New 1-4 family mortgage originations tumbled a sizeable 26 percent between the second and third quarters of this year, according to new numbers compiled by Inside Mortgage Finance. Some $410 billion in new mortgages were made in 3Q09, the lowest quarterly pace seen in 2009. This brought mortgage originations for the first nine months of 2009 to $1.41 trillion or not far behind the $1.50 trillion seen for all of 2008.

Most of the decline in third quarter originations was due to a slide in refinance activity in the Fannie Mae/Freddie Mac sector of the market. But new FHA originations held up remarkably well in the third quarter as volume actually rose 6 percent from the second quarter. FHA originations for the first three quarters of 2009 already have set a new annual record at $283 billion.

Tish Washington, the Honest Mortgage Pro, can be reached at 877-897-4831. Now lending in AZ, CA, CO, CT, FL, HI, ME, NM, NV, OR, and WA.

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Newsletter-Chrisman,Rob

I can tell that I am grown up because I get up at 4AM, not go to bed at 4AM, and I no longer consider a $4.00 bottle of wine “pretty good stuff”. The French, known for their wine, celebrate Bastille Day today. It is called Fête Nationale (National Holiday) in France and commemorates the 1790 Fête de la Fédération, held on the first anniversary of the storming of the Bastille: the Fête de la Fédération was seen as a symbol of the uprising of the modern French “nation,” and of the reconciliation of all the French inside the constitutional monarchy which preceded the First Republic, during the French Revolution. (The “Bastille” was the French prison where people were held merely at the king’s judgment.)

Economists focused on mortgage banking, most of who work for Freddie, Fannie, and the large investors, are all scaling back on their estimates of mortgage originations for 2009, and cutting them drastically for 2010. If you are a large company, who has invested extensively in “bricks and mortar”, how are you dealing with expected lower volumes? Recently the MBAA lowered its forecast for mortgage originations, for the fourth month in a row, in 2009 to about $2 trillion. Last week I heard a respected speaker in the business say that his company believes that companies may want to scale their operations toward purchase business, which has hovered around $1 trillion a year. If prices are stable, or slide further, the dollar volume of purchases will slide, and, in the perfect storm environment, rates move higher, refinancing will also drop. The current MBAA estimate of 2009 purchase business has dropped to $737 billion while refinances were reduced $1.3 trillion by the MBAA.

“In the old days”, the Fed influenced the economy through “open market operations”. What are those? The Fed would typically trade in safe, short-term T-bills, buying and selling them to impact the short-term, risk-free rate. Buying securities pushes the price up, and rates down. Although very short-term rates have dipped slightly below 0% a few times recently, usually rates can only go down to 0%, which limits the Fed’s activity and impact. (If a Treasury security goes below 0%, investors would rather hold cash.) So let’s hope that they keep buying, since right now they continue to be the only game (or close to it) in town.

Not only have mortgage rates fallen below 5.25%, but LIBOR rates continue to decline. So what? Basically it means that banks have become more comfortable with lending to each other, which is a key step toward banks being more comfortable with lending in general. And this is obviously a good thing. But even if banks are more comfortable, what about the consumer? Unfortunately the consumer is showing more signs of weakness, according to last week’s University of Michigan consumer sentiment report which worsened for the first time since February. And since the consumer accounts for about two thirds of GDP, it is not good news – or is it? If folks like you and me continue to hunker down, it leads to more saving and less spending IF the consumer actually has a job. Today we had two key pieces of information, after the overnight rallies that we saw in Asian and European stock markets and a release of strong Goldman Sachs earnings. The Retail Sales number showed a stronger-than-expected 0.6 percent in June, ex-auto +.3%. And U.S. producer prices jumped by twice as much as expected in June due to energy: +1.8%, the biggest jump late 2007. Taking out food and energy, core PPI was +.5%, also higher than expected. This news, combined with the strength in stocks, has pushed the 10-yr back up to 3.44% and made mortgage prices worse by .375-.5.

(Warning: R-rated.)
When Charles DeGaulle decided to retire from public life, the British ambassador and his wife threw a gala dinner party in his honor.
At the dinner table, the Ambassador’s wife was talking with Madame de Gaulle” “Your husband has been such a prominent public figure, such a presence on the French and international scene for so many years! How quiet retirement will seem in comparison. What are you most looking forward to in these retirement years?”
“A penis,” replied Madame deGaulle.
A huge hush fell over the table. Everyone heard her answer… and no one knew what to say next.
Charles leaned over to his wife and said, “Ma cherie, I believe ze English pronounce zat word, ‘happiness’!”