Morning Report

Vital Statistics:

	Last	Change	Percent
S&P Futures	1302.7	-7.3	-0.56%
Eurostoxx Index	2143.7	0.6	0.03%
Oil (WTI)	82.22	-2.6	-3.07%
LIBOR	0.468	0.000	0.00%
US Dollar Index (DXY)	82.72	0.666	0.81%
10 Year Govt Bond Yield	1.56%	-0.08%
RPX Composite Real Estate Index	178.7	0.4

Markets are weaker this morning after some disappointing economic data out of Europe. I guess people were hoping for a little bit more out of the Bernank regarding further stimulus when he testified in front of Congress yesterday. The trade deficit narrowed as imports and exports fell by 1.7% and .8% respectively. Bonds and MBS are both up a little. Overall, it feels like a typical Summer Friday and I would expect most of the Street to be on the L.I.E. by noon.

The Fed voted yesterday to accept the Basel III framework. Rob Chrisman has a good piece on how Basel III will impact mortgage pricing. Essentially the new treatment of mortgage servicing rights will force big lenders like Wells to lower the price they are willing to pay for servicing released premiums. In plain English, this means that Basel III has imposed a higher cost on the banks that will be passed on to borrowers. The Fed estimates that the 19 largest US banks are about $50 billion short of meeting new capital requirements, but they also note that these rules will become fully implemented by 2019 and that most banks should be able to meet the new capital requirements through retained earnings and won't need to raise more capital.

Fannie Mae notes in its National Housing Survey that consumer sentiment seems to be plateauing as we head into the summer selling season. Roughly 1/3 of the respondents expect home prices to rise in the next 12 months and 72% believe now is a good time to buy.

The FHA is planning to announce a bulk sale program today. However, they want to deter "vulture investors" by requiring that the loan buyer to wait 6 months to foreclose and to agree to keep at least half the REO for 3 years.