MBS RECAP: Up Down Sideways

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MBSonMND: MBS RECAP
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FNMA 3.5
96-19 : +0-02
FNMA 4.0
100-21 : +0-03
FNMA 4.5
103-27 : +0-03
FNMA 5.0
106-14 : +0-03
GNMA 3.5
97-28 : +0-02
GNMA 4.0
102-09 : +0-02
GNMA 4.5
105-21 : +0-03
GNMA 5.0
108-06 : +0-03
FHLMC 3.5
96-14 : +0-03
FHLMC 4.0
100-19 : +0-03
FHLMC 4.5
103-22 : +0-03
FHLMC 5.0
106-09 : +0-03
Pricing as of 3:57 PM EST
Afternoon Market Updates
A recap of MBS Market Updates provided by MND Analysts and streamed live to the MBSonMND Dashboard .
3:57PM  :  The Impact of MBS Price Volatility on Rate Sheets
Home loan borrowing costs continue to hover near the best levels we've seen all year. Activity in the secondary mortgage market is getting more and more restless though as investors await an update from the Federal Reserve tomorrow and new developments in the Greek debt crisis. Intraday volatility has picked up as a result. "Volatility" in and of itself doesn't mean rates are more likely to get directionally better or worse, but it does mean lenders are more anxious about the potential for larger intraday loan pricing swings. This creates a defensive environment where rate sheets fluctuate in a wider range of offers as lenders look to stay ahead of volatility (they add cushion to rate sheets). If you can't afford (or don't want to afford) to risk what could be a meaningful increase in closing costs or even a .125% shift higher in rate, we're always in favor of protecting current offers, especially when rates are near their best levels in recent memory and high-risk, high-impact economic events are less than 24 hours away. If you float through today into tomorrow, you're basically accepting any short-term rate/cost adjustments that take place following the market's reaction to those events.
3:11PM  :  New Mortgage Rate Watch Post
2:40PM  :  JPMorgan Agrees to Pay $154 million in Mortgage Case
(Reuters) - JPMorgan Chase & Co said it agreed to pay $153.6 million to settle U.S. Securities and Exchange Commission charges that it misled investors about a mortgage securities transaction just as the nation's housing market was starting to plummet. Tuesday's announcement came less than a year after Goldman Sachs Group Inc agreed to pay $550 million to settle SEC charges that it did not tell investors in the Abacus CDO that hedge fund investor John Paulson helped choose the underlying securities and bet against them. According to the SEC, JPMorgan in 2007 structured a collateralized debt obligation, Squared CDO 2007-1, mainly with credit default swaps tied to other CDO securities whose value was tied to the nation's housing market. It said the Squared CDO's marketing materials said the underlying investments were chosen by a GSC affiliate. But in fact, Magnetar played a significant role and would benefit from defaults because of a nearly $600 million short position, it said. The SEC also filed civil charges against Edward Steffelin, a principal at GSC Capital Corp, accusing him of drafting misleading marketing materials for the transaction that failed to reveal that the Magnetar Capital LLC hedge fund helped choose and bet against the underlying securities. In a conference call, SEC enforcement chief Robert Khuzami said he did not anticipate the agency bringing charges against any JPMorgan executives in connection with the CDO case. JPMorgan did not admit wrongdoing in agreeing to settle.
2:04PM  :  MBS Reach Reprice Territory. Lenders Slow to Recall
Rate sheet influential MBS prices have continued to climb and are now +7/32 at 100-25 after touching 100-14 earlier in the session. These price appreciations have led to scattered reprices for the better, but nothing widespread yet. However if these gains hold we'd expect to see more lenders recall and reissue for the better. Otherwise, with stocks hovering near their intraday highs, the chance for MBS price volatility remains elevated. This will keep some lock desks defensive and potentially even dissuade them from repricing for the better.
12:17PM  :  ALERT: Bonds Pull 180. Lenders Pace Pricing Volatility
The stock lever has disconnected from bonds, in a good way. Although the S&P is now 1.24% better on the day, benchmarks are making a comeback and production MBS coupons have pulled a total 180. After falling as low as 100-14 early in the session, the Fannie Mae 4.0 is now +4/32 at 100-22. This 8/32 reversal is enough reason for aggressive lenders to reprice for the better. In Treasuries, the 10-year note has seen buying (short covering) near technical support at 3.00%, regardless of equities holding near their best levels of the day. Remember the 10yr note was bid at 2.89% just yesterday morning. With many investors parked on the sidelines and trading volumes below average, this directional volatility was expected given the lack of liquidity in the marketplace. What it tells us about loan pricing is lenders will likely be adding some cushion to rate sheets to account for a wider intraday trading range ....we will alert if reprices for the better are awarded.
11:15AM  :  New MBS Commentary Post


Featured Market Discussion
A recap of the featured comments from the Live Discussion on the MBSonMND Dashboard .
Chris Kopec  :  "Ken....thanks for the followup....I have a couple lenders that have looked at it and said they would do it, but the first lender I sent the deal to shot it up based on that."
Ira Selwin  :  "Scott - don't forget the MI rule in New York too, can save the borrower on some purchases"
Scott Valins  :  "just got an email from my 5/3rd rep and he said 2 years and 75% ltv in years 2-5"
Scott Valins  :  "can anyone confirm that for borrower to be able request removal of PMI (Radian, MGIC, etc) they must have loan for one year and LTV must be under 79%?"
Ken Crute  :  "CK, we do a ton of condos, here, and that is the number 1 deal killer, FNMA won't take it, even if its a $1 off the 10%, has been my expereince "
Chris Kopec  :  "Ken, sorry, had to jump away.....my question involves well-funded condos (i.e., reserves in exess of 10%) that either don't have a 10% line item for reserves, or less than 10%. In other words....I have a condo that has 60% of it's annual budget in a reserve account. Therefore they are currently taking less than 10% annually, simply because they don't need to. They are running in the black, and every year, their reserve is growing, therefore they never had the need to raise their annual allotm"
Mike Drews  :  "i was able to refiance the FHA investment property as a streamline too."
Jill Statz  :  "I seem to remember having something similar to that and we could not get it done at all"
Mike Drews  :  "i have one like that, but they were relocated from IL to WI..so they have a investment FHA loan and primary FHA loan"
Justin Bayle  :  "looks like it Jill, unless you can justify major family change/expansion or you are relocating a significant distance"
Jill Statz  :  "but...you will not be able to get another FHA loan then on the new property right?"
Justin Bayle  :  "if it is purchased owner-occupied, I don't think they can stop you from renting it out at a later date..."
Jill Statz  :  "thought you could not have a rental as an FHA loan?"
Justin Bayle  :  "anyone know if there is time limit on obtaining FHA loans on two different properties? Buyer bought a triplex in Feb. 2010 with FHA loan, now wants to go buy another and move-in"
Steve Chizmadia  :  "Plaza better"
Victor Burek  :  "flagstar better"
Jill Statz  :  "2nd reprice from PF .25 better on the day"
Matthew Graham  :  "Pinnacle price change"
Ira Selwin  :  "FAMC price change"
Bill Clark  :  "Breaking News J.P. Morgan to pay $153 million to settle SEC charges that it misled investors in its mortgage securities."
Adam Quinones  :  "really just a drift amidst pre-FOMC/Greek motivated position squaring."
Tom Bartlett  :  "You guys called it AQ. That seems to be happening now."
Adam Quinones  :  "Remember the 10yr note was bid at 2.89% just yesterday morning. With many investors parked on the sidelines and trading volumes below average, this directional volatility was expected given the lack of liquidity in the marketplace. What it tells us about loan pricing is lenders will likely be adding some cushion to rate sheets to account for a wider intraday trading range ..."
Adam Quinones  :  "Negative Feedback Loop in Action: Existing Home Sales: http://www.mortgagenewsdaily.com/06212011_existing_home_sales_may.asp"
Bill Clark  :  "PF .125 better"
Andrew Horowitz  :  "the market doesn't care about his plan what they care about is a vote of confidence from parliament"
Andrew Horowitz  :  "The vote basically gives him the power to implement his parties plan "
Jason Wilborn  :  "so the "vote of confidence" give the PM to enact and implement his own Austerity plan"
Adam Quinones  :  "Investors believe this vote will pave the way for Greece to receive the next installment of its emergency bailout payments. Prospects for this vote to pass Greek Parliament seem to be strong at the moment as equities are green around the globe, but failing to agree on deep spending cuts would be a signal that the Greeks are not serious about making long-term concessions to pay back their debt, which could lead to sharp declines in global equity markets and a flight to safety in U.S. government b"
Adam Quinones  :  "Since restructuring government leadership positions largely failed to improve national sentiment surrounding tough spending cut decisions, Greek Prime Minister George Papandreou is now seeking government approval to enact his own austerity plan through a "vote of confidence", which will be taken on Tuesday night around midnight in Greece (5pm eastern). "
Adam Quinones  :  "Greek officials have said the country will face default by mid-July if the European Union and the International Monetary Fund do not release the next phase of bailout funds by then. Over the weekend Euro-zone finance ministers delayed a final decision on extending those emergency loan funds to Greece until they agree on an aggressive plan to pay back their debt (austerity measures)."
Adam Quinones  :  "explained here: http://www.mortgagenewsdaily.com/mortgage_rates/blog/216665.aspx"
Adam Quinones  :  "Greece just needs to present an aggressive austerity plan to win over the confidence of other EU lenders who are debating with the IMF on the decision to release more funds"
Dirk Postupack  :  "What is the vote in greece for?"
Brent Borcherding  :  "Short covering is good."
Brent Borcherding  :  "Let me see...If Papa-whatever wins the "confidence" vote...there is a chance he might still be able to get Greece aid without default? So we may or may not learn something at 5 EST."
Adam Quinones  :  "TSY traders say decent activity in cash market. seeing short covering in 10yr futures contract"
Adam Quinones  :  "no volume to confirm rally Brent. Short covering (position squaring) motivated..."
Brent Borcherding  :  "I don't know much about much so looking for a little help; do recent trends show day to day show that S&P defended the 1270 mark? It's rallied fairly strong from there."
Andrew Horowitz  :  "Here is a chart from wikipedia http://en.wikipedia.org/wiki/Economy_of_the_European_Union"
Jeff Anderson  :  "Other than Germany how many countries, among the Euro countries, are in GOOD shape? Is that a short list?"