Mortgage Pros, Inc.

Holiday Bond Market schedule: NO early close Friday, Full close Monday 7/5/10

Pending Sales of Existing Homes Fell 30% in May, the biggest on record since 2001 and more than the forecasted 14% drop. The decline shows that the industry at the center of the financial crisis remains vulnerable in the absence of government support. NAR chief economist Lawrence Yun said, “Consumers are rational and they rushed to meet the tax credit eligibility deadline in April. The sharp decline in contract signings in May is a natural result with similar low levels of sales activity anticipated in June,” he said. “Surprisingly, though, some local markets such as Portland, Maine, and Jacksonville, Fla., actually experienced an increase in contract signings from a year ago without the tax credit. “Existing-home sales that close in June will remain elevated, but we’ll then see a notable decline for July and August.”
Institute for Supply Management’s manufacturing gauge fell to 56.2 last month from 59.7 in May. The ISM’s production index decreased to 61.4 from 66.6. The new orders measure dropped to 58.5 from 65.7. The employment gauge decreased to 57.8 from 59.8. The measure of export orders declined to 56 from 62.
Jobless Claims increased by 13,000 to 472,000; Continuing claims rose by 43,000 to 4,616,000 from the preceding week’s revised level of 4,573,000.
Treasury Yield Curve Flattest Since October on U.S. Jobs, Factory Reports The extra yield investors demand to hold Treasury 10-year notes over 2-year debt fell to the lowest level since October as an increase in initial jobless claims and slower manufacturing growth raised the risk of deflation.
Greenspan Says U.S. Is Undergoing a `Typical Pause’ in Economic Recovery Former Federal Reserve Chairman Alan Greenspan said the U.S. economic recovery is undergoing a “typical pause” that will be shaped by the performance of stock markets.
Growth Slows Across U.S. Economy. A slew of data pointed to slowing growth throughout the economy, from slower manufacturing expansion to elevated claims for jobless benefits and declines in home construction and pending sales.

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Economic Indicator News Release Calendar for the weeks ahead
Thursday, July 1
United States
Date Value Consensus Forecast Previous
8:30 AM Jobless Claims 6/26/2010 450,000 455,000 457,000
10:00 AM Construction Spending (C30) May -0.8% -1.4% 2.7%
10:00 AM Case-Shiller® Home Price Indexes 2010Q1 n/a n/a -2.5
10:00 AM ISM Manufacturing Index June 59.0 59.3 59.7
10:00 AM Pending Home Sales May 98.4 n/a 110.9

Friday, July 2
United States
Date Value Consensus Forecast Previous
8:30 AM Employment Situation June -110,000 -155,000 431,000
9:40 AM ECRI Future Inflation Gauge-North America June n/a n/a -2.8%
10:00 AM Factory Orders (M3) May -0.5% -1.5% 1.2%
10:30 AM ECRI Weekly Leading Index 6/25/2010 n/a n/a 122.9

Tuesday, July 6
United States
Date Value Consensus Forecast Previous
7:45 AM Chain Store Sales Snapshot 7/3/2010 n/a n/a -0.5%
10:00 AM ISM Nonmanufacturing Index June 55.5 n/a 55.4
5:00 PM ABC News/Washington Post Consumer Comfort Index 7/4/2010 n/a n/a -43

Wednesday, July 7
United States
Date Value Consensus Forecast Previous
7:00 AM MBA Mortgage Applications Survey 7/2/2010 n/a n/a 621.2
7:30 AM Challenger Report June n/a n/a 38,810

Thursday, July 8
United States
Date Value Consensus Forecast Previous
Chain Store Sales
June n/a n/a 2.5%
8:30 AM Jobless Claims 7/3/2010 n/a n/a 457,000
3:00 PM Consumer Credit (G19) May $0.0 bil n/a $1.0 bil

Friday, July 9
United States
Date Value Consensus Forecast Previous
10:00 AM Wholesale Trade (MWTR) May 0.6% n/a 0.4%
10:30 AM ECRI Weekly Leading Index 7/2/2010 n/a n/a 122.9

Tuesday, July 13
United States
Date Value Consensus Forecast Previous
7:30 AM NFIB Small Business Economic Trends June n/a n/a 92.2
7:45 AM Chain Store Sales Snapshot 7/10/2010 n/a n/a -0.5%
8:30 AM International Trade (FT900) May n/a n/a -$40.3 bil
10:00 AM Job Openings and Labor Turnover Survey May n/a n/a 24.4%
2:00 PM Treasury Budget* June n/a n/a -$135.9 bil
5:00 PM ABC News/Washington Post Consumer Comfort Index 7/11/2010 n/a n/a -43

Wednesday, July 14
United States
Date Value Consensus Forecast Previous
7:00 AM MBA Mortgage Applications Survey 7/9/2010 n/a n/a 621.2
8:30 AM Import and Export Prices June n/a n/a -0.6%
8:30 AM Retail Sales June n/a n/a -1.2%
10:00 AM Business Inventories (MTIS) May n/a n/a 0.4%
2:00 PM FOMC Minutes
June n/a n/a N/A

Thursday, July 15
United States
Date Value Consensus Forecast Previous
8:30 AM Jobless Claims 7/10/2010 n/a n/a 457,000
8:30 AM Manufacturers Alliance/MAPI Survey 2010Q2 n/a n/a 78%
8:30 AM NY Empire State Manufacturing Survey July n/a n/a 19.6
8:30 AM Producer Price Index June n/a n/a -0.3%
9:15 AM Industrial Production June n/a n/a 1.2%
10:00 AM Philadelphia Fed Survey July n/a n/a 8.0

Friday, July 16
United States
Date Value Consensus Forecast Previous
8:30 AM Consumer Price Index June n/a n/a -0.2%
9:00 AM Treasury International Capital Flows May n/a n/a $83.0 bil
10:00 AM University of Michigan Consumer Sentiment Survey July n/a n/a 76.0
10:30 AM ECRI Weekly Leading Index 7/9/2010 n/a n/a 122.9

Sunday, July 18
United States
Date Value Consensus Forecast Previous
10:00 AM Risk of Recession June n/a n/a 23%

Monday, July 19
United States
Date Value Consensus Forecast Previous
10:00 AM NAHB Housing Market Index July n/a n/a 17

Tuesday, July 20
United States
Date Value Consensus Forecast Previous
7:45 AM Chain Store Sales Snapshot 7/17/2010 n/a n/a -0.5%
8:30 AM New Residential Construction (C20) June n/a n/a 0.593 mil
10:00 AM Regional and State Employment June n/a n/a N/A
5:00 PM ABC News/Washington Post Consumer Comfort Index 7/18/2010 n/a n/a -43

Wednesday, July 21
United States
Date Value Consensus Forecast Previous
7:00 AM MBA Mortgage Applications Survey 7/16/2010 n/a n/a 621.2

Thursday, July 22
United States
Date Value Consensus Forecast Previous
8:30 AM Jobless Claims 7/17/2010 n/a n/a 457,000
10:00 AM Existing-Home Sales June n/a n/a 5.66 mil
10:00 AM The Conference Board Leading Indicators June n/a n/a 0.4%
10:00 AM FHFA Purchase-Only House Price Index May n/a -2.9% -1.5%

Friday, July 23
United States
Date Value Consensus Forecast Previous
10:00 AM Mass Layoffs June n/a n/a 1,412
10:30 AM ECRI Weekly Leading Index 7/16/2010 n/a n/a 122.9

Monday, July 26
United States
Date Value Consensus Forecast Previous
8:30 AM Chicago Fed National Activity Index June n/a n/a 0.21
10:00 AM New-Home Sales (C25) June n/a n/a 300,000

Tuesday, July 27
United States
Date Value Consensus Forecast Previous
7:45 AM Chain Store Sales Snapshot 7/24/2010 n/a n/a -0.5%
9:00 AM S&P/Case-Shiller® Home Price Indexes May n/a n/a 2.3
10:00 AM The Conference Board Consumer Confidence July n/a n/a 63.3
10:00 AM Richmond Fed Manufacturing Survey July n/a n/a 23
5:00 PM ABC News/Washington Post Consumer Comfort Index 7/25/2010 n/a n/a -43

Wednesday, July 28
United States
Date Value Consensus Forecast Previous
7:00 AM MBA Mortgage Applications Survey 7/23/2010 n/a n/a 621.2
8:30 AM Durable Goods (Advance) June n/a n/a -1.1%
2:00 PM Beige Book June

Thursday, July 29
United States
Date Value Consensus Forecast Previous
8:30 AM Jobless Claims 7/24/2010 n/a n/a 457,000
11:00 AM Kansas City Fed Manufacturing Survey July n/a n/a 3

Friday, July 30
United States
Date Value Consensus Forecast Previous
8:30 AM Employment Cost Index 2010Q2 n/a n/a 0.6%
8:30 AM GDP 2010Q2 n/a n/a 2.7%
8:30 AM ISM – NY Report July n/a n/a 449.3 index
9:45 AM ISM-Chicago July n/a n/a 59.7
10:00 AM University of Michigan Consumer Sentiment Survey July n/a n/a 76.0
10:30 AM ECRI Weekly Leading Index 7/23/2010 n/a n/a 122.9

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The MBA Weekly Mortgage Applications Survey: The Market Composite Index increased 8.8%, Refinance Index increased 12.6%, and Purchase Index decreased 3.3%. “Amid continuing financial market volatility, mortgage rates dropped again last week, with rates on 15-year loans reaching a record low for the MBA survey. Refinance applications jumped in response, but remain at about half the level seen in the spring of 2009,” said Michael Fratantoni, MBA’s Vice President of Research and Economics. “Purchase applications declined for the seventh time in the last eight weeks, keeping the purchase index near 13-year lows.” The refinance share of mortgage activity increased to 76.8% of total applications from 73.8%, the highest refinance share since April 2009, and the ARM share of activity decreased to 4.7% from 4.9%. The average 30-year rate decreased to 4.67% from 4.75%, and the average 15-year rate decreased to 4.06% from 4.19%.

ADP Employment Report: Private-sector jobs in the U.S. increased by 13,000 in June, the fifth consecutive monthly gain. However, over these five months the increases have averaged a modest 34,000. Recent ADP Report data suggest that, following steady improvement through April, private employment may have decelerated heading into the summer. The BLS Friday will probably report June total payrolls dropped by 110,000, following a jump of 431,000 in May, and the unemployment rate is projected to edge up to 9.8% from 9.7%, according to economists surveyed.
Institute for Supply Management-Chicago Inc. Business Barometer fell to 59.1 in June, the Ninth Month in expansion territory above 50. The employment index climbed to 54.2 from 49.2 in May, and the production gauge rose to 64.2, the highest level since February, from 61. The gauge of new orders decreased to 59.1 from 62.7. The index of backlogs fell to 50.7 from 52.7. The gauge of inventories dropped to 46.5 from 56.4, which was the highest level since November 2006.
Treasury Two-Year Yield Advances From Record Low on European Bank Optimism Treasury two-year note yields rose from a record low as banks sought less cash from the European Central Bank than economists forecast in a sign the financial institutions are stronger than investors had estimated. Yesterday, fears about the pace of global growth hit financial markets hard, with stocks sliding and investors rushing to the safety of the dollar and U.S. government bonds. The Dow industrials fell 265.87 points, or 2.62%, and the S&P 500 fell 33.20 points, or 3.1%, to its lowest closing level of the year. The benchmark 10-year Treasury yield fell to its lowest level since April 2009, while the 30-year bond’s yield fell below 4% to its lowest point since October 2009 and the two-year yield fell to a record low.
Realty Trac: Foreclosure Sales Account for 31% of All Residential Sales and Sell at 27% Discount as Supply Grows. A total of 232,959 homes sold in 1Q10 had received a default or auction notice or were seized by banks, down 14% from the fourth quarter and 33%. The average price of a distressed property was $171,971. As lenders have begun repossessing homes at record levels over the first half of 2010, it will be interesting to watch how they will manage the inventory levels of distressed properties on the market in order to prevent more dramatic price deterioration.”
Mortgages Face New Rules. Some Worry About Higher Costs, Fewer Choices for Borrowers. The Dodd-Frank financial-regulatory overhaul bill is expected to pass the House this week, Another key provision of the bill tries to make compensation of mortgage brokers and loan officers more transparent. It bans any sort of payment based on steering the consumer to a particular type of loan or rate. Appraisers may get some help too as the bill stipulates that lenders must compensate appraisers “at a rate that is customary and reasonable.” The legislation includes $1 billion to establish a program that would offer short-term loans to unemployed homeowners at risk of foreclosure. The bill also provides an additional $1 billion in funding for the Neighborhood Stabilization Program, which helps local organizations buy and repair foreclosed and vacant homes.
House votes to extend homebuyer credit 3 months, which would only apply to people who signed purchase agreements by April 30, and now It now goes to the Senate.
What Finance Reform Means for Mortgage Pay. Originators can be paid only by base salary or by percentage of the loan amount, or from a bonus if the employer chooses, and can’t be paid based on the type of loan. Origination fees may be capped at 3%, and consumers can decide to pay those fees up front or have them built into the interest rate. Before, borrowers sometimes had to pay both upfront and the fees embedded into the interest rate. The bill will also require lenders to retain a 5% stake in risky loans, and will be exempt from retention requirement for require rigorous verification.
MBA’s 2009 Mortgage Bankers Production Survey: Production Profits Rebounded in 2009. Independent mortgage bankers and subsidiaries made an average profit of $1,135 on each loan they originated in 2009, compared to $305 per loan in 2008. The survey said the increase was driven by a drop in total loan production expenses to $3,685 per loan in 2009 from $4,717 per loan in 2008. Total loan production income dropped slightly to $4,820 per loan in 2009 from $5,023 per loan in 2008. The average profit rose to 61.3 basis points in 2009 from 15.4 basis points in 2008, but differed widely by company type. Profits for mortgage subsidiaries of banks and thrifts averaged 79.5 basis points, but only 54.9 basis points for independent mortgage companies.

Posted in MORTGAGE NEWS, THE FED | No Comments »

Personal Income Rose 0.4% in May, Consumer Spending Grew 0.2%. The savings rate increased to 4 percent last month, the highest level in eight months. Wage income grew 0.5% for the second consecutive month. The report showed inflation was stabilizing. The inflation gauge tied to spending patterns increased 1.9 percent from May 2009 after a 2 percent increase in the 12 months through April.
Chicago Fed National Activity Index fell to 0.21 in May from a downwardly revised 0.25 in April (previously 0.29), consistent with an economy in the early stages of a tepid and still-fragile recovery. Moreover, the index is consistent with subdued inflation.
Treasury 10-Year Yield Drops to Lowest Since 2009 on G-20’s Deficit Stance Treasuries rallied, pushing the yield on the 10-year note to the lowest level since April 2009, on concern the economic recovery will remain slow. Mortgage securities backed by 5.5% are widening on Fed announcement they will begin coupon swap program tomorrow.
Group of 20 Responds to European Debt Crisis With Deficit-Cutting Target Group of 20 leaders responded to the European debt crisis with deficit-reduction targets and agreed to pursue higher capital requirements for banks once economic recoveries take hold.
New York Fed Releases Statement Regarding Timely Settlement of Federal Reserve’s Agency Mortgage-Backed Security Purchases: The Fed will start the trades as soon as tomorrow and doesn’t expect to do more than $9.2 billion of the swaps, the amount of its unsettled Fannie Mae 5.5 percent bond trades. The Desk plans to swap unsettled Fannie Mae 30-year 5.5 percent coupon securities (Fannie Mae 5.5) for other agency MBS that are more readily available for settlement. The operations will begin on or around Tuesday, June 29, will be conducted as expeditiously as market conditions allow, and are not expected to exceed the unsettled amount of $9.2 billion in the Fannie Mae 5.5. In addition, the Desk may continue to arrange dollar roll transactions as needed to facilitate settlement. For more details on agency MBS purchase operations, see the program’s frequently asked questions.
MBA Responds to Conference Committee Agreement on Risk Retention, Mortgage Underwriting and Appraisals. “We believe the progress that the conferees have made on risk retention and mortgage underwriting and home appraisals reflect an improved shift from what could have been much more harmful legislation,” said MBA Chairman Robert E. Story, Jr., CMB. “Mortgage lending is going to change as a result of this legislation. There will be increased costs associated and new regulatory burdens that will impact consumers and lenders. As the regulators begin work on the details, during the coming year MBA will continue to push for improvements to ensure a balance is struck between ensuring a safe, robust US financial system, protecting consumers and avoiding negative impacts on credit availability.”
Housing Expert: ‘The Suburban Century Is Over’. Over the next decade, four demographic groups will fuel the housing market: older baby boomers increasingly are moving back to the central city, while younger baby boomers are finding it more difficult to relocate for jobs because they cannot sell their suburban houses. Meanwhile, millennials are more environmentally aware and will seek urban lifestyles, and immigrants who cannot afford large suburban houses to shelter multiple generations will increase demand for rentals.

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Economic Indicator News Release Calendar for the weeks ahead
Monday, June 28
United States
Date Value Consensus Forecast Previous
8:30 AM Chicago Fed National Activity Index May n/a n/a 0.29
8:30 AM Personal Income May n/a n/a 0.4%

Tuesday, June 29
United States
Date Value Consensus Forecast Previous
7:45 AM Chain Store Sales Snapshot 6/26/2010 n/a n/a -0.8%
9:00 AM S&P/Case-Shiller® Home Price Indexes April n/a n/a 2.3
10:00 AM The Conference Board Consumer Confidence June n/a n/a 63.3
5:00 PM ABC News/Washington Post Consumer Comfort Index 6/27/2010 n/a n/a -45

Wednesday, June 30
United States
Date Value Consensus Forecast Previous
8:30 AM ISM – NY Report June n/a n/a 449.3 index
9:45 AM ISM-Chicago June n/a n/a 59.7
10:30 AM Oil and Gas Inventories 6/25/2010 n/a n/a 365.1 mil barrels

Posted in MORTGAGE NEWS, THE FED | 1 Comment »