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Posted To: MBS Commentary

We've reference "VWAP" before, though it's not a metric that makes it into every post. VWAP stands for "Volume-Weighted-Average-Price." We find it to be an incredibly useful, simple, and logical tool in telling another story about what is happening in the markets beyond the simple price charts. In short, it WEIGHTS a given price with the VOLUME traded at that price. As such, it tends to show a much more stable picture of most trading days considering that volume tends to congregate most heavily at or near one price and taper off as it moves further and further away from that price. Here's a visual on this concept of "distribution" As you can see the volume congregates most densely around 116.28 and generally tapers off from there. This isn't always…(read more)

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Source:MBS CLOSE: Illustrating Deceptive Effects Of Low Volume



Posted To: Community Commentary

“The real and effectual discipline which is exercised over a workman is … that of his customers. It is the fear of losing their employment which restrains his frauds and corrects his negligence.” Adam Smith – Scottish philosopher and famed economist, 1723-1790. Among other things, Adam Smith is known for the concept of Division of Labor. As we visit mortgage operations around the country, we see many types of business models. The mortgage business is actually pretty easy… Sales people, (loan offices), go out and kill the animal (originate a loan) The animal (loan file) is skinned, dressed and package up for market (mortgage operation) The finished product (investor file) is delivered to market for sale (secondary market investor). Within these three broad areas of the mortgage…(read more)

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Source:The Evolution of Origination Processes and Lender Operations Models



Posted To: Mortgage Rate Watch

Vic gave me permission to write on his blog today. Thank you Vic. So most readers are locked right? At least those of you who are closing in December? We have been shouting LOCK from the rooftops since early December. I assume there are not many readers still holding their breath in hopes of better mortgage rates before 2010. Right? Putting aside compliance issues…administratively I'm not even sure its possible not to be locked at this point in the month. Tomorrow is pretty much an off day, lock desks will be thinly manned and bps cutting decision makers will be no where near their rate sheets. Then early next week, only specific secondary staff will be present, the processing pit will be sparse, underwriters will have up out of office replies…but you should find a few closers and shippers…(read more)

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Source:Attention Floaters and Fence Sitters: MND Mortgage Rate Outlook



Posted To: MBS Commentary

I am really struggling to find something to talk about today. I already discussed the delay of FHA HVCC, we went over Personal Income and Spending data, I published color on New Home Sales , wrote on mortgage apps, and already told you that secondary is on cruise control until 2010. Not many new stories to share with you….especially in the bond market. Rates showed signs of a rally in the overnight session and carried progress over into the NY trading day…something we were anticipating but not as a function of any BIG PICTURE perspectives. This outlook was based on expected "position squaring" and final exit from the market ahead of Christmas, which we considered to be bond market friendly because positions were SHORT, which needed to be covered, which means buying at the lows…(read more)

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Source:MBS LUNCH: Shorts Covered. Positions Square. Flows Now Nonexistent



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