MBS RECAP: 2/1/2011
By:
•
MBSonMND: MBS RECAP
| Open MBSonMND Dashboard | ||||||||||||||
|
|
|
||||||||||||
| Pricing as of 4:04 PM EST | ||||||||||||||
Afternoon Market Updates
A recap of MBS Market Updates provided by MND Analysts and streamed live to the MBSonMND Dashboard
.
3:19PM :
ALERT:
Further Weakness Suggests Dusting Off Reprice Risk
With FNCL 4.5's now at 101-27 and having reached those levels fairly rapidly, risks of reprices for the worse are making a late day return to the outlook. These are very close to the lows of the day and jumpy lenders may reprice soon.
3:11PM :
MBS Shed 4 Ticks Fairly Quickly To Return To 101-28
101-28 has been a prevalent pivot point for FNCL 4.5's today and in the recent past. Shortly after Egyptian state television announced that President Mubarak would be make a statement in a broadcast shortly, bonds backed up fairly quickly, in stark contrast to the low volatility sideways moves from the rest of the day. MBS shot down from 102-00 to 101-28 and 10yr yields rose to 3.445. Somewhere in the midst of the 3.45's marks an important line of support for the bond market, but volume would have to rise during that breakout if we're to read much significance into it after the 3pm close.
2:25PM :
Short Covering Adds to Modest Bounce
Profit taking on short positions (short covering) is bringing some money back into the market and helping benchmark 10 year TSY notes move back into the middle of the recent range. This is happening regardless of a relentless stock market rally. We view this behavior as position squaring or "getting flat" before ADP data tomorrow morning.
2:16PM :
New MBS Commentary Post
1:33PM :
Steadily Making Gains, But Still Blocked By Resistance
Since just after 10am, the trend in treasuries has been a narrow and stable trend channel pointing at lower yields, but so far, the testing of the 3.42 band of yields has proven inconclusive. Little change in MBS with FNCL 4.5's at 101-30. Volume is lower than this morning, and nowhere near Friday, but is shaping up to be roughly in line with yesterday's levels, or a bit higher.
12:54PM :
Bonds Make Small Gains, Battling Pivot Point
10yr notes are now testing the 3.42+ pivot point we mentioned earlier as their "gateway" to further gains. Once below 3.42, there's limited recent trading supporting any other technical levels until 3.40 and below. The fact that this test is occurring alludes to some minor bond market gains. 10's are currently at 3.428 and the FNCL 4.5 is up a few ticks since last look and now sits at 101-31 (10 ticks down on the day).
12:19PM :
Support Holding, But Resistance Needs To Break Before Gains
10yr notes need to tackle resistance at 3.434 before getting a green light to move lower. Once that resistance breaks, it could coincide with less of a "sideways" vibe in the bond market and give way to something slightly more directional. FNCL 4.5's are sideways as well, currently down 11 ticks on the day at 101-29. To simply, as long as 10yr yields are between 3.42 and 3.46, we're locked in a range within a range, sideways and boring.
11:44AM :
Supportive Bounce At Range Limits Holding As Lowest Level Of Day
Whether due to a technical trendline resting along a consolidating range of lower highs and higher low or whether due to recent yield highs around the same levels, support was likely to be seen today in the 3.45+ range and indeed it was. This has coincided with FNCL 4.5's holding their own support at 101-28 and the longer it does do, the more the risks of any reprices for the worse evaporate. Moreover, we now may get to see if the range is indeed consolidating. If it is, the highs will be in for treasuries at 3.45+ and a cross of 3.4 would generate positive momentum with a target in the low to mid 3.3's.
11:16AM :
New MBS Commentary Post
Featured Market Discussion
A recap of the featured comments from the Live Discussion on the MBSonMND Dashboard
.
Adam Quinones : "that is directly from the Federal Reserve"
Adam Quinones : "Q21. May a loan originator pay some or all of the third party fees of a consumer or otherwise credit the consumer from a premium rate or out of his own pocket?
A. Fed Response - No. The rule prohibits overages and underages tied to terms including rate. The Board has concluded that if it did not prohibit lowering of loan originator compensation, the industry may establish high prices/compensation amounts, and then lower prices and compensation amounts for borrowers who negotiated. The Board vie"
Adam Quinones : "very likely AC"
Alan Craft : "I see a lawsuit coming on Originator Compensation."
Adam Quinones : "The Federal Reserve Board on Tuesday announced that it does not expect to finalize three pending rulemakings under Regulation Z, which implements the Truth in Lending Act (TILA), prior to the transfer of authority for such rulemakings to the Consumer Financial Protection Bureau (CFPB).
The proposed rules were published as part of the Board's comprehensive review of its mortgage lending regulations under TILA. The first phase of the review consisted of two proposals issued in August 2009, which "
Adam Quinones : ""Approve/ineligible loans are generally backed by borrowers who have demonstrated the willingness and ability to stay current on their debts, but for one reason or another they just don't qualify for an agency loan" said MND's managing editor Adam Quinones. He added, "This type of loan paper would be a great source of collateral to jumpstart the non-agency secondary mortgage market. We suggested this might be a good idea last year when Fannie Mae announced their Loan Quality Initiative". "
Ross Miller : "I have a webinar tomorrow with a lender who still seems to want to allow for the credit from the lender to the borrower and then the borrower can pay me. I may just start sending all my loans there."
Ross Miller : "Well, since each lender creating the rules based on their opinions I am going to keep asking if we can go back to the old gfe and hud until a lender makes it their opinion."
Joe Ridings : "the new comp law is doable, although it sux, but is hard to work into the 2010 respa rules."
Joe Ridings : "in my opinion the current GFE/HUD are not compatible with the new compensation law. "
Ross Miller : "Joe, that is a question that I have been trying to get an answer too. If the lender can no longer provide a credit to the borrower and the borrower pay the fee to the broker then what is the point of the current gfe and Hud?"
Joe Ridings : "ok that is what i thought. so then how do you get to keep ysp as a broker after april 1st?"
Chip Harris : "Dan, I assume I cannot charge a processing fee for processing my own files if I am using the lender paid model. I am thinking that it's time to contract out to a third party processor as they would be allowed to collect that still, right?"
Aaron Meyer : "Dan not even appraisal title credit report etc.?"
Dan Clifton : "@Ridings, under the new law there is NO YSP, and you can only get compensated by ONE party, either the lender or the borrower. You CANNOT get comepsated by both. SO on each loan you must choose if you are taking lender paid or borrower paid. If you take lender paid, there can be NO upfront fees for ANYTHING."
Joe Ridings : "hey guys back to the broker GFE. with new comp law in april, would that still be disclosed the same way? if borrower is paying 2.5% to the originator then how do you collect YSP? i guess its ok if you are crediting it back to them?"
John Klarin : "Thanks to the info on this site I locked in a bunch of deals yesterday. Subscription fee is cheap compared to what I saved on one little loan..."
Chris Kopec : "If we had a process like that, loan officers could still be removed from the process....and the headaches."
Chris Kopec : "Lenders already have ample tools to spot fraud. They existed prior to the meltdown. I used them back when I was on the lender side....we had inhouse appraisers desk review every single report, with the aid of MLS reporting technology. The bank can reserve the right to accept, reject, or counteroffer any appraisal submitted."
Chris Kopec : "Raise the professional requirements of an appraiser to that of a CPA, and allow the borrower to contract with an appraiser independent of the financing process. "
Chris Kopec : "The condition of a foreclosure is not comparable; the motivation of a seller is not comparable; simply black box the stuff."
Andy Pada : "@Chris, that is such a telling analogy; love it."
Mike Drews : "if there's a $200 HGTV sold on every block, than Best Buy MAY have issue selling the same TV for $1200"
Mike Drews : "that depends on how many people lose their jobs and sell their HGTV's to the nieghbor."
Chris Kopec : "That's the logic that seems to be prevailing now in the housing market."
Chris Kopec : "If I lose my job and sell my HDTV to a neighbor for $200, does that mean Best Buy should be selling them for $200?"
Chris Kopec : "I think we should turn appraisers into the equivalent of CPAs, and return their true independence."
Chris Kopec : "We need a law to remove foreclosures and short sales as comparables."