For Sale Vs Pulse

When I was growing up, no one that I knew of wanted to be a “purchasing manager”. Anyway, purchasing managers are surveyed, and the results can make the financial markets move. What exactly is a purchasing manager? Whether for use by their own company, or for re-sale, purchasing managers, buyers, and purchasing agents purchase goods for a job. They are considered experts at price, quality, availability, reliability, and technical support when choosing suppliers and merchandise, and are responsible for obtaining all of those at the best price while maintaining desirable inventory levels. It may be a commodity, a finished good, whatever, produced in an old way or by using new technology, produced by a long-time supplier or a new vendor, it doesn’t matter. So tracking what these purchasing managers are doing gives statisticians and recent math majors a feeling that they have their finger on the pulse of the general economy.

What do we have for economic news during the last official week of summer, and the last week that one can wear white pants and still be fashionable? (That is, if ever wearing white pants is fashionable outside of Florida…) Today is the Chicago Purchasing Manager’s Index (see above). Tomorrow we’ll have Construction Spending, Pending Home Sales, and the ISM Index; Wednesday Factory Orders, the minutes from the Fed meeting, and the always-questionable ADP Employment Survey; Thursday Jobless Claims,; and then on Friday, when everyone is trying to leave town (whatever town they happen to be in), all of the Nonfarm Payroll data (NFP expected -225k). With no news yet, the bond market is seeing a slight rally: the 10-yr is back down to 3.45% and the 5-yr and mortgage prices are about unchanged versus Friday afternoon.

Fannie Mae gave loans from Taylor Bean “the Heisman”. (Think of the statue: player holding his arm outstretched, hand pushing away.) “Conventional and government loans for which TBW was involved in any part of the origination process – including borrower application, processing, obtaining documentation, and/or underwriting – are ineligible for delivery to Fannie Mae unless re-underwritten by the lender selling the loan to us.” And if anyone wants to send Fannie one of the TBW loans, they must obtain all new documentation, with a HVCC-compliant appraisal, “including a new borrower loan application, and underwrite the TBW-originated loan to your own standards and Fannie Mae requirements. If the loan was previously underwritten through DU, a new DU loan case file must be created and submitted, or the loan must be fully underwritten manually.” And any seller had better be prepared to rep and warrant their underwriting, plus Fannie “will perform extra quality control on loans known to be sourced by TBW.”

And since Fannie is purportedly able to track previous DU case numbers, it probably isn’t in anyone’s best interest to try to slip a loan by them that was previously related to TBW.

Is your sentiment as a consumer improving? The sentiment of those consumers polled by the University of Michigan’s is, improving in late August but still below July’s level. And what else happened Friday? The FDIC said it had 416 banks on its "problem list" at the end of June, equivalent to about 5% of the nation's banks. And these banks had/have a combined $300 billion of assets, compared with only $78 billion a year ago. So should the government send the FDIC more money now or wait a month or two? On Friday the FDIC “only” closed down three banks: Affinity Bank (CA), Bradford Bank (MD), and Mainstreet Bank (MN).

With rates having crept down somewhat, canny Secondary folks are dusting off their float-down information. It runs the gamut, from “we don’t have a policy” to “what’ll take to keep that lock?” Flagstar, for example, says, “Existing locks can now go to current market minus .50 in fee from the current market price…you will be capped at your current rebate if the float down price exceeds your current rebate.” Bank of America Home Loans say, "We don't have an official float down policy but we will work with our customers to renegotiate the rate down.” Be forewarned, however, that most investors won't pay a higher premium, but will focus on lowering the rate for the borrower.