Logical Analysis Report

Key Focus

  • It purchased $40 billion of mortgages Friday,
    $10 billion less than it planned to buy, and it plans to do another $40 billion Monday but could end up doing less.
    "We are expecting the Fed to modulate their purchases," Frantantoni said.
    But Habib said the Fed needs to go further than just modulate.
    "This is a collapse of the system," Habib said
  • There was also fear that borrowers wouldn't be able to pay.
    In the week of March 16, the Fed bought $68 billion of mortgages. But the market still saw massive selling, prompting the Fed to come in with an additional $183 billion of purchases last week

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High Level Topics

  • MORTGAGE
  • FED
  • MARGIN
  • MBA

    • High Level Abstractions

  • MORTGAGE(3, 0 Order)
  • ( MORTGAGE )(3, 0 Order)  top
  • FED(5, 0 Order)
  • ( FED )(5, 0 Order)  top
  • ( FED, MORTGAGES )(2, 1st Order)  top
  • ( FED, MORTGAGE )(2, 1st Order)  top
  • ( FED, MODULATE )(1, 1st Order)  top
  • ( FED, MBA )(2, 1st Order)  top
  • ( FED, HABIB )(1, 1st Order)  top
  • ( FED, SURGICALLY )(1, 1st Order)  top
  • ( FED, SLEDGEHAMMER )(1, 1st Order)  top
  • ( FED, OUTCRY )(1, 1st Order)  top
  • ( FED, MICHEAL_FRANTANTONI )(1, 1st Order)  top
  • ( FED, FRANTANTONI )(1, 1st Order)  top
  • ( FED, FOUR-WEEK )(1, 1st Order)  top
  • ( FED, ECONOMIST )(1, 1st Order)  top
  • MARGIN(2, 0 Order)
  • ( MARGIN )(2, 0 Order)  top
  • MBA(3, 0 Order)
  • ( MBA )(3, 0 Order)  top

    • References

    • ( MORTGAGE )  top
    • (Read more)   topIt is generally considered to be a safe trade: the hedge simply protects the lender against higher rates until the mortgage closes. But compounding the problem, many customers couldn't close on their loans because of quarantines, leaving the mortgage lenders with only the cost of the hedge and no off-setting loan. The...
    • (Read more)   top... working capital and threatening their ability to continue to operate." Some lenders, the letter said, may not be able to meet their margin calls in a day or two. The Fed came into the mortgage market forcefully two weeks ago when rates began to rise because a large array of investors were selling mortgage securities to raise cash, in part, to offset big losses in the stock market
    • (Read more)   top The combined $250 billion in mortgage purchases by the Fed over two weeks was $84 billion more than the Fed had bought over any four-week period during the financial crisis in 2009. Ironically, the MBA had urged the Fed to come...
    • ( FED )  top
    • ( FED, MORTGAGES )  top
    • (Read more)   top
      In the week of March 16, the Fed bought $68 billion of mortgages. But the market still saw massive selling, prompting the Fed to come in with an additional $183 billion of purchases last week
    • (Read more)   topIt purchased $40 billion of mortgages Friday,
      $10 billion less than it planned to buy, and it plans to do another $40 billion Monday but could end up doing less.
      "We are expecting the Fed to modulate their purchases,"...
    • ( FED, MORTGAGE )  top
    • (Read more)   top
      The Fed came into the mortgage market forcefully two weeks ago when rates began to rise because a large array of investors were selling mortgage securities to raise cash, in part, to offset big losses in the stock market
    • (Read more)   top The combined $250 billion in mortgage purchases by the Fed over two weeks was $84 billion more than the Fed had bought over any four-week period during the financial crisis in 2009.
      Ironically, the MBA had urged the Fed to come in...
    • ( FED, MODULATE )  top
    • (Read more)   top
      "We are expecting the Fed to modulate their purchases," Frantantoni said.
      But Habib said the Fed needs to go further than just modulate.
      "This is a collapse of the system," Habib said
    • ( FED, MBA )  top
    • (Read more)   top
      Ironically, the MBA had urged the Fed to come in strongly to help the mortgage market.
    • (Read more)   top "We understand that when the Fed came into the market, they couldn't come in surgically. They didn't have a scalpel. They only have a sledgehammer," MBA chief economist Micheal Frantantoni told CNBC.
      The New York Fed appears to have adjusted its purchases in response to the industry outcry
    • ( FED, HABIB )  top
    • (Read more)   top
      But Habib said the Fed needs to go further than just modulate.
      "This is a collapse of the system," Habib said
    • ( FED, SURGICALLY )  top
    • (Read more)   top "We understand that when the Fed came into the market, they couldn't come in surgically. They didn't have a scalpel. They only have a sledgehammer," MBA chief economist Micheal Frantantoni told CNBC.
      The New York Fed appears to have adjusted its purchases in response to...
    • ( FED, SLEDGEHAMMER )  top
    • (Read more)   top "We understand that when the Fed came into the market, they couldn't come in surgically. They didn't have a scalpel. They only have a sledgehammer," MBA chief economist Micheal Frantantoni told CNBC.
      The New York Fed appears to have adjusted its purchases in response to the industry outcry
    • ( FED, OUTCRY )  top
    • (Read more)   topThey only have a sledgehammer," MBA chief economist Micheal Frantantoni told CNBC.
      The New York Fed appears to have adjusted its purchases in response to the industry outcry.
    • ( FED, MICHEAL_FRANTANTONI )  top
    • (Read more)   top "We understand that when the Fed came into the market, they couldn't come in surgically. They didn't have a scalpel. They only have a sledgehammer," MBA chief economist Micheal Frantantoni told CNBC.
      The New York Fed appears to have adjusted its purchases in response to the industry outcry
    • ( FED, FRANTANTONI )  top
    • (Read more)   top
      "We are expecting the Fed to modulate their purchases," Frantantoni said.
      But Habib said the Fed needs to go further than just modulate.
      "This is a collapse of the system," Habib said
    • ( FED, FOUR-WEEK )  top
    • (Read more)   top The combined $250 billion in mortgage purchases by the Fed over two weeks was $84 billion more than the Fed had bought over any four-week period during the financial crisis in 2009.
      Ironically, the MBA had urged the Fed to come in strongly to help the mortgage market
    • ( FED, ECONOMIST )  top
    • (Read more)   top "We understand that when the Fed came into the market, they couldn't come in surgically. They didn't have a scalpel. They only have a sledgehammer," MBA chief economist Micheal Frantantoni told CNBC.
      The New York Fed appears to have adjusted its purchases in response to the industry outcry
    • ( MARGIN )  top
    • (Read more)   top ... couldn't close on their loans because of quarantines, leaving the mortgage lenders with only the cost of the hedge and no off-setting loan. The huge volatility in mortgage bonds created massive margin calls from the broker-dealers, who wrote the hedges, to their mortgage bankers. Some of these mortgage bankers are now facing margin calls of tens of millions of dollars that could drive them...
    • (Read more)   topFor a significant number of lenders, many of which are well-capitalized, these margin calls are eroding their working capital and threatening their ability to continue to operate." Some lenders, the letter said, may not be able to meet their margin calls in a day or two. The...
    • ( MBA )  top
    • (Read more)   top ... week. Hardest hit are independent mortgage bankers who wrote about 55% of the $2.1 trillion mortgages created last year and can have higher leverage. In its letter to regulators, the MBA said: "The dramatic price volatility in the market for agency mortgage-backed securities [MBS] over the past week is leading to broker-dealer margin calls on mortgage lenders'hedge positions...
    • (Read more)   top ... combined $250 billion in mortgage purchases by the Fed over two weeks was $84 billion more than the Fed had bought over any four-week period during the financial crisis in 2009. Ironically, the MBA had urged the Fed to come in strongly to help the mortgage market. "We understand that when the Fed came into the market, they couldn't come in surgically
    • (Read more)   top They didn't have a scalpel. They only have a sledgehammer," MBA chief economist Micheal Frantantoni told CNBC. The New York Fed appears to have adjusted its purchases in response to the industry outcry