Protection Insurance

Everybody has a dream, some want to buy a house while some want to construct a house to their very liking. Not many have cash to make their dream come to reality. That's the very reason why many go in for mortgage loans. This is perhaps the most important financial commitment in ones life. However not most of them realize that, so they don't even bother protecting such a huge commitment. If you are one of them then it is better you read the entire article in which I am about to describe about protection insurance for your mortgage.

Mortgage payment protection insurance is a different form of insurance which is basically designed to protect the mortgagee from loan owners like bank or private money companies. This insurance protects the mortgagee if he or she were to fail to meet the payment. The reason why the mortgagee failed to meet the payment matters a lot when claiming the insurance policy. If he or she were unemployed due to which the payment was not able to be made then the policy will cover, however if the reason for unemployment was voluntary then policy does not provide any coverage. Further more. If the mortgagee is not actively looking for a job then the policy does not provide any coverage.

This is the very reason why one needs to read every clauses of the policy before purchasing. There are two ways one can go about shopping for protection insurance. The first way is to approach a broker, who can explain each and every detail about various insurance policies. This way is suitable for those who do not know anything about new policies. The major drawback is that some information can be withheld voluntary and once the policy is purchased there is nothing one can do. Furthermore with a lot of information it is tough to compare all the policies to see which one is best for you.

The second way is to check out the internet. There are many websites which deal with Protection insurance. One needs to log on to these sites and provide the necessary information for the website to provide you with the list of all existing and new policies which suit your information. Once you have all the policies all you need to do is go through all the policies. If you want to compare any policies you can choose the option of comparison provided in the website.

Is The State Minimum Auto Insurance Coverage Enough?

It is the law in the Commonwealth of Pennsylvania that drivers carry auto insurance. A minimum amount of protection is required to cover any property damage you cause in an at fault wreck as well as liability coverage if someone is injured in a crash. Pennsylvania car insurance minimums may not be nearly enough to cover all the costs associated with an accident though and it is wise to go beyond what the law requires.

Pennsylvania car insurance minimums require $5,000 for property damage and $15,000 per person-$30,000 per accident for bodily injury. These liability amounts can be woefully inadequate though if you are involved in a serious crash. Most new vehicles cost $20,000 or more and if one is totaled in an accident, you would be liable for the total cost of replacing the vehicle if the accident is your fault. Medical costs associated with an accident can quickly escalate as well if you factor in lost wages and rehab, most people carry liability coverage for medical expenses up to $100,000 per accident. With the Pennsylvania sate minimum on medical coverage at $5,000 the time to find out you're under insured is before you have a claim.

Most drivers also go beyond Pennsylvania car insurance minimums to make sure that their own car is covered in case it is stolen or damaged in a hit run accident. Comprehensive coverage is not included with state minimums which means you would be on the hook for the cost of replacing the car or repairing the damage. Collision coverage is not included either which means if your car is damaged in an accident that is your fault; you have to pay for the repairs.

State minimums do not include coverage if you are hit by someone who does not have insurance or does not carry enough coverage. Uninsured and underinsured motorist coverage are popular options that many people will add to their policies and it will not add significantly to the price of your premium. Other popular add-ons to a car insurance policy are rental car coverage and road hazard protection. Rental car coverage provides you with the same type of coverage you have when driving your regular car. Hazard protection means you can recover the cost of repairing a flat tire or the price of a tow if your car breaks down. Remember that none of these coverages are required by the state of Pennsylvania so your may not get them unless you specifically ask the agent.

Direct Car Insurance Advice

Finding an honest to goodness cheap auto insurance deal can be pretty difficult especially if you're living in high cost states. Remember, that your path to savings on auto coverage is a little added research.

In most states there can be over 200 companies supplying auto insurance protection and they are looking for your business. So it is important that you get quotes from most of them to make sure that you get a good idea on what these insurers offer. This enables you to compare rates and which you get for which amount.

Do not forget that those insurers can decide to not insure you depending on your driving history. As soon as you find the auto coverage that fits your needs you also want to make sure that the rates will not change after a year of coverage.

Here are few pointers:

Search the internet. The web is an excellent starting point when you start your search. Most reputable companies can offer you an idea on what these insurance policies cover and for how much. Searching online is also best way to begin comparing insurance coverage companies and see which kinds insurers may be worth looking into.

Use your phone. Most if not all insurers will have an 800 number you can use to call and inquire. This is also the very best way to get to know the insurer much better and see what these folks can offer. Talk to a live agent who can present to you what your options are with their company. This is also a great way to start inquiring about discounts that can allow you to get automobile insurance cheaper.

Look for nearby agents. Search for local insurance brokers which can take your needs and budget into account. Most agents operate for more than one company and these brokers can offer you the ins and outs of each of the companies which they represent. You can also get a quote from popular insurance companies.

To be able to save on car coverage make sure you do your research and evaluate what insurers offer you. It can make all the difference on your auto insurance coverage bill month in and month out.

Determining the Car Insurance Coverage You Need

Car insurance is almost the same like any other insurance where you stay on the safe side and avoid spending money if a mishap occurs that can put you into financial problems if the insurance coverage is not available. However, when you are choosing your auto insurance coverage, you need to completely aware about the available types of insurance coverage. Also, there are certain factors which you need to consider for the purpose of the determining the insurance coverage you need as well.

Car is such a valued investment that auto insurance is the only thing with the help of which you can keep it secured. So, it is important for you to determine the type of coverage you would be getting from your insurance provider ahead of time. Although insurance coverage types can easily get anyone confused but if you can once go over the available coverage types, then the task of determining the best possible one would be become much easier for you.

Including the principle coverage there are some other coverage types that you can include in your policy too like rental or property coverage, crash coverage, physical injury, medical coverage, liability, and some more. Apart from all these car insurance coverage types, there are only two basic types that everyone wants at all costs. Well, it is a necessity so you need to at least have two.

When purchasing a new vehicle, the car insurance is a major concern. Vehicle insurance is something that is necessary and should be there until you possess a car or that particular car. It is more about the safety of other road users compared to the safety of the insured person usually. Car insurance coverage is something that all of us need especially in today's society to avoid problems.

Two major factors decide on the type of coverage you should go for; the type of vehicle that you have and how much have you invested in it. Once you have decided over what major coverage type to go for, then you can also consider the add-on types that your auto insurance company have to offer as additional. Getting the right type of car insurance coverage is important to save money and stay secured; too much is of no use and under covered is too dangerous.
Searching for what's best for your car and your pocket doesn't have to be hard. Nowadays it's fairly easy to get auto insurance quotes and choose which one is the best for you. Stop worrying about your car and your pocket when it comes to auto insurance.

Benefit From A Car Insurance Comparison

Being a smart consumer is what will get you a lot farther in life. This way, you never have to compromise any quality for better prices, regardless of what the product or service may be. For example, you can also benefit from a car insurance comparison to make sure that you are getting the best of both worlds, as you should be.

It is so unfortunate that far too many people do not take advantage of this and all other opportunities that come their way. They would rather pay full price and not be bothered. But full price when it comes to insurance is far more expensive than you can imagine. Obviously, this is an ongoing service or product which you require every year for as long as you own a vehicle and are driving it on a public road.

Therefore, you have to multiply that amount by several years and factor in increases for inflation and other justifiable reasons like claims or infractions. As you can see, the result will be far more than you probably care to pay.

Now, if you have done your comparison shopping, you might land on some less expensive insurers that will provide you the coverage you want at a rate that can be hundreds of dollars less than you already pay. Now, multiply those savings by the amount of years you may have used as an example above. Certainly, you can find other use for that amount of money!

As well, it is never been easier to do such a comparison than now. With the help of the Internet, this can be a simple task requiring just a few moments out of your life that could turn out to be a present for you each year. These savings can help you find your next vacation or another big-ticket item that you might have been saving up for. By the same token, it can easily pay off other debt.

Of course, for it to really count, your car insurance comparison shopping has to include several examples. Don't stop at one or two quotations. You need a good amount to really get a full understanding of what is available on the market to drivers, like yourself. Think of it as an investment with a long-term result. This investment will require no money on your part, and only time. But, the return on your investment will be monetary.

Source

Bill would repeal FSA cap provision in health care reform law

WASHINGTON—Legislation introduced in the Senate on Thursday would repeal provisions in the health care reform law that cap how much money employees will be able to contribute to flexible spending accounts and sharply restrict the use of FSAs and health savings accounts to pay for over-the-counter medications.
The measure, S. 312, introduced by Sen. Kay Bailey Hutchison, R-Texas, would remove the provision, which, effective in 2013, places a $2,500 ceiling on FSA contributions. Under current law, there is no limit, though employers typically cap employee contributions at between $4,000 and $5,000.
Sen. Hutchison’s bill, which has seven co-sponsors, all Republicans, also would remove a health care reform law provision that bars employees from using their FSAs and health savings accounts to pay for over-the-counter medications, except for insulin, without a doctor’s prescription. That provision took effect on Jan. 1.
These new restrictions “stifle patients’ flexibility and freedom to use health benefit accounts that have helped make care more affordable for tens of million of Americans,” Sen. Hutchison said in a statement.
“Our bill strikes these arbitrary limitations and puts patients back in charge of how and when they’ll use HSA and FSA benefits,” she said.
A companion bill, H.R. 605, was introduced in the House by Rep. Erik Paulsen, R-Minn.

Long-range Somali Piracy Could Affect Insurance Costs, Conditions

Insuring ships against piracy could become more expensive and subject to tighter conditions after the hijacking this week of oil tanker Irene SL, one of the most long-range attacks to date by Somali pirates.

Analysts say the incident, some 1,000 miles off the coast of Somalia, confirms the seafaring gangs can operate with ease in waters previously considered safe, marking a clear escalation of the risks faced by shipping in the region.
“Premiums may rise further if the Lloyd’s market makes larger losses, and this will continue to push up the price of shipping goods, potentially raising commodity prices in affected markets such as in the Gulf,” said John Drake, senior risk consultant with security firm AKE Ltd.
Ship owners seeking financial protection against attacks by Somali pirates typically buy marine kidnap and ransom cover in the Lloyd’s of London market, insuring themselves against the cost of raising and delivering multi-million dollar ransom payments.
Insurers are reluctant to disclose the size of marine K&R premiums or claims for fear that pirates will use the information to set their ransom demands, with any increase potentially setting off an inflationary spiral.
A study last month estimated the total cost of insurance due to Somali piracy was up to $3.2 billion annually.
Brokers say that while the Irene SL hijacking has so far caused no rise in the cost of marine K&R cover, insurers are likely to step up their demands that ships operating in pirate-infested waters take physical precautions against attacks.
“We haven’t seen any dramatic increase in premiums to provide the cover that’s required,” said Sean Woollerson, marine insurance specialist at insurance broker Jardine Lloyd Thompson .
“Underwriters are paying far more attention to the security measures taken by owners. We can negotiate a discount off the price quoted by underwriters for those measures being put in place.”
The most widely used on-board defenses against piracy include razor wire and so-called citadels – secure rooms with communications equipment into which crew members can retreat while remaining in control of the vessel until naval forces arrive.
PRICE SQUEEZE
Some ship owners may baulk at an increase in insurance prices as they struggle with wafer-thin margins caused by a glut of shipping capacity ordered before the economic crisis of 2008 muted commodity demand in the developed world.
“(Dry bulk) owners already operate at such thin margins that they cannot possibly be squeezed for much more in terms of insurance, and are not likely to be able or even inclined to adopt mitigation measures,” said J. Peter Pham, an African security adviser to European and U.S. governments and companies.
Brokers estimate that sales of marine K&R policies have risen to about $125 million a year since 2008, when the product was first developed in response to an upsurge in vessel seizures and ransom demands off the coast of Somalia.
Prices initially rose strongly in the face of strong demand before leveling off last year because of increased competition as more insurers entered the market, attracted by the bumper profits on offer.
A spokeswoman for Hiscox, the biggest provider of marine K&R in the Lloyd’s market, said it was too early to tell whether the seizure of the Irene SL would spur a fresh rise in premiums.
Richard Scurrell of Special Contingency Risks, a unit of brokers Willis, said the insurance impact will depend on the size of any ransom payments, and warned that no let-up in the frequency of attacks is likely until a stable government is established in Somalia.
“I take the view that you’re not going to fix the problem (of Somali piracy) until there’s some solution to the problems on land,” he said.

6 in 10 Employers Want Health Reform Repeal

LIVONIA, Mich., Feb. 10, 2011 /PRNewswire/ --For even the most casual observer, it's obvious that the ''Patient Protection and Affordable Care Act'' is one of the more controversial laws ever passed by Congress. But even savvy observers may learn something new about the attitudes and concerns employers expressed about the law in "Health Care Reform 360," a new national study by Market Strategies International, the highly-regarded global market research and consulting firm.
"Sixty-two percent of employers included in our study hope Health Care Reform is repealed, with 29 percent strongly in favor of repeal," said Susan McIntyre , senior vice president in the company's Healthcare Division. "And 72 percent disagree that it will reduce their company's health care cost burden. This is independent of firm size and whether or not employee health benefits are currently offered."
Findings also show:

• 63 percent of employers disagree that Health Care Reform will make their business more competitive from a cost of doing business standpoint
• 63 percent also disagree that it will make their company more competitive in attracting and retaining employees

"However, seven in ten believe some parts of health care reform should stay in place and 58 percent believe reform was long overdue," said McIntyre. "This suggests that while most employers do not support the law as it is currently written, there is support for some aspects of the law."

Think Outside the Bun

That is Taco Bell’s slogan.  It’s meant to remind us that fast food doesn’t end with hamburgers. Tacos are pretty tasty in their own right.
In the lending world, the closest equivalent to “the bun” is the 5-year fixed mortgage. Like hamburgers are to fast food, the 5-year fixed is to mortgages. It’s been the most popular term in Canada for years.
Yet, despite its prevalence, qualified borrowers owe it to themselves to think outside the 5-year fixed. A little extra risk can sometimes yield a lot more reward.
Fixed 5-year mortgages are especially popular in uncertain/rising rate markets (like today’s). People who can’t afford rate risk, and those who cannot qualify for shorter terms, often choose a 5-year fixed by default.
Even individuals with rock-solid financial resources frequently gravitate to 5-year terms. Much of the time that’s because they don’t want to overthink the safety of a longer-term mortgage. In other cases, it’s because no one has ever shown them how much 5-year fixed terms really cost over the long run.
No matter how popular 5-year terms are, however, mortgages are not a one-size-fits-all proposition.  For those who can stomach the chance of higher rates at renewal, various compelling alternatives exist. One happens to be the 3-year fixed.
Lenders like Merix Financial, HSBC, and others still have three-year rates in the 3.35% range or better. That’s 59+ basis points below current 5-year pricing.
At those rates, (from a purely mathematical and hypothetical perspective) the 3-year fixed performs better in our internal simulations than any other term, be it a variable or a 1, 2, 4, 5, 7 or 10-year fixed.¹
With major banks forecasting a 2% rate hike in 24 months, 3-year fixed mortgages model even better than variable-rate mortgages (primarily because of the 3-year’s low rate and its 36 months of rate-hike protection).
This doesn’t mean a 3-year will definitely save you more money than any other term. It just means they offer very good value with decent odds of interest savings.
On a $300,000 mortgage with a 25-year amortization, a 3.35% three-year will save you about $5,130 over a 3.94% five-year fixed. That’s over 36 months.
After 36 months, you can move into any other term you want (e.g.,  a 1-year fixed, variable, or another 3-year fixed). As long as your rate at renewal is about 5% or less, you’ll come out ahead of today’s 5-year fixed.
A few other points about 3-year terms:

• You can make your 3-year fixed payment equal to a 5-year fixed payment, thus shrinking your amortization even faster.
• People tend to refinance 5-year terms roughly every 3.5 years on average. Three-year terms let people out without a penalty just before many of them are getting ready to renegotiate their mortgage.

The “optimal term” (if there is such a thing) changes as rates fluctuate and as borrowers’ finances change.
All things considered, however, the three-year fixed is the sweet spot of the mortgage market at this particular point in time.

Refinance Demand Dips as Mortgage Rates Reach 10-Month High

The Mortgage Bankers Association (MBA) today released its Weekly Mortgage Applications Survey for the week ending February 4th, 2011.
The MBA's loan application survey covers over 50% of all U.S. residential mortgage loan applications taken by mortgage bankers, commercial banks, and thrifts. The data gives economists a snapshot view of consumer demand for mortgage loans. In a falling mortgage rate environment, a trend of increasing refinance applications implies consumers are seeking out lower monthly payments. If consumers are able to reduce their monthly mortgage payment and increase disposable income through refinancing, it can be a positive for the economy as a whole (may boost consumer spending. Also allows debtors to pay down personal liabilities faster). A trend of declining purchase applications implies home buyer demand is shrinking.
Excerpts from the Release...
The Market Composite Index, a measure of mortgage loan application volume, decreased 5.5 percent on a seasonally adjusted basis from one week earlier.  On an unadjusted basis, the Index decreased 3.9 percent compared with the previous week.
The Refinance Index decreased 7.7 percent from the previous week.  The four week moving average is down 1.5 percent. The refinance share of mortgage activity decreased to 66.6 percent of total applications from 69.3 percent the previous week.
This is the lowest refinance share observed in the survey since the week ending May 14, 2010.

The seasonally adjusted Purchase Index decreased 1.4 percent from one week earlier.  The unadjusted Purchase Index increased 4.8 percent compared with the previous week and was 16.6 percent lower than the same week one year ago.   The four week moving average is down 0.8 percent.

The average contract interest rate for 30-year fixed-rate mortgages increased to 5.13 percent from 4.81 percent, with points decreasing to 0.84 from 1.02 (including the origination fee) for 80 percent loan-to-value (LTV) ratio loans.  This is the highest contract 30-year rate recorded in the survey since the week ending April 9, 2010. The 32 basis point jump is the largest rate increase since June 2009.  The effective rate also increased from last week.
The average contract interest rate for 15-year fixed-rate mortgages increased to 4.29 percent from 4.13 percent, with points increasing to 1.02 from 1.01 (including the origination fee) for 80 percent LTV loans. This is the highest contract 15-year rate recorded in the survey since the week ending May 7, 2010.  The effective rate also increased from last week.

"Mortgage rates increased last week as many incoming economic indicators continue to show stronger growth than had been anticipated. Refinance volume continues to be low, as fewer homeowners with equity have any incentive to refinance," said Michael Fratantoni, MBA's Vice President of Research and Economics. "We are at the beginning of the spring buying season, but purchase volume remains weak on a seasonally adjusted basis."

The MBS Ledge: Are We Still Teetering? What's at Stake Here?

Today's MBS price movement shouldn't stress you out. Not Yet. They should make you very defensive, but not stressed. Not yet....
Yes, we ended down on the day. Yes, it looked good up until 2pm, but to quote myself: "these are the realities of the post-range-breakout bond market." 
AND WE CAN'T FORGET: We're operating with a handicap where anything can and will be used against the bond market.  Stocks are in favor and bonds have been cast out of the garden. 
With that in mind, today has ended with lower MBS prices because several opportunities to pressure interest rate prices lower were taken advantage of by traders. Those opportunities are almost always taken these days.  It's that simple really, it's the most basic explanation we can offer for bearish technical momentum that still needs to be reversed.
In the big picture, while loan pricing is still very sensitive, we have only inched closer to "The Ledge". And we still have one maybe two major, high volume, sell-offs before current market "Best Execution" jumps up to 5.375%.   We need to see snowball selling before that happens.....we don't want to see it though. That's for sure...
See what we mean by defensive? It only takes a couple of consecutive down days. That means decision time is always just around the corner. BE DEFENSIVE.
That is what's at stake here after all. 5.375% BEST EXECUTION.

So why'd we end up with the Matterhorn at the end of the day?
Combination of reasons really, and the mix of which among them bears more responsibility than the next is debatable.  Certainly, we know that the Budget Deficit hitting it's 2nd highest level ever was reported at the same time the sell-off got moving directionally.  So I'd put that on a short list of suspects for sure.  There were also comments from Fed's Lockhart speaking soothe about high enemployment about 15 minutes later. 
And of course the talk of the mortgage town followed about an hour later when early details of the Obama Administration's white paper on GSE reform were shared with news outlets. Focused mortgage weakness as it relates to preparations for "Snowball Selling" could have forced some investors to sell of portion of the Treasury holdings as well. We call this "extending".  In terms of the impact of the soon to be released GSE Reform White paper on the MBS market and current coupon valuations...This "headline event" has already been leaned on as motivation for fast money day traders who need an axe to grind. Yield spreads are indeed wider into lower prices today so the implied headline risk will likely be pointed to as the reason behind it. Lower and wider hasn't been uncommon lately though. We're just off recently rich valuations and now we're teetering on  shift in duration bias.  This would push the production MBS coupon up to 5.00% and lead "Best Execution" mortgage rates higher (5.375%). READ MORE ABOUT THE SHIFT IN PRODUCTION COUPONS
But the treasury chart will tell you that not much happened.  Feeling optimistic in the morning?  Trade yields under the pivot.  Kinda queasy 'bout the Budget Gap and White Paper uncertainty in the afternoon?  Trade yields back over the pivot.  Can I go home now?  Sure...  Go ahead and show MBS some support around PAR and the 10yr some support around 3.72, keeping each of those markets limited to say.... an 8 tick loss on the day?  Then you're free to go.
What a mixed picture. We've seen lots of short covering lately. So maybe this is a sign that 3.70% will hold....

Tomorrow's candidates for economic report-driven excitement include the Trade Balance at 830am and Consumer Sentiment at 955am.  Oh and the GSE Reform White Paper. You can read more about them, see the consensus estimates, and a few snippets of quotes from economists at the bottom of The Week Ahead.

Higher Loan Funding Costs Loom; Hardest Hit Housing Funds at Work; Originator Compensation a Work in Progress

Many guys only know that Valentine's Day is nearing because their radio stations are playing jewelry store ads. Here's your warning: it's Monday! And here's your number for the day: 1,317. That is the number of U.S. manufacturing establishments that produced chocolate and cocoa products in 2008, employing 38,369 people. California led the nation in the number of these facilities, with 146, followed by Pennsylvania, with 115. For this, and other exciting business patterns, go HERE.
Word had certainly leaked out about the proposals for Freddie and Fannie that have come out this morning. Reuters broke out a set of options yesterday for the plans that were presented today. No one is expecting Congress to have something substantial to act on in the near future. One includes an option to create an insurance fund for mortgage-backed securities that is similar to the FDIC. But in general the paper lays out three legislative options for making long-term changes to the U.S. housing finance system, while also taking near-term steps to gradually lessen the government's role in the mortgage market by making agency loans more expensive. Specific details were released today, and after that Congress, who also produced the Dodd Frank legislation, will be tasked with determining the final plan. Watch out for the battle of special interest groups for many months to come.
The buzzwords on Freddie & Fannie reform seems to be "gradual," "private sector," and "no one wants to spook the fragile housing market." Something tells me that we'll all be sick of those terms by the time Congress ends up with a plan perhaps this year. Here is the latest synopsis on the issue:  Reduced Loan Limits, Larger Down Payments, Higher FHA MIP Fees
And who can forget TILA Reg. Z compensation regulations? This week's focus has been centered on Section 226.36(d)(2) regarding compensation received directly from the consumer. There appears to be some question about the difference between commissions that might be paid on a transaction versus a base salary or hourly wage for a loan officer. Stay tuned - it certainly is a work in progress!
Kinecta Federal Credit Union weighed in with its compensation guidelines, which are a work in progress. "At this time, Kinecta is drafting guidelines around the following: Kinecta will permit Broker compensation to be either Borrower paid or Lender paid. Not both. For Lender-paid Broker compensation, Brokers will be permitted to determine their own levels of compensation. If a Broker's Lender-paid compensation will vary by loan type (e.g. FHA vs. Conventional), Kinecta will require the Broker to confirm that the varying compensation levels comply with the Final Rule (i.e. the different levels of compensation are not based on terms and conditions of the loan or constitute a proxy for terms and conditions of the loan). In order to receive Lender-paid Broker compensation, Brokers will be required to provide Kinecta with a schedule of the Brokers' fees. We will provide a sample schedule of fees for Brokers' use. The Brokers' scheduled of fees may not be changed more frequently than quarterly."

Kinecta goes on. For "Borrower-Paid Broker Compensation," the "Amount of compensation is negotiated between you and your borrowers. Borrowers may use credits from the interest rate chosen to pay for third party fees, but such credits may not be used to cover any amount of the Borrower-paid Broker compensation. Brokers can lower compensation, pay for tolerance violations or offer credits towards third party costs. Borrower may pay discount points to reduce their interest rate." For "Lender Paid Compensation," 100% of the Broker's compensation must be paid by Kinecta. For purposes of the Final Rule, Yield Spread Premiums will always be considered Lender paid. Compensation must match exactly to Broker's schedule of fees on file with Kinecta. Borrowers may also use credits from the interest rate chosen to pay for third party fees. Borrowers may pay discount points to reduce the interest rate. Broker may not reduce commission to pay for tolerance violations, credit third party fees or offer other concessions."
Kevin Warsh, the youngest-ever governor of the US Federal Reserve and one of chairman Ben Bernanke's "buds," is to leave the Fed at the end of March. His leaving will remove a "hawkish" voice from the FOMC although he always supported Bernanke. Apparently he is anxious to return to the private sector. Mr. Warsh's departure may change the balance of the FOMC in favor of keeping monetary policy looser for longer.
MetLife Inc., the parent company of MetLife Bank, reported its 4^th quarter numbers. Profits fell 82%, in part due to derivative losses totaling $1.54 billion. MetLife Bank, which is the mortgage arm, saw its 4^th quarter total operating revenue fall 6% to $355 million as it experienced a decline in mortgage servicing revenue. For all of 2010, however, MetLife pulled in a profit of $2.7 billion versus 2009's loss of $2.4 billion.
And while we're talking billions, the California Housing Finance Agency (CalHFA) is now up and going with its "Keep Your Home California" initiative using roughly $2 billion from the U.S. Treasury's Hardest Hit Fund. Under "Keep Your Home California" are three programs that offer several forms of mortgage assistance and one program that provides transition assistance to borrowers in the process of a short sale of deed-in-lieu transaction: the Unemployment Mortgage Assistance Program, the Mortgage Reinstatement Assistance Program (for homeowners who have defaulted on their mortgage payment due to a temporary change in household circumstance), and the Principal Reduction Program (for houses that have seen a large drop in value). There is also the Transition Assistance Program. I am glad that the money is coming from the Fed, as California is not exactly plush with cash.
"Dolphins are so smart that within a few weeks of captivity, they can train people to stand at the edge of a pool and throw fish." Remember Bowie Bonds? Bowie Bonds were asset-backed securities of current and future revenues of the 25 albums (287 songs) that David Bowie recorded before 1990. Issued in 1997, the bonds were bought for US$55 million by the Prudential Insurance Company with a yield of 7.9% and an average life of ten years. Royalties from the 25 albums generated the cash flow that secured the bonds' interest payments. By forfeiting ten years' worth of royalties, David Bowie was able to receive a payment of US$55 million up front and use the money to buy songs owned by his former manager.
Along those lines, we now have Wireless tower securitizations which are backed by a wireless tower operator's interest in tower sites and the improvements thereon, tenant leases, and associated rents and revenues, through either a mortgage lien or an ownership interest in a special purpose entity. There are currently six issuers. As one might expect the risks center around decreasing tenant lease renewals, industry consolidation, and the inability to fund the "soft bullet" maturity at the anticipated repayment date (i.e., refinancing risk).
Investor changes continue on. BB&T updated its FHA, VA & non-conforming product lines. Chase Correspondent tweaked its conventional high balance product lines, and also followed BofA, Wells, and others by suspending temporary buydowns.
Looking at the MBS markets, "mortgages opened up unchanged vs. the swaps curve but have failed to keep pace with the rallying treasury market as the flight to quality trade picked up momentum thanks to increased tensions in the Middle East" according to one trader yesterday. Once the 30-year Treasury auction results came out, however, everything pretty much sank. The sale of the $16 billion did not go as well as Wednesday's 10-yr auction, although it was still mo' better than the 3-yr auction Tuesday. The bid-to-cover ratio, a measure of demand, was 2.51-to-1 versus 2.67 at the prior auction and an average of 2.55 at the prior four. By the end of the trading day the new 10-year notes closed off/down about .375 with a yield of 3.71%. Mortgage-backed securities, made up of mortgages on current rate sheets, were worse by between .250-.375.