Monday Morning Cup of Coffee

A look at stories across HousingWire’s weekend desk, with more coverage to come on bigger issues: Many U.S. stocks futures moved higher early Monday morning, as the markets and the world react to the death of Osama bin Laden. The news comes ahead of a relatively light week of economic data with employment figures coming Wednesday from Automatic Data Processing (ADP) and nonfarm payroll data from the government Friday. Elsewhere, analysts at Barclays Capital expect increased focus on the perceived timing of the normalization of monetary policy in the second half of this year, following the latest meeting of the Federal Open Markets Committee and Federal Reserve Chairman Ben Bernanke’s press conference last week. The central bank has kept the federal funds rate near zero since the end of 2008, and the Fed began reinvesting proceeds from maturing securities in long-term Treasury securities last fall. “The first step in the normalization of monetary policy is likely to be allowing securities holdings to shrink through ending some or all of the reinvestments,” the analysts said. “Risky asset prices improved on the heels of the press conference. In addition, Treasuries rallied across the curve based on the weaker-than-expected GDP report and the chairman’s tempered inflation concerns. Not surprisingly, mortgages also performed well in this environment, trading higher across the coupon stack.” The BarCap analysts remain optimistic about private-label MBS, despite continued supply from Maiden Lane II, “especially given loss-adjusted returns relative to comparable risky assets.” Analysts said a proposal from the Treasury Market Practices Group for a fails charge for agency debt and MBS “will be a positive technical for the basis and the higher coupons, but a negative for specified pools.” “As a by-product of the shortage of collateral and low short-term rates, MBS fails have been a persistent problem in the TBA market…MBS fails to deliver have spiked dramatically since the end of the Fed purchase program, and this issue has exacerbated by strategic defaults,” according to the BarCap analysts. Starting June 1, all loans pooled into certain Ginnie Mae mortgage-backed securities must be current at the time of issuance. BarCap analysts don’t expect the change to affect Ginnie Mae valuations. “A bigger concern, in our view, is the high re-default rate of re-pooled loss-mitigation loans and the lack of ways to identify them,” analysts said. Meanwhile, Interactive Mortgage Advisors is offering servicers $402.1 million of residential loans backed by Ginnie Mae. The Denver-based firm said it will accept bids through May 10 and the bulk servicing offering includes mostly single-family mortgages from across the country. The loans are in 37 different states with 10% in North Carolina, 9.4% in Pennsylvania and 7.6% in New York. No other states has more than about 5.5% of the mortgages. There are 2,408 mortgages in the offering with 64 delinquent loans and 24 foreclosures. Nearly 87% of the mortgages are for single-family properties. The weighted average interest rate for the mortgages is 5.99% with a weighted average term of 332 months. The loans have an average age of nearly seven months and an average size of $167,035. Regulators closed another five banks last week and now 39 have been shuttered through the first four months of 2011. About 300 American financial institutions failed in 2009 and 2010. The Wall Street Journal reported over the weekend that small banks are fighting the political efforts toward reducing federal government support of the mortgage market, claiming the current proposals merely boost the market share of the industry’s biggest players. Small lenders argue the phasing out Fannie Mae and Freddie Mac give the four big banks, which already hold 60% of the domestic mortgage market, even more power, allowing them to dominate the secondary market for mortgage-backed securities, according to the Journal. The Federal Deposit Insurance Corp. estimates a total loss to its deposit insurance fund of about $643.2 million for the five banks closed last week. The Georgia Department of Banking and Finance closed First Choice Community Bank of Dallas, Ga., as well as The Park Avenue Bank of Valdosta, Ga. Bank of the Ozarks in Little Rock, Ark., agreed to acquire the all the deposits and most of the assets of the failed Georgia banks. At Dec. 31, First Choice had total assets of $308.5 million and total deposits of $310 million, and The Park Avenue Bank had assets of $953.3 million and deposits of $827.7 million. The Office of the Comptroller of the Currency closed First National Bank of Central Florida in Winter Park, Fla. And the Florida Office of Financial Regulation shut down Cortez Community Bank of Brooksville, Fla. Premier American Bank of Miami agreed to acquire all the deposits and most of the assets of the two Florida financial institutions. The combined eight branches of the failed banks will reopen as Florida Community Bank, which is a unit of Premier American Bank. As of Dec. 31, First National Bank of Central Florida listed assets of $352 million and deposits of $312.1 million. Cortez Community Bank had total assets of $70.9 million and total deposits of $61.4 million. The Michigan Office of Financial and Insurance Regulation closed Community Central Bank of Mount Clemens, Mich. Talmer Bank & Trust of Troy, Mich., agreed to acquire all the roughly $476.3 million assets and $385.4 million deposits of the four branches of the failed Michigan bank. Write to Jason Philyaw.