How big exactly is a “trillion” dollars? Lawmakers and economists throw “billions” and “trillions” around every day, but we rarely stop to think about just how big these numbers are. To put a “trillion” in perspective, at a $58,000 salary per year it would take 17,241,379 years to reach 1 trillion dollars. That’s a lot of overtime.

If you want scheduled economic news of any substance, you’ll have to wait until later in the week, and even then it is light. The first will be the Trade Balance on Wednesday. Thursday we have Jobless Claims and Retail Sales (try to guess how those numbers are going to look), and on Friday we have the University of Michigan Consumer Sentiment number. Treasury Secretary Timothy Geithner was initially scheduled to speak today at noon to unveil details of the Obama administration’s plan, but it has been delayed until tomorrow at 11 a.m. EST. Why? Since the Senate is voting on stimulus plan today, the administration’s economic officials need to focus on that. They may also need more time to finalize the main points of the rescue plan and firm them up with key members of Congress.

News regarding the Senate's fiscal stimulus proposal and the Treasury's financial institution cleanup plan may be the biggest drivers of mortgage rates this week. Bond markets will close early on Friday in observance of Presidents Day. We do, however, have a $32 billion 3-yr auction tomorrow, $21 billion 10-yr on Wednesday, and $14 billion of 30-yr on Thursday, which will also be guiding the market – and this news has not been kind to interest rates.

Ryan Ogata
Senior Mortgage Consultant

From: Rob Chrisman Subject: Feb 9: Fannie loosens non-owner limits. GMAC wants houses with kitchens - is that too much to ask? Who is Chris Warren?

Federal prosecutors said Friday that they charged 27-year-old Christopher J. Warren of Sacramento (who had been cooperating in their investigation before he fled) in a $100 million mortgage fraud and investment scheme that spanned five states after he fled the country in a private jet last week. Prosecutors allege that Loomis Wealth Solutions attracted investors through public investment seminars. First, the investors bought a life insurance policy through the company's president, Lawrence Leland "Lee" Loomis, and then they invested their home equity and retirement plans through the company in what prosecutors allege was a Ponzi scheme that used money from later investors to pay off earlier investors. Finally, investors were used to purchase real estate under false premises from lenders across the nation, prosecutors said. The arrest warrant says that the scam involved 500 properties in at least five states, including Arizona, California, Florida and Illinois. According to the IRS affidavit, Citimortgage Inc. alone lost more than $6 million on 15 bogus loans.

Fannie Mae has issued Announcement 09-02, “Updates to Multiple Mortgages to the Same Borrower Policy, Reserve Requirements, Reserves Definition, and Form 3170.” In what is good news for “professional borrowers” with multiple investment properties, Fannie Mae is changing their current limit of four financed properties per borrower when the mortgage being delivered to Fannie Mae is secured by an investment property or second home. They will allow “five to ten financed properties per borrower, with certain eligibility and underwriting requirements, including a 720 minimum credit score and 70–75% maximum LTV/CLTV/HCLTV (depending on the transaction and property type). The requirements apply to any investment property or second home loan being delivered to Fannie Mae, regardless of whether Fannie Mae is the investor on the borrower’s other mortgages. Second home and investment property loans to borrowers with five to ten financed properties will be accepted for whole loan purchase or delivery into MBS with purchase dates on or after March 1, 2009, and new Special Feature Code 150 will be required at delivery.” Brokers everywhere await Wells, Citi, Chase, etc. to follow.

GMAC Bank Correspondent announced that all Jumbo loans with a LTV/CLTV's greater than 80% require a minimum FICO of 700. And, this is classic, “due to the numerous inquiries about the condition of the kitchen in real estate transactions, GMAC Bank has confirmed with the agencies, HUD and VA, that the kitchen must be functional, meaning that there must be kitchen cabinets, and a working sink and working stove. This applies to all real estate transfers. In addition, all property must be habitable and all appliances, plumbing, electrical, etc. must be functional and in good working condition. GMAC Bank will not purchase a loan unless these minimum property standards are met. This policy applies to all conventional, FHA and VA loan programs.”

Rob Chrisman