Mortgage News March 3rd,2008 - mortgagesfirst.com

Do Down Payment Assistance Programs exist? Loan agents will know more about this than I could ever put in a few sentences, but a true DAP is like Nehemiah where they “gift” the borrower all the down payment funds in return for charging the seller a fee. These work almost exclusively with FHA loans. However, DAP’s are often lumped in with “community 2^nd” types of programs, whereby various cities and counties across the US offer a wide range of products that are virtually impossible to track from a corporate stand point, since they “run in and out of money” all year long. Here in California, for example, one of the most popular is the CHDAP which is a CHFA 3% “silent 2^nd” that works out very well for the borrower. Or the ACCESS purchase money 2^nd program, which is administered by the National Homeownership Fund. There are several sites on the web such as http://www.downpaymentsolutions.com/.

Thornburg Mortgage, in a Bloomberg story today, said it hasn't met a fresh round of margin calls that total $270 million. Thornburg “is working to meet all of its outstanding margin calls within a time frame acceptable to its lenders by either selling portfolio securities or raising additional debt or equity capital.” Rumors sprang up last week (denied by management) about their ability to fund loans in a timely manner.

FNMA “updated” pricing in a new Loan-Level Price Adjustment Matrix and Adverse Market Delivery Charge schedule. Their LLPAs are deducted from the purchase proceeds, but Fannie has imposed an adverse market delivery charge of 0.25 percent on all loans which will no doubt be passed along soon enough. Some LLPAs are based on a combination of loan features and LTV, maturity (loans with 40 year terms will require an 0.125 percent adjustment), while cash-out refinance adjustments will range from 0 to 0.75%. They increased hits for investment properties, manufactured homes, credit scores to varying degrees below 680, mortgages with subordinate financing, all MyCommunityMortgage loans, and on Flexible & Expanded Mortgages. In an attempt to preserve their capital, Fannie Mae will be concentrating on securitizing mortgages for sale to other investors rather than investing in mortgages itself because securitizing requires less capital.

Effective immediately, EverBank will no longer offer any lending programs with Stated Income documentation (SIVA or SISA). The EverBank Easy Step Plus and EverBank Conforming Alt A will be discontinued altogether while the SIVA documentation option will be removed from the EverBank Preferred.

Treasury prices improved (and rates fell) on Friday due to the continued “feeling” that we’re in a recession – whether or not the government statistics support it, most people believe that we are in a slowdown. Odds favor another cut on March 18^th, with perhaps a total of .5% by the April 29/30 meeting. Mortgage prices lagged the improvement in the Treasury market, however, due to a) early pay-off fears for existing mortgages, and b) continued nervousness about the credit quality of mortgages in general. Unfortunately today, although the 10-yr is down to the high 3.50’s, mortgage prices are worse from Friday afternoon by roughly .250.

This week is a full week of economic news. Today we have the ISM manufacturing index for February, which measures manufacturer sentiment and is expected to show a decline from January’s 50.7 to 49.0 last month. (A reading below 50.0 is a recessionary indicator.) Wednesday we’ll have the revised Productivity Index for the 4^th quarter, and also January’s Factory Orders. The Fed Beige Book will be posted Wednesday afternoon, detailing economic activity throughout the country by region. The biggest news of the week comes Friday morning when the Labor Department will release February’s Employment report at 8:30AM EST. Current forecasts are calling for 0.1% increase in the unemployment rate to 5.0% and approximately 40,000 new jobs added. In addition to these announcements, there are fifteen scheduled speaking engagements by Fed officials, including an appearance by Fed Chairman Bernanke to discuss mortgage foreclosures.

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