1/11/2009

MBA Applications Survey: Composite Index down 24.5%, Refinance Index fell 30.3%, Purchase Index down 9.8%, pushing the MBA's purchase index to its lowest level since the end of 2000. Reinancings made up 66.7% of applications filed last week, down from 73.2% the week before, while adjustable-rate mortgages accounted for 2.5%, up from 2.1% The rate charged on 30-year fixed-rate mortgages averaged 5.19% last week, down from 5.28% the week before. The average on 15-year fixed-rate mortgages sank to 5.00%, down from 5.15%. One-year ARMs averaged 6.22%.



Treasuries Little Changed Before Record Sale of 10-Year Notes. Government bonds erased gains after the biggest advance in almost two months yesterday as Treasury Secretary Timothy Geithner failed to ease concern that a U.S. plan to rescue the banking system won’t work. President Barack Obama, who is borrowing unprecedented amounts to combat the economic recession, is asking lawmakers to approve a stimulus package within days. Yields at this time are in 2.78 – 2.80 range.

U.S. Trade Deficit Narrowed 4% in December to Lowest Since 2003. The gap between imports and exports shrank 4 percent to $39.9 billion, the lowest since February 2003, from a revised $41.6 billion deficit in November that was wider than previously estimated, the Commerce Department said today in Washington. Imports fell to the lowest since 2005.

Treasury Secretary's Announcement Short on Details About Bad Assets, Mortgages. Mr. Geithner committed the government to spending $50 billion to stem home foreclosures but said the details remain to be worked out in the next few weeks. Officials also will take the coming weeks to flesh out details, in consultation with the public, of a planned Public-Private Investment Fund to take soured assets off banks' books.
Bernanke Begins ‘Thorough Review’ of Fed Disclosure. Bernanke has invoked emergency authority and more than doubled the size of the Fed’s balance sheet to $1.8 trillion to combat the worst credit crisis in seven decades. His moves have prompted concern that the central bank is encouraging excessive risk-taking, distorting pricing in financial markets and jeopardizing the Fed’s independence. The Fed hasn’t disclosed many of the assets and participants in its programs.
Finding a Way to Stem Foreclosures Proves Tricky. Right now servicers are limited in their ability to modify mortgages that have been packaged into securities and sold to multiple investors. In addition, "the borrower is going to have to probably -- if they get some assistance -- agree to give up some equity once housing prices recover," the president said in Ft. Myers yesterday. Government officials are also expected to create national standards for loan modifications that would be adopted by Fannie Mae and Freddie Mac. But there is little data on what types of workouts are most cost-effective. Data released in December by federal banking regulators show that more than 40% of borrowers were at least 60 days past due eight months after their loan was modified. Critics say redefaults are so high because mortgage companies aren't doing enough to make payments more affordable.
Foreclosure 'Tsunami' Hits Mortgage-Servicing Firms. At the American Securitization Conference in Las Vegas Tuesday, panelists discussed the growing number of foreclosures. An attendee said that the servicing arms had been inundated with borrower requests to change the terms of their loans. "We have a tsunami upon us,"
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