MBS MID-DAY: 10/24/2011
By:
Matthew Graham
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MBS Live: MBS MID-DAY
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Morning Market Updates
A recap of MBS Market Updates provided by MND Analysts and streamed live to the MBS Live Dashboard.
9:00AM :
ALERT:
Euro Summit Reaction and HARP News Causing MBS Convulsions
First things first in MBS today: new HARP details are expected to be announced later today. WSJ writes confidently on what those details will be. including:
- Lifing LTV Caps (as in "completely lifting")
- Streamlined UW Process, likely waiving appraisals
- No repeat HARP borrowers (not so much a change as a clarification)
- Some sort of MI portability
- Easing of Rep/Warrant liability
- LLPA reduction, even removal for shorter loan terms
MBS have already been put through their paces in the weeks and weeks of run-up to the HARP announcement. Now that it looks imminent today--not to mention it looks like it might include significantly more changes than expected--MBS are, in a way, reliving the recent gyrations of the past few weeks all in the space of a few hours this morning.
Treasuries opened stronger on a lackluster response to the initial phase of the EU summit over the weekend, but MBS did not. Shortly after the open, treasuries moved into the red, and MBS deeper into the red, currently down 6 ticks to 100-25 in Fannie 3.5's. Rate sheets could be delayed slightly and should be noticeably weaker if current levels hold.
- Lifing LTV Caps (as in "completely lifting")
- Streamlined UW Process, likely waiving appraisals
- No repeat HARP borrowers (not so much a change as a clarification)
- Some sort of MI portability
- Easing of Rep/Warrant liability
- LLPA reduction, even removal for shorter loan terms
MBS have already been put through their paces in the weeks and weeks of run-up to the HARP announcement. Now that it looks imminent today--not to mention it looks like it might include significantly more changes than expected--MBS are, in a way, reliving the recent gyrations of the past few weeks all in the space of a few hours this morning.
Treasuries opened stronger on a lackluster response to the initial phase of the EU summit over the weekend, but MBS did not. Shortly after the open, treasuries moved into the red, and MBS deeper into the red, currently down 6 ticks to 100-25 in Fannie 3.5's. Rate sheets could be delayed slightly and should be noticeably weaker if current levels hold.
Featured Market Discussion
A recap of the featured comments from the Live Discussion on the MBS Live Dashboard.
AQ : "If GSEs waive reps and warrants on 125% LTV...it will be big deal."
AQ : "major announcement is def the relaxation of reps and warrants. Fannie is not taking on new risk on loans up to 125LTV. However, if the new LTV is over 125, then we're looking at the GSEs taking on new credit risk, which won't fly. Those will need credit subordination and pricing will be brutal. "
Ken Crute : "PMI flexibilty will be a great help, if the MI companines will get on board, or at least stay in business "
Mitch Mitchell : "Removing appraisals is excellent! Sooo many borrowers in my area can't refi due to appraisal. I have a ton of people that their payment would drop going to a 15 or 20 year from their current rate. Again if you give people a reason to stay in their upside down house I think this greatly helps foreclosure problems."
Chris Kopec : "2 biggest takeways - removing appraisals from the process is HUGE (from a cost and heartburn perspective). Greater PMI flexibility is also a big big plus."
Brent Borcherding : "Most of the one's I've done, Ira, ahve been 15 year. 5.75% to 6.5% 30 year refi'd into a 3.75% 15 year....works."
David Z. : "Good point Ira, we need fees reduced on term extensions"
Ira Selwin : "I dont understand this part here: An important element of these changes is the encouragement, through elimination of certain risk-based fees, for borrowers to utilize HARP to refinance into shorter-term mortgages. Borrowers who owe more on their house than the house is worth will be able to reduce the balance owed much faster if they take advantage of today’s low interest rates by shortening the term of their mortgage..... How many people can afford to go into a 15 year?"
Dean Gorenflo : "PIW's are scarce as hen's teeth anyway. Most times you need a 2075"
Brent Borcherding : "The lessening of buy back concern, mentioned in the article, may actually make this one work. Who in hear has heard enough, as an LO, about buyback risk if you don't cross that t and dot that i?"
Dean Gorenflo : "not yet...you can always write a new spec"
Gaius Rossini : "how would they waive appraisals for manual refi plus? there's no such thing as a PIW for manual right?"
Matthew Graham : "most important thing to note is that official details are expected to be announced today"
Ira Selwin : "as is always"
Steven Stone : "the ultimate question now becomes if investors adopt the program"
Matthew Graham : "" This will streamline the refinance process, eliminating the need in many cases for borrowers to obtain appraisals ""
Gaius Rossini : "sounds like a leak"
Gaius Rossini : "http://blogs.wsj.com/developments/2011/10/23/twelve-questions-on-obamas-refi-plan/"