|
Feb. 24, 2012: MI companies watching for the FHA MIP increase; BofA & Fannie - does it matter? The CFPB needs board members
Rob Chrisman
“First
wash
all the cars, then wax.”
“Why do I have to...”
“Remember deal. No questions.”
“Yeah, but...”
“Wax on right hand. Wax off left hand. Wax on, wax off. Breathe
in through nose, out through mouth. Wax on, wax off. Don't
forget to breathe. Very important.”
Wax
on, wax off, risk on, risk off. Fixed income traders here in the
U.S. love to talk about the "risk on, risk off" trade. What does
that mean? Traditionally, whenever there is risk, the majority
of investors will put their money into a safe place. And for
bond folks, this is usually the U.S. fixed-income markets. So when things are going
awry overseas, money tends to come into the U.S debt markets,
which includes mortgage-backed securities, pushing prices higher
and rates lower.
That
doesn’t necessarily mean every LO should be rooting for civil
unrest and the collapse of Greece, however. But just look at
some of the things that have happened out there: Chinese
manufacturing contracted for the 4th straight month. Iran
refused to let inspectors into certain nuclear sites, Euro
manufacturing came in
lower than expected, Fitch downgraded Greece, the Bank of
England minutes came out more dovish than expected, oil prices
are above $108 per barrel…the list goes on and on. Meanwhile,
our rates and currency remain relatively stable, and our markets
relatively liquid: a
safe haven – and this is helping our mortgage rates.
There
is plenty of blame to go around for the mess we're in:
borrowers, brokers, lenders, investors, appraisers, rating
agencies, investment banks, and so on. The rating agencies have
begun to come under more scrutiny, since their role ties
together many of these parties. Credit rating agencies have been
widely criticized in recent years for the poor performance of
their ratings on mortgage-backed securities (MBS) and other
structured-finance bonds. In response to the concerns of
investors and other market participants, the 2010 Dodd-Frank Act
incorporates a range of reforms likely to significantly reshape
the rating industry. Too lengthy to mention in this commentary,
more details can be found at
|
