| Last | Change | Percent | |
| S&P Futures | 1504.0 | -9.3 | -0.61% |
| Eurostoxx Index | 2590.3 | -43.3 | -1.64% |
| Oil (WTI) | 90.78 | -1.3 | -1.38% |
| LIBOR | 0.284 | -0.003 | -1.04% |
| US Dollar Index (DXY) | 82.3 | 0.349 | 0.43% |
| 10 Year Govt Bond Yield | 1.84% | -0.03% | |
| RPX Composite Real Estate Index | 194.7 | 0.5 |
Stock markets are weaker this morning after disappointing economic data out of Asia and Europe. Consumer spending grew .2% in January, the first post tax-hike reading on consumption. Bonds continue to rally, and MBS are flat.
Today is sequester day. For mortgage originators, that means cuts at HUD could affect you. FWIW, I met with several HUD people last week who told me that the sequester will not affect them at all. They have increased their headcount by something like 30% over the past couple of years and are slotted to grow that number another 20%. They aren't worried.
That said, Shaun Donovan is warning that the sequestration cuts could lower the availability of FHA loans. Given that the refi boom is probably over, FHA mortgages will probably drop anyway, which means that even if capacity drops a little, demand is probably going to drop more, which will offset the effects of the sequester.
It turns out that JP Morgan's announcement of 13000 layoffs in the mortgage division is not concentrated in origination, it is in workouts. As the number of delinquencies decline, less resources are needed to handle mods and defaults.
Richard Cordray spoke to the Credit Union National Association regarding the Qualified Mortgage Rule and other issues. He urged lenders to extend more credit, saying that they are "leaving money on the table" by not lending to "low risk borrowers who want to refinance." He also urged banks not to concentrate solely on lending to QM borrowers. Of course QM doesn't really provide all that much protection, and the banks know that the CFPB is also working hard to elongate foreclosure timelines. Such is the cognitive dissonance of the CFPB - they want the banks to lend, while at the same time raising their costs if the loan goes bad.
One of FDR's worst ideas was the undistributed profits tax, which taxed retained earnings in an effort to get businesses to hire and pay dividends. This was controversial even in FDRs administration and certainly played a big role in the 1937 "depression within a depression." Well guess what, it is back, at least in the state of Connecticut, which is considering a bill (called a "hoarders tax") that would try and force CT-based corporations to use their retained earnings to hire people or pay a tax. Of course the details haven't been filled in and it is one of those bills that is meant to make a point, but still... If I am a new business considering where to locate, I would think hard about scratching CT off my list.
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