Jun. 16, 2009: news from Wells, US Bank, PMI, Flagstar, AgFirst, and the CMBA/Fannie; report from the trenches in Hawaii

Jun. 16, 2009: news from Wells, US Bank, PMI, Flagstar, AgFirst, and the CMBA/Fannie; report from the trenches in Hawaii Rob Chrisman

Would you like to feel your head spin? Check out http://www.usdebtclock.org/. (Thank you Jeff C. for this one.)

Wells Fargo’s correspondent and wholesale channels are having another pricing special for 5/1 ARM production. And, once again, I will say that it is a good thing to see some movement and interest in mortgage production. Today, it is believed, we will see a pricing special, rumored to be 2 points, on a 5/1 ARM including; Conforming, Conforming HB, amortized and IO and FREDDIE MAC HARP eligible loans.

Folks following rates will notice that with the steeper yield curve, interest in ARM loans has picked up. Bank-to-bank lending rates have plunged to near record lows in recent weeks, a positive indication for the credit markets. The three-month LIBOR (London Interbank Offered Rate) has hit a record low of 0.61%, down from 0.62%, and the overnight Libor rate, meanwhile, hit .21% late last week. (The London Interbank Offered Rate is a daily average of rates that 16 different banks charge each other to lend money and is used to calculate many types of ARM’s.)

US Bank Wholesale announced cash back limits on loans on or after Monday, June 22, on a FNMA DU Refi Plus Program Rate/Term Refinance. The amount will be limited to $250.00. “Any excess cash resulting from the difference between the estimated and the actual payoff of the original loan plus closing costs and prepaid fees that is more than $250.00 must be applied as a principal curtailment to the new mortgage.”

PMI told its customers that they have expanded their HARP and refinance-to-modification programs, starting on the 18th. Previously PMI required that a refinance loan be originated by the existing lender/servicer. “Our new PMI-to-PMI Refinance-to-Modification Programs offer flexible refinance options for existing PMI-insured loans to allow: the same lender/servicer to refinance via HARP for GSE-owned loans as well as    refinance-to-modification for loans owned by other investors and portfolio lenders, a new lender/servicer to refinance via HARP for GSE-owned loans as well as refinance-to-modification for loans owned by other investors.

Flagstar announced that owner-occupied loans falling under the requirements of Section 50(a)(6) of the Texas Constitution are now eligible under the Making Home Affordable Programs: Fannie Mae DU Refi Plus and Freddie Mac Relief Refinance. Any loan with the words “Texas” and “cash out” involved has always been, uh, touchy. Flagstar also tweaked their Freddie Relief Refinance price adjustments, and not for the better.

Many parts of the country have their economies based in agriculture. (I went to an “Ag” college, where there were lots of bumper sticks that said “Thank farmers 3 times a day!”) One company that specializes in loans in agricultural areas is AgFirst Mortgages. Their website address is: agfirstmortgageloans.com. Check it out if you do those loans.

The CMBA’s Western Secondary is already only weeks away, and Fannie is propounding the HARP and HAMP programs. “Learn details about the Home Affordable Refinance Program (HARP) andHome Affordable Modification Program (HAMP) on Wednesday, July 8, 2009, 9:30 am – 12:00 pm, Westin St. Francis Hotel.”

What is going on in Hawaii? One agent wrote to say, “The biggest thing that has plagued us or I should say me has been the tightening up on the portfolio loans.  Almost every local bank out here has tightened up or discontinued the portfolio product that caters to condotel financing.  Any ideas on how I could reach out to any private equity firms or investors out there that may have an appetite for high quality borrowers dropping 40% to 50% down payments on collateral that is very sound, but has been deemed very risky?  Finding a source out there that finances condotel in this market would be a blessing.”

We saw a nice improvement in rates Monday, at the expense of the stock market. It would seem that the thinking is now that the economy is going to need much more time to get back to “normal”, and some are even talking about mortgage rates heading back to their high 4% to low 5% level. That being said, credit reports and appraisals may expire, so borrowers should be content with the mid 5.25% to high 5.75% range. The run-up in rates has really hit new locks, and most believe that any recovery in the US will have to include a rebound in housing. This morning we learned that housing starts and permits rebounded in May from record lows (helped by multi-family units) Housing Starts were up 17.2%, with multifamily units +61.7%! (Remember that multifamily unit starts fell 49.4 percent in April.) New building permits rose 4.0 percent, the biggest advance since June last year, although compared to a year ago permits are down 47%.

Although consumer confidence is doing well, consumer spending, which makes up 70% of the GDP in the United States, is lagging mostly due to unemployment issues. It is hard to spend a lot of money when you don’t have a job, and your equity line is tapped out or non-existent. Related to spending, this morning’s reports showed that U.S. producer prices rose by less than expected (+.2% versus +.6% as expected) in May despite a jump in gasoline costs, and prices compared with a year ago notched their steepest falls since 1949. After all this news the 10-yr is at 3.75% and mortgage prices are worse by about .250.

Eddie wanted desperately to have a relationship with this really cute, really hot girl in his office. But she was dating someone else. One day Eddie got so frustrated that he went to her and said, ‘I’ll give you $100 if you let me make love with you.” The girl looked at him, and then said, “NO!” Eddie said, “I’ll be real fast. I’ll throw the money on the floor, you bend down and I’ll finish by the time you’ve picked it up.” She thought for a moment and said that she would consult with her boyfriend. So she called him and explained the situation. Her boyfriend says, “Ask him for $200, and pick up the money really fast. He won’t even be able to get his pants down.” She agreed and accepts the proposal. Over half an hour goes by and the boyfriend is still waiting for his girlfriend’s call. Finally, after 45 minutes the boyfriend calls and asks “What happened…?” Still breathing hard, she managed to reply, “He had all quarters!” Management lesson: Always consider a business proposition in its entirety before agreeing to it and getting into trouble.

Rob

(For archived commentaries, check www.robchrisman.com, or to subscribe write to rchrisman@robchrisman.com)