Sometime “early this week” is what legislators are saying about the Senate vote on the stimulus bill. Remember, however, that even if it passes, the differences between their bill and the House bill need to be worked out. Last Friday Senate Republicans and Democrats cut back the package, and Senate Democrats (who control the chamber with a 58-41 majority) were able to close off debate yesterday. If approved, the package would go to a vote today.

The key difference is the $35.5 billion measure that would create a new tax credit equal to 10% of a primary-home purchase, up to $15,000. The House bill has much smaller $2.5 billion housing provision, which would waive the repayment requirement for a $7,500 tax credit that already exists for first-time home buyers.

Also, read below regarding the potential outsourcing of key mortgage origination positions. Can you imagine how much of a pain it would be to call India to get your docs to escrow.

Ryan Ogata
Senior Mortgage Consultant

From: Rob Chrisman Subject: Feb 10: lay-offs, who doesn't do them, and how to avoid them. Rates drop overnight.

What do Aflac, Nugget Markets, Devon Energy, Scottrade, Quik Trip, The Container Store, NuStar Energy, Stew Leonard, and Publix Super Markets have in common? None of them have ever had a lay-off! Strategies and comments include not replacing employees who leave voluntarily, locations within 15 miles of each other sharing staff, cross-training employees, using past employees for temp work, keeping costs low, no raises in slow times but mid-year raises in boom times, telecommuting and flex schedules helping streamline operations, and cushioning p&l swings by giving the employees a share of profits rather than giving them to stockholders/owners.

Let’s hope that owners of mortgage companies out there aren’t thinking about lay-offs already, unless funding volumes pick up. STRATMOR, a consulting and investment banking company that specializes in mortgage banking recently released the results of a survey they performed. They state that “lenders strongly believe that a large proportion of mortgage banking origination tasks or functions have the potential to be outsourced. In general, however, those functions that typically involve direct contact with borrowers are not viewed as candidates for outsourcing. Independent of company size, a majority of lenders approach origination outsourcing on an ‘a la carte basis’ and most lenders want to be able to pick and choose those functions that they will outsource. Lenders perceive that outsourcing all or most of their back office origination functions puts them at great strategic risk to the pricing, performance and continued business operation of their outsource service provider, so would like to be able to adopt outsourcing on a gradual basis and, as only where it makes economic and strategic sense. Lenders told us that controlling costs, managing operational risks and improving efficiency and productivity are the primary reasons for outsourcing.”

UBS posted the biggest annual loss in Swiss history and said it would cut a further 2,000 investment banking jobs. UBS lost $7 billion in the 4th quarter, but also said that net new money turned positive in both wealth and asset management in January, after three consecutive negative quarters.

Fortunately we are seeing some buying in the fixed-income markets, and rates have crept back down. Yesterday, in a speech, FHFA Director Lockhart said Fannie/Freddie may need more than the $200 billion already pledged by the US Government if the housing market continues to deteriorate. Once again there is no scheduled economic news, but rates have dropped: the 10-yr is back to 2.94% and mortgage prices are better by .250 or more. Apparently, there is some sense that today’s $32 billion 3-yr Treasury auction will generate investor demand. Will the US Government turn around and buy the Treasury instruments? I can’t quite figure that one out, but perhaps Fed Chairman Ben Bernanke will help explain things when he testifies today before the House Financial Services Committee on the Fed’s lending programs at 1PM EST. We also have Treasury Secretary Timothy Geithner testifying before the Senate at 10AM EST on the oversight of the financial rescue plan before outlining the details an hour later.

Rob Chrisman