End of a Wild Week

  • Consumer sentiment comes in higher than expected. Durable
    goods orders come in higher than expected. NEW HOME SALES come in
    better than expected.
  • Today is a victory for low expectations, much more than a sign of
    recovering economy, but still, stocks are benefitting and bonds getting
    beat up. We had had a little rally, but we’re losing ground today.
  • Of note: FHA conventional-to-FHA refinances have been put into
    the FHA Secure program, which was originally designed to allow
    delinquent homeowners to get out of their ARMs before they lose their
    homes. Obviously – OBVIOUSLY – lumping these two kinds of loans
    together is silly, as it takes good loans from responsible homeowners
    and prices them the same as risky loans to those missing payments.
    This costs good borrowers, no matter how good their credit, about .5%
    to their rate when refinancing to FHA.
  • There is, however, an exception, and it comes from Countrywide,
    of all people. That company has decided that it will not buy FHA
    Secure loans except when the homeowner has never been delinquent.
    Therefore they do not have to lump risky and good loans together,
    therefore they can offer better pricing, and it is that pricing that is
    reflected in the chart above.
  • Never thought I’d say it, but Countrywide is acting very smart. And it’s a good thing for us.

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