Monday Morning Cup of Coffee

A look at stories across HousingWire’s weekend desk, with more coverage to come on bigger issues: While the Obama administration may be pondering the idea of helping underwater homeowners through principal write-downs, Federal Housing Finance Agency Director Edward DeMarco said there is no current consideration for principal write-downs on underwater home loans. DeMarco told C-SPAN in an interview that the FHFA has already assisted borrowers through principal forbearance programs and loan modification tools that have helped borrowers reduce their monthly payments. He said the other balance the FHFA has to strike is making sure home aid efforts do not afflict taxpayers with additional losses since public funds hold up the quasi-federal housing agencies. He placed write-downs on principal in this camp and suggested the FHFA is not going in that direction. Last week, the Federal Housing Finance Agency announced its plan to tweak the Home Affordable Refinance Program to try and help more underwater borrowers refinance into lower-rate mortgages. President Obama even appeared on the Tonight Show to further spread the message of the administration’s plans. Analysts at Barclays Capital said the details of HARP 2.0 are essentially as expected although “the extent of rep and warranty relief remains somewhat unclear.” Still, BarCap analysts expect a “more benign refinancing response than the market may have initially feared.” “Even pricing in our worst case prepayment scenario, 6s and 6.5s still pick up substantial yield to Treasurys. In our view, this clearly highlights the cheapness of super-premiums,” the analysts said. Barclays Capital also said the FHFA plan seems to attempt to consolidate the policies and procedures of Fannie Mae and Freddie Mac regarding “waiver of reps and warrants, greater usage if AVMs, and simplified income and employment verification.” One analyst at Royal Bank of Scotland said HARP 2.0 will result in just 17% of government-sponsored enterprise 30-year loans qualifying for refinancing. The Occupy Wall Street protests continue across the country and some of the gatherings are starting to get contentious. Protesters have been arrested in Austin, Texas, Dallas, Denver and elsewhere with chaos on the streets of Oakland, Calif. The vitriol directed at banks and mortgage companies doesn’t appear to be slowing down, although the weather is getting colder, which may dampened the size of the protests. Still, there’s plenty of lawsuits working their way through the judicial systems of numerous parts of the country that will keep lenders and regulators occupied for awhile. It seems all of America is now talking about mortgage finance and HousingWire magazine has it all covered. For our November issue, we gathered opinions from dozens of mortgage analysts, lenders, servicers and investors about what needs to be down to get the industry back on track and the economy growing. Look for the latest issue of HousingWire this week. On Tuesday, the Federal Open Market Committee meets again to hash out its next monetary policy. The central bank has kept the target federal funds rate near zero for almost three years and recently began its Operation Twist, in which the Federal Reserve will purchase $400 billion of long-term Treasury bonds in an effort to drive interest rates lower. The Illinois Department of Financial and Professional Regulation closed All American Bank, in Des Plaines, Ill., on Friday. International Bank of Chicago agreed to acquire the roughly $37.8 million of assets and most of the $33.4 million in total deposits held by the one branch of All American. The Federal Deposit Insurance Corp. said the latest bank failure will cost its deposit insurance fund about $6.5 million. All American Bank is the 85th financial institution to fail in 2011. About 300 banks were shuttered the previous two years. Write to Jason Philyaw. Follow him on Twitter: @jrphilyaw.

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