“If passion drives you, let reason hold the reins.” – by Benjamin Franklin

Anyone interested in GSE reform and servicing compensation may want to listen in to a Banc of America Securities/Merrill Lynch call today at 7AM PST. Participant Passcode: 1239593, dial-in number US/CAN Toll Free: 1-888-797-2983. (It will also be available for the next 7 days, in replay form, at 1-888-203-1112, Passcode: 1239593.)

HUD issued a mortgagee letter focused on a change in the remittance process for over claimed amounts of FHA single family claims. This modification of the existing process is being made in response to the Department of the Treasury’s mandate for all agencies to switch from their current lockbox services to Treasury’s Pay.gov collection service. HUD

The FHA flipping waiver was extended. FHA’s “temporary” waiver of the agency’s ‘anti-flipping rule’ was extended through 2011. With certain exceptions, FHA regulations prohibit insuring a mortgage on a home owned by the seller for less than 90 days, but this is now waived. “Since the original waiver went into effect on last February, FHA has insured more than 21,000 mortgages worth over $3.6 billion on properties resold within 90 days of acquisition.”

And finishing up with HUD, recently HUD provided additional guidance on claim filing requirements for FHA’s refinance program for underwater borrowers. The program, begun last August, taps funds from the Emergency Economic Stabilization Act (EESA), administered by the Department of the Treasury, for partial payment of a mortgagee’s unpaid principal balance. HUDUnderwater.

The news out of Egypt on Thursday/Friday pushed bond prices higher & rates lower, and the stock market lower. MBS volume, depending on who you ask was either next-to-nothing or above the recent average. 10-yr notes rallied almost .5 down to a yield of 3.33%, and rate-sheet MBS prices were better by .250-.375, depending on coupon.

As long as Egypt hangs in there, and Europe doesn’t crumble, and China continues to buy our debt, the biggest economic event this week will be the employment report on Friday. Today we’ve already had Personal Income and Consumption (Spending), along with the PCE Prices number. PI was +.4%, as expected, and PC was +.7%, stronger. Later, at 7:45AM MST we have the Chicago Purchasing Manager’s numbers. After these numbers the 10-yr is at 3.36% and MBS prices are about .125 worse.

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Does It Make Sense To Buy a Home?
The financial turmoil we have experienced over the last five years has definitely taken it’s toll. It has especially been a difficult time for real estate. Nationally, values have fallen over 25% and there may be more softening in prices to come. We realize that this has caused difficulty, and in some cases, heartbreak for many families. People unable to make their mortgage payments have been forced to sell or, even worse, have faced foreclosure.

However, the thing that has continued to amaze us is the country’s steadfast belief in the benefits of homeownership even in these most difficult of times. The vast majority of Americans still realize that the value of a family owning a home goes far beyond just the financial considerations.

There have been three major surveys done in the last 75 days delving into Americans’ current belief in the value of owning a home:

The National Housing Survey by Fannie Mae this past November.
The Housing Survey by the Gallup Organization completed last month.
The American’s Attitudes About Homeownership (AAAH) study completed by Harris Interactive for the National Association of Realtors.

Each showed the country still believes that buying a home makes all the sense in the world. Let’s consider some of the findings:

Is owning a home good for a family?

In the AAAH study, 87% of homeowners and 64% of renters believed that “owning a home provides a healthy and stable environment for raising a family”.

The Fannie Mae study showed that the main reason people gave for buying a home is that “it is a good place to raise children and provide a good education”.

Has owning a home been a positive experience?
 

AAAH: The study shows that an astonishing 88% say it has been “a positive or very positive experience”. An overwhelming majority of home owners are happy with their decision to own a home. A full 93% of owners surveyed would buy again.

Fannie Mae: The study shows that 95% see homeownership as a “positive experience” for them and their families.

Do renters aspire to own a home?

AAAH: Most renters aspire to home ownership. The majority of renters (63%) say they are at least somewhat likely to purchase a home at some point in the future. Among them, young adults (18- to 24-years-old) have the strongest aspirations for home ownership.

Fannie Mae: 67% of renters plan to purchase a home in the future.

Is now a good time to buy a home?

AAAH: 78% of homeowners and 58% of renters believe now is a good time to buy.

Fannie Mae: 64% of those surveyed said it is a good time to buy a home.

Gallup Poll: 67% of Americans think now is a good time to purchase a home.

Bottom Line

Survey after survey report Americans believe two things: that there is a value in owning a home and that now is the time to buy!! What are you waiting for?

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WHAT’S IN THE NEWS?

Personal Income Increased 0.4% in December and Consumer spending increased 0.7%, higher than expected and increasing trend for sixth month in a row.  Spending for all of 2010 rose 3.5%, the fastest pace in three years, and the best performance since a 5.2% rise in 2007.

Influential Proposal to Outline Fannie, Freddie Fixes: All MBS would carry explicit government guarantees; Fees charged on mortgage bonds would finance a catastrophic risk insurance fund; If a mortgage firm became insolvent, the government would guarantee payments to investors on their securities, but the firm itself wouldn’t be rescued; Multiple firms would issue the same mortgage security, allowing for liquidity if one issuer failed. It is estimated that the proposal would increase mortgage rates by .5 of a percentage point on 30-year fixed, compared to the increase of 2 to 3 percentage points increase without such a guarantee as estimated by mortgage investors.