Yesterday there was a huge sell off in the bond market. The Mortgage Bond had their worst one day performance since October, losing an astounding 206bp. The main culprit was SUPPLY. The Treasury has literally been printing money be way of Treasury acutions to pay for the massive spending. And these hundreds of Billions of dollars of new Bond suplly have to b absorbed by the market. so the additioanal supply literally weighs on the entire Bond makret and drags prices lower.

well it has been a busy couple of weeks since my last post. Mortgage Bonds have been up and down but rates are still great. One of the biggest news makers is a law that was resently went from the house to the senate and if passed in it's current state with put mortgage brokers and small to medium size mortgage lenders that rely on warehouse lines of credit out of business. Here is some facts

H.R. 1728: Not All Reform Is Created Equal
What You Need to Know About H.R. 1728!
Last week, H.R. 1728, the Mortgage Reform and Anti-Predatory Lending Act of 2009, was passed by the House of Representatives and sent to the Senate for consideration. The bill is a tougher version of a measure to overhaul mortgage regulations that House Financial Services Committee Chairman Barney Frank sponsored in the previous Congress.
So what does all of this exactly mean for your business...and for your clients? Mortgage Success Source Faculty Member Mark Madsen says that, "While this bill is much more than just a ban or regulation on YSP, the first thing that jumps out to me is the fact that we will no longer be able to offer clients limited closing cost options for refis or purchases. A simple .125% bump in rate could literally save clients thousands of dollars in closing costs, which is what the political powers in support of this bill fail to recognize."
Echoing these concerns, Mortgage Success Source Faculty Member S. John Murray explains that, "If the Senate passes the House bill, Barney Frank will have succeeded in his quest to ban fees attached to interest rates (YSP), limit all non-conventional lending and reward 30 yr. fixed rate mortgages, provide legal redress of mortgage related complications, and require all originators of mortgage loans (except 30 year fixed rate loans) to retain at least 5% stake in the loan, for the life of the loan, so in short put all mortgage brokers and lenders that rely on warehouse lines out of business."
Murray added that, "Now is not the time to limit financial choices and increase borrowing costs."
Mortgage Sucess Source Faculty Member Jim Sahnger commented, "What I think the writers of this legislation fail to recognize is that by limiting mortgages at wholesale to par pricing, the consumers that would likely be hurt the most are the ones they are working to protect, those with the least amount of available cash for closing costs and down payment. This will not help the housing market, it will only impede recovery."
The Mortgage Bankers Association (MBA) has also expressed their concerns about how the bill will impact the current economic situation in our country. In a letter to Congress, the MBA said that the bill will "make it highly problematic for many lenders to operate, particularly smaller non-depositories that lend on lines of credit. It will also necessitate that larger lenders markedly increase their capital requirements. Both results will narrow choices, lessen credit, and force an inefficient use of capital at the worst possible time for our economy."
If H.R. 1728 passes the Senate and is signed into law by the President, the mortgage lending industry won't be the same...and this may not be welcome news for everyone. As the MBA noted, "If carefully crafted, improved regulation is the best path to restoring investor and consumer confidence in the nation's lending and financial markets and assuring the availability and affordability of sustainable mortgage credit for years to come. At the same time, if regulatory solutions are not well conceived, they risk exacerbating the current credit crisis."
We'll continue to watch this situation closely and keep you updated.

thanks Brian McLaughlin

Jobs report arrived this morning showing there were 539,000 jobs lost in April versus expections of 610,000 lost and this was the smallest job loss since October. Umemployed Rate moved to a 26 year high of 6.9%.

Mortgage Bonds are all over the place and have fallen beneath the 50 and 100 day moving averages. Stocks are treading higher today.

The NY Fed has purchased to date 450 B of the 1.25 T comitted to purchase Mortgage Backed Secureites. The Fed has not purchased any of the 3% coupoin, in which heavy buying would be needed to bring home loan rates near 4%. Additionally, the total amount of 3.5% coupons purchased has only been $392M, only .08% of the total, In other words, 99.2% of the Fed's spending is not going towards helping rates move towards 4%.

Stock Market stages a good rally yesterday and the S and P 500 broke through resistance at the 875 level to turn back into the positive territory for 2009. Stocks did not weigh on Mortgage bonds which have enjoyed a nice rise after bouncing off the triple layer of support yesterday.

Stocks are sluggish at the open on new that the government stress tests on banks have revealed that ten large banks may need to raise capital to endure the ongoing recession. Mortgage Bonds respond and move higher on the new.

Big Ben Bernanke will be testifying in front of the Joint Economic Committe speaking on the state of the economy. Everyone will be listening closely and the markets may react to his outlook.

If clients are looking to lock in their interest rates today we recommend a Float postion to see if prices can once again retest resistance at the top of the trading randge.

Mortgage Bonds are trading above a triple layer of support based on differnt moving averages. Pending home sales come in better than expected today but we do not expect it to be much of a market mover. The stock market of the last couple weeks has done very well and the the S and P is at a turning point to either move higher or lower based on the the chart and moving averages.

Our man Warren Buffet was in the news today. One of the richest men in the world. Everything in the news media is a negative and making people scared. Warren as always had an ability to go agianst the grain and move in the oppostite dirrection of the herd. Based on this there is great opportunity to profit on all fronts. If people wait to long they will miss the boat. As the economy starts to recover so with housing and interest rates. If you have not purchased a home yet, get out there and do it before the opportunity has passed.

For now we do recommoned a float based on the trading of mortgage backed securites and the triple lay of support. But we always have our fingers on the lock trigger should things change quickly.

thanks

Brian

OK. So it has been a while, the way that I market is right now I am just catching my breath after a tough month with a couple tough files. I can't tell clients how important it is to have all your documents in order. W2's, pay stubs, bank statement ( ALL PAGES !!!), verify large deposits from gifts, taxes etc. Cash under the mattress does not work. If you have some put it in your bank or from God's sake at least put it in safe or safety deposit box. I had two difficult loans close recently that was stressful for the borrower because their stories was not together for the underwriter and all their documents where not in order. If you loan is a little more complex than most it can be like a puzzle for an underwriter. The better that we can put the puzzle together ahead of time and explain it to the underwriter the better off everyone else will be.

So here is the deal. Rates are the LOWEST EVER!!!. That is right George Washington could not get a lower interest rate. So what is happening with the mortgage market. Well credit is tight, kinda of. You need to have a good credit score, verify income, and assets and have a down payment. yes people you need to verify income and assets, as if before it was OK that you did not have to. Are you listening SELF EMPLOYED PEOPLE, If you want to get a loan to refinance or purchase a home you have to verify income.

FHA ( Federal Housing Admin) has become a very popular loan program. They are require a 620 minimum credit score, 3.5% down and you can buy all the way up to a 4 unit property.

That is it for now, will be back on monday with the market update.

thanks

Brian McLaughlin

Todays Update

Mortgage back securities are coming of the starting block positive today. The stock market is lower. Some poor earnings on the Street to with Best Buy and Macys. Just a couple of days ago we had that Circuit City was closing 150 stores. Retail Sales for the holiday season is not shaping up to be good.

No other economic reports are coming out today. The treasury department is set to auction 20 Billion with B in 10 years notes.

Also in the news was GM who is back to their lowest stock price pre World War II. Can you say government bail out?

Always we have plenty of money to lend for qualified buyers. Popular loan programs are Fannie and & Freddie (conventional loan). FHA, USDA and VA. We work with over 50 different lenders that if out goes out of business which who know what the future will bring that we work with so many that we have so many options