Raymond E. Bowman, the former president of Taylor, Bean & Whitaker Mortgage Corp., pleaded guilty to two charges over his role in what U.S. prosecutors said was a $1.9 billion fraud scheme. Bowman, 45, who lives in Atlanta, entered his plea today in federal court in Alexandria, Virginia, to one count of conspiracy to commit wire fraud, bank fraud and securities fraud and one count of making false statements. Bowman also agreed to cooperate with prosecutors’ probe of the company. Federal prosecutors filed a criminal case against Bowman last week before U.S. District Judge Leonie Brinkema, who has presided over cases resulting from an alleged scheme that the U.S. said sought to defraud the government’s Troubled Asset Relief Program and contributed to the failure of Montgomery, Alabama-based Colonial Bank. Bowman faces a maximum sentence of five years in prison on each count, plus a fine of as much as $500,000 and full restitution to victims, according to prosecutors. Brinkema asked prosecutors whether they would file a forfeiture case against Bowman. “That remains to be seen,” said Charles Connolly, an assistant U.S. attorney in Alexandria. “The issue we’re exploring is whether the defendant derived any benefit from the fraud scheme.”

This has been one of those instances of decreasing prices in MBS and Treasuries that almost doesn't bear mentioning. With FNCL 4.5's at 102-03 currently, we're still 7 ticks up on the day, not to mention that morning levels of 102-01 have been maintained throughout. Do be aware however, that some lenders repriced for the worse and if yours hasn't, it's still a risk. Furthermore, there looks to be some threat of a late day stock rally that could put additional pressure on bonds, but this is not incredibly likely.

(Reuters) - A settlement proposal by state attorneys general with the five biggest U.S. mortgage servicers stands out less for what it contains than for what it omits -- terms for resolving the most difficult issues dividing regulators and the big banks. The proposal, which calls for a dramatic increase in loan modifications, is intended as the basis for settling allegations of widespread wrongdoing by the big loan servicers in handling millions of foreclosures. But the sharply conflicting interests of the banks, regulators, homeowners and investors in mortgage securities signal that chances are remote for any "global" settlement with the banks. Failure to reach a comprehensive settlement would be bad for the housing market, homeowners, investors in mortgage-backed securities, and even the banks themselves. "There are so many different parties involved that I question the doability of a global settlement," said Bert Ely, an independent banking consultant. Paul Miller, a bank analyst with FBR Capital Markets, said the banks ultimately might reach a settlement with requirements for loan modifications greatly watered down.

(Reuters) - Anonymous, a hacker group sympathetic to WikiLeaks, released on Monday emails that it obtained from someone who said he is a former Bank of America Corp employee. In the emails dating from November 2010, people that appear to be employees of a Balboa Insurance, a Bank of America insurance unit, discuss removing documents from loan files for a group of insured properties. Neither the emails nor correspondence released by Anonymous indicate the reason behind the electronic record keeping discussion. A representative of Anonymous told Reuters on Sunday the documents relate to the issue of whether Bank of America has improperly foreclosed on homes. The representative added that he had not seen the documents, but he has been briefed on their contents. Consumer groups have accused major U.S. lenders of foreclosing on many homes without having proper documentation in place. A BofA spokesman said on Sunday the documents were clerical and administrative documents stolen by a former Balboa Insurance employee, and were not related to foreclosures. "We are confident that his extravagant assertions are untrue," the spokesman said.

Guidance to SAVE, SAVE, SAVE continues to pour out of the U.S. government. This reminder was released today by the IRS: "The IRS is reminding those who haven’t filed their tax returns that they can receive their refunds in the form of savings bonds, payments to retirement accounts, mutual funds, as well as in the form of cash directly deposited to a checking or savings account. By March 4, the IRS had issued more than 52 million refunds worth $161 billion for an average refund of $3,070. For tax year 2010 returns, there are new savings bond options. Last year, if the taxpayer chose to receive a savings bond as part of the refund, it could only be issued in the taxpayers’ name. This year, taxpayers can designate anyone to receive a savings bond and also designate the co-owner or beneficiary. Also a new section was added to Form 8888, Allocation of Refund (Including Savings Bond Purchases), for entering savings bond information so that taxpayers no longer need to enter a pre-specified routing number. Instead, taxpayers will enter the bond owner’s name. The savings bonds will be mailed to the taxpayer or the person designated on the form." SEE THE ATTACHED VIDEO...

With 4 ticks separating the average MBS price from 10am to 2am, 102-06, and the current price 102-02, we're at the precipice of reprice risk territory. This goes hand in hand with weakening in treasuries and strengthening in stocks. Reprices for the worse are now possible and will get more and more likely if prices continue to fall or even hold sideways.

Following reprices for the better, on average among the five major lenders, C30 rebate is 25.2bps more aggressive than it was on Friday afternoon. These gains are inline with price appreciations in the secondary market. The largest improvements are seen in note rates below 4.875% but the cost to permanently buydown the rate from 4.875 to 4.75 is still almost 1 point, on average. That is expensive! It would take borrowers 10+ years to recover the upfront fees they paid at closing to obtain this permanent buydown. We have however noticed a few lenders pricing 4.75% at rebate levels that would allow an originator to quote this rate with lower costs, but that deal would be very skinny, especially with new LTV risk-based pricing adjustments. A wide gap between 4.875 and 4.75 pricing will be obvious on rate sheets until lenders are able to hedge their pipelines with 4.0 MBS coupons

Both Treasuries and MBS are moving outside their weakes levels since before 10am. MBS hadn't ticked any lower than 102-05 during that time, but are currently at 102-04 in FNCL 4.5's. Similarly, 10yr yields held onto some support at 3.35 but has recently moved up to 3.36 shortly after stocks made a new high (1291.02 vs 1291.55 in S&P's). These moves decrease the likelihood of ongoing reprices for the better and could even be the first warning sign of reprices for the worse, if they mark the beginning of some more weakness into the afternoon.

The bond market continues sideways, now slightly off its best levels of the day. Stock prices have had a strong direct correlation to treasury yields so far today, and in turn treasury yields a strong inverse correlation to MBS Prices. As stocks bounced in the high 1286's (S&P), 10yr yields moved up to the 3.35's. Stocks have since turned a corner and headed back to the middle of their afternoon range. Treasuries and MBS have done the same with FNCL 4.5's at 102-06 and 10yr yields at 3.349. These are the levels that, if maintained, should continue to see reprices for the better trickle in from more and more lenders.

There were two situations that could have resulted in reprices for the better today: either rallying further in which case reprices would come more quickly or simply holding near the highs of the day in which case reprices would trickle in after gains had held for a few hours. The latter is what we're seeing at the moment as FNCL 4.5's have held a tight range between 102-06 and 102-07, and now, more and more lenders are repricing for the better. More will follow based on the same two conditions.

FNCL 4.5's continue to operate in their 102-06 / 102-07 range at their highs of the day. The 3.33's proved to be resistant to further gains for benchmark 10's, although 3.35 has held supportively as yields rose. Stocks are drifting sideways at thier lows of the day around 1289. We'd expect a few early lenders to reprice if MBS continue to hold current levels, but reprices are more likely if we appreciably break 102-08.

As expected, we're now seeing Treasuries beginning to resist the stock lever a bit as yields push lower. The S&P is now at 1289 and has a fairly linear, diagonal series of lower lows. The lows in 10yr notes however are not nearly as steeply sloped with a difference of only 3.334 to 3.332 from 10:35am to 11:10am. In contrast, S&P's fell 3 points in the same time period. FNCL 4.5's remain at their highs of the day near 102-06 / 102-07. There is an abundance of unexpected information for the markets to digest at the moment, given the mid-east situation and Japan, among others. In general, the middle of the yield curve is improving at the best pace today, whereas the 30yr bond is lagging on speculation that Insurance Funds will sell the long bond to finance rebuilding.