President Obama said last week that it's a good time to buy
stocks. So this morning, instead of spending $5 on a Grande latte, I used the
money to buy 100 shares of GM…
If the taxpayers should pay for their neighbor’s
mortgages, should “good” banks pay for the mistakes of other banks?
The FDIC insures 8,300 banks and lenders (including Capital One, who cut their
dividend by 87%), and they are all facing increased fees and a one-time
“emergency” charge designed to raise $27 billion this year for the
agency. Small community banks may take a
10-20% hit on their 2009 earnings. In theory, community banks
rely more heavily on deposit funding, so they suffer a “much heavier
burden” as a result of deposit insurance proportionate to size than banks
like Citi or BofA. U.S. Senate Banking Committee Chairman Dodd may introduce
legislation that would temporarily raise the FDIC’s $30 billion borrowing
authority with the Treasury to $500 billion, with a permanent increase to $100
billion.
“Rep. Tom Price, R-Ga., plans to introduce legislation
that would prohibit the use of government funds to modify mortgages for
individuals that "lied about their income on their mortgage
application." Price's measure would also prohibit government funding to
any lender that failed to follow proper underwriting standards.”
Determining this sounds near-impossible, but you can take a look at http://www.marketwatch.com/news/story/story.aspx?guid=%7BAABB222B%2D4D22%2D4E51%2D9C76%2D6B3D1E2ABF2B%7D&siteid=rss
Chase, given the recent announcement
regarding the Homeowner Affordability and Stability Plan and the plan to have
servicers possibly modify loans, has established a support unit that is
prepared to offer help to those borrowers looking for refinance assistance. If
Chase is the servicer of record, the borrower should call (866) 550-5705.
The purchase market, or I should say the
interest by investors in purchase loans, is heating up. Some investors are
offering price incentives. For example, Union Bank of California, who
offers no correspondent channel, is knocking 1/8% off the interest rate on the
purchase of a primary residence or vacation home.
Franklin American is revising their credit parameters for
FHA Jumbo and Conventional Conforming Fixed Rate loans. These
changes are effective for all loans locked from today onward. FHA Jumbo
revisions include all cash out refinance transactions must meet a minimum
credit score of 680 and must have a second appraisal regardless of property
location, the maximum cash out is limited to $100,000, loans utilizing gift
funds are ineligible, and the borrower may not have any other financed
properties other than the subject property. For their Conventional Conforming
Fixed Rate, all Conventional Loan Appraisals dated on and after April 1, 2009
must be accompanied by a completed Form 1004 Market Conditions Addendum
(1004MC) for appraisals of one to four unit properties. (FAMC also reminded
their customers that they are not following the Fannie guidelines for maximum
properties owned, but instead are restricting the total number of properties to
4 including the borrower’s primary residence.)
For the week ending March 4th, the Federal
Reserve Bank of New York
bought $30 billion in mortgage-backed securities. (They’ve bought a total
of $190 billion so far.) What are the coupons? 4.5’s and
4.0’s accounted for 77% of the net purchases. If buying $30 billion in 5 days,
when new production is about $2 billion a day, won’t help mortgage
prices, I don’t know what will!
This week is light in terms of economic news. In fact,
there is little until March 11th, when we see the usually-ordinary
Treasury Budget. (This has taken on a little more significance as of
late…) Thursday we have Jobless Claims, Retail Sales, and Business
Inventories, and then on Friday the 13th we have the Trade Balance
figures for January along the preliminary Michigan Consumer Sentiment Survey
(is there much to be optimistic about in Michigan right now, aside from Spring
being on the way?). Of no little importance is an auction this week, starting
tomorrow with $34 billion of 3-yr notes, $17 billion of 10-yr notes on
Wednesday, and $11 billion of 30-yr bonds on Thursday. Nonetheless, the
markets are roiled this morning since HSBC’s stock taking a 24% plunge is
once again pushing our own equity markets down, and we find the 10-yr at 2.86%
and mortgage security prices roughly unchanged from Friday afternoon.
A cowboy, who is visiting Idaho
from Texas,
walks into a bar and orders three mugs of Bud. He sits in the back of the room,
drinking a sip out of each one in turn. When he finishes them, he comes back to
the bar and orders three more.
The bartender approaches and tells the cowboy,
“You know, a mug goes flat after I draw it. It would taste better if you
bought one at a time.”
The cowboy replies, “Well, you see, I have two
brothers. One is in Arizona the other is in Colorado . When we all
left our home in Texas
we promised that we'd drink this way to remember the days when we drank
together. So I'm drinking one beer for each of my brothers and one for
myself.” The bartender admits that this is a nice custom, and leaves it
there.
The cowboy becomes a regular in the bar, and always drinks
the same way. He orders three mugs and drinks them in turn.
One day, he comes in and only orders two mugs. All the
regulars take notice and fall silent. When he comes back to the bar for the
second round, the bartender says, “I don't want to intrude on your grief,
but I wanted to offer my condolences on your loss.”
The cowboy looks quite puzzled for a moment, then a light
dawns in his eyes and he laughs.
“Oh, no, everybody's just fine,” he explains,
“It's just that my wife and I joined the Mormon Church and I had to quit
drinking.”
“Hasn't affected my brothers though.”
Rob
(For archived commentaries, check www.robchrisman.com,
or to subscribe write to rchrisman@robchrisman.com)
