MBS RECAP: 3/5/2012

This is one of those reprice alerts that will only apply to a very small sub-set of lenders who are characteristically the first to reprice for the worse on moves lower in MBS Prices. Even then, current price levels are just barely on the edge of risky territory for such lenders (MBS down 3 ticks on the day at 103-12).

The culprit looks to be the 3pm Treasury close. A low volume and somewhat illiquid environment have exacerbated the negativity to a small extent and 10yr yields are testing their AM highs just over 2%. If they bounce in the after hours trade (3pm-5pm), MBS may well go no lower, and reprices would be increasingly unlikely.

Bottom line, watch the 103-13 level in Fannie 3.5's. We'd guess that any of the "early crowd" that might reprice would do it between there and 103-10, with more lenders getting involved under 103-10. Not a panic situation at all... Just a heads up that you might see one or two.

HOPE NOW, the voluntary, private sector alliance of mortgage servicers, investors, mortgage insurers and non-profit counselors, released its January 2012 loan modification data, which shows that an estimated 74,000 homeowners received permanent, affordable loan modifications from mortgage servicers in the first month of the year.

The reported data for January shows that mortgage servicers completed approximately 56,000 proprietary loan modifications for homeowners and 17,992 Home Affordable Modification Program (HAMP) modifications (as reported by US Treasury Department).

(Reuters) - Greek Finance Minister Evangelos Venizelos warned Athens' private creditors on Monday not to hold out but take the bond swap on which a second bailout of the debt-ridden country depends because it was the best deal they would get.

Venizelos told Reuters in an interview three days before the exchange offer expires, that the terms hammered out last month after months of tortuous negotiations were favourable and Greece would not hesitate to activate laws forcing losses on bond holders who did not willingly sign up.

"Whoever thinks that they will hold out and be paid in full, is mistaken," he said. "We are ready to activate CACs (collective action clause to enforce losses) if needed," he said.