During December, the Cost of Funds Index declined 27 basis points, from October, the Federal Home Loan Bank of San Francisco reported. The decline follow a 66 BPS rise between November and October.
Six federally insured banks were closed on Friday by state and federal regulators. The Federal Deposit Insurance Corporation said that losses to its Deposit Insurance Fund as a result of the failures were estimated at more than $2.3 billion. The Office of the Comptroller of the Currency noted that one of the failed institutions was acquired using a new mechanism known as a shelf charter.
Huge Losses From Friday’s Failures
Fannie Mae reported that new business acquisitions during 2009 were 30 percent higher than in 2008. Fourth-quarter volume was 53 percent higher than a year earlier, Fannie said. Looking at just December activity, business was up 69 percent from November and 49 percent better than December 2008.
Fannie Volume Leaps
During December 2009, the dollar volume of mortgage insurance written increased 4 percent over the prior month, according to data reported by the Mortgage Insurance Companies of America. It was the second consecutive monthly increase in new business. But primary insurance defaults increased 5 percent from November.
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M.I. Defaults, Volume Rise
Moody’s Investors Service reported on its analysis of securitized non-conforming mortgages issued between 2005 and 2008. The report indicated that delinquency on jumbo residential mortgage-backed securities issued between 2005 and 2008 shot up 623 basis points from the end of 2008 to the end of last month. Moody’s said that almost half of subprime loans backing RMBS issued between 2005 and 2008 are seriously delinquent.
Non-Conforming Performance Seriously Bad
In December 2004, Countrywide Financial Corp. agreed to a deal with the State of Texas to add 7,500 mortgage employees in the state. Shortly after its July 2008 acquisition of Countrywide, Bank of America Corp. confirmed that it planned to maintain the agreement with Texas. Now BoA is refunding money it received under the agreement because the current mortgage market is not conducive to the original expansion plans.
BoA Backs Out of Texas Deal
Cashout refinances of Freddie Mac mortgages accounted for a record-low share of all refinances during the fourth-quarter 2009, the secondary lender reported. Freddie considers a refinance to be cashout when the principal balance increases at least 5 percent. Freddie Economist Amy Crews Cutts pointed to stiffer underwriting and declining home prices as the culprits for contracting cashouts.
Cashout Level Lowest on Record
Last year’s purchases and issuances jumped 19 percent at Freddie Mac, according to operational data. During December, volume was up by more than half from November. Freddie’s total mortgage portfolio rose by nearly $11 billion between November and December, while it increased $43 billion between the end of 2008 and the end of 2009.
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Freddie Reports Growth
The average 30-year fixed-rate mortgage declined 1 basis point in Freddie Mac’s most recent weekly survey. The one-year adjustable-rate mortgage average 3 BPS less than last week, Freddie reported. In the Mortech-MortgageDaily.com Mortgage Market Index for the week ended Jan. 27, new loan activity jumped 18 percent.
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Mortgage Market Gains Strength