Morning Report 9/12/12

Vital Statistics:

  Last Change Percent
S&P Futures  1435.8 5.2 0.36%
Eurostoxx Index 2568.4 10.7 0.42%
Oil (WTI) 97.4 0.2 0.24%
LIBOR 0.394 -0.005 -1.13%
US Dollar Index (DXY) 79.74 -0.113 -0.14%
10 Year Govt Bond Yield 1.74% 0.03%  
RPX Composite Real Estate Index 193.2 0.1  

Markets are buoyant this morning after a German Court ruled against efforts to block a european rescue fund. Apple is unveiling the iPhone 5 today as well. Mortgage applications rose, while import prices fell. Bonds are down about 3/4 of a point and MBS are down 1/4 or so.

The FOMC starts their two day meeting today, and will release their decision tomorrow around noon. The market expectations are for an extension of ZIRP into 2015 and a new round of bond buying. Given the run we have had in the stock market, we are possibly setting ourselves up for disappointment or a “buy the rumor, sell the fact” reaction.  

If you live in a state with judicial foreclosures (e.g. New York, New Jersey, Florida), you may find that it will cost you more to get a mortgage. Acting FHFA Chairman Ed DeMarco has suggested that Fan and Fred increase their guarantee fees in these states to compensate the fund for the elongated timelines. (It can take 5 years to complete the entire process in NY, while in non-judicial states like AZ the process can be done in 2).  JP Morgan estimates that the proper compensation would be 10 – 20 basis points up front. FHFA intends to put the policy out for comment in the near future, where it will undoubtedly get panned by housing advocates.

WaPo has a long background piece on the CFPB and what it is up to (spraying lenders with subpoenas).

Foreclosure auctions are attracting big institutional money.  Colony, Blackstone, Och-Ziff and Oaktree have raised $8 billion for the activity. The plan is to rent them out of drip them out slowly into a rising housing market. In an era of ZIRP, high single digit rental yields are appealing to yield starved investors.

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