Phil Grossfield's Blog

Something Rdiuculouslous.  I’m tired…real real real real tired. I was up most of the night, again, last night. Wednesday night I didn’t sleep at all…not a wink, and last night I slept a little, but not enough. Sleep seems like a dream, if you know what I mean…HEY, that rhymes!  So, if I say something incoherent to you today, or if I type something rdiuculouslous, please forgive me. I’m happy…but I’ve got tired eyes.                                                           

Fannie Mae announced yesterday it was postponing its Gfee and LLPA (adjustment) increases. This is GREAT NEWS because it should result in more competitive pricing, at least in the short-run.

Announcement SEL-2014-01: Pricing Update Change
In Selling Guide Announcement SEL-2013-09, Pricing Update, Fannie Mae announced plans to increase single-family guaranty fees and implement changes to loan-level price adjustments and other related pricing fees at the direction of the Federal Housing Finance Agency (FHFA). On Jan. 8, 2014, FHFA directed Fannie Mae to delay implementation of all of these changes until further notice. In its news release on Jan. 8, FHFA indicated that it would give not less than 120 days’ notice after completing the evaluation before implementing any changes. Read the announcement here.

DEADLINE FOR NON-QM ATR LOANS IS TODAY!  UPLOAD BEFORE 3pm. Tomorrow QM kicks in so if you have any loans you’re concerned about then I advise you get them uploaded today before 3pm.  If you upload after then you will be subject to the new QM rules.

I ADVISE 45-DAY LOCKS ON EVERYTHING. Turn-times are fast…fast like lightening fast. But free lock extensions are going away and if you need more time, for whatever reason, I will not be able to assist. I have been making an argument to get some relief, and I’m gaining headway, but the safe bet is to lock for 45 days to avoid issues down the road. For now, Interbank is being advised by legal that it has no choice but to require you to extend at a cost and redraw docs, even if it’s a purchase.  Let me know if you want specifics…

My Market Watch: Bonds Flat; Fed Minutes Released, Jobs Report Is Tomorrow. This morning the 30-year Fannie Mae bond is flat. As a result, rates are the same as yesterday.

Yesterday the Fed released their minutes from last month’s Fed meeting. If you recall, this was the meeting where they announced QE Tapering, new policy of decreasing the amount of bonds the government buys. The minutes revealed many members believe the economy is and will continue to recover at a good clip, and, that many members supported a more significant taper. Frankly, I’m surprised we didn’t see a bond sell-off after learning this, but I’ll take a passive response to this kind of news every time.

Jobs Report Tomorrow.  The Jobs Report tells us how many new jobs were created in December. Traders use this information to determine if the economy is stronger or weaker, and then they buy and sell stocks based on that information. Simply put, if the report indicates more new jobs than expected, then traders conclude the economy is stronger. That should make sense…more new jobs = stronger economy. On the other hand, if the report indicates less new jobs in December than anticipated, then traders will logically conclude the economy is weaker. Traders buy stocks when the economy looks strong and they buy bonds when the stock market is a bad bet. Therefore, most of the time there is an inverse relationship between when traders buy and sell bonds and stocks. Here is a good way to look at the analysis:

Tomorrow it is expected that 200,000 new jobs will be reported for December. Because the ADP Employment report yesterday was stronger than expected, I recommend locking rather than floating. It’s a conservative approach but it makes feel all warm and fuzzy inside.

My Disclaimer