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Water (or Beer?) Consumption By Sports Fans
Who says that numbers aren’t fun? A top muni bond analyst at Wells Fargo sent this chart to me.

California’s 2009 Home Buying Stats
In California (state motto: “By age 30, our women have more plastic than your Honda”) last year 47% of all homebuyers were first-time homebuyers, up from 35.9% in 2008. And REO and short sales made up half of the assets sold in the state, up from 36% in 2008, according to the California Association of Realtors. Of those surveyed by CAR, 40% of the homebuyers said they would not have purchased a home without the first time buyer tax credit. Lastly, the higher FHA loan amounts ($729,750 for single family) helped: in 2009 FHA loans accounted for 32% of the market compared to 18.9% in 2008, according to CAR. more…

Nouriel Roubini thinks the US economy is dangerously close to a double dip recession, and covers the topic in detail on his website. Below are his introductory notes on the topic of what kind of recovery we’re experiencing, and these topics are covered in detail on his site (which is subscriber based).

A slew of poor economic data over the past two weeks suggests that the U.S. economy is headed for a U-shaped recovery—at best—in 2010. The macro news, including data on consumer confidence, home sales, construction and employment, actually suggests a significant downside risk even to the anemic levels of growth which RGE forecast for H1. The U.S. faces continued challenges in H2—particularly as historic levels of fiscal stimulus fade—and appears far too close to the tipping point of a double-dip recession. more…

Swerve aside Toyota. There’s a bigger, badder consumer recall notice on the loose now: Gerber Legendary Blades Recalls Machetes Due To Laceration Hazard. Totally off topic but hilarious. And true. Click the link for the full story, and below is the picture of the recalled machete. That machete is a laceration hazard? Are you sure? (Note to Seth and Amy on SNL: this is your next ‘Really?’ segment).

Possible Bad Outcomes Of Fed Policy
We began the year believing that rates were heading higher, with the Fed “tightening” and making credit costs higher – but this tightening cycle will be different. There are two policy decisions for the FOMC to make, the first being increasing short term rates, but also having to deal with its asset holdings (all those securities it owns). Obviously some mortgages pay off, but the Fed doesn’t necessarily want to own mortgage-backed securities or agency debt until their maturity in 30 years – they prefer Treasury securities. Watch for selling to start this summer – which could lead to mortgage spreads increasing. One scenario I’d read about stated that if the Fed chooses to leave $1 trillion of 4.5% mortgages on its books as it starts to raise rates, and inflation really picks up, the Fed could find itself paying out 10% or more as interest on excess reserves and receiving only 4.5% on the assets. This, in turn, would lead to $55 billion of annual losses (and $300 billion in mark-to-market losses) will set them up as a politically weak inflation fighting central bank.

How Are Rate Lock Periods Determined?
How are rate lock periods determined? Companies certainly don’t want to run up against GFE and RESPA issues, for one thing, in setting deadlines. On the investor side, for brokers, Wells Fargo reminded them that “We’re serious about closing purchase deals on time!” Wells will “provide an initial decision within two business days of receipt of the complete file for all first mortgage purchase loans. If you submit your loan with a Wells Fargo Home Equity Line of Credit product, it will also be decisioned within two business days of the first mortgage approval. We can meet the closing date if the loan has been locked and all prior to close conditions (including all pre-close documents) are received at least 10 business days prior to the closing date.” Wells doesn’t outright tell brokers that it will close a loan within whatever lock period the broker sets, but it is almost the other way around. Wells goes on to tell brokers what pre-close documents are needed, how many days ahead of closing brokers should submit a complete file (20 business days), etc. more…

Often I start the commentary off saying something witty, but I couldn’t think of anything clever so I thought I’d suggest you take a look at this video about seat belts (also embedded below). It is making the rounds, and with good reason.

Why Rates Won’t Rise On March 31
The Federal Reserve has a little more than ten business days to complete their well-publicized purchase of agency mortgage-backed securities (MBS). Last week it bought $10 billion, breaking their 3-week streak of $11 billion. Only fixed-rate agency MBS securities guaranteed by Fannie Mae, Freddie Mac and Ginnie Mae are/were eligible assets for the program. Everyone knows that the end of the program is imminent. more…

Rates Up This Morning, Slow Economic Week
Last week rates were moved around by economic data. By Friday rates had improved slightly, and locks appeared to be picking up a little, but then a better-than-expected employment number pushed them higher. Fortunately for mortgage rates, the spread between them and the 10-yr Treasury (still a benchmark, in spite of actual rates more closely tracking 5-yr and 7-yr notes) is the lowest it has ever been. This week won’t have as much to chew on: the Trade Balance & Jobless Claims will be released on Thursday, and Retail Sales, Consumer Sentiment, and Business Inventories come out Friday. And on Tuesday, Wednesday, and Thursday the US Government will be selling securities to finance its activities: $74 billion broken down by $40 billion in three-year notes, $21 billion in 10-year notes and $13 billion in 30-year bonds. Ahead of this the 10-yr yield is up to 3.72% and mortgage prices are worse by between .125 and .250 in price.

Four More Banks Fail
When I was a kid, I used to pray every night for a new bike. Then I realized that God doesn’t work that way. So instead I stole a bike and asked Him to forgive me. Neither strategy worked for four more banks, as the FDIC shut them down Friday (without finding buyers for two of them leading to losses for depositors who had balances exceeding the agency’s insurance limits). Sun American’s (FL) deposits and assets were acquired by First-Citizens Bank (NC) at a cost to the FDIC of $103 million. The Bank of Illinois was “absorbed” by Heartland Bank (IL) at a cost to the FDIC of about $54 million. Waterfield Bank (MD), at a cost to the FDIC $51 million, and Utah’s Centennial Bank are now being run by the FDIC, with the help of Zion’s Bank, at a cost of about $96 million. more…

Despite a rate uptick today after a better than expected February jobs report, rates are holding to their sub-5% levels reached last week. To be specific: the market closed today at 4.75% on a 30yr fixed for a single family home with at least 20% equity, a loan of $417k or less, points of 1%, and a borrower credit score of 740 or greater. Headlines can be misleading since rates vary based on property type, borrower profile, loan amount, and fees.

Also be aware that most press reports on rates are based on Freddie Mac’s weekly average nationwide rate survey which is published Thursdays. The report is for the rates on loans with parameters noted above, and headlines rarely mention average points for the average rates highlighted. So if you’re reading press reports, read long enough to see what the average points are. And you can also go to the source. more…

This report covers weeks 60-61 of a mortgage bond purchase program by the Federal Reserve—here’s weeks 57-59. In the last two weeks, the Fed bought $21b net of mortgage bonds as follows: $11b Feb 18-24, $10b Feb 24-Mar 3. For the past 6 months, the Fed has focused weekly buying on 4.5% and 5% coupons (tables below), which represent outstanding loans in the 4.75%-5.125% and 5.375%-5.75% ranges respectively. This makes sense since most of the new bond supply coming to market from new loans being made are at those rate ranges.

Rates have held below 5% since dipping last week, but are advancing higher this morning’s release of the February jobs report which was interpreted as positive despite the economy losing 36k jobs and forced-into-part-time workers increasing by 500k. Rates are still just a touch above all-time lows, but how long will it stay this way? more…

The Bureau of Labor Statistics non-farm payroll report showed that the economy lost 36,000 private sector jobs in February. January was revised from -20k to -26k jobs lost and December was revised from -150k to -109k jobs lost. This means 25 of the last 26 months have shown losses, putting the job loss toll since the recession began in December 2007 at 8.4 million. In 2009, 4.8m jobs were lost. BLS also reported that 14.8 million people are unemployed. This is a 9.7% unemployment rate, up 4.8% since the recession began in December 2007. See charts below.

Additionally there are now 8.8 million people who would like to work full time but are working part time because their hours have been cut or they can’t find full-time jobs. This forced-into-part-time-work category is up 4.1m million since January 2008, and increased by 500k this month, offsetting a big drop in January. January’s drop from 9.2m to 8.3m was the first improvement in nine months. This is the fine print of the jobs report—the headline job loss and unemployment statistics show that these 8.8 million people are employed and therefore not in the job loss category, but because of their job status these 8.8 million workers aren’t likely to be consuming at normal levels. Markets are interpreting today’s report as positive—stocks are rallying, bonds are selling off, and rates are higher—but this statistic is mostly undiscussed in market coverage.

Update on State & National Mortgage Licensing
The SAFE Act continues to weigh on some agents’ minds. Different states have different interpretations. In general, the SAFE Act requires all mortgage loan officer license applicants to complete 20 hours of pre-license education, including three hours of federal law and regulations, three hours of ethics, including fraud, consumer protection, and fair lending issues, and two hours of training related to lending standards for the nontraditional mortgage product marketplace. Here in California, “Approval has been granted for individuals who are currently licensed by DRE to obtain certification that the pre-license education requirement has been satisfied based on the education completed to obtain their DRE license. However, to be eligible for this process, licensees must file Form MU 4 by August 31, 2010.” There are a few other things to keep in mind, but this appears to be some good news. Here’s the California site.

Thornburg’s Last (and Next) Chapter
In a story out of Reuters, four top executives of Thornburg Mortgage improperly paid themselves handsome bonuses just before the mortgage lender filed for bankruptcy last year, and stole money and ideas from Thornburg to secretly launch a new firm, the bankruptcy trustee in charge of liquidating the lender alleged in a lawsuit. Per the complaint, the four executives and their outside lawyer and law firm conspired to launch a new company, called SAF Financial, using a strategy created by Thornburg to try to save itself. CEO Larry Goldstone, former CFO Clarence Simmons, and former VP’s Deborah Burns and Amy Pell were mentioned. more…