyler Durden 05/29/2013 09:47 -0400 In the 'old normal' a spike in interest rates would have sparked an avalanche of 'rational' home-buyers and refinancers to apply for mortgages for 'fear' of the 'never-to-be-seen-again' rates disappearing. It seems, however, courtesy of a Bernanke-trained market, that this surge in rates has pushed many to the sidelines (mortgage applications slipped 8.8% WoW and -23% in the last 3 weeks), we presume waiting for the omnipotent-one to save the day yet again. The year-to-date shift in mortgage applications is now the worst since...

Sheila Bair, former FDIC Commission, and Barney Frank, former Congressman, penned a misleading op-ed in Fortune/CNN Money entitled “Watch out. The mortgage securities market is at it again“. Here is the misleading sentence: Big, ugly giants with names like Countrywide Financial and New Century packaged huge pools of mortgages, sliced them up into securities, and sold them to investors, who now bore the risk if the loans defaulted. It turns out that “big, ugly giants” with names like Fannie Mae and Freddie Mac did exactly the same thing. They packaged huge pools of mortgages, sliced them up into securities, and...

A friend of mine is trying to sell a 5 acre lot in Las Vegas and has been trying since 2009. But recently, he has received 3 offers at above the asking price; he has turned all offers down. Why? He thinks The Fed will continue rolling the dice on easy money policies. Reuters had an interesting piece on the Las Vegas “rebound” entitled “Special Report: Cheap money bankrolls Wall Street’s bet on housing.” According to the Reuters article, The Vegas market has unsteady legs. Statistics compiled by the University of Nevada at Las Vegas show some 40,000 homes are...

The Federal Housing Finance Agency (FHFA) announced today that it is directing Fannie Mae and Freddie Mac to limit their future mortgage acquisitions to loans that meet the requirements for a qualified mortgage, including those that meet the special or temporary qualified mortgage definition, and loans that are exempt from the “ability to repay” requirements under the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank). In January, the Consumer Financial Protection Bureau (CFPB) issued a final rule implementing the “ability to repay” provisions of Dodd-Frank, including certain protections from liability for loans that meet the criteria of a qualified...

The Federal Housing Finance Agency (FHFA) today released its January 2013 Refinance Report, which shows that refinance volume remained high through the first month of this year. There were nearly 470,000 refinances in January, with roughly 97,600 completed through the Home Affordable Refinance Program (HARP). This brings total HARP refinances to more than 2.2 million since the program’s inception in April 2009. • Borrowers in January with loan-to-value ratios greater than 105 percent accounted for 47 percent of the HARP refinance volume. • The number of completed HARP refinances for deeply underwater borrowers continued to represent a significant portion of...

There’s something macabre about an imminent train wreck, you know exactly what is coming but you can’t help but watching. Now imagine that instead of watching that train wreck from atop a building a safe distance away, you’re standing right between the train and the tanker truck that has stalled on the tracks. That’s a different story all together. At that point, rather than being a mere fascination it’s a matter of life or death. You’ve seen the damage a train wreck can do. That’s why it was fascinating in the first place. The difference now of courses is that...

While flying back to Washington DC from Dallas (mercifully American Airlines has Wifi!), I saw this article in the Financial Times: “Fed warned to rein in QE.” Essentially, Blackrock’s Rick Rieder warns that The Fed’s unorthodox approach to stimulating the economy (or at least the stock market). “Fed policy has had a distorting effect on capital allocation decisions of all kinds at virtually every level of the economy,” he told the Financial Times. “It is a very large and dull hammer for markets.” I wonder if Fed Chairman Ben Bernanke sings “If I had a (dull) hammer,” Thanks to Bernanke’s...

<p>The Obama administration is engaged in a broad push to make more home loans available to people with weaker credit, an effort that officials say will help power the economic recovery but that skeptics say could open the door to the risky lending that caused the housing crash in the first place.</p>

Yes, we have yet another government mortgage modification program. This makes the 15th government mortgage modification program to go along with HAMP, HARP, the Attorneys General Settlement and their various contortions. The Federal Housing Finance Agency (FHFA) today announced that Fannie Mae and Freddie Mac will offer a new, simplified loan modification initiative to minimize losses and to help troubled borrowers avoid foreclosure and stay in their homes. Beginning July 1, servicers will be required to offer eligible borrowers who are at least 90 days delinquent on their mortgage an easy way to lower their monthly payments and modify their...