San Diego, California Mortgage Market Update

Mortgage Market Happenings:

The market is getting a boost out of the open but given yesterday's excessive sell-off that isn't unexpected. Not much has changed since the Fed announced its latest liquidity initiative and the euphoria carried over somewhat to the global stage dragging on treasuries overnight. Expectations for an aggressive rate cut next week have backed off a bit, which may take a bite out of the pop in equities providing support for bonds in an otherwise event-free day. We have seen a nice pick up Agency MBS since the opening bell with a slow but steady rally as buyers now have more appetite at these levels and spreads over Treasuries. We currently sit up 15 ticks (+15/32) on FNMA 5.50% with April settle. Expect improved lender ratesheet pricing by up to 40 bps.

Industry News:

Fed Takes Added Liquidity Measures

The Federal Reserve, in conjunction with several other central banks, has announced new measures to promote liquidity in financial markets. Under the new Term Securities Lending Facility, the Fed will lend up to $200 billion of Treasury securities to primary dealers secured for a term of 28 days (rather than overnight, as in the existing program) by a pledge of other securities, including federal agency debt, agency residential-mortgage-backed securities, and nonagency triple-A rated private-label residential MBS. Securities will be sold via weekly auctions, beginning March 27. In addition, the Federal Open Market Committee has authorized increases in its temporary reciprocal currency arrangements, or swap lines, with the European Central Bank and the Swiss National Bank. The latest actions supplement measures announced March 7 to boost the size of the Fed's Term Auction Facility to $100 billion, among other things. Sen. Christopher J. Dodd, D-Conn., chairman of the Senate Banking Committee, termed the Fed move "a significant step" to address the "liquidity lock-down" in U.S. credit markets, but he called for further steps to address "the foreclosure crisis." He said he is preparing legislation to do so.

Paulson Pooh-Poohs Principal Reductions

Treasury Secretary Henry Paulson continues to dismiss calls for helping borrowers with "underwater" mortgages through principal reductions that are being advocated by some federal banking regulators. It's not the "government's job" to help borrowers who would walk away from their homes because the properties' values have dropped and they don't want to pay the mortgage, Secretary Paulson told the American Bankers Association. The Treasury secretary played an important role in getting mortgage servicers to join the Hope Now alliance, which is focused on helping struggling homeowners who want to stay in their homes but can't afford their mortgage payment because of a change in their ability to pay or the reset of an adjustable-rate mortgage. He stressed that it is important for the Hope Now servicers to publicly disclose the results of their workout efforts so that everyone can see whether the servicers are following through on the commitments. "I won't look kindly on free riders," Mr. Paulson said. Last week, Federal Reserve Board Chairman Ben S. Bernanke called on lenders to make permanent reductions in the principal amount of a mortgage to help troubled borrowers stay in their homes or refinance into a Federal Housing Administration-insured mortgage.

Morgan Sees Weak Spring Homebuying Season

If mortgage lenders thought a stronger-than-expected spring homebuying season would help reverse their fortunes, they should think again, according to a new report issued by Morgan Stanley. The report says the housing market is weak in most key markets, including California and Florida. After polling 1,000 Realtors, Morgan is predicting a 19% decline in sales this homebuying season. Morgan analyst Ken Posner writes that his group is "defensively positioned, preferring to avoid or short stocks with mortgage-related credit exposure." He adds that, "Zeroing in on the issue of obtaining mortgages, our Realtors report that down payments are now the biggest stumbling block" to buying a home.

Misc:

-- On Today’s date in 1933, President Franklin D. Roosevelt delivered the first of his radio "fireside chats," telling Americans what was being done to deal with the nation's economic crisis. George, get some fire wood.

-- On Today’s date in 1947, President Truman established what became known as the Truman Doctrine to help Greece and Turkey resist Communism.

-- Today Actress-singer Liza Minnelli is 62.

-- Today Former Massachusetts Governor Mitt Romney is 61.

-- Today Former baseball player Darryl Strawberry is 46.

The mortgage market update is brought to you by:

Todd Albrigo

Account Executive

CMG Mortgage, Inc.

Market Happenings:

Trade had been sliding from the best levels into the Chicago PMI, which came in better at 48.2 versus an expected 46.7, improved over the Feb 44.5, the worst since early 02. The number remains under 50 which is the dividing line for expansion versus contraction. The market was working lower and will suffer as the employment component improved and the prices paid heated up. Trade is retaining some of the session's bid, while trade slows and Treasury's Paulson spoke at length on regulation. There was little new from the talk, while data is through and late Fed-speak is a way off, so trade may stall out. A collapse in stocks could help prices some, but there are too many larger issues, and important data, to occupy the markets' collective brain. On quarter-end, Credit Suisse today notes, "Refuting the typical "window dressing" cliché, it's hard to make a strong argument to own any equity sector (although the Transports and Real Estate have shown some life). If you really wanted to "dress up" your portfolio to impress shareholders, you'd buy bonds. Or perhaps you'd sell International indices... But if you're a U.S., long only manager, you probably don't have a lot to do....which is consistent with what a lot of those managers have done ytd." Agency MBS are holding tight with FNMA 5.50% coupons up 3 ticks (+3/32). Look for flat to slightly improved investor ratesheet pricing today.

Industry News:

Radian Won't Insure Stated-Income Loans

Radian Guaranty Inc., Philadelphia, the primary mortgage insurance subsidiary of Radian Group Inc., says it will no longer issue policies for stated-income and stated-asset loans. In a message to its customers, Radian said, "while certain forms of alternative documentation used to verify assets and income are appropriate with a disciplined underwriting process, the stated programs will no longer be insurable as a result of poor performance." This change takes effect on April 30. It is in addition to other changes affecting loan-to-value, documentation, and credit score requirements Radian is implementing on March 31. "These changes reflect the current market conditions and a commitment to our business partners and shareholders to write new business that will allow homebuyers appropriate and affordable alternatives," said Dave Applegate, president of Radian Guaranty. "The continued weakness in the housing market and overall economy has created unprecedented challenges for the industry and our clients. .... Accordingly, we have tightened guidelines and increased pricing in areas in which we continue to see deterioration in our risk-adjusted returns."

Subprime Defaults Exceed 25%, FBR Says

The default rate on securitized subprime loans hit 25.2% in December, up 185 bp from that of the previous month, but defaults on alternative-A loans are also surging, according to a report by Friedman Billings Ramsey Investment Management. Defaults on alt-A mortgages jumped to 8.26% in January, up 106 basis points from the level in December and 250 bps from that of November. Alt-A borrowers have high credit scores, but are generally self-employed and highly leveraged. There are 2.8 million securitized alt-A loans totaling $839 billion, and nearly 20% of the loans are secured by second homes and investment properties. The alt-A world is vulnerable in today's market with falling house prices and deteriorating labor market conditions. "It is really a double-whammy for alt-A," said FBRIM managing director Michael Youngblood. (The default rate includes loans 90 days or more past due, in foreclosure, and real estate owned.)

Fed Plans Countrywide Merger Hearings

The Federal Reserve Board is soliciting public input on Bank of America's acquisition of the nation's largest mortgage lender and servicer, Countrywide Financial Corp., and plans to hold two public hearings in April. The hearings are scheduled for April 22 in Chicago and April 28-29 in Los Angeles. In weighing the public benefits of a bank merger, the Fed normally considers competitive issues as well as the institutions' Community Reinvestment Act ratings. Based in Calabasas, Calif., Countrywide originated $408.3 billion in mortgages in 2007, and it serviced $1.48 trillion in mortgages as of Feb. 28.

This Week's Calendar:

Misc:

-- On Today’s date in 1880, Wabash, Ind., became the first town in the world to be illuminated by electrical lighting.

-- On Today’s date in 1917, the United States took possession of the Virgin Islands from Denmark.

-- On Today’s date in 1968, at the conclusion of a nationally broadcast address on efforts to bring a peaceful end to the Vietnam War, President Lyndon B. Johnson shocked listeners by announcing he would not seek another term of office.

-- Today Actor Christopher “More Cowbell” Walken is 65.

-- Today Former Vice President and Internet pioneer Al Gore is 60.

-- Today Rock musician Angus Young (AC/DC) is 53.

Today's market update brought to you by:

Todd Albrigo

Account Executive

Market Happenings:

The market is not taking too much from the lack of confidence number, which, while worse than expected, was released in an environment where the bar has been set pretty low. The day's event risk is all in and the market may fall into that catatonic "Mirror stocks...mirror stocks" mindset that may only be salvageable by month end stragglers buying late. Mortgages and bonds have managed to pull themselves out of a minor hole this morning with data helping out a bit. Spending was off as were UofM revisions while inflation was tame, providing a decent backdrop for bonds to at least plug some leaks. The afternoon looks mired in positions squaring and looking ahead to next week's event risks (namely payrolls). Agency MBS pricing is sitting at a positive so far with FNMA 5.50% coupons trading up 7 ticks (+7/32). For those lenders who did not re-price yesterday, as the market slowly faded, expect pricing to be near flat today from yesterday

Industry News:

Freddie: House Prices May Not Trough Till '10

Housing prices may not bottom out until 2010, if then, according to the deputy chief economist at Freddie Mac. Amy Crews Cutts says she expects prices to fall 11% on a national level, from peak to trough. So far, however, prices have dipped just 1% or so, meaning that "we've got a long way to go," the economist said at the National Association of Hispanic Real Estate Professionals' annual legislative conference in Washington. While some local markets may be doing better already, she stressed that prices nationally could be on a downward slope for 20-24 quarters from their peak in the third quarter of 2005 -- "or longer if the financial markets continue to falter," she told MortgageWire. "We're not even forecasting when prices go back to their '05 level," she added. "We're merely forecasting when the pain stops." However, LaVaughn Henry, director of economic analysis at PMI, Walnut Creek, Calif., said he is "starting to see some evidence" that house prices in some places aren't falling as fast as they have been. "It's not a reversal -- prices are still going down," Mr. Henry told the conference. "But things are not as bad as they were. It's not huge, but it's a change in the right direction."

'08 Mortgage Fraud Losses Forecast at $2.5B

Losses from mortgage fraud will reach $2.5 billion in 2008 and comparable losses will continue for several years thereafter, according to new research from TowerGroup, Needham, Mass. The report says the substantial rise in mortgage fraud over the past 10 years is an important factor in mortgage credit woes, though falling home prices and poor mortgage underwriting have been given most of the blame in recent months. TowerGroup anticipates that lenders will respond by deploying technology to assist in the detection and prevention of mortgage fraud and that their annual spending on such tools will reach several hundred million dollars in the next few years.

Probe Faults New Century Management

Senior management at New Century Financial Corp. "largely rejected or ignored" staff recommendations to tighten credit standards in 2004, which evidentially lead to a "tsunami of impaired and defaulted mortgages" and the subprime lender's bankruptcy, according to a court-appointed investigator. "The increasingly risky nature of New Century's loan originations created a ticking time bomb that detonated in 2007," according to 550-page report filed in a U.S. Bankruptcy Court by investigator Michael Missal. The Irvine, Calif.-based company was the second-largest subprime lender when it filed for bankruptcy in April 2007. The examiner found numerous accounting problems and faulted KPMG, New Century's independent auditor, for allowing the publicly traded company to reduce its repurchase reserve in 2006 when it was being "flooded with repurchase claims" from investors. "New Century understated its repurchase reserve by as much as 1000% in the third quarter of 2006, reported a profit of $63.5 million ...when it should have reported a loss," the Missal report says. A KPMG spokesman said the firm "strongly" disagrees with the report's conclusions. A New Century representative said the submission of the report will allow the bankruptcy process to continue, and "we can take the next steps of confirming the liquidation plan."

Misc:

-- On Today’s date in 1898, the Supreme Court ruled in United States v. Wong Kim Ark that a child born in the United States to Chinese immigrants was a U.S. citizen.

-- On Today’s date in 1930, the names of the Turkish cities of Constantinople and Angora were changed to Istanbul and Ankara.

-- Today Country singer Reba McEntire is 53.

-- Today Olympic gold-medal gymnast Bart Conner is 50.

-- Today Actor Vince Vaughn is 38.

Today's market update brought to you by:

Todd Albrigo

Account Executive

CMG Mortgage, Inc.

Market Happenings:

More Bad Data : Industrial production fell -0.5% worse than expected, while capacity utilization stumbled to 80.9, an over 2-yr low. The measures for Feb offer further concern over recession, with the market leaning more toward the "we're there" camp versus the "are we there yet" crew. The market is well aware of the deteriorating situation in manufacturing, further bolstered by the awful NY report earlier, and within the current environment, only big, serious numbers getting much play. With the Bear Sterns debacle over the weekend, investor capital is seeking safety with Treasuries as well as Agency paper heavy on the bid side. FNMA 5.50% are up 20 ticks (+20/32) so far in choppy but positive trade. Expect lender ratesheet pricing to rebound by up to 60 bps today.

Industry News:

JPMorgan Chase to Buy Bear Stearns

JPMorgan Chase has made plans to acquire the Bear Stearns Cos. Inc. - and has gotten up to $30 billion in special financing from the Federal Reserve to do it - in the wake of severe liquidity woes at Bear. The deal is a stock-for-stock exchange in which the former company will exchange 0.05473 of its common shares per one share of Bear Stearns' stock based on a March 15 closing price of about $2 per share. The Fed said it would fund up to $30 billion of Bear's less liquid assets in the transaction.

HUD Issues Bold RESPA Proposal

The Department of Housing and Urban Development has issued its long-awaited RESPA reform proposal, and it is more ambitious than the industry expected or wants to implement during the current market turmoil. Most observers expected HUD to issue a Real Estate Settlement Procedures Act proposal narrowly focused on providing consumers with concise and understandable disclosures of loan terms and settlement costs. However, HUD has "cast a wider net," according to RESPA attorney Phillip Schulman, who says the RESPA proposal is "complicated," "confusing," and "controversial." The RESPA proposal mandates the use of a standardized four-page good faith estimate that discloses loan terms and settlement costs, including the mortgage broker's compensation. HUD also wants the closing agent to read a closing scripting that summarizes important loan terms and highlights differences between the GFE and the HUD-1 settlement sheet. HUD Assistant Secretary Brian Montgomery expects industry opposition, but he told reporters it is "no longer acceptable" for industry to stand in the way of giving consumers clear disclosures. HUD has issued the proposal for a 60-day comment period. Seven major financial services trade groups, including the American Bankers Association and the Mortgage Bankers Association, have asked HUD to extend the comment period to 120 days.

Freddie Seeks Appraisal Comments

Freddie Mac is seeking public comments until April 30 on the appraisal policies it agreed to implement as part of a settlement with New York Attorney General Andrew Cuomo. Freddie Mac and Fannie Mae are slated to implement the new appraisal code by Jan. 1 under the March 3 settlement with Mr. Cuomo. "To implement the Code with minimum disruption to the market and, as required under the agreement, Freddie Mac is requesting comments on operational and implementation issues, as well as unintended consequences or risks you identify in connection with the requirements of the Code," Freddie said. The agreement bars Freddie and Fannie from purchasing mortgages from lenders that use in-house appraisers or subsidiary appraisal firms. On brokered loans, lenders must certify that the mortgage broker did not select the appraiser.

This Week's Calendar:

Misc:

Date	ET	Release	For	Actual	Briefing.com	Consensus	Prior	Revised From
Mar 17	08:30	NY Empire State Index	Mar	-22.2	-8.0	-7.4	-11.7
Mar 17	09:00	Net Foreign Purchases	Jan	$62.0B	NA	$60.0B	$56.5B
Mar 17	09:15	Industrial Production	Feb	-0.5%	-0.1%	-0.1%	0.1%
Mar 17	09:15	Capacity Utilization	Feb	80.9%	81.2%	81.3%	81.5%
Mar 18	08:30	Housing Starts	Feb		980K	995K	1012K
Mar 18	08:30	Building Permits	Feb		1010K	1020K	1061K
Mar 18	08:30	PPI	Feb		0.1%	0.3%	1.0%
Mar 18	08:30	Core PPI	Feb		0.2%	0.2%	0.4%
Mar 18	14:15	FOMC Policy Statement
Mar 19	10:30	Crude Inventories	03/15		NA	NA	6177K
Mar 20	08:30	Initial Claims	03/15		355K	360K	353K
Mar 20	10:00	Leading Indicators	Feb		-0.2%	-0.3%	-0.1%
Mar 20	10:00	Philadelphia Fed	Mar		-20.0	-18.0	-24.0

-- On Today’s date in A.D. 461 (or A.D. 493, according to other authorities), St. Patrick, the patron saint of Ireland, died in Saul.

-- On Today’s date in 1966, a U.S. midget submarine located a missing hydrogen bomb which had fallen from an American bomber into the Mediterranean off Spain.

-- Today Singer-songwriter John Sebastian (The Lovin' Spoonful) is 64. The Lovin Spoonful

Thanks for your business!

Todd Albrigo

Account Executive

CMG Mortgage, Inc.

Market Happenings:

Nothing to Fear : The bonds are high-tailing it to the downside after erasing yesterday's gains overnight. The Fed has stepped in to prop up credit markets again and that is bolstering the risk trade sending bonds lower, which is likely being aided by some weak stops getting run. The move is a little excessive as some of the good vibe over in equities is an overdue bounce. With that in mind, trade will likely see some nibbling soon, particularly with data due later in the week. Once again, the confidence boost from the Fed's news is going to get a reality check at some point with credit markets still broken and some probably wondering just how bad things are that it requires such action. FNMA MBS have been bouncing all over the place, unfortunately for mortgages, all over the negative. Currently April FNMA 5.50% are off 4 ticks (-4/32). Expect lender ratesheet pricing to be roughly 10 bps worse.

Industry News:

Macquarie Mortgages USA Shuts Down

Macquarie Mortgages North American operations have ceased with no new applications being taken beginning on Monday, March 10^th. In addition, Macquarie announced that they would be scaling back operations in the Australian mortgage market. Market headwinds and rising borrowing costs were given as the primary motivation behind the decision out of its Sydney corporate office.

Thornburg Advised to Restate Earnings

Thornburg Mortgage Inc.'s auditors have advised it to restate its 2006 and 2007 earnings due to deteriorating mortgage-related securities prices and partly unmet margin calls that may affect its ability to hold its purchased adjustable-rate mortgages to maturity. The company said it may have trouble holding the ARMs to maturity because the partly unmet calls "have raised substantial doubt about the company's ability to continue as a going concern." The restatement is slated to result in a $427.8 million charge for impairment on its purchased ARM assets as of Dec. 31, a move the company said it believes will not have a "material" effect on its book value. The company had gotten counterparties involved in the margin calls to agree to temporarily freeze additional calls on March 7 and said the freeze might be extended.

Fannie to Begin Buying Jumbos April 1

Fannie Mae will begin purchasing fixed-rate jumbo mortgages on April 1, but the single-family loans will have to be manually underwritten until its automated underwriting system is updated. Purchases of adjustable-rate mortgages will begin May 1, the secondary-market agency told lenders in posting its underwriting criteria for the temporary jumbo program authorized by Congress in the economic stimulus bill. On purchase mortgages, loan-to-value ratios (including second liens) cannot exceed 90% on fixed-rate jumbos and 80% on ARMs, which means a homebuyer has to put up a 20% down payment on a jumbo ARM. On refinancings, the cash take-out is limited to $2,000, and the LTV ratio cannot exceed 75% on the first mortgage or 95% with second liens. Despite the conservative lending standards, Fannie is charging a special fee of 25 basis points on fixed-rate jumbos and a 75-bp fee on ARMs.

MBIA Asks Fitch to Withdraw Ratings

MBIA, one of the bond insurers that has been working to maintain ratings strained by mortgage-related exposures, has asked Fitch to withdraw its insurer financial strength ratings on its subsidiaries, citing reasons that include limited use of the rating agency by MBIA's issuers. MBIA chairman and chief executive Jay Brown gave extensive reasons for the move in a letter to owners after Fitch posted MBIA's request to withdraw ratings on the Fitch website. Mr. Brown also addressed what he said were press and Internet allegations that MBIA withdrew the ratings because of an impending Fitch downgrade, declaring that its limited knowledge of the rating agency's model makes it impossible for the company to estimate what Fitch's model "will produce in any given week, nor why the changes occur, nor when." A call to Fitch had not been returned as of midday Monday.

Misc:

-- On Today’s date in 1957, Charles Van Doren's 14-week run on the rigged NBC game show "Twenty-One" ended as he was defeated by attorney Vivienne Nearing; Van Doren's take was $129,000. He later acknowledged that he had been given answers by the show's producers.

-- On Today’s date in 1985, Mikhail S. Gorbachev was chosen to succeed the late Soviet President Konstantin U. Chernenko.

-- On Today’s date in 2004, 10 bombs exploded in quick succession across the commuter rail network in Madrid, Spain, killing 191 people in an attack linked to al-Qaida.

-- Today Media mogul Rupert Murdoch is 77.

-- Today ABC News correspondent Sam Donaldson is 74.

-- Today Supreme Court Justice Antonin Scalia is 72.

Today's market update brought to you by:

Todd Albrigo

Account Executive

CMG Mortgage, Inc.

Here’s Today’s Market Update

Here is a link to the conforming loan limit press release from the Office of Federal Housing Enterprise Oversight (OFHEO). According to the release, these limits will be in effect from July 1, 2007 (to allow for refinances) until December 31, 2008.

http://www.ofheo.gov/newsroom.aspx?ID=418&q1=1&q2=None

Fannie weighs in with a new set of pricing changes to delivery fees, effective June 1:

https://www.efanniemae.com/sf/guides/ssg/annltrs/pdf/2008/0804.pdf

Citigroup announced that it is scaling back its mortgage business to free up capital. CitiMortgage’s plan is to cut back the number of loans on its books, which currently totals $200 billion, by about 20% ($45 billion) over the next year and afterwards will focus its underwriting on loans that can be sold on to other investors. The reduction, fortunately, will take place mainly by not replacing loans when they mature or are paid off. Citigroup said it will combine some middle office and support services and will cut some $ 200 million a year in costs, Citigroup said. There will be job cuts, but the bank wouldn't say how many.

Anyone believing that the economy is not retracting must be in the minority after this morning’s job numbers. Non-farm Payroll, expected unchanged, was -63k for February, along with January and December numbers being revised downward by a total of 47k! Although the Unemployment Rate came in at 4.8% and Hourly Earnings were +.3%, the numbers pointed to continued weakness in the employment area. (The drop in the unemployment rate compared to the drop in non-farm payroll indicates that a large number of unemployed aren’t even looking for work any longer!) And although the government added jobs, the private sector lost over 100k in jobs. In an interesting move, 15 minutes prior to the 5:30AM PST numbers the Fed came in and made a move to increase liquidity: “a series of 28-day term repurchase agreements, increase the March TAF auctions to $50 billion each, and to continue to address the heightened liquidity pressure”. The 10-yr has improved to 3.56% and mortgage prices are better by roughly .250-.50 in price.

We have also seen a “slew” of Fed officials speaking around the world (Brazil, France, etc.), but their impact on the markets has been slight. US mortgage foreclosures increased to an all-time high and the Carlyle Mortgage–Bond Fund received a default notice after missing margin calls. It’s no surprise that treasury prices rallied on the news while US stocks dipped down to 18-month lows. New foreclosures jumped to 0.83 percent of all home loans in the fourth quarter from 0.54 percent a year earlier. Late payments rose to a 23-year high, and the government is urging lenders to avert foreclosures by modifying mortgage terms amid the worst housing slump in a quarter century. The share of all home loans with payments more than 30 days late, both prime and fixed-rate loans, rose to a seasonally adjusted 5.82 percent, the highest since 1985, a bankers' group reported.

Why did I put my entire 401K into Thornburg stock a few weeks ago? Thornburg stock dropped by 51% to $1.65/share yesterday, versus $12/share last week, and has fallen 82% this year.

Today's market update brought to you by:

Todd Albrigo

Account Executive

CMG Mortgage, Inc.

Market Happenings:

A slew of early data had the Institute for Supply Management reporting that nonmanufacturing sectors of the U.S. economy contracted at a slower pace during February, while the Commerce Department reported a 2.5% January decline in factory orders. Also, the nation's private sector shed 23,000 jobs in February, according to an employment report based on ADP payrolls data. Adding in some 25,000 jobs typically created by government, the ADP report suggests nonfarm payrolls grew by about 2,000, compared to the 20,000 forecast by economists. Meanwhile, data tracking productivity in U.S. nonfarm businesses and unit labor costs -- a key inflation gauge -- were revised slightly higher in the fourth quarter from prior estimates. Stocks are rallying nicely since the bell rang this morning with the Dow up 90 points. Treasuries and Agency Bonds are taking the brunt with investors pulling out of these investments in favor of equities. FNMA 5.50% coupons are trading down 9 ticks (-9/32) so far. Expect lender ratesheet pricing to be off 25 – 30 bps from post re-price marks of yesterday.

Industry News:

NAMB Mulls Challenge to Appraisal Settlement

The National Association of Mortgage Brokers is considering legal action to stop implementation of appraisal standards by Fannie Mae and Freddie Mac that would take the selection of appraisers out of the hands of brokers. The new appraisal standards the mortgage giants worked out as part of a settlement with New York Attorney General Andrew Cuomo amount to "de facto regulatory action" that avoids the proper regulatory process, NAMB executive vice president Roy DeLoach said. It will "create a severe disadvantage to small-business mortgage brokers, and prevent them from engaging competitively in the mortgage marketplace," Mr. DeLoach said. Under the settlement, Fannie and Freddie can't purchase mortgages if the broker selected the appraiser. Wholesalers will have to pick the appraisers, which gives the lender more control of the transaction and makes it difficult for brokers to sell the loan to another investor.

Builders Urge Quick Passage of Tax Credit

The National Association of Home Builders is urging the Senate to quickly pass a temporary $10,000 tax credit for homebuyers to encourage sales and reduce the huge inventory of unsold homes overhanging the market. "We are encouraging policy makers to take a hard look at stimulating the housing sector," NAHB chief executive Jerry Howard said, to prevent the economy from spiraling into recession. Mr. Howard told reporters that the homebuilders support several provisions in a Senate foreclosure prevention bill that Republican senators blocked because of a controversial provision that allows bankruptcy judges to restructure mortgages. The NAHB CEO said the Senate Democrats should strip the bankruptcy provision from the bill and consider an amendment by Sens. Johnny Isakson, R-Ga., and Debbie Stabenow, D-Mich., to provide a homebuyer tax credit. Senate Majority Leader Harry Reid, D-Nev., has indicated that he would let Sen. Isakson offer his amendment when the foreclosure bill comes up again for a vote and that he might support a $4,000 tax credit.

Bair Voices Concerns About Repayment Plans

FDIC Chairman Sheila Bair says she expects loan modifications to increase, but she is still concerned that servicers continue to rely too heavily on repayment plans. Repayment plans may be "unsustainable for borrowers and lead to delinquencies down the road and ongoing borrower distress," the Federal Deposit Insurance Corp. chairman told the Senate Banking Committee. Hope Now servicers reported that they modified 45,320 subprime loans in January and placed 48,155 subprime borrowers in repayment plans. The FDIC chairman testified that additional approaches may be needed to reduce foreclosures, including writedowns of the principal amount of the "underwater" mortgages. Meanwhile, Federal Reserve Board Chairman Ben S. Bernanke spoke favorably about an Office of Thrift Supervision proposal that would encourage writedowns by giving investors a share in future appreciation. "A writedown that is sufficient to make borrowers eligible for a new loan would remove downsize risk to investors of additional writedowns or a re-default," the Fed chairman told the annual convention of the Independent Community Bankers of America.

Misc:

On Today’s date in 1963, country music performers Patsy Cline, "Cowboy" Copas and "Hawkshaw" Hawkins died in a plane crash near Camden, Tenn., that also claimed the life of pilot Randy Hughes (Cline's manager).

On Today’s date in 1982, comedian John Belushi was found dead of a drug overdose in a rented bungalow in Hollywood; he was 33.

On Today’s date in 1998, NASA scientists said enough water was frozen in the loose soil of the moon to support a lunar base and perhaps, one day, a human colony.

Today Singer Eddy Grant is 60.

Today Niki Taylor is 33.

Today's market update brought to you by:

Todd Albrigo

Account Executive

CMG Mortgage, Inc.