Morning Report

Vital Statistics:

	Last	Change	Percent
S&P Futures	1410.0	-2.6	-0.18%
Eurostoxx Index	2486.0	-15.2	-0.61%
Oil (WTI)	104.53	-0.7	-0.67%
LIBOR	0.4692	0.001	0.21%
US Dollar Index (DXY)	78.934	0.114	0.14%
10 Year Govt Bond Yield	2.16%	-0.02%
RPX Composite Real Estate Index	170.63	0.1

Equity markets are slightly lower this morning on no major news. Bonds are up half a point and MBS are up about 1/4 of a point. After spiking to 2.38%, the 10 year bond has been slowly rallying, with yields back to 2.16%.

Regulators are trying to figure out how to apply some of the terms of the landmark $25 billion settlement to other financial firms. Iowa AG Patrick Madigan fires a shot across the bow of servicers: "Loan servicing has been a mess for the past four of rive years. Reforming that industry is very important and very challenging." He goes on further to say that it isn't only the servicer / borrower relationship that he is focused on, it is also the servicer / MBS investor. Of course this helps explain why you can't give away MSRs right now. Regulators are going after another 8 banks - SunTrust, US Bancorp, PNC, EverBank, GOldman, OneWest, MetLife, and HSBC.

The $25 billion settlement included a foreclosure moratorium which kept a lot of property off the market. They are about to be released, and RealtyTrac estimates that prices could drop as much as 10 percent. Moody's estimates sales of REO will probably rise 25% this year. A lot of these properties could be 100% losses. Interesting statistic from the Federal Reserve Bank of Cleveland: Foreclosures held less than a year lose about 35%. After two years, the loss is close to 60%.

The NYT has yet another piece on institutional investors buying REOs and turning them into rentals.

The markets will be looking to the release of the FOMC meeting minutes for more clues into QEIII and what replaces Operation Twist. They should be released around 2:00 - 2:15 EST.