John Tuggle's Blog

First Time Homebuyer Tax Credit Still Alive and Well and Available Into 2011 (For Some)

John Tuggle (John Tuggle, Primary Capital Advisors, LC) — Wed, 29 Sep 2010 15:18:17 -0700

If qualified, April 30th, 2011 is the deadline to enter into a binding contract to purchase, Credit: $8000

Below are the benefits for members of the military and certain other federal employees:

Members of the military and certain other federal employees serving outside the U.S. have an extra year to buy a principal residence in the U.S. and qualify for the credit. Thus, an eligible taxpayer must buy, or enter into a binding contract to buy, a principal residence on or before April 30, 2011. If a binding contract is entered into by that date, the taxpayer has until June 30, 2011, to close on the purchase. Members of the uniformed services, members of the Foreign Service and employees of the intelligence community are eligible for this special rule. It applies to any individual (and, if married, the individual's spouse) who serves on qualified official extended duty service outside of the United States for at least 90 days during the period beginning after Dec. 31, 2008, and ending before May 1, 2010.
In many cases, the credit repayment (recapture) requirement is waived for members of the uniformed services, members of the Foreign Service and employees of the intelligence community. This relief applies where a home is sold or stops being the taxpayer's principal residence after Dec. 31, 2008, in connection with government orders received by the individual (or the individual's spouse) for qualified official extended duty service. The credit is still allowable even if this happens during the year of purchase. Qualified official extended duty is any period of extended duty while serving at a place of duty at least 50 miles away from the taxpayer's principal residence (whether inside or outside the U.S.) or while residing under government orders in government quarters. Extended duty is defined as any period of duty pursuant to a call or order to such duty for a period in excess of 90 days or for an indefinite period.

Question and Answer

Q. Are both spouses required to be overseas for the requisite time period in order to qualify for the 2011 extension to claim the credit?

A. Only one spouse must be overseas on official extended duty for the requisite amount of time for either spouse to be eligible for the 2011 extension of time to purchase a principal residence and claim the credit.

The Wind of Change is Blowing Again for FHA, Call To Action: Please Oppose Seller Concession Change!!!

John Tuggle (John Tuggle, Primary Capital Advisors, LC) — Fri, 27 Aug 2010 11:15:19 -0700

Less Up Front From Buyers, Less Up Front From Sellers, More Per Month From Buyers -- Please voice your opposition to the Seller Concession Change!!!!

An overview of some of the changes for FHA coming this fall:

Higher monthly fees. The legislation allows the FHA to hike the monthly fee to as much as an annualized 1.5% of the loan balance, up from 0.55%, though initially it will go only to 0.9%. The initial fee was upped earlier this year to 2.25% from 1.75%, though the FHA has said it will bring it down to 1% with the higher monthly fee.

Even with the decrease in the upfront fee, increasing the continuing fee is expected to generate $300 million per month, "which would replenish FHA's capital reserves much faster than is possible under the premium authority" now, according to the quarterly report.

Better credit scores. In its 76-year history, the FHA has never required a credit score from borrowers, though the lenders typically have. That would change under a proposed rule that the FHA is expected to adopt.

The FHA would require borrowers to have at least a 500 score for FHA backing. At 580 and above, borrowers would be eligible for the 3.5% down payment. But those who fall between 500 and 580 would see their down payments jump to 10%. That, however, is still well below scores of 660 to 720 that most lenders look (Freedom Mortgage - John Tuggle, Senior Loan Originator - is still accepting 620 although some LLPAs may apply) for to accept only a 10% down payment.

For the FHA, "this change is dramatic," the quarterly report said. Among borrowers with scores below 580, loans 90 days in arrears, what FHA calls "seriously delinquent," have been three times as high as those for borrowers with scores above 580, the FHA said. Of the total FHA loan portfolio, some 6% are to borrowers who had scores below 580 at the time of origination, FHA Commissioner David Stevens told a House subcommittee in March.

Cutting sellers' contributions. This is the change that will have the biggest impact on borrowers, because it could nearly double their total upfront costs from the just the required 3.5% down payment to a total 6.5%.

Sellers have been able to contribute up to 6% of the price of the home toward the buyer's purchase. That was often done by paying some of the closing costs, such as the upfront FHA fee and other fees, amounting to about 3% of the purchase price. Sellers might also agree to pay from some needed repairs, sparing the buyers that expense.

As part of its proposed rule changes, the FHA wants to slice the seller's contribution to no more than 3%, which CMPS Institute's Nicholas said ups the buyer's ante to 6.5% in some cases.

The FHA contends that this change will weed out sellers who artificially inflate the sales price to create the concession. It also will bring FHA in line with industry standards. These are just the latest in a string of new policies that the FHA has imposed in the last few years and could lead to substantially fewer buyers looking for the FHA insurance, turning instead to Fannie Mae or Freddie Mae programs.

"Many of these reforms were long overdue as FHA did not respond effectively to changes in the marketplace that happened during the housing boom and the subsequent decline," Stevens told Congress.

USDA Rural Housing Guarrantee Program Announcement, New Fees, Implementation, Previous Committments, Other Pertenent Matters

John Tuggle (John Tuggle, Primary Capital Advisors, LC) — Wed, 25 Aug 2010 14:04:50 -0700

USDA ~

~~ Development

United States Department of Agriculture

Rural Development

TO: Participating Lenders AUG 2 3 2010

FROM: Tammye Trevifio,Administrator

Housing and Community Facilities Programs

SUBJECT: Single Family Housing Guaranteed Loan Program

Funding Notice

Many of you may be aware of recent legislation in which Congress provided USDA with authority to resume operating the Single Family Housing Guaranteed Loan Program (SFHGLP) at no cost to taxpayers. This was done through a combination of authority to: increase the upfront fee up to 3.5 percent of the principal obligation; charge a new annual fee of up to 0.5 percent of the outstanding principal balance; and waive payment of any fees for low and very low income borrowers up to a certain amount of loan guarantees.

Rural Development expects to complete an interim enhancement to its electronic systems by mid-September to accommodate the increase in the up-front fee to 3.5 percent. When this interim enhancement is complete, Rural Development will process all Conditional Commitments issued after May 26, 2010, that had the proviso "subject to the availability of funds." These Conditional Commitments will be processed in the date order by which they were received by the agency. Also, after the enhancements are completed, Rural Development will resume issuing standard commitments without the special "subject to" condition.

In the meantime, Rural Development will continue to accept complete loan applications and issue Conditional Commitments subject to the condition in italics below. Lenders may close loans upon receipt of these conditional commitments, but will assume all risk until the Loan Note Guarantee is issued.

This Conditional Commitment is subject to the continuing availability of funds and thecompletion of Rural Development operation systems enhancements to implement guarantee fee changes made by Public Law 111-212, sec. 102 (7/29/10). When Rural Development operation systems enhancements are completed, the Agency will notify the lender, and the

Guarantee process will continue subject to al applicable Agency regulations and conditions

1400 Independence Ave, SW .. Washington DC 20250-0700

Web: http://www.rurdev.usda.gov

Committed to the future of rural communities.

'USDA is an equal opportunity provider, employer and lender."

To file a complaint of discrimination, write USDA, Director, Office of Civil Rights,

1400 Independence Avenue, SW., Washington, DC 20250-9410 or call (800) 795-3272 (Voice) or (202) 720-6382 (TOO).

Set forth in this Conditional Commitment. Rural Development will not reserve loan funds for applications in process during this timeframe. Lenders may close the loan as scheduled. The lender will assume all risk of loss for the loan until Rural Development obligates funds and the Loan Note Guarantee is subsequently issued. When the lender requests the Loan Note Guarantee, the lender must certify to the Agency, using the process provided in this commitment, that there have been no adverse changes to the borrower's financial condition since the date the Conditional Commitment was issued by the Agency. The lender will submit the appropriate guarantee fee at the time they request the Loan Note Guarantee. The Agency will not be able to issue the Loan Note Guarantee until these conditions are met and funding

is obligated.

Rural Development also is working on a more complete system upgrade to accommodate all provisions of the new law. We expect this full enhancement to be completed as early as possible next fiscal year. While the 3.5 percent up-front fee is sufficient at the current subsidy rate, we must be prepared to make adjustments in later years using the new authority for an annual fee to maintain a zero cost program. We appreciate your role as a lender in responsibly servicing loans in the SFHGLP portfolio and helping us maintain a successful program.

All Conditional Commitments issued for purchase loans under the authority described in this memorandum are subject to a guarantee fee of3.5 percent. A sample of the Conditional Commitment form, and its attachment, are both attached. The italicized language set out above will be added as an "other condition" on the attachment.

The waiver of fees for Low Income and Very Low Income borrowers that was authorized in Public Law 111-212, sec. 102, cannot be accommodated at this time. However, borrowers who meet the criteria may be eligible for USDA's Section 502 Direct Loan Program which currently has sufficient funding to meet the needs for the remainder of the 2010 Fiscal Year. Please consult with the closest Rural Development Office in your area for more information on the Direct lending process.

Based on current usage, sufficient funds should be available for the remainder of the FY to fund all guaranteed refinance loans at a 0.5 percent guarantee fee.

Relief is on the Way ---- We Think, House Passes Stand Alone Bill To Extend Closing Deadline for Home-buyers!

John Tuggle (John Tuggle, Primary Capital Advisors, LC) — Tue, 29 Jun 2010 18:33:31 -0700

Today the US House of Representatives passed legislation that would extend the closing deadline for the Home-buyersTax Credit. The Senate has already passed a similar measure and this is the second time this year for the house to do so. If the US Senate can pass a conference bill the credit will be available to Closing Home buyersall the way through September, 2010. (The deadlinie to qualify for the credit of April 30th, 2010 will not be extended, this bill is for closing those transactions only)

Estimates are as high as 180,000 for loan applications backlogged in a system that became swamped by potential home-buyers trying to cash in on the tax credit that can be as high as $8,000 to a first time home purchaser. The vote was for a separate bill as previous attempts to remedy the bottleneck in the nations mortgage origination, processing and underwriting systems became mired in partisan politics as the measure was made part of more controversial legislation in the Finance Reform bill currently being debated on Capital Hill.

Although the measure is expected to pass there is some concern as to when. Most projections from Capital Hill are saying that even if it dosen't get done and made law by June 30th, it can be retroactive. The death of Senator Robert Byrd (West Virginia) may cause some delay. Sources are not sure to what extend if any.

"The slow down in approving mortgages is really no one's fault. We have an industry that has had to reduce staff nationwide do to the slowdown in applications and then it gets hit with a massive month of applications and then after that another slow down. There is no way you can fill staff for a couple of months so the eemployees left have to do all the work. These are not labor positions. These people are highly technical and specialized. Right now it is ruthless in the Lending industry" said John Tuggle, Senior Lending Officer for Freedom Mortgage Corporation in Georgia and Alabama.

Veterans (active and former) have been allowed special exemptions and in some cases may qualify for the First Time Homebuyers Tax Credit well into 2011. A VA lender can assist any military personel in the details and whether or not they qualify.

If the deadline is extended it may have a huge and settling effect on residential Real Estate for the next few months and could allow lenders to hire based on expectation for a few months instead of a few weeks. Stay tuned to "...As The US Capital Turns.."

Congress Expected to Extend Closing Deadline For Homebuyer Credit Thru September 2010

John Tuggle (John Tuggle, Primary Capital Advisors, LC) — Thu, 17 Jun 2010 03:46:19 -0700

The US Senate has amended a bill to give homebuyers who were under contract on a home purchase on or before April 30, 2010 an additional three months to close the transaction and claim the Federal Homebuyer Tax Credit. Extending the deadline for closing from June 30 to Sept. 30 would allow lenders more time to clear a backlog of 180,000 homebuyers nationwide, said amendment sponsor Sen. Harry Reid, D-Nev. No extension to the deadline for qualifying for the credit (April 30th, 2010) was approved and Congress is not expeted to do so.

The nations mortgage lender backlong is at record levels due to industry staff reductions over the last couple of years along with the record number of contracts to purchase and mortgage loan applicatiions placed into process due to the end of the tax credit. The legislation was supported by the Mortgage Bankers Association and the National Association of Realtors.

Also in the legislation are provisoins to expand documentation requirements for the first-time homebuyer tax credit to require taxpayers to attach property tax bills, contracts, and other documentation to their tax returns when claiming such credit. These measures were sought by the Internal Revenue Service to assist in reducing fraudulent attempts to access the tax credit.

The US House of Representatives has already passed similar legislation and sources from both legislative bodies expect conference committees to complete and approve one compromise bill for the President's signature and enactment as law prior to the July 4th, Holiday.

For Certain Qualifying Individuals, home buyer tax credit has been extended a full year -- to April 30, 2011

John Tuggle (John Tuggle, Primary Capital Advisors, LC) — Sun, 13 Jun 2010 12:11:41 -0700

REMINDER! For certain members of the military, the Foreign Service, and the intelligence community REMINDER! For certain members of the military, the Foreign Service, and the intelligence community, the home buyer tax credit has been extended a full year -- to April 30, 2011 for a signed contract and June 30, 2011 for the closing. To qualify, government service personnel need to have been on official extended duty and meet specific provisions. If you know someone who may qualify for this valuable benefit, please have them contact us right away to see if they meet the explicit requirements.

National Flood Insurance Program Expired, Senate Adjourned Without Renewing March 28, 2010

John Tuggle (John Tuggle, Primary Capital Advisors, LC) — Tue, 30 Mar 2010 16:02:20 -0700

National Flood Insurance Program

The program expired on March 28, 2010. . Unfortunately, the United States Senate adjourned without approving H.R. 4851, which would have extended a number of programs including the National Flood Insurance Program (NFIP). The lapse in authority means that mortgage transactions will be delayed in which a new flood policy is required but was not issued before the expiration date. A procedural motion has been filed in the Senate setting up a vote for the week of April 12th.

Almost all national mortgage lenders will hold up funding of any mortgage requiring Flood Insurance with the policy not issued prior to March 28th, 2010.

It is still beyond me how our Congress continues to inconvenient their constituents without any regard for the consequences. Delaying a closing on a residential property for no other reason other than the Senate getting out of the office at a decent hour is ridiculous and illustrates pure arrogance on the part of our representatives.

I firmly believe the only way our government can change its attitude is if every incumbent, regardless of party affiliation, be voted out of office this fall. Let them all know from now and into the future that being elected is not an invitation to an all expense paid Country Club or Club Med experience.

USDA RURAL HOUSING Running out of Funds, Possibly by end of April, Get Contract to Lenders NOW!

John Tuggle (John Tuggle, Primary Capital Advisors, LC) — Wed, 10 Mar 2010 13:46:01 -0800

Notice of Funding / USDA RURAL HOUSING

This message is to notify you that program funding for the Single Family Housing Guaranteed Loan Program will likely be exhausted by the end of April, 2010.

Once funding is exhausted, the Agency will not issue Conditional Commitments "subject to receipt of appropriated funds." This is because it is not certain when additional funding will be available.

Limited funding may become available for disaster areas declared in 2008, or in disaster areas declared for Hurricanes Katrina and Rita. Limited funding may also become available as prior Agency commitments are de-obligated, however, such funding will be very limited.

We apologize for any inconvenience this may cause you. Should you have any questions, you may contact the Single Family Housing Guaranteed Loan Division at (202)720-1452.

Freedom Mortgage Corporation, John Tuggle Announces New Position, Division

John Tuggle (John Tuggle, Primary Capital Advisors, LC) — Mon, 15 Feb 2010 14:27:49 -0800

Tuggle Joins Freedom B2B Division, Wholesale Rates from a Retail Lender!!!

I am pleased to announce that effective immediately I have joined Freedom Mortgage Corporation, B2B Retail Division. This division was formed to specifically fill the void of the loss in the market place of wholesale pricing and is being delivered by one of the most stable names in the Retail Lending Business. Realtors and Borrowers now have a source for Full Retail Mortgage Lending Services and they also may take advantage of Wholesale level pricing. It is my belief that this is a Win-Win opportunity for the market and raises the bar for rates and service that currently is not available in the market place.

I live and work in the West Georgia, East Alabamamarket. Columbus, Georgia and Phenix City, Auburn, Opelika, Alabama and the surrounding areas have been my home all my life and I have been active in all facets of Real Estate and lending for almost 25 years in these markets. It is with great excitement that I can bring this superior service and pricing to my network of Clients and Referral Sources.

For those that know me and for those that will know me my motto remains the same: I work when Realtors Work; nights and weekends!

First Time Home Buyers Tax Credit - An excerpt from an open Letter from Honorable Johnny Isakson, US Senator, Georgia, dated October 16th, 2009

John Tuggle (John Tuggle, Primary Capital Advisors, LC) — Fri, 16 Oct 2009 14:39:58 -0700

Below is .an excerpt from an open Letter from Honorable Johnny Isakson, US Senator, Georgia, dated October 16th, 2009. Senator Isakson is the point man on Capiatl Hill for this important Legislation. He is also a Realtor. Please tell your Congressional Representatives to support his initiatives and do so NOW. This is very important to us all.

Dear Friends,

I am working every day to find a way to extend and expand the current first-time homebuyer tax credit, which is set to expire on November 30, 2009.

I plan to offer a homebuyer tax credit amendment to legislation extending unemployment benefits. My amendment would remove the first-time homebuyer requirement, extend the tax credit until June 30, 2010, and raise the income limits to $150,000 for an individual or $300,000 for a couple.

I will testify on Tuesday before the Senate Banking Committee on the state of our nation's housing market and the need to extend the homebuyer tax credit. After spending more than three decades in the real estate business, I understand the housing market and its critical role in our overall economy. The current first-time homebuyer tax credit has made a difference. First-time home buyers have used it and the market has stabilized slightly. The National Association of Realtors estimates that about 1.8 to 2.0 million first-time buyers will take advantage of the $8,000 tax credit this year, with approximately 350,000 additional sales that would not have taken place without the credit.

However, the real housing recession is not only with first-time home buyers. I believe we have a recession in the "trade-in" or "move-up" market in which citizens are putting off purchasing their next home. Today in the United States, one in two home sales is a short sale or a foreclosure. That is an unhealthy market, and Americans are still facing an illiquid housing market, a decline in their equity, a decline in their net worth and a depression in the housing market.

Home sales do more than simply stabilize the housing market. NAR research shows that each home sale at the median price in 2008 generated $63,260 of economic impact. I believe my amendment will swiftly help our economy get back on track.

The idea of expanding the current homebuyer tax credit has been endorsed by the U.S. Chamber of Commerce, National Association of Realtors, Business Roundtable Housing Working Group and Mortgage Bankers Association.

Sincerely,
Johnny Isakson,

US Senate

Washington, DC

FHA IS on Solid Ground, Please CLICK on the link below for an interview with Dave Stevens, Commissioner of the FHA

John Tuggle (John Tuggle, Primary Capital Advisors, LC) — Mon, 12 Oct 2009 13:46:16 -0700

In a recent interview with MS-NBC, the Commissioner of the FHA made some very interesting points. A lot of this information is not widely known. Some key points that Mr. Stevens made were as follows:

1. The FHA is not considering going to a minimum credit score formula for qualification at the present

2. The FHA has $ 30 Billion in excess capital to cover risk to their portfolio and although foreclosures are and have been high, the capital in the bank is continuing to exceed the risk (delinquent borrowers). The FHA WILL survive.

3. FHA currently has no intention of going to "Risk Based MIP Premiums). The current rate for most FHA loans is 1.75%. The FHA currently plans to continue the moratorium on raising this with a Risk Based Pricing System (lower credit score, higher premium)

4. The FHA is doing business with high quality borrowers. The average credit score for FHA Borrowers has increased to 690 from 630.

Please click below for the interview. It is very enlightening.

http://www.cnbc.com/id/15840232?video=1274114504&play=1

CALL TO ACTION, PLEASE WRITE YOUR CONGRESSMAN TO EXTEND THE FIRST TIME HOMEBUYER'S TAX CREDIT

John Tuggle (John Tuggle, Primary Capital Advisors, LC) — Mon, 12 Oct 2009 11:31:13 -0700

Subject:
Homebuyer Tax Credit: Extend and Expand

Dear [ Decision Maker ],

As a Realtor and a constituent, I can assure you that the $8,000 first-time homebuyer tax credit has definitely been a success. Homebuyer interest and housing sales increased almost as soon as the ink was dry on the tax credit legislation. Today's lower prices and interest rates appeal to consumers, but it's been the tax credit that has attracted people to open houses and to homeownership.

That progress could grind to a halt sooner than you think. Congress must act NOW to extend the credit through 2010. Otherwise, uncertainty will return and the market might again be frozen -- possibly as soon as October.

A homebuyer is eligible for the tax credit only if the home is "purchased" before December 1, 2009. That means that buyers have to find a house, complete a contract, satisfy any contingencies, secure financing and go to closing by November 30. Accomplishing those tasks by November 30 will become more difficult with every passing day. In today's market, it generally takes between 45 and 60 days to go from contract to closing.

The market has improved, but it has not yet fully corrected itself. The credit needs to be extended for an additional period of time and expanded in order to build upon the progress that's been made. Uncertainty about the future of the credit will dampen consumer demand. The best way to assure continued housing activity is to extend and expand the credit and to do that NOW.

We can't wait until late in the year to see what happens. Consumers will drop out soon if they can't predict what's in their future. Please act NOW to extend and expand the credit through 2010.

Sincerely,
[Your name]
[Your address]

Senator Johnny Isakson reports more information on First Time Homebuyer Tax Credit proposals in the US Senate

John Tuggle (John Tuggle, Primary Capital Advisors, LC) — Sat, 20 Jun 2009 12:19:21 -0700

Open letter from Senator Johnny Isakson, Georgia in reference to First time Homebuyer Tax Credit, currently under review and debate in the Senate.

Dear Friends,

First-Time Homebuyers Forum
I'm pleased to announce that I will host a statewide First-Time Homebuyer's Forum on Saturday, June 27, 2009. The workshop will be held at the Busbee Center at Gwinnett Technical College in Lawrenceville, Ga., from 10 a.m. until noon.

This forum is an opportunity for first-time homebuyers to hear from professionals on best practices for first-time homebuyers, federal and state tax incentives, how to choose a Realtor, and general information on the home purchasing process. Presenting organizations will include the U.S. Department of Housing and Urban Development, the Georgia Department of Community Affairs, the Georgia Association of Realtors and the Mortgage Bankers Association of Georgia. Representatives from the U.S. Small Business Administration, the Department of Veterans' Affairs, the Atlanta Board of Realtors and Gwinnett County also will be available to speak with attendees.

Anyone interested in attending interested must make a reservation online at rsvp@isakson.senate.gov, or by contacting my office at (770) 661-0999. All persons who wish to attend must do so by the registration deadline on Thursday, June 25, 2009, at 5 p.m.

I am honored to be able to offer this excellent opportunity to first-time homebuyers from across Georgia. As someone who was in the real estate business for more than three decades, I'm well aware of the value of a knowledgeable buyer. Information is power in home buying and negotiating, and I encourage anyone interested in meeting with professionals in the field to participate in our forum.

Senatory Johnny Isakson, Georgia

New Stand Alone Legislation To Boost Housing Demand Introduced In US Senate, Letter From Honorable Johnny Isakson, GA

John Tuggle (John Tuggle, Primary Capital Advisors, LC) — Sat, 13 Jun 2009 14:17:35 -0700

Dear Friends,

This week, I introduced stand-alone legislation to boost housing demand and to restore the economy by expanding the first-time homebuyer tax credit passed by Congress earlier this year.

The legislation would increase the maximum amount of the credit from $8,000 to $15,000 and expand the current tax credit so that it applies to any buyer of any home, not just first-time buyers. The legislation also would eliminate the income caps of $75,000 for an individual and $150,000 for a couple under the current tax credit. Finally, the legislation would extend the tax credit for one year from date of enactment and would allow homebuyers to claim the credit on their 2009 tax return for purchases made in 2010.

The legislation has already been endorsed by the National Association of Realtors and the Housing Working Group of Business Roundtable. In addition, it has gained bipartisan support in the Senate from Senators Lamar Alexander, R-Tenn., Jim Bunning, R-Ky., Saxby Chambliss, R-Ga., Chris Dodd, D-Conn., John Ensign, R-Nev., Joe Lieberman, ID-Conn., Lisa Murkowski, R-Alaska, James Risch, R-Idaho, and David Vitter, R-La.

After spending more than three decades in the real estate business, I understand the housing market and its critical role in our overall economy. In the mid-1970's when America faced a similar housing crisis following a period of easy credit and loose underwriting that flooded the market with new construction and a three-year supply of vacant homes, Congress responded by passing a $2,000 tax credit for anyone purchasing a new home for their principal residence. The results from that tax credit were clear and swift as home values stabilized, housing inventory dropped and the market recovered.

The first-time homebuyer tax credit has made a difference. First-time home buyers have used it and the market has stabilized slightly. However, the real housing recession is not with first-time home buyers - we have a recession in the move-up market. Americans are still facing an illiquid housing market, a decline in their equity, a decline in their net worth and a depression in the housing market that we are obligated to correct if we possibly can.

Today, in the United States, one in two sales made every day is a short sale or a foreclosure. That is an unhealthy market, and it is continuing to precipitate a downward spiral in values, loss of equity by the American people and a protracted, difficult economic time for our country. This legislation will swiftly help our economy get back on track.

From Honorable Johnny Isakson, US Senate, Georgia

It's no longer Shop Til You Drop; It's Save To The Grave!

John Tuggle (John Tuggle, Primary Capital Advisors, LC) — Wed, 03 Jun 2009 16:55:56 -0700

After a little volatility this morning the mortgage markets settled down this afternoon. Stocks were lower all day but the trading didn't look anything like some kind of reversal, just taking a breather ahead of jobs data tomorrow and Friday. As usual with any declines in equities, going into the close the losses through the day were cut in half in the last 30 minutes from levels at 2:30.

This morning's ADP employment report may have taken a little wind from the sales of the markets, job losses at 532K in May and a revision from -491K in Apr to 545K isn't a strong building block.

Bernanke was testifying to the House Budget Committee today and did his usual best to paint the economy as one that has seen the worst, ditto on the financial system; but shot some arrows into the air. Spitting in the wind; "Unless we demonstrate a strong commitment to fiscal sustainability in the longer term, we will have neither financial stability nor healthy economic growth," Bernanke said in testimony to lawmakers today. "Maintaining the confidence of the financial markets requires that we, as a nation, begin planning now for the restoration of fiscal balance." Fiscal responsibility in Congress is a another oxymoron. His comments that the financial system is still stressed and unless fiscal constraint occurs the the fragile system could take another major hit; saying the Fed won't finance government spending over the long term.

"In recent weeks, yields on longer-term Treasury securities and fixed-rate mortgages have risen," Bernanke said. "These increases appear to reflect concerns about large federal deficits but also other causes, including greater optimism about the economic outlook, a reversal of flight-to-quality flows and technical factors related to the hedging of mortgage holdings." Generally Bernanke said he thinks the economy will bottom before the end of the year. That statement is one we would not take on its face; consumers, although having to spend on necessities, are not about to spend enough or see incomes increase this year and possibly next. Bernanke said what any Fed head would be expected to say about the recovery; jawboning however, has its limits.

PIMCO's Bill Gross has coined the next phrase that the media will eventually beat to death; speaking to what kind of economic recovery, Gross said " its no longer shop 'til you drop, its save to the grave"; very apropos, He is right on and with the new mantra. Gross also continues to warn that the

Weekly jobless claims at 8:30 tomorrow; expected to be another increase of 620K, look for The Street and its pundits to spin it as good news. Also tomorrow markets will drop back to supply when Treasury releases the amounts for next week's dip in the well; 3 yr, 10 yr and 30 yr issues next week. Interest rate markets will have a tough hill unless the equity market finally capitulates into a retracement. Friday, the current estimate consensus (another oxymoron for job guesses) 630K job losses with a range of estimates between 495K and 625K.

Mortgages are a little better now than at 10:00 but no one we know of re-priced better. Lenders are not going to get aggressive with pricing in this environment and the bearish outlook that currently exists. We say it everyday, but we feel we have to; unless the view of economic recovery that is sending stock markets up changes interest rates won't do much better, add in next week's supply and it is not likely we can expect much improvement. It is a risky trade now to be holding rate locks; if jobs data indicate more losses than expected rate markets are not likely to see yields decline much. All that said, those that have an appetite should hold locks, mortgages at 4:00 are 8/32 better than at 10:00.

Selling in the mortgage markets continued today (until about 3:00) as wholesalers and originators race to get ahead of the increasing interest rate markets

John Tuggle (John Tuggle, Primary Capital Advisors, LC) — Thu, 28 May 2009 21:33:50 -0700

Selling in the mortgage markets continued today (until about 3:00) as wholesalers and originators race to get ahead of the increasing interest rate markets. It took two and a half months of rising 10 yr note rates, from 2.50% to 3.73% yesterday, while at the same time mortgage rates hardly increased. Yesterday someone turned on the light and realized that just because the Fed will buy a total of $1.25T of MBSs that would not be enough to counter the 125 basis point increase in the 10 yr note. That said, we are now looking for the 10 to retrace some of the rapid increase in rates and will also support the mortgage markets. Not likely though that the trend in the rate markets will turn from bearish to bullish so any rallies in rates should be seen as an opportunity to get some business done. Likely though, when there is an improvement in mortgage rates most will miss it as they will wait to long, being too greedy to squeeze the last drop out of the pipe.

The stock market is as strong as a rock, we continue to look for a retracement in that market, and yesterday it appeared we may have it; today, however the indexes rallied again, recovering much of the decline yesterday. Any real chance for a big decline in rates rests with the possibility that the equity markets will reverse and make a big move lower. So far equities have shrugged off any negative news in favor of the view that the economy has bottomed. A good example of ignoring bad news came this morning with the April durable goods orders; increasing 1.9% against forecasts of +0.5%, nice on the surface but in March durables were revised today from -0.8% to -2.1%; and March new home sales originally reported-0.6% were revised to -3.0% (April +0.3%). And the lower revisions from previous months has been the norm for many of the 45 economic reports released each month.

Auction of $26B 7 yrs saw a higher 3.300% with a bid-to-cover of 2.26 and an indirect bidder take of a near average 33.0%. The market was not impressed, but had also been fairly well prepared for a sloppy outing. Not as bad as many were thinking this morning and gave some relief to treasury rates as we move to the end of the session. Supply will take a rest now for two weeks, then back again with a 3 yr, 10 yr and 30 yr offering. So far the fear the Chinese would make good on their comments that it may not be so aggressive in buying US debt has not materialized.

Foreclosures are on the increase; foreclosure starts jumped 27% in the first quarter to 1.33% of all outstanding residential loans as state foreclosure moratoriums expired and it became clear that certain at-risk homeowners couldn't qualify for government-mandated loan modification programs. At year-end the foreclosure start rate was 1.08%. 53% of foreclosure starts in the quarter were so-called prime mortgages. According to figures compiled by the Mortgage Bankers Association, 9.12% of all home mortgages were in some stage of delinquency/foreclosure at the end of March, that equates to a total of $874B of delinquencies. 25% of all sub primes are delinquent; 7.28% of all mortgage loans are 90 days late.

Tomorrow more data; at 8:30 Q1 preliminary GDP is expected at -5.5%, up from -6.1% reported in the advance report a month ago. At 9:45 the May Chicago purchasing mgrs index is expected at 42.0 frm 40.1 in April. The U. of Michigan consumer sentiment index at 9:55 is expected to have increased to 68.0 frm 67.9 two weeks ago; last Tuesday the Conference Board reported its consumer confidence index jumped to a very strong 54.9 frm 40.8 in April.

We said this morning that the mortgage markets would be volatile today; they were. Mortgage prices started weak, got weaker and weaker, then about 3:00 this afternoon found traction and bounded to be unchanged on the day at 4:00. The 10 yr also was volatile; up early, then sold off at mid-day and then after the 7 yr note auction found footing to trade 7 basis points lower than yesterday's close. We can expect intraday and interday volatility to be high for the next week or so.

Mortgage markets continue to perform better than treasuries; the spread between the 10 yr note and mortgages had widened to about 270 basis points earlier this year and now at 165 basis points; the spread that has been typical over the years.

John Tuggle (John Tuggle, Primary Capital Advisors, LC) — Wed, 29 Apr 2009 18:20:13 -0700

The FOMC policy statement was about the same as the March 18th meeting; the fly for treasuries and to a lesser extent mortgages, was that the Fed did not increase the purchases of treasuries or mortgages from what it announced at the March meeting ($750B of MBSs and $300B of treasuries). And the statement did indicate that economic activity had shown some improvement since the March meeting. That has been reflected in some of the recent economic data that has hit since the March meeting, particularly increases in consumer sentiment and confidence. click to read the entire statement http://www.federalreserve.gov/newsevents/press/monetary/20090429a.htmThat the Fed deliberately refrained from keeping support at 3.00% for the 10 yr blew the yield up to 3.12% on the initial knee jerk and took mortgage prices down on the initial move 20/32 clearly demonstrates that markets were hoping and trading on the idea the Fed would send the message it will keep rates from increasing. When that wasn't there traders turned on treasuries and to a lesser extent on mortgages and rates broke out of their tight four week range on the 10. As we have been showing in the charts in the morning reports for the past month, the technicals had been bearish on the RSI and moving averages, being held in check at 3.00% area. Mortgages however are in better shape technically with investors following the Fed in MBS buying; mortgages being originated today in the TBA market are likely some of the best in years in terms of credit quality and based on very subdued appraisals. By 3:30 the 10 yield remained at 3.09%, -18/32, while mortgage prices on the day bounced back to -6/32.(see below for 4:00 levels)

Almost an after thought; the $26B 7 yr note auction was not that well received. The yield at 2.63% with the cover at 2.28 versus 2.52 at the prior auction and indirect bidders taking just 33% of it from 28.0% in March, but the participation rate still trailed the 38.7% rate seen in February. Supply will continue to press on treasuries next week with another $71B hitting in 3s, 10s and 30s ( $35B 3-year note auction next Tuesday, a $22B 10-year note auction next Wednesday, and a $14B 30-year bond auction next Thursday).

Early this morning the MBA's purchase index fell 0.6% in the April 24 week. Refinancing applications were down 22% in the week but remain very active, making up three quarters of all mortgage applications. Thanks to government buying of Treasuries and agency debt, mortgage rates are at rock bottom with 30-year fixed loans averaging 4.62% for an 11 basis point drop in the week. Housing data have been showing some life but not MBA's report.

Tomorrow weekly jobless claims at 8:30 (unch); also at 8:30 March personal income and spending (-0.2% and unch respectively); the PCE inflation +0.2%. Finally at 8:30 the employment cost index for Q1 (+0.5%). At 9:45 the Chicago purchasing mgrs index (35.0 frm 31.4 in March).

Mortgage markets continue to perform better than treasuries; the spread between the 10 yr note and mortgages had widened to about 270 basis points earlier this year and now at 165 basis points; the spread that has been typical over the years.

Foreclosure starts are continuing to rise to record highs but total delinquencies fell in March to 7.88%, a month-over-month decrease of 5.8%, according to the April 2009 LPS Mortgage Monitor from Lender Processing Services, Inc., Jacksonville, FL. The seasonal February to March decline in delinquencies in the five years from 2002 to 2007 averaged 14%, and the number of newly delinquent loans saw a greater decline in March compared to 2008.

Thirty-year mortgage rates rose to 4.87% in the seven days ended April 9 from 4.78% the week before, which was the lowest since Freddie Mac began tracking the figure 37 years ago

John Tuggle (John Tuggle, Primary Capital Advisors, LC) — Tue, 14 Apr 2009 10:02:12 -0700

Treasuries this morning in early activity (8:00) were sitting unchanged from last Thursday; by 9:00 prices were increasing and yields falling. At 9:30 the 10 +13/32 at 2.88% -4 BP, mortgage prices at 9:30 +1/32. Today treasuries will likely find a little support as the Fed will buy more treasuries, part of its plan to purchase $300B of treasuries announced last month at the FOMC meeting. Interest rate markets are being supported fundamentally by the Fed's buying of treasuries and mortgages, but traders are not overly enthused at the pace of Fed buying so far, more dabbling than taking big bites. Technically, the 10 yr note is supported at the 3.00% level, successfully tested on 9 occasions since early Feb (see chart above). The one thing Bernanke wants is to keep the long end of the curve from increasing in yield; 3.00% is critical in that regard.

The central bank plans to buy treasuries due from March 2011 to April 2012 today and from September 2013 to February 2016 tomorrow, according to its web site. The Fed has more than doubled the size of its balance sheet to $2.09T in the past year by purchasing financial assets including treasuries in an effort to spur growth.

Thirty-year mortgage rates rose to 4.87% in the seven days ended April 9 from 4.78% the week before, which was the lowest since Freddie Mac began tracking the figure 37 years ago. Rates are 1.97% more than U.S. 10- year yields, widening from 1.46% points two years ago, and frm 2.60% last year.

No economic releases scheduled today. This week however is full of reads on the economy.

This Week's Economic Calendar:

Tuesday;

8:30 Mar PPI (unch, the core rate +0.1%)

Mar retail sales (+0.3%, ex autos +0.1%)

10:00 Feb business inventories (-1.1%)

Wednesday;

7:00 weekly MBA mortgage applications

8:30 Mar CPI (+0.2%, ex food and energy +0.1%)

NY Empire State manufacturing index (-35.0 frm -38.2)

9:15 Mar industrial production (-0.9%)

Mar capacity utilization (69.7% frm 70.9% in Feb)

2:00 Fed Beige Book

Thursday;

8:30 Mar housing starts (-5.3%)

Mar building permits (+0.5%)

weekly jobless claims (-9K)

10:00 Philadelphia Fed business index (-32.0 frm -35.0)

Friday;

9:55 U. of Michigan consumer sentiment index (58.5 frm 57.3)

12:00 Bernanke speaking

Note that many of the releases are expected to be slightly better.

Treasuries and mortgages are improving so far this morning; the 10 yr note is so well supported at 3.00% that it can't actually get there to re-test. Traders are completely convinced at the moment that 3.00% will not be breached that anytime the 10 gets over 2.90% buyers step up, so far a trade that has reaped nice gains. On the other side, when the 10 yield falls to the 2.75% area traders turn sellers. Early this morning the 10 traded at 2.93%, at 9:30 back to 2.85%. Mortgage rates of course follow the general direction of the 10, at 8:15 mortgage prices were off 2/32, at 9:30 up 5/32 frm Thursday's close.

Markets in London and Hong Kong are closed today.

The stock market is starting weaker adding support to treasuries and mortgages. More to the point however, it is a technical trade today in both equities and rate markets. The stock market blew up 246 points last Thursday, today talk on the NYSE is an overbought market. Treasuries are getting support today on technical's and the Fed buying more treasuries. With no direct data to focus on today the bond market will trade on how stocks perform. No treasury auctions this week takes the supply issue off the table. Take a quick look at the two charts; note the narrow ranges for both mortgages and the 10 yr; generally no directional movement and likely to remain that way for the rest of the week.

PRICES @ 10:00 AM

10 yr note	*99.04 +19/32 2.85% -7 BP June 10 yr note contract 122.08 -3/32**
5 yr note	99.21 +10/32 1.82% -7 BP
2 Yr note	99.30 +3/32 0.90% -5 BP
30 yr bond	*96.21 +35/32 3.69% -6 BP June 30 yr bond contract 126.31 +34/32**
Libor Rates	(London closed)
30 yr FNMA 4.0 June	99.17 +5/32 (-1/32 frm 10:00 Thursday)
15 yr FNMA 4.0 June	101.00 +2/32 (+1/32 frm 10:00 Thursday)
30 yr GNMA 4.0 June	99.20 +6/32 (+3/32 frm 10:00 Thursday)
15 yr GNMA 4.0 June	102.02 +2/32 (+2/32 frm 10:00 Thursday)
Dollar/Yen	100.23 unch
Dollar/Euro	$1.3287 +$0.0104 (dollar weaker)
Gold June	$897.40 +$14.10
Crude Oil May	$49.26 -$2.88
Goldman-Sachs Commodity Index	369.22 -9.98
DJIA	7991.23 -92.15
NASDAQ	1638.96 -13.58
S&P 500	848.87 -7.69

Monday, 4/13/09 10:30am

Senate Again Unanimously Approves Isakson Amendment to Stimulate Housing Market

John Tuggle (John Tuggle, Primary Capital Advisors, LC) — Sat, 04 Apr 2009 14:52:44 -0700

On Wednesday, the Senate unanimously approved my amendment to the Fiscal Year 2010 Budget Resolution that seeks to stimulate the nation's declining housing market by providing for a $15,000 tax credit to individuals who purchase a home in the next year. My amendment creates a deficit-neutral reserve fund for providing a nonrefundable federal income tax credit for the purchase of a principal residence during a one-year period.

It would also ensure that there is room available in the Fiscal Year 2010 budget for a homebuyer tax credit to be passed at a later date. I plan to introduce my $15,000 tax credit as a stand-alone bill in the next few weeks.

Our economic crisis started with housing, and our economy will continue to suffer unless we do something now to immediately fix the housing problem. I'm pleased my colleagues in the Senate understand the importance of creating targeted incentives that will encourage Americans to buy homes again and implement the first step in my four-point plan to economic recovery

With the government throwing everything but the sink into trying to revive the economy, Treasury borrowings will keep interest rates from falling

John Tuggle (John Tuggle, Primary Capital Advisors, LC) — Fri, 03 Apr 2009 19:12:58 -0700

Not a good day in the bond market; the 10 yr clearly broke its near term support and is now poised to move to 3.00% area. Mortgage rates also moved higher today, following the 10 yr note. Supply is the culprit; as we have talked many times, the long end of the curve is not likely to move much lower than what we saw on 3/18 when the Fed announced it would buy an additional $725B of MBSs and $300B of longer dated treasuries; the 10 fell briefly to 2.50%. It took two weeks to move back to where it traded prior to the Fed's announcement. With the government throwing everything but the sink into trying to revive the economy, Treasury borrowings will keep interest rates from falling. Traders are now turning to supply issues as the equity market is improving. Although we do not believe the economy will rebound much, and the present stock market improvement is a rally in a bear market likely to see new lows by the end of the year, the momentary reality is that investors and talking heads are calling the stock market rally the end of the declines.

Next week we expect Treasury to sell $59B in notes, last week it sold $93B. $6 billion in 10- year inflation-indexed notes on April 7; $35B of 3 yr notes on the 8th, and $18B of 10 yr notes on the 9th. The Congressional Budget Office is now saying a deficit of $1.38 trillion this fiscal year; the White House estimate, $1.17 trillion (low balling). We still look for the deficit to come in higher, at $1.50 trillion. Next year likely closer to $2.0 trillion.

Delinquency rates on the least risky home loans, which account for two-thirds of all mortgages, more than doubled last year, showing credit quality deterioration is spreading through the housing market, U.S. regulators said. Seriously delinquent prime loans climbed to 2.4% of total loans on Dec. 31, from 1.11% in the first quarter, the Office of the Comptroller of the Currency and Office of Thrift Supervision said today in a report. Mortgages in delinquency rose 30% in the fourth quarter, accounting for 4.6% of all home loans, the report showed. "We're in uncharted territory, we've never seen the number this high before," John Dugan, U.S. Comptroller of the Currency, said in a Bloomberg Television interview today.

Wells Fargo plans to expand its presence in warehouse lending using a platform it acquired when it bought Wachovia Corp. at year-end, according to industry officials familiar with the matter. Two sources at Wells confirmed the move but at press time a spokesman could not be reached for official comment. It's believed that at year-end Wachovia had commitments of about $1B. Very good news for non-depositories that need lines to fund mortgages.

On the week: the 10 yr note increased 15 BP to 2.91% at 4:00 -36/32; 5 yr note +8 BP at 1.88%; 2 yr +3 BP at 0.96%. Mortgage prices this week; 30 yrs -16/32 (most of it today); 15 yrs -3/32; FHA 30s -15/32. The spread between mortgage rates and the 10 yr note continue to narrow. Mortgages holding well against treasuries. Crude oil -$0.08; gold -$27.50.

Not yet much to worry about; as long as the 10 yr note doesn't trade over 3.04%. Still stuck in a 50 basis point range on the note but now has come almost all the way back up from the strong one day rally on 3/18 when the FOMC announced the increased mortgage buying and Fed to buy treasuries. Mortgage rates are increasing but continue to look technically stronger than the treasury markets. Not sure that will continue once the stock market enthusiasm wanes in the next week or two. Equities are in a bear market rally, not a turn in the tidal wave of negative economic outlook. The feel-gooders on CNBC are all lathered about the equity markets; misleading those that believe their euphoria.

The Federal Reserve Bank of New York announced Wednesday several additional days that it would purchase Treasury securities in April.

John Tuggle (John Tuggle, Primary Capital Advisors, LC) — Wed, 01 Apr 2009 14:50:45 -0700

The Federal Reserve Bank of New York announced Wednesday several additional days that it would purchase Treasury securities in April. Besides a previously announced operation on Thursday, it will hold five more starting next week. The Fed specified what securities it may purchase on given days, including the first scheduled buyback of Treasury Inflation Protected Securities, or TIPS, on April 16. So far, the central bank has purchased about $23.5 billion in U.S. debt, as it continues plans to buy $300 billion in Treasury securities over the next six months to improve conditions in private credit markets and spur lending.

Fannie Mae has issued the following Announcement: Announcement 09-08, Temporary High-Cost Area Loan Limits and Revised Eligibility Requirements for High-Balance Mortgage Loans

John Tuggle (John Tuggle, Primary Capital Advisors, LC) — Tue, 31 Mar 2009 19:32:30 -0700

Fannie Mae has issued the following Announcement:

•· Announcement 09-08, Temporary High-Cost Area Loan Limits and Revised Eligibility Requirements for High-Balance Mortgage Loans

Effective May 1, 2009, Fannie Mae will accept for delivery loans originated in 2009 using the higher of the current permanent high-cost loan limits, or the temporary loan limits that were in place for loans originated in 2008 that were applicable to jumbo-conforming mortgage loans.

In addition, new eligibility requirements will apply to high-balance loans, including:

•· Revised loan to value ratios for certain loan types

•· New minimum credit score requirements

•· Additional appraisal requirements

Refi Plus^TM options (manual underwriting or Desktop Underwriter^® [DU^®]) are eligible for the high-balance loan feature, including those using the temporary high-cost limits. Eligibility requirements specific to Refi Plus supersede all requirements that apply to high-balance mortgage loans.

High-balance loans may be underwritten manually or in DU. (For DU, lenders must manually apply the temporary high-cost area loan limits and eligibility requirements until DU is updated in a future release.)

For a summary of key eligibility, underwriting, pricing, committing, and delivery requirements, see the new High-Balance Feature Matrix on eFannieMae.com.

If this is accomplished, it will significantly help the mortgage industry.

John Tuggle (John Tuggle, Primary Capital Advisors, LC) — Mon, 30 Mar 2009 16:55:56 -0700

Housing data surprised everyone last week. Existing home sales in February rose 5.1% on expectations of a decline of -0.9%.

February new home sales increased 4.7% on estimates that called for a -2.9% decline. A substantial portion of the sales were from first time homebuyers and distressed properties.

While low interest rates and increased affordability are encouraging developments, the housing sector continues to face high levels of inventory, tight credit conditions and the deleveraging of consumers.

The Mortgage Bankers Association last week asked federal banking regulators to cut the capital requirement on warehouse lines of credit by as much as 80% to alleviate the funding crisis facing non-depositories that we explained was causing delays and major back-ups in closing loans. If this is accomplished, it will significantly help the mortgage industry.

The Georgia Senate overwhelmingly approved legislation Thursday that would give tax credits to buyers of single-family homes

John Tuggle (John Tuggle, Primary Capital Advisors, LC) — Thu, 26 Mar 2009 19:33:58 -0700

The Georgia Senate overwhelmingly approved legislation Thursday that would give tax credits to buyers of single-family homes.

Senators passed the bill 42-4, dismissing objections that the state can't afford what the tax credits would cost in lost revenues during a recession.

Under the legislation, which originated in the House, home purchasers would receive income-tax credits of up to $3,600, or $1,200 for each of three years. To qualify, homeowners would have to apply for the credit within six months of the date the governor signs the measure.

A housing slump was the catalyst of the current recession in Georgia, and only a revitalized housing market would put the state on the road to recovery, said Sen. Chip Pearson, R-Dawsonville, who presented the bill on the Senate floor.

"There's nothing happening out there now to stimulate the market," he said. "This is a true stimulus in that (home buyers) have to act now. This won't be available next year."

But Sen. Nan Orrock, D-Atlanta, said the benefits the tax credits would bring to the state economy wouldn't be worth the cost.

Orrock cited a fiscal note accompanying the bill, which projected the tax credits would reduce state tax revenues by $166.3 million. Based on estimates that the legislation would result in the sale of an additional 1,100 homes, she put the cost of the initiative at about $150,000 per home.

Orrock raised similar cost/benefit arguments on Wednesday in opposing a package of tax credits for businesses that passed the Senate.

On Thursday, Pearson said the housing tax credits would pay off in the long run because the economic activity from the additional home sales would generate added tax revenues.

The Senate made several changes to the bill, sending it back to the House.

Congress is about as helpful these days as a cold sore

John Tuggle (John Tuggle, Primary Capital Advisors, LC) — Tue, 24 Mar 2009 14:06:48 -0700

At 9:00 this morning the 10 yr note traded down 16/32 at 2.71% +6 BP; mortgage prices at 9:00 were -4/32. The stock indexes at 9:00 were pointing to a weaker open after the 497 point rally yesterday. A big day today; this morning Bernanke and Geithner are testifying in Congress at Barney the Frank's committee in the House (again) on the AIG thing on paying bonuses. Congress is about as helpful these days as a cold sore. The Geithner plan announced yesterday is still being analyzed this morning; PIMCO and Blackrock have signed on to take part in the public-private plan to take assets off banks' books and freeing up the market in toxic assets. A bold program on the order of the RTC plan 15 yrs ago where private equity got 85% loans from the government to buy up failed S&L assets. A plan that some are worrying that banks themselves may balk at once there is a dollar amount attached to the junk they are stuck with. A plan that some worry that with Congress acting like school children that lost their ball to bullies and taking it out on first graders; will eventually want their cut if private investors rake in nice profits. A plan that if it fails will drive the economy into a more prolonged recession.

Getting toxic loans off banks' books investors will put up $1.00, the PPIP (public-private investment program) will put up a $1.00, then the FDIC will leverage that up to 600% to buy the loans. Banks will have to sell the junk at a price that entices the private money. The loans purchased by investors and PPIP will be managed by private managers until the loans are paid off or re-sold. The FDIC will guarantee $12.00 for each $1.00 from private investors. . The second part; freeing up the market for toxic securities; Treasury will approve five large fund managers to raise $1.00 the raised capital will be matched dollar for dollar from the PPIP, Treasury will provide loans of 50% to 100% of total equity, then the funds will be used to buy asset backed securities and mortgage backed securities.

A Stampede to get out of the TARP program? Goldman Sachs is making plans to get the money back to the government; JP Morgan/Chase also hurrying to pay back the TARP money. Congress set the tone with its maniacal tirades and tax plans against AIG. Unintended consequences; Congress's actions may lengthen the time it takes to free up the credit markets as banks return the funds and then are left with little to lend. Good news in a sense; markets do not trust government, as it should be.

Not to be overlooked; Treasury begins raising $98B today with $42B of 2 yr notes; tomorrow $34B of 5 yr notes and Thursday $24B of 7 yr notes.

No economic reports scheduled today.

Last Wednesday the 10 yr note yield fell 50 basis points on the announcements from the Fed that it would buy an additional $750B of MBSs and buy $300B of longer term treasuries. At 9:30 this morning the 10 yr has given back 20 basis points of that move. Mortgage rates dipped slightly below 5.00% last Wednesday, now back above 5.00%. While all the current focus is on Treasury and "The Plan", behind the scene fixed income markets are concerned that sooner rather than later (if all the government plans work and the economy begins to recover inflation will storm out of the shoot. Whether the plans work remains a big question, even if they do help free up credit markets there is no direct corollary that it will feed into bank lending and economic rebound. Long term treasuries are stuck in a 50 basis point range with nothing on the horizon now that will break it out.

The dollar is stronger this morning; crude oil down about $1.00. Gold is off over $28.00 so far this morning.

John Tuggle's Blog

First Time Homebuyer Tax Credit Still Alive and Well and Available Into 2011 (For Some)

Question and Answer

Q. Are both spouses required to be overseas for the requisite time period in order to qualify for the 2011 extension to claim the credit?

A. Only one spouse must be overseas on official extended duty for the requisite amount of time for either spouse to be eligible for the 2011 extension of time to purchase a principal residence and claim the credit.

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It's no longer Shop Til You Drop; It's Save To The Grave!

Selling in the mortgage markets continued today (until about 3:00) as wholesalers and originators race to get ahead of the increasing interest rate markets

Mortgage markets continue to perform better than treasuries; the spread between the 10 yr note and mortgages had widened to about 270 basis points earlier this year and now at 165 basis points; the spread that has been typical over the years.

Thirty-year mortgage rates rose to 4.87% in the seven days ended April 9 from 4.78% the week before, which was the lowest since Freddie Mac began tracking the figure 37 years ago

Senate Again Unanimously Approves Isakson Amendment to Stimulate Housing Market

With the government throwing everything but the sink into trying to revive the economy, Treasury borrowings will keep interest rates from falling

The Federal Reserve Bank of New York announced Wednesday several additional days that it would purchase Treasury securities in April.

Fannie Mae has issued the following Announcement: Announcement 09-08, Temporary High-Cost Area Loan Limits and Revised Eligibility Requirements for High-Balance Mortgage Loans

If this is accomplished, it will significantly help the mortgage industry.

The Georgia Senate overwhelmingly approved legislation Thursday that would give tax credits to buyers of single-family homes

Congress is about as helpful these days as a cold sore