Anytime one combines the words “politician”, “mortgage fraud”, and “dominatrix” in a news story, it makes for interesting press. http://www.newsday.com/news/local/crime/ny-liguld266083594mar26,0,1234881.story

Brokers are wondering if they will become extinct. Frankly, I doubt it. Remember that mortgage investors are “for profit” institutions. If a particular investor, such as Bank of America or Wells Fargo, decides that their wholesale channel brings in an acceptable volume of business cheaply, compliments their other business lines, and contributes to their bottom line for servicing as time passes, they will keep that business channel. If, on the other hand, the investor decides that the risk/reward ratio is not acceptable for the amount of capital involved, they will scale back or dismantle the operation, such as what Citi and Chase have done. Remember that the wholesale line of business actually sprang up in the 1970’s and early 1980’s to meet the needs of lenders (mostly savings and loans) who didn’t have the network to do enough loans. But most S&L’s are gone, and as I mentioned yesterday the large investors have huge branch networks to not only handle deposits but also bring in mortgage loans. It still comes down to what makes sense for the bottom line with any investor.

What is the agent/broker on the street saying? “The bigger problem that continues to persist is the expectancy of rates to drop.  Last week after the meeting that is all you heard about. ‘Bernanke was a genius.’ ‘This will make the banks have to lend.’  The banks do not give two hoots.  They are calling their own shots and probably laughing as they got what they wanted and no one regulated them.  Now they still can not drop rates because they are under staffed and can not handle the volume. The big banks tell us to kiss their behinds because their books are more important than saving our economy.  We should have let some more of the big banks tumble.  This would have at least left some fear in the banking system that no bank is to big.  So we are left with tons of people trying to refinance to save money and all they hear on a continual basis is that rates should be getting lower and we are left to tell them, no because the banks are not staffed well enough to handle the volume.”

In a story out of CNNMoney, in the five months since it has been in effect, the $300 billion HOPE program has helped exactly one homeowner to avoid foreclosure, and has received only 752 applications. Their story goes on to say that the House of Representatives recently approved an updated version of HOPE as part of the bankruptcy-reform bill, but that the changes are minor. But Sen. Chris Dodd supports keeping it in the bankruptcy bill.

I learned a new verb today: “regularize” (to regulate). The Mortgage Bankers Association of America (MBAA) is trying to set up a nation-wide system for mortgage bankers and brokers to “establish a tough, new federal regulatory framework for mortgage lending to protect borrowers nationwide.  In the letter, MBA offered an outline of proposed legislation, titled the Mortgage Improvement and Regulation Act (MIRA), that would establish new uniform national lending standards to replace the current patchwork of state and federal lending laws and that would also establish a new federal regulator to implement and enforce these standards.” http://www.mbaa.org/NewsandMedia/PressCenter/68218.htm Speaking of them, the MBAA, based in Washington, eliminated 20 positions and cut several "non-core programs," The MBA notes that it “made initiatives to cut costs in the last year by streamlining program expenses and eliminated lower-priority products.”

Yesterday we had some good news out the “New-Home Sales” category, with sales +4.7% in February. Although most of this was attributed to falling prices, it still was a bit of good news, especially with analysts believing that the number was going to drop. The median price of a new home was -18% to $200,900 in February from $245,300 last February and the average price decreased 16.7% to $251,000 from $301,200 a year earlier. The market, however, did not focus on that but was more concerned with the 5-yr Treasury note auction, which did not go so well. In an interesting move, the Fed, right before the auction, bought $7.5 billion of Treasury securities, which apparently confused traders and made for a sloppy 5-yr sale. We will see how the $24 billion 7-yr sale goes today. Note, however, that dealers are seeing interest from overseas in buying our GNMA securities, made up of FHA/VA loans.

We had a good chunk of data out this morning. GDP (Gross Domestic Product), which measures the total output of goods and services within U.S. borders, fell at an annual rate of 6.3 percent in the October-December quarter, the steepest decline since the first quarter of 1982, down .1% from the previous estimate but slightly better than forecast. (Remember – it is “old news”.) For all of 2008 the economy expanded 1.1%, the smallest advance since 2001, after growing 2.0% in 2007. Jobless Claims rose to 652k last week, and the number of workers collecting state unemployment benefits rose to a record 5.56 million earlier this month, both higher than expected. After the numbers the 10-yr is up to 2.80% and mortgages prices are “unchanged to a smidge worse” than yesterday afternoon.

There were 3 good arguments that Jesus was Jewish:

1. He went into his father's business.

2. He lived at home until he was 33.

3. He was sure his mother was a virgin and his mother was sure he was God.

But then there were 3 equally good arguments that Jesus was a Californian:

1. He never cut his hair.

2. He walked around barefoot all the time.

3. He started a new religion.

But the most compelling evidence of all - 3 proofs that Jesus was a woman:

1. He fed a crowd at a moment's notice when there was virtually no food.

2. He kept trying to get a message across to a bunch of men who just didn't get it.

3. And even when he was dead, he had to get up because there was still work to do.

Rob

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