More Economic News That Can Affect The Mortgage Business!

This week in Pennsylvania, the G-20 summit began with a 2 day meeting. The economy is still vwery fragile and that is almost identical from what the Fed's have said in the recent past. Economists have been told that it is still not a time in which the Government should stop mmaking making massive financial injections into the economy

"...following its severe dowturn economic activity has picked up...conditions in financial markets have improved further, and activity in the housing sector has increased...household spending seems to be stabilizing, but remains constrained by ongoing job losses, sluggish income growth, lower housing wealth, and tight credit. Businesses are still cutting back on fixed investment and staffing, though at a slower pace; they continue to make progress in bringing inventory stocks into better alignment with sales. Despite the economic happenings is likely to remain relatively weak for some time, the Committee anticipates that actions regarding policy to stabilize the institutions and markets, fiscal and monetary stimulus, and forces in the market will support a strenghtening of economic growth and a steady return to larger levels os utilization in a context of stability regarding price...inflation will remain stagnent for awhile."

An important item to note is that "the Federal Reserve will continue to employ a wide range of tools to promote economic recovery and to preserve price stability." This includes keeping overnight rates near 0% for an extended period, and purchasing a total of $1.25 trillion of agency mortgage-backed securities and up to $200 billion of agency debt. "The Committee will gradually slow the pace of these purchases in order to promote a smooth transition in markets and anticipates that they will be executed by the end of the first quarter of 2010. The Federal Reserve, as announced before, purchases of 300 billion of Treasury Securities will be finished no later than Oct. 2009."

In recent weeks, the Fed has been buying mortgage-backed securities (remember, NOT whole loan deals backed by private-label or jumbo production) at a steady pace of $25 billion per week. This many slow, but only marginally so, in the immediate future.

No one told this to the buyers of the Treasury's 5-yr note. The results of the 5-year note auction were not pretty, but not terrible, coming in at 2.47% versus the existing 5-yr at 2.44%. But the bid to cover seemed to be in line with other auctions from before, and bidders indirectly took down .45% of the auction, which compares with an average of 50% for the prior four 5-year note auctions. This morning we've already had Jobless Claims, and will see Existing Home Sales at 7AM PST. We also have a $29 billion 7-Year Note auction. Claims for jobless benefits fell by 21,000 last week to 530,000 - better (for the employment picture) than expected. The four-week moving average of new claims dipped to 553,500, the lowest since late January. Following the jobless claims posts the fresh five year is at two.40%, the 10-yr is at 3.forty percent, and thirty year mortgage prices (securities) are higher (better).

Regarding the new TILA requirements, Wells Fargo correspondent channel made clients aware that they "tweaked" their view on the timing of the initial TIL and disclosure. Wells has to decided to expand the options to accomodate different deliver methods allowing shorter post time if documented as follows: Fax: Initial and re-disclosed TILs delivered to the borrower(s) by fax will be considered "received" by the borrower(s) on the date they sign and date the TIL disclosure. Other methods of documenting receipt, such as time/date stamps in the fax header, or fax confirmation sheets, are not sufficient. Overnight delivery: Initial and re-disclosed TILs shipped overnight to the borrower(s), will be considered "received" by the borrower(s) on the date they sign and date the TIL disclosure. Other methods of documenting receipt, such as a signature on an overnight courier receipt, are not sufficient. E-mail/E-Sign: Because the Truth-in-Lending Act requires that delivery of disclosures electronically be done in compliance with the federal E-SIGN Act, initial and re-disclosed TILs may only be delivered to the borrower(s) electronically by Sellers who are approved by Wells Fargo for E-Disclosure, and who deliver the documents through their approved E-Sign Technology software." The subject tends to be very sticky and Wells clients should look to the bulletin for more specifics.

CitiMortgage came out with their Reg. Z notice and "higher-priced mortgage loan" note. "Each loan that you sell to CitiMortgage comes with your representation and warranty as to compliance with these provisions and any other federal, state or local law or regulation governing the origination of consumer mortgages." Citi goes on to mention HPML ineligible products, including FHA Fixed Rate and ARM loans, VA ARM loans, VA IRRRL, conventional ARM loans with an initial fixed rate period of less than 7 years, partial term buy downs, and loans with a DTI greater than 45%, or as limited by the process or program. Citibank has some newer fields when one is going to the web registration field, so check them out.

With regards to of Citigroup, Citi, according to a article in the WSJ, plans to "cut back its U.S. branchs to six big metropolitan areas, and also plans to "Cap its consumer lending business in the United States primarily to Jumbo Loans and credit Cards, catering largely to wealthy customers." The article stated that the institution would" put more emphasis on Washington, New York, Chicago, Los Angeles and San Francisco, but would pair its business in Pennsylvania, Boston and TX."


Copyright (c) 2009 Christian Amstadter