Fed continues to provide market liquidity

Fed Purchases $17.050 Billion Agency MBS. Over Half of Allocated Funds Now Used

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The Federal Reserve today reported on their weekly purchases of agency mortgage-backed securities (MBS). In the four trading days between July 2 and July 8, the Federal Reserve purchased a gross of $23.250 billion Agency MBS. During this period the Federal Reserve sold $6.2billion agency MBS, which brought their weekly net purchases to a total of $17.050 billion.

Since the inception of the program the Federal Reserve has spent $638.61 billion, 51% of the $1.25 trillion that was allocated.

The goal of the Federal Reserve's agency MBS program is to provide support to mortgage and housing markets and to foster improved conditions in financial markets more generally. Only fixed-rate agency MBS securities guaranteed by Fannie Mae, Freddie Mac and Ginnie Mae are eligible assets for the program. The program includes, but is not limited to, 30-year, 20-year and 15-year securities of these issuers.

Of the net $17.050 billion weekly purchases:

$900 million was used to buy 30 yr 4.0 MBS coupons. 5.28% of total weekly purchases.

$6.850 billion was used to buy 30 yr 4.5 MBS coupons. 40.18% of total weekly purchases.

$6.750 billion was used to buy 30 yr 5.0 MBS coupons. 39.59% of total weekly purchases.

$500 million was used to buy 30 yr 5.5 MBS coupons. 2.93% of total weekly purchases.

$1.450 billion was used to buy 15 yr 4.0 MBS coupons. 8.50% of total weekly purchases.

$200 million was used to buy 15 year 4.5 MBS coupons. 1.17% of total weekly purchases.

The Fed's daily average of purchases was $4.263 billion per day, down from the previous week's average of $4.620 per day. Originator supply between July 2 and July 8 averaged just under $2 billion per day, which implies the Federal Reserve continues to provide more than enough liquidity to loan originators looking to sell their loans.

Here is a chart illustrating the evolution of the Federal Reserve's Agency MBS Purchase Program. Notice that more recently Fed MBS purchases have declined relative to their market participation during March and April. This reflects the recent rise in mortgage rates and the slowdown in application activity in the mortgage market.

Unemployment rate for Adult Men is 10%

June Employment Data Worse than Expected: 467k Jobs Lost. 9.5% Unemployment Rate

by Patrick McGee

Posted Jul 02 2009, 08:44 AM

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Forecasts were much too optimistic for the June employment numbers. The labor market lost 467,000 jobs last month, pushing the unemployment rate up one-tenth to 9.5%, its highest level in 26 years. Analysts had been looking for just 325,000 lost jobs, following a loss of 322,000 in May.

“Job losses were widespread across the major industry sectors, with large declines occurring in manufacturing, professional and business services, and construction,” said the Bureau of Labor Statistics.

Since the recession began in December 2007, the unemployment rate has surged by 4.6 percentage points, adding 7.2 million people to the unemployed list.

The unemployment rate for adult men is 10.0%, for adult women it is 7.6%. Teenagers have an unemployment rate of 24%. The jobless rate for whites is 8.7%, for blacks it is 14.7%, for Hispanics it is 12.2% ― all were little changed from May.

Job Losses by Sector:

• Goods-producing: -223k
• Construction: -79k
• Manufacturing: -136k

• Service-Sector: -244k
• Retail Trade: -21k
• Professional Services: -118k
• Education/Healthcare: +34k
• Leisure/Hospitality: -18k
• Government -52k

Analyst reactions were aptly pessimistic. TD Strategist Millan Mulraine called the report "unequivocally weak" and "very ugly".

"Not only does it suggest that the pace of job losses in the U.S. remains very high, it bucks the trend of four consecutive months of improvement in the pace of job losses," he said. "Moreover, with conditions in the U.S. economy continuing to be very weak, there is little to suggest that a turnaround in U.S. labour market conditions is on the horizon."

Elsewhere in the report, average weekly hours hit a cycle low at 33.0 hours, and wage growth was nonexistent during the month but up 2.7% compared to last year.

First Time Homebuyer Subscription is Available

Please visit my home page http://www.prestonware.com and sign up for the First Time Homebuyer Series. I have created a series of 8 emails with video that explain the process of getting ready to go buy a home. Issues addressed include topics such as building credit, using alternate credit, repairing credit and settling debts. The series also describes the steps we take in determining how much house to buy.

Once this series is complete I stongly suggest the nest series which discusses the mortgage process. This series details what to expect once the loan is in process and the steps we take as your loan travels through the bank. Key episodes include, "The three advantages a mortgage broker has over a bank" and also the importance of a detailed Good Faith estimate.

If you know that you have bad credit or too many debts and collections you may want to view the Debt series which details the steps you take in eliminating debts.

Bank of America Accused of Ruthless Practises

Bank of America accused of anti-consumer practices
July 1st, 2009 Posted in Bank of America
NEW YORK (Reuters) - Consumer and labor groups demanded Bank of America Corp and other lenders reform their sales practices so that workers under pressure to meet sales quotas do not saddle customers with costly and unnecessary products.
The whistleblowing campaign was announced Tuesday as the U.S. Treasury Department unveiled legislation to create a Consumer Financial Protection Agency, as part of the Obama administration financial regulation overhaul.
People, who said they were former Bank of America employees, alleged that their supervisors drove them to burden consumers with needless debt and fees, to fatten the bank’s earnings and the paychecks of senior executives, and threatened to retaliate if they complained. Some complained their salaries had been too low and that they had to hit quotas to earn needed bonuses.
“This is the kind of information that really needs to get out,” said Representative Keith Ellison, a Minnesota Democrat who sits on the House Financial Services Committee. “Without a strong whistleblower law, we simply are not doing the things we need to do in order to manage risk properly.”
He suggested that lending standards could be compromised by “the urgency to sell, sell, sell, sell, sell.”
Groups conducting the campaign include the Service Employees International Union, which is trying to organize Bank of America workers; the National Association of Consumer Advocates, and the U.S. Public Interest Research Group.
Bank of America spokeswoman Anne Pace rejected the allegations, saying the SEIU misrepresented the largest U.S. bank’s relationship with its customers and associates.
She said the Charlotte, North Carolina-based bank is “pro-associate and believes that managers are well-equipped to respond to associates’ needs,” and is committed to ensuring that customer fees are “transparent and predictable.”
Christopher Feener, who said he used to work in the bank’s credit card unit, was among the former workers who spoke out.
He complained that the bank regularly violated the Fair Debt Collection Practices Act, and sometimes pushed workers to falsely threaten legal action against customers. He said his team was sometimes pushed to call customers’ neighbors about delinquent accounts, “to embarrass the customer and actually encourage the neighbor to bring over a message.”
Shares of Bank of America rose 5 cents to $13.24 in early afternoon trading on the New York Stock Exchange.
(Reporting by Jonathan Stempel; Editing by Tim Dobbyn)
Excellent reporting! by Rueters

Home Affordable Guidelines Revised

HARP guidelines allow up to 125%-This is a good sign especially in states like Florida where values have dropped considerably. This could be a mute point because the home affordable program offers an appraisal waiver in some cases. Please see my YOUTUBE video on this topic.
http://www.youtube.com/mortgagesUSA123#play/uploads/4/Mgt8rombQ2I

HUD Secretary Shaun Donovan today announced that the Federal Housing Finance Agency has authorized Fannie Mae and Freddie Mac to raise the Home Affordable Refinance Program's (HARP) loan to value (LTV) ceiling from 105% to 125%.
The Home Affordable Refinance Program was designed to assist borrowers who have demonstrated an acceptable payment history on their existing Fannie Mae or Freddie Mac owned mortgage loan. Unfortunately due to rising unemployment levels and increasing foreclosure rates, demand for housing has weakened and property values have continued to decline, which has blocked many borrowers from utilizing HARP.
The expansion of Fannie Mae's and Freddie Mac's LTV guideline aims to expand qualified homeowner's refinance opportunities. The underlying initiative is that lower monthly mortgage payments will raise real household incomes and therefore afford more spending power upon consumers. In a government press releases, Treasury Secretary Tim Geithner stated...
"By expanding refinance eligibility, we can bring relief to more struggling homeowners more quickly. It's a crucial step in our broader efforts to get America's housing market and economy on the path to recovery."
Thus far the effectiveness of the HARP program has faced many barriers. Among these roadblocks: lenders adding underwriting overlays and guideline restrictions, lenders all together not participating in the program, difficulty determining if Fannie Mae/Freddie Mac own your mortgage because of addresses not exactly matching the original note, additional costs because of lender imposed risk based loan level price adjustments (on top of GSE LLPAs), the unwillingness of banks to subordinate second mortgages, reluctant mortgage insurers, and the Home Valuation Code of Conduct.
Kent Mikkola, a mortgage consultant from Roseville, Minnesota says "Overall, it is difficult to obtain a HARP approval. Furthermore, it is even more difficult to find out why a seemingly eligible borrower has been denied"
Since the program was launched on April 1,2009 several updates have been made to counteract these roadblocks, however HARP remains unable to live up to the hype surrounding it. That said, today's announcement, although appreciated, was broadly overlooked by skeptical mortgage professionals. John Rodgers, president of Prime Mortgage Lending in Apex, North Carolina, had this to say:
"It appears that the Obama Administration is aware of the constraints blocking borrowers from lower mortgage payments. Unfortunately, today's update will likely prove ineffective in lowering those barriers. At this point granting appraisal waivers, allowing reduced documentation, and cutting loan level price adjusters appear to be the only way HARP will ever be effective. Otherwise HARP will turn out to be yet another loan program nobody can use, much like like FHA Secure and the Hope for Homeowners program."
Nonetheless, borrowers who are in trouble with their mortgage should find out if they are eligible for a refinance or loan modification. You can do so HERE

The Three Advantages of Using a Mortgage Broker

Speed, Pricing & Service A lot of times I am asked by my customers, "Why don't I just go to the bank directly?"

Pricing: The answer to that question is a discussion of wholesale vs retail prices. When you shop at a store, you are paying retail prices. By definition wholesale prices are lower than retail prices. A mortgage broker has access to wholesale prices of the same bank you are interested in. Also, he or she has the advantage of being able to shop your loan and take advantage of the best pricing in the country. Please see this video http://www.youtube.com/watch?v=WK0z4jzXRTo
The classic analogy is when I am shopping your loan in the middle of winter. If a bank in Ann Arbor Michigan has three feet of snow on their door step most customers won't be able to just jump opn their snow mobile and go get a loan. So what do they do? They broadcast their prices to the rest of the country to a guy like me down here in Florida. I see their rate sheet and say "Wow, they must have three feet of snow right now!" Then I go in and place your loan there and capitalize on the exceptional pricing they are offering to attract business.

Speed: Also when you avoid the slow moving chain of command of a large bank the customer benefits from fewer hands on their file. Every time the file is passed on, there is a delay in explaining unique situations or re-examining certain details. Also there is a greater chance that some detail is miscommunicated and an error will result.

Service: Dealing with myself directly, I am your sole point of contact. There is no re-explaining or calling a long list of possible contacts. Also when I check my list of banks, I always check to see which bank is backed up or which can give me service. I in turn pass this service on to my customers in the form of a smooth and easy process.