The Future of Fannie and Freddie Still TBD

Vital Statistics:

	Last	Change	Percent
S&P Futures	1796.1	2.6	0.14%
Eurostoxx Index	3082.4	27.9	0.91%
Oil (WTI)	93.46	-0.4	-0.40%
LIBOR	0.237	-0.001	-0.31%
US Dollar Index (DXY)	80.67	-0.176	-0.22%
10 Year Govt Bond Yield	2.70%	-0.01%
Current Coupon Ginnie Mae TBA	105.9	0.0
Current Coupon Fannie Mae TBA	104.8	0.0
RPX Composite Real Estate Index	200.7	-0.2
BankRate 30 Year Fixed Rate Mortgage	4.3

Markets are up small this morning on no major news. Bonds and MBS are up small.

We don't have a tremendous amount of economic data this week, although we will get the minutes from the October FOMC meeting. Analysts will be looking for clues regarding December. Remember the state of play from the Sep meeting - the Fed didn't think the economic data warranted reducing asset purchases, but some felt like they had to do it anyway, just to maintain credibility. I don't think the credibility argument really applies anymore, although the Fed may do a token move just to say they did it. Also the market seems pretty convinced that any changes will be on the Treasury side, not the MBS side. (That doesn't mean mortgage rates won't go up, they will)

Earnings season is largely over, except for the retailers. I think the consensus is that this year's holiday season will be nothing to get all excited about. We will hear from the Despot tomorrow and Lowe's on Wednesday. Wal Mart is watching closely to see if the obamacare insurance mandates hurt sales.

The future of Fannie and Fredie is still being worked out. The Senate has to balance the demand from liberals that the mortgage market serve all markets equitably and from conservatives that the taxpayer has to be protected. The goal is to wind down F&F and replace them with a re-insurer which will cover losses over 10%. Will Ackman and Fairholme play a role in this? That will be up to the courts.

Eminent Domain:  The bad idea that won't die. Now Irvington, N.J. is considering. How many of these loans were CRA-driven in the first place? I wonder...

Brent Nyitray, CFA

Director of Capital Markets

iDirect Home Loans

National Asset Direct

Dellacamera Capital Management

1010 Washington Blvd, 6th Floor

Stamford, CT 06901

203-817-3614 (w)

917-841-4938 (c)