MBS RECAP: Wild Ride For Markets, Mortgages Fare Well

MBS Pricing Snapshot

Here's one of those "more of a heads up than an out-and-out reprice alert" alerts. Granted it was spiky and brief, but Fannie 3.0s did hit 105-08 earlier today and now just hit 105-00 (though they've bounced a tick or three higher since then). That's a quarter of a point of movement off the highs and something that would cause some concern on a normal day of movement.

Of course, this isn't a normal day of movement, and even at 105-03, Fannie 3.0s are still up 7 ticks on the day. It looks like bond markets are bouncing and holding their ground here, but just something to be aware of if you're on any sort of "to lock or not to lock" fence heading into the weekend. Depending on the lender (and there are only a few who do this) the "pipeline control reprice" is probably the bigger consideration.

NEW YORK - Attorney General Eric T Schneiderman today warned Wells Fargo to reverse a new policy that temporarily suspends review of mortgage relief applications from New York homeowners, many of whom are still struggling to recover in the aftermath of Hurricane Sandy. In a letter to Wells Fargo, Attorney General Schneiderman warned the bank that its directive to suspend “all home preservation reviews and decisions” across the Northeast “in order to await further instructions from FEMA” likely violates the terms of the National Mortgage Settlement. That historic agreement, reached in March between 49 State Attorneys General, the Department of Justice, and the nation’s five largest mortgage servicing companies including Wells Fargo, mandates lender compliance with a number of servicing reforms, including swift review and response timelines for borrowers seeking mortgage modifications and other forms of relief.

Attorney General Schneiderman informed Wells Fargo that his office will not allow the bank to use the devastation inflicted by Sandy to evade their obligations under the settlement. The Attorney General’s letter to the Chairman, President and CEO of Wells Fargo today demands the bank immediately rescind this policy and comply with its obligations without interruption.

“Wells Fargo is not excused from any of its obligations under the National Mortgage Settlement or under New York law as a result of Hurricane Sandy,” wrote Attorney General Schneiderman. “My office will aggressively pursue any loan servicing company that uses this tragic event as an excuse to violate loss mitigation decision timelines.”

Equities markets have been tanking from the get-go this morning as reasons abound to move in a "risk-off" direction. But "forced selling" is perhaps the biggest driver at the moment, and this looks all the more likely considering the huge bounce back that's unfolded over the past 5 minutes.

Forget the morning data. It's not having an impact at the moment. The Euro tanked along with equities most severely heading into the 10am hour. It took Treasuries and MBS a while to react , but forced buying there complimented the forced selling in stocks. European concerns are a factor, as are the escalating geopolitical tensions in the Mid-East.

All of the above carried Treasuries to their lowest yields in over a month and MBS prices to their best levels of the week, as high as 105-08 on Fannie 3.0s. We've since fallen back to 105-03, which is still 7 ticks higher on the day. Several lenders repriced for the better on the positivity. More may follow if we hold these gains.

Stocks are whipsawing like nobody's business, ostensibly in response or anticipation of headlines out of Washington after the President met with Congressional leaders on the Fiscal Cliff. We have no new news on that front, yet, but will update you when it hits. For now, S&P futures are off their 1340 lows, all the way up to 1352 in a few short minutes.

Volatility reigns supreme for stocks and bond markets are doing their best to make smaller iterations of those swings.