MBS RECAP: 2/27/2012

By: Matthew Graham
MBS Live: MBS RECAP
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FNMA 3.5
103-17 : +0-04
FNMA 4.0
105-11 : +0-02
FNMA 4.5
106-20 : +0-01
FNMA 5.0
108-01 : -0-01
GNMA 3.5
104-29 : +0-03
GNMA 4.0
107-20 : +0-00
GNMA 4.5
108-30 : -0-02
GNMA 5.0
110-18 : -0-03
FHLMC 3.5
103-09 : +0-04
FHLMC 4.0
104-31 : +0-02
FHLMC 4.5
106-07 : +0-02
FHLMC 5.0
107-21 : -0-01
Pricing as of 4:00 PM EST
Afternoon Market Updates
A recap of MBS Market Updates provided by MND Analysts and streamed live to the MBS Live Dashboard.
1:21PM  :  ALERT: MBS Continue Holding Day's Gains. Positive Reprice Reported
Although outright gains in Fannie 3.5's haven't exceeded 4 ticks since the open, there is something to be said for stability, especially when MBS are stably holding onto 5-8 ticks of gains versus the previous session. We sometimes refer to the potential reprices during such times as "stability reprices" and we just got one.

We'd continue to hold the possibility open for a minority of the "early crowd" lenders to get on board with something like this, but wouldn't expect to see anything widespread unless Fannie 3.5's were moving higher into the 103-20's. They're currently up 7 ticks on the day at 103-20 and 10yr yields are down 6 bps at 1.9152. S&P's seem to have stalled out for now near their highs of the day just under 1370.

Some long term charts are updated in the MBS Commentary Section. Take a look:
12:07PM  :  NY Fed's Quarterly Report on Household Debt and Credit
Aggregate consumer debt fell $126 billion to $11.53 trillion in the fourth quarter of 2011 according to the Federal Reserve Bank of New York’s latest Quarterly Report on Household Debt and Credit, a 1.1 percent decrease from the $11.66 trillion reported in the prior quarter’s findings. The report, which includes data on a variety of household debt levels, also revealed further declines in real estate debt and delinquencies, while showing that other forms of consumer indebtedness increased.

Mortgage and home equity lines of credit (HELOC) balances fell a combined $146 billion, a sign that consumers continue to reduce housing related debt.

After a mild uptick in the third quarter, total household delinquency rates resumed their downward trend in the fourth quarter. The report finds that $1.12 trillion of consumer debt (or 9.8 percent of outstanding debt) is currently delinquent, with $824 billion seriously delinquent (at least 90 days late). Meanwhile about 2.2 percent of mortgage balances transitioned into delinquency during the fourth quarter, resuming the recent trend of reductions in this measure. However, delinquency rates remain elevated compared to historical figures.

"While we continue to see improvements in the delinquent balances and delinquency transition rates this quarter, there has been a noticeable decrease in the rate of improvement compared to 2009-2010," said Andrew Haughwout, vice president and economist at the New York Fed. "Overall it appears that delinquency rates are stabilizing at levels that remain significantly higher than pre-crisis levels."
Featured Market Discussion
A recap of the featured comments from the Live Discussion on the MBS Live Dashboard.
Jeff Anderson  :  "Local BofA telling clients up to 90 days for appointment to TALK about a refi."
Robin Baran  :  "boa more and more limited on what they can do. No cash out refi's, they are not doing any more FNMA loans (except harp). Tradelines are actually 4 and first time buyers MUST show housing payments for at least 12 months if less than 20% down. So much for college kids living at home and saving a few bucks to buy a house. If current customer calls in for refi, they are told they will get a call back in 60-90 days! "
Timothy Baron  :  "Yeah I've seen that overlay several places. Minimum 3 tradelines open at least 12 months. Conv and FHA."
Matt Hodges  :  "even if au approve/eligible, some lenders have that overlay"
Joe Ridings  :  "Just had a customer come from BOA to me. BOA couldnt do his loan because he didnt have 3 tradelines and his dti is over 41%. he is an 800 score borower. gonna have to start camping out at boa parking lot if thats what they have to offer. "
John Paul Mulchay  :  "Wow. 69bps better on FHA 5/1"
John Paul Mulchay  :  "REPRICE: 1:13 PM - Sun West Mortgage Better"
Matt Hodges  :  "without referencing the program, Buffett spoke about bulk purchases of real estate this morning on CNBC as a great option for rate of return"
Matthew Graham  :  "RTRS - U.S. HOUSING REGULATOR SAYS IT IS NOW ACCEPTING APPLICATIONS FROM PRE-QUALIFIED INVESTORS FOR FIRST PILOT ON BULK SALES OF REAL-ESTATE OWNED PROPERTIES "
Matthew Graham  :  "103-22 maybe? I don't know... The +0-05 is deceptive as that's basically where we opened (as MD also points out)"
Matthew Graham  :  "Holding on to something slightly better than opening price levels would be ideal, although a "stability reprice" isn't out of the question among an excruciatingly small minority of lenders."
Mike Drews  :  "mbs haven't really improved since open..like treasuries have"
Brandon Blue  :  "Good morning MG, where do we need to get to for a potential positive reprice?"
Matthew Graham  :  "RTRS- CORRECTED-GERMANY'S MERKEL JUST WINS 2ND GREEK BAILOUT VOTE WITHOUT RELYING ON OPPOSITION VOTES-PARL'T SOURCE "
Matthew Graham  :  "full report and lots of charts here: http://www.newyorkfed.org/research/national_economy/householdcredit/DistrictReport_Q42011.pdf "
Matthew Graham  :  "also in the report: "Mortgage originations, which we measure as appearances of new mortgages on consumer credit reports, reversed their two-quarter decline and rose to $404 billion. Mortgage originations in 2011Q4 were still 13% below their 2010Q4 level. For 2011 as a whole, mortgage originations totaled $1.55 trillion, about 3.1% below the 2010 level and the lowest level of originations since 2000.""
Andy Pada  :  "Hard time breaking through 103-19"
Victor Burek  :  "German parliment approves bill for second Greece bailout"
John Rodgers  :  "BOA knee jerked right out of the market"
Jason Wilborn  :  "Wells had good fulfillment, HARP 2.0 rates are good"
John Rodgers  :  "honestly WF has it right, by 2014 they will be looking grand."
Andrew Horowitz  :  "interesting Wells now sits at 30.1% market share of mortgage originations Chase and B of A combined are not that high"