Good Morning on this Terrific Tuesday,

Bonds are up a bit (10-yr at .62 and Mortgage bonds +14) and the Stock market has turned from up a lot to flat. Rates continue to be more dependent on servicing valuation than how mortgage bonds are trading. This will take some time to balance out. If the current market holds, that would allow for rates to drop another .50-1.00. I am not in any way advocating to wait, for it as I think that is too risky with 1) the uncertainty in the rate market, 2) the changes in loan guidelines 3) uncertainty of property valuations. The time to act on a purchase or refinance is now. The data today was rough. Consumer confidence dropped even further than the weak estimates were, and the Richmond Fed dropped so far, I hear it is in the Mariana Trench (GDP to soon join it). I am still expecting equities to hit a wall here soon.

The 2-day FOMC meeting starts today and it will be interesting to hear what Chairman Powell says tomorrow at 11  a.m. Pacific. He did have the following to say which I thought was fairly inspiring.  None of us has the luxury of choosing our challenges; fate and history provide them for us. Our job is to meet the tests we are presented.

Some notes and updates on forbearances:

The Federal Housing Administration, which insures loans backed by Ginnie Mae, has said it will let skipped payments be added to the home as a second lien. That lien won’t need to be paid off until the mortgage is refinanced or the home is sold.

Fannie and Freddie have released an array of more-complicated options. Borrowers can choose to repay the forbearance in as long as 12 months, but if they can’t, they have to apply for a loan modification, which servicers say could trigger delays and documentation issues like those that occurred after the 2008 crisis.

An FHFA spokesman said Fannie and Freddie forbearance repayment options “allow servicers to work with borrowers to find a repayment option that works best for all parties.” He noted an FHFA announcement on Monday that made clear borrowers won’t be forced to repay forbearance in a lump sum.

Last, if you are reading on the progress being made against this horrible virus, the WSJ shared the this piece. Really encouraging (and somewhat humbling to realize how smart some people are). If you want to skip to the research report, that can be found here.

Please remain safe and stay healthy.