What a day we had yesterday in the mortgage business. Lock volume exploded as rates for conforming loans dropped drastically amidst another rally in the bond market this week (at least that’s what I hear…)

The Senate and House are set to vote today on the new stimulus package. Looks like the $15,000 tax credit we were all hoping for is off the table and has been replaced with the $8,000 tax credit that won’t work in San Francisco. Oh well...

Long overdue news from ING: Beginning today, “Interest-Only is no longer available on properties located in California. Financing on second homes is no longer available on properties located in California. And LTV price incentives are no longer available on properties in California.” I thought this was the Golden State”.

Ryan Ogata
Senior Mortgage Consultant

From: Rob Chrisman Subject: Feb. 13, 2009: ING cracks down in CA, what the stimulus plan will do for housing, locks snowing investors under.

Is it any wonder that Bill Gross wants mortgage rates to come down? Pacific Investment Management Co. (PIMCO) is rumored to have made large investments in mortgage-backed securities last month, and their “Total Return Fund” has $136 billion under management – 83% of which are mortgage-backed securities. Mortgages are “a very safe and well-supported security based upon what the Treasury has announced and the Fed has announced that it’s going to do,” Gross said in a Feb. 6 interview on Bloomberg television. One cannot argue with their performance last year, which beat many other funds.

The $790 billion economic stimulus plan is on track for vote today in the House, and the Senate will either vote later today or over the weekend. There will be $4 billion to repair and make more energy efficient public housing projects; $2 billion for the redevelop foreclosed and abandoned homes; $1.5 billion for homeless shelters and $2 billion to pay off loans on public housing accounts. $6.6 billion will be allocated to repeal a requirement that an $8,000 first-time home buyer tax credit be paid back over time for homes purchased from Jan. 1 to Nov. 30, unless the home is sold within three years. The bill increases the size of an existing temporary and refundable first-time home buyer credit to $8,000, up from $7,500. It also removes the requirement under current law that the credit be paid back if the buyer stays in the home for at least three years. And it would extend the credit's expiration date to Dec. 1, 2009, from July 1. Those eligible for this credit must have purchased a home after Jan. 1, 2009, and before Dec. 1, 2009. The full credit is available to those making $75,000 or less ($150,000 for joint filers).

Obama administration was creating a plan to subsidize mortgage payments for troubled homeowners. Reuters reported yesterday afternoon that the administration will work with mortgagors to re-write and subsidize mortgage payments for those with difficulty, but must pass a means test. There are no details, but the news did help to reverse a Dow Jones that was down another 250 points. This speculation that the government will support the housing market by working with borrowers rather than in buying treasuries seems to have energized portions of the financial community. Speaking of the Fed, they bought $23.2 billion of mortgage-backed securities last week, mostly 4 & 4.5% coupons, which include 4.25-5.125% 30-yr mortgages. The only news out today is the University of Michigan Consumer Confidence Survey, which is expected to drop slightly.

Rob Chrisman