“Why does Sea World have a seafood restaurant?? I’m halfway through my fish burger and I realize, ‘Oh my God…. I could be eating a slow learner.’”
Ginnie Mae announced that it is “eliminating the restriction on the size of mortgage loans guaranteed by the Department of Veterans Affairs (VA) that can be pooled in mortgage-backed securities guaranteed by Ginnie Mae. Effective with pools issued on or after September 1, 2007, Ginnie Mae will no longer limit the size of VA loans to the maximum original loan amount for conforming loans…Ginnie Mae expects that this change will expand the availability of low-cost financing and increase homeownership opportunities for America’s veterans and their families, particularly in high-cost areas.” VA loans currently constitute only 30% of total GNMA origination (and GNMA origination is only 10% of total agency monthly issuance of $7 billion/month), but it does raise the questions of further FHA reform.
Federal Reserve Chairman Ben S. Bernanke said portfolio limits on Fannie Mae and Freddie Mac (who own $1.4 trillion in mortgage assets) need not be lifted to mobilize the two largest U.S. home-loan buyers in stemming a surge in foreclosures. The asset restrictions “need not be lifted to allow them to accommodate new borrowers,” Bernanke said.
Chase is rumored to be in the process of making some major changes to their corporate structure. In spite of this, their management released a letter to their customers reiterating their commitment to the business and stating, “Our financial strength and stability affords us the ability and desire to place some of these products into our bank loan portfolio. Because JPMorgan Chase insures the liquidity of our funding, we are not reliant on the secondary market through which to sell our loans. We have chosen to leverage this portfolio in order to maintain and strengthen the business relationship we have with you. Although you will see some refinements of our offering based on prudent and responsible lending guidelines, we are able to minimize the extremity of the changes and remain committed to offering these products to you.”
We haven’t seen much about them in the press, but Wachovia’s exposure to the mortgage mess is getting plenty of attention now since an article appeared in the Wall Street Journal saying that they are suing Thornburg Mortgage for $5.1 million, alleging the mortgage provider hasn’t returned $5.1 million from an unwound series of derivatives transactions. There is also news to the effect that Wachovia wholesale suspended their Alt-A fundings, and that 100 mortgage employees at the company’s SF East Bay locations will soon be losing their jobs (according to a mortgage blog).
Effective August 31, 2007, Nat City will no longer accept the following on Non-Conforming loans: Streamline Refinances, 80/20 Option, or Reduced Documentation features.
The Carlyle Capital Corp Ltd., a unit of private equity firm Carlyle Group and a leveraged fund that invests in mortgage-backed securities, said on Wednesday it hopes the worst of the credit crunch has passed, allowing it to resume paying a dividend. It is selling $900 million of assets to help shore up the fund.
A former American Home Mortgage branch manager in Alaska was sentenced to two years in prison after he falsified documentation to secure “stated income” mortgage loans from Melville-based American Home and Countrywide.
Countrywide has announced further warehouse changes, effective next week. The maximum allowed LTV/CLTV is 75% and minimum required FICO is 700 for non-conforming loan programs, but there are some exceptions, and “Full/Alt and CLUES Fast & Easy Doc Types in the CHL Non-Conforming tranche for agency conforming loan amounts, and with both a CHL Rate lock, and CLUES Accept are exempt from FICO and LTV/CLTV guidelines. CLUES Fast & Easy is no longer available for the Pay Advantage ARM (Specialty ARM Jumbo Plus Tranche). Secondary financing behind negatively amortizing or potentially negatively amortizing programs (such as Pay Option and Pay Advantage) is ineligible.”
Mortgage demand decreased 4.0% last week with purchase applications -4.0% and refinance applications -4.2%. The contract rate on the 30-year fixed rate mortgage (FRM) decreased 8 basis points to 6.41%, while the contract rate on the 1-year adjustable rate mortgage (ARM) jumped up 67 basis points to 6.51%. The spread between fixed and adjustable contract mortgage rates evaporated. In fact the ARM is 10 basis points higher. And what is going on this morning with the 10-yr yield at 4.54% and mortgages recovering a little of their price worsening from yesterday? The 2nd Quarter GDP came out +4.0%, as expected, but Jobless Claims were +9k to 334k, higher than expected. In spite of signs of economic weakening, the job market has been very stable – but now this Jobless Claims number may indicate that there are some possible labor market issues.
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