[ucodegen]

But I still don’t understand how can a broker possibly give a better rate than a bank? Can’t I just walk into the same bank and get the same loan without paying any YSP?

Basically they can’t. But an ethical mortgage broker has better access to bank rates and can do a quicker job of comparing/shopping. If you don’t have the time to do the leg work/chasing down banks, a mortgage broker is a good alternative. Be aware, not all mortgage brokers are ethical. The YSP or Yield Spread Premium goes to the broker and creates a conflict of interest with respect to getting a mortgage. The broker in effect works for the bank, not you.. If using a mortgage broker, make sure that they are not the only one trying to find you a loan (do a first/best one wins).

[ucodegen]

But I still don’t understand how can a broker possibly give a better rate than a bank? Can’t I just walk into the same bank and get the same loan without paying any YSP?

Basically they can’t. But an ethical mortgage broker has better access to bank rates and can do a quicker job of comparing/shopping. If you don’t have the time to do the leg work/chasing down banks, a mortgage broker is a good alternative. Be aware, not all mortgage brokers are ethical. The YSP or Yield Spread Premium goes to the broker and creates a conflict of interest with respect to getting a mortgage. The broker in effect works for the bank, not you.. If using a mortgage broker, make sure that they are not the only one trying to find you a loan (do a first/best one wins).

[ucodegen]

But I still don’t understand how can a broker possibly give a better rate than a bank? Can’t I just walk into the same bank and get the same loan without paying any YSP?

Basically they can’t. But an ethical mortgage broker has better access to bank rates and can do a quicker job of comparing/shopping. If you don’t have the time to do the leg work/chasing down banks, a mortgage broker is a good alternative. Be aware, not all mortgage brokers are ethical. The YSP or Yield Spread Premium goes to the broker and creates a conflict of interest with respect to getting a mortgage. The broker in effect works for the bank, not you.. If using a mortgage broker, make sure that they are not the only one trying to find you a loan (do a first/best one wins).

[ucodegen]

With the Fed purchasing $1.25 trillion in MBS trash, is it any surprise that some of the $700 billion in TARP is being paid back?

Not so simple.. see further down on your referenced doc.

What securities are eligible for purchase under the program?
Only fixed-rate agency MBS securities guaranteed by Fannie Mae, Freddie Mac and Ginnie Mae are eligible assets for the program. The program includes, but is not limited to, 30-year, 20-year and 15-year securities of these issuers. The program does not include CMOs, REMICs, Trust IOs/Trust POs and other mortgage derivatives or cash equivalents.

And no, FRE/FNM & Ginnie Mae are not getting off scott free:

Does the agency MBS program expose the Federal Reserve to increased risk of losses?
Assets purchased under this program are fully guaranteed as to principal and interest by Fannie Mae, Freddie Mac, and Ginnie Mae, so the Federal Reserve’s exposure to the credit risk of the underlying mortgages is minimal.

The real purpose here is to keep mortgage interest rates artificially low. No one wants to buy the securitization at those low rates.. so the gov is stepping in to do that. Since it ends first quarter 2010.. I suspect interest rates for mortgages will go up after Q1 2010, unless it is extended.

[ucodegen]

With the Fed purchasing $1.25 trillion in MBS trash, is it any surprise that some of the $700 billion in TARP is being paid back?

Not so simple.. see further down on your referenced doc.

What securities are eligible for purchase under the program?
Only fixed-rate agency MBS securities guaranteed by Fannie Mae, Freddie Mac and Ginnie Mae are eligible assets for the program. The program includes, but is not limited to, 30-year, 20-year and 15-year securities of these issuers. The program does not include CMOs, REMICs, Trust IOs/Trust POs and other mortgage derivatives or cash equivalents.

And no, FRE/FNM & Ginnie Mae are not getting off scott free:

Does the agency MBS program expose the Federal Reserve to increased risk of losses?
Assets purchased under this program are fully guaranteed as to principal and interest by Fannie Mae, Freddie Mac, and Ginnie Mae, so the Federal Reserve’s exposure to the credit risk of the underlying mortgages is minimal.

The real purpose here is to keep mortgage interest rates artificially low. No one wants to buy the securitization at those low rates.. so the gov is stepping in to do that. Since it ends first quarter 2010.. I suspect interest rates for mortgages will go up after Q1 2010, unless it is extended.

[ucodegen]

With the Fed purchasing $1.25 trillion in MBS trash, is it any surprise that some of the $700 billion in TARP is being paid back?

Not so simple.. see further down on your referenced doc.

What securities are eligible for purchase under the program?
Only fixed-rate agency MBS securities guaranteed by Fannie Mae, Freddie Mac and Ginnie Mae are eligible assets for the program. The program includes, but is not limited to, 30-year, 20-year and 15-year securities of these issuers. The program does not include CMOs, REMICs, Trust IOs/Trust POs and other mortgage derivatives or cash equivalents.

And no, FRE/FNM & Ginnie Mae are not getting off scott free:

Does the agency MBS program expose the Federal Reserve to increased risk of losses?
Assets purchased under this program are fully guaranteed as to principal and interest by Fannie Mae, Freddie Mac, and Ginnie Mae, so the Federal Reserve’s exposure to the credit risk of the underlying mortgages is minimal.

The real purpose here is to keep mortgage interest rates artificially low. No one wants to buy the securitization at those low rates.. so the gov is stepping in to do that. Since it ends first quarter 2010.. I suspect interest rates for mortgages will go up after Q1 2010, unless it is extended.

[ucodegen]

With the Fed purchasing $1.25 trillion in MBS trash, is it any surprise that some of the $700 billion in TARP is being paid back?

Not so simple.. see further down on your referenced doc.

What securities are eligible for purchase under the program?
Only fixed-rate agency MBS securities guaranteed by Fannie Mae, Freddie Mac and Ginnie Mae are eligible assets for the program. The program includes, but is not limited to, 30-year, 20-year and 15-year securities of these issuers. The program does not include CMOs, REMICs, Trust IOs/Trust POs and other mortgage derivatives or cash equivalents.

And no, FRE/FNM & Ginnie Mae are not getting off scott free:

Does the agency MBS program expose the Federal Reserve to increased risk of losses?
Assets purchased under this program are fully guaranteed as to principal and interest by Fannie Mae, Freddie Mac, and Ginnie Mae, so the Federal Reserve’s exposure to the credit risk of the underlying mortgages is minimal.

The real purpose here is to keep mortgage interest rates artificially low. No one wants to buy the securitization at those low rates.. so the gov is stepping in to do that. Since it ends first quarter 2010.. I suspect interest rates for mortgages will go up after Q1 2010, unless it is extended.

[ucodegen]

With the Fed purchasing $1.25 trillion in MBS trash, is it any surprise that some of the $700 billion in TARP is being paid back?

Not so simple.. see further down on your referenced doc.

What securities are eligible for purchase under the program?
Only fixed-rate agency MBS securities guaranteed by Fannie Mae, Freddie Mac and Ginnie Mae are eligible assets for the program. The program includes, but is not limited to, 30-year, 20-year and 15-year securities of these issuers. The program does not include CMOs, REMICs, Trust IOs/Trust POs and other mortgage derivatives or cash equivalents.

And no, FRE/FNM & Ginnie Mae are not getting off scott free:

Does the agency MBS program expose the Federal Reserve to increased risk of losses?
Assets purchased under this program are fully guaranteed as to principal and interest by Fannie Mae, Freddie Mac, and Ginnie Mae, so the Federal Reserve’s exposure to the credit risk of the underlying mortgages is minimal.

The real purpose here is to keep mortgage interest rates artificially low. No one wants to buy the securitization at those low rates.. so the gov is stepping in to do that. Since it ends first quarter 2010.. I suspect interest rates for mortgages will go up after Q1 2010, unless it is extended.

[ucodegen]

Great breakdown Dave. Bank TARP hasnt been a total loss for the American taxpayer. But I wonder how financing plays into the return. It wasnt free for the treasury to get those billions.

Look at the return on treasury bills vs what TARP is charging.

Treasuries were going for about 0.40% +/- on a 1 year, 0.80% +/- on a 2 year, 1.34% on a 3 year. Spread against FNM and FRE TARP would probably be about 9% on $100Bil (using 2 year +). Spread against BAC and other banks would be about 2.5%.

http://www.treas.gov/offices/domestic-finance/debt-management/interest-rate/yield.shtml

[ucodegen]

Great breakdown Dave. Bank TARP hasnt been a total loss for the American taxpayer. But I wonder how financing plays into the return. It wasnt free for the treasury to get those billions.

Look at the return on treasury bills vs what TARP is charging.

Treasuries were going for about 0.40% +/- on a 1 year, 0.80% +/- on a 2 year, 1.34% on a 3 year. Spread against FNM and FRE TARP would probably be about 9% on $100Bil (using 2 year +). Spread against BAC and other banks would be about 2.5%.

http://www.treas.gov/offices/domestic-finance/debt-management/interest-rate/yield.shtml

[ucodegen]

Great breakdown Dave. Bank TARP hasnt been a total loss for the American taxpayer. But I wonder how financing plays into the return. It wasnt free for the treasury to get those billions.

Look at the return on treasury bills vs what TARP is charging.

Treasuries were going for about 0.40% +/- on a 1 year, 0.80% +/- on a 2 year, 1.34% on a 3 year. Spread against FNM and FRE TARP would probably be about 9% on $100Bil (using 2 year +). Spread against BAC and other banks would be about 2.5%.

http://www.treas.gov/offices/domestic-finance/debt-management/interest-rate/yield.shtml

[ucodegen]

Great breakdown Dave. Bank TARP hasnt been a total loss for the American taxpayer. But I wonder how financing plays into the return. It wasnt free for the treasury to get those billions.

Look at the return on treasury bills vs what TARP is charging.

Treasuries were going for about 0.40% +/- on a 1 year, 0.80% +/- on a 2 year, 1.34% on a 3 year. Spread against FNM and FRE TARP would probably be about 9% on $100Bil (using 2 year +). Spread against BAC and other banks would be about 2.5%.

http://www.treas.gov/offices/domestic-finance/debt-management/interest-rate/yield.shtml

[ucodegen]

Great breakdown Dave. Bank TARP hasnt been a total loss for the American taxpayer. But I wonder how financing plays into the return. It wasnt free for the treasury to get those billions.

Look at the return on treasury bills vs what TARP is charging.

Treasuries were going for about 0.40% +/- on a 1 year, 0.80% +/- on a 2 year, 1.34% on a 3 year. Spread against FNM and FRE TARP would probably be about 9% on $100Bil (using 2 year +). Spread against BAC and other banks would be about 2.5%.

http://www.treas.gov/offices/domestic-finance/debt-management/interest-rate/yield.shtml

[ucodegen]

My virus sw is telling me it is blocking hits to my computer right now…I’m thinking maybe the hackers at the two sites above grabbed my ip…

Might want to look into getting a hardware firewall.. It is much more effective.

[ucodegen]

My virus sw is telling me it is blocking hits to my computer right now…I’m thinking maybe the hackers at the two sites above grabbed my ip…

Might want to look into getting a hardware firewall.. It is much more effective.

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