Let me start off by saying that I do not believe the rumor that the International Olympic Committee has taken back skier Lindsey Vonn's gold medal, and instead awarded it to President Barack Obama, announcing that no one has ever gone downhill faster than he has.

While we're talking about going downhill, here's one list on which you don't want to be. The Federal Housing Administration's Mortgagee Review Board (MRB) announced dozens of administrative actions against FHA-approved lenders who failed to meet its requirements. This year alone, the MRB took nearly 1,500 administrative sanctions against lenders, including reprimands, probations, suspensions, withdrawals of approval, and civil money penalties.

(If anyone out there knows of a more "user friendly" list, like in Excel, please let me know.) FHASanctions.

On the positive side, the folks at HUD are presenting a free Webinar (why should webinar be capitalized and not seminar?) on August 11th on better understanding the FHA Refinance general guidelines. "Presenters will discuss Streamline Refinances, Cash-Out, & Rate & Term Refinances. Basic calculations will be included in this training for anyone wanting to improve their knowledge of FHA refinances." One needs to register ahead of time, at no cost: HUDWeb

 

Lastly, HUD announced that $79 million is available "for a broad range of housing counseling programs to help families find and preserve housing.  The available funding is an increase of $21 million, or 27%, over last year.  These grants will be awarded competitively to hundreds of HUD-approved counseling agencies and State Housing Finance Agencies that offer a variety of services including how to avoid foreclosure, how to purchase or rent a home, how to improve credit scores, and how to qualify for a reverse mortgage. The primary benefits of the program are to expand homeownership opportunities, improve access to affordable housing and preserve homeownership."

What will you be doing August 17th, besides commemorating the conclusion of Woodstock in 1969? The Obama administration, or Congress - take your pick - will be hosting a conference at the Treasury Department on that day which will address the future of Freddie & Fannie. The wheels of government usually grind slowly, and this will no exception. The financial overhaul signed by President Barack Obama didn't address their future, despite protests that it was incomplete without a plan for the two companies. The Obama administration has said it wants to wait until next year to determine their future, and the public comment period just ended for the Treasury's study on them.

 

Builder Magazine came out with its 2009 builder rankings, based on closings and revenue. (I am glad that People Magazine doesn't take that long to come out with its "Sexiest Celebrity" list.) The top 10 builders are:  D.R. Horton, Pulte Homes, Lennar Corporation, NVR, KB Home, Centex Corporation, Hovnanian Enterprises, Habitat for Humanity International, The Ryland Group and Beazer Homes USA. The magazine noted that a D.R. Horton-built house averaged $213,400, a Pulte Homes structure ran $258,000 and a home built by Habitat for Humanity International cost $60,000. "Despite the range in costs, Habitat for Humanity joined the multi-billion dollar revenue generating building giants in the top 10 of the 2009 Builder 100 list in the eighth position." In 2009 the number of new home starts dropped below one million units for the second time since 1945 and single-family units were the lowest since 1959. D.R. Horton had a 33% decrease in revenue and 24% decrease in closings compared to 2008.

 

We aren't to the point yet where all major lending announcements come from the government, but maybe we're moving closer... Fannie Mae issued an Announcement titled "Reporting and Validation of Mortgage Insurance Coverage". "The Announcement requires Fannie Mae seller/servicers, after 10/1, to direct mortgage insurers (MIs) to provide Fannie Mae with information concerning its insured loans, and provides a form that may be used for this purpose. Additionally, it describes the pre-loan-delivery mortgage insurance validation efforts currently under development that are related to this new requirement and part of a broader effort to improve the quality of Fannie Mae's loan-level data. FannieGuide

Fifth Third Bank is doing some job shuffling in various departments. The intent apparently is to combine all mortgage operations with all the other bank non-mortgage operations. In that area: FifthThird

 

The Census Bureau reported the home ownership and vacancy rates for Q2 2010. (That was pretty fast!)  As you'd expect, the homeownership rate declined to 66.9% - the lowest level since 1999 - removing the impact of the changing demographics and in mortgage underwriting that we saw in the 2000's. The rental vacancy rate was steady at 10.6%. Censusnumbers

Remember when there was a lot of hand wringing as the government's MBS purchase plan was coming to an end? Everyone should be happy to know that the yield spread between MBS's and Treasury securities is virtually unchanged since then. The private sector really has stepped up and been buying MBS's while Treasury yields have improved nearly 1%. As Paul Jacob (Banc of Manhattan CA) points out, "declining interest rate volatility, a friendly prepayment environment and widespread expectations that the Fed's "extended period" could run quite a bit longer" have all helped, but in addition "demand for MBS from domestic money managers and depositories as well as overseas investors has been voracious."

 

Monday rates didn't do much, although they did go up slightly. The 2-yr Note sale attracted bids worth 3.33 times the amount on offer, well above the historical average of 2.38 times, although primary dealers bought a big chunk of it at a yield of around .67%. The stock market wallowed around, we had a decent 2-yr sale, but the better-than-expected home price gains in May were offset by a larger than expected decline in Consumer Confidence in July. Fortunately for mortgages, there continues to be strong demand with not enough supply. Supply has been averaging around $2 billion per day ($1.8 yesterday), while money managers, leveraged, real money, and overseas all want it and more. Many borrowers with above market loan rates are not able to refinance in this record low mortgage rate environment due to the tight credit conditions and underwater mortgages. Many feel that the only risk of higher coupons prepaying is if the government makes it easier for them to do so.

 

So let's look at all the news yesterday: "Financial Overhaul Includes $1 Billion in Mortgage Aid for Unemployed", "Home Vacancies Rise as U.S. Ownership Falls to Lowest in Decade", "Mortgage Delinquencies Fall in June, Still Near Record Highs", "Consumer Confidence Falls", "Housing Price Index shows improvement". It is an interesting combination - but certainly nothing that would really point to higher or lower rates. So by the end of the day the 10-yr closed around 3.04% and mortgage prices ended worse by about .125. And today, we start the day with everything at about the same level.

The MBA application numbers came out this morning showing mortgage loan application volume decreased 4.4%, with the refinance index -5.9% and the purchase index +2.0%.

 

This morning we had June Durable Goods, expected +1.0%, were -1.0%, ex-Transportation was -.6% - both weaker than expected. The numbers have pushed stocks down, and bonds higher (thus reducing rates) slightly. At 2PM EST the Fed releases its Beige Book with anecdotes regarding economic activity in the various districts in preparation for the August 10 FOMC meeting, and the Treasury will auction $37 billion in 5-year notes. Mortgage rates are pretty much unchanged from Monday's close and the 10-yr is at 3.04%.