The seasonally adjusted delinquency rate for mortgage loans on one-to-four-unit residential properties fell to 7.99 percent in the third quarter of 2011, according to data from the Mortgage Bankers Association's (MBA) National Delinquency Survey. This is the lowest level recorded since the fourth quarter of 2008.

The third quarter seasonally adjusted rate of 7.99 percent is a decrease of 45 basis points from the second quarter of 2011, and a decrease of 114 basis points from one year ago. The non-seasonally adjusted delinquency rate increased nine basis points to 8.20 percent this quarter from 8.11 percent last quarter.

The percentage of loans on which foreclosure actions were started during the third quarter was 1.08 percent, up 12 basis points from last quarter and down 26 basis points from one year ago. The percentage of loans in the foreclosure process at the end of the third quarter was 4.43 percent, unchanged from the second quarter and four basis points higher than one year ago.

RTRS - BUSINESS CONDITIONS NOV 3.6 VS OCT 8.7

RTRS - NEW ORDERS INDEX NOV 1.3 VS OCT 7.8

RTRS - PRICES PAID INDEX NOV 22.8 VS OCT 20.0

RTRS - EMPLOYMENT INDEX NOV 12.0 VS OCT 1.4

RTRS - SIX-MONTH BUSINESS CONDITIONS NOV 41.9 VS OCT 27.2

RTRS - SIX-MONTH CAPITAL EXPENDITURES OUTLOOK NOV 16.1 VS OCT 12.3

RTRS - EMPLOYMENT INDEX AT HIGHEST SINCE MAY 2011

RTRS - 6-MTH BUSINESS CONDITIONS INDEX AT HIGHEST SINCE MARCH 2011

(Reuters) - Euro zone and International Monetary Fund officials have discussed the idea of the European Central Bank lending to the IMF, to provide the fund with sufficient resources for bailing out even the biggest euro zone sovereigns, officials said.

"Some discussions on this have taken place... It could be one way of getting around the legal restrictions on the ECB," one official with knowledge of the talks said. A second official said ECB lending to the IMF was being explored. Article 23 of the ECB statute says that "the ECB may conduct all types of banking transactions in relations with third countries and international organisations, including borrowing and lending operations".

The IMF could then use the ECB money to finance various rescue operations in the euro zone like bailouts, precautionary credit lines, on its own, or in cooperation with the EFSF.

Money from the ECB to the IMF would also help alleviate criticism from non-euro zone IMF member countries that all of the fund's resources -- which come from all IMF members -- are being used up for the relatively rich euro zone. To prevent a collapse of the euro zone debt market, the ECB has been buying government bonds on the secondary market, saying it was doing so to improve the transmission of its monetary policy, which highly volatile bond markets were distorting.

While it may be designed to keep the pressure on governments to implement reforms, euro zone policymakers privately say it is also the costliest possible way of dealing with the crisis.

"If the ECB told the market it would buy euro zone bonds for as long as it takes, or up to some big limit, who in the market would want to test that? But if they do it bit by bit, markets keep coming back," a third euro zone official said.

RTRS - HOUSING STARTS -0.3 PCT VS SEPT +7.7 PCT (PREV +15.0 PCT)

RTRS - HOUSING STARTS 628,000 UNIT RATE (CONSENSUS 610,000) VS SEPT 630,000 (PREV 658,000)

RTRS - HOUSING PERMITS +10.9 PCT VS SEPT -5.8 PCT

RTRS - HOUSING PERMITS 653,000 UNIT RATE (CONSENSUS 603,000) VS SEPT 589,000 UNIT RATE

RTRS - SINGLE-FAMILY STARTS +3.9 PCT TO 430,000 UNIT RATE; MULTIFAMILY -8.3 PCT TO 198,000 UNIT RATE

RTRS - HOUSING PERMITS RATE HIGHEST SINCE MARCH 2010 (688,000 UNITS)

Freddie Mac (OTC: FMCC) announced today that it will begin securitizing certain mortgage loans that previously were delinquent and that the company had purchased from its related Mortgage Participation Certificate (PC) pools. These mortgage loans have been reinstated to current, performing status and have not been modified. Beginning in November 2011, these reinstated loans, which Freddie Mac holds in its mortgage-related investment portfolio, will be pooled into new Freddie Mac PCs with the new "R" prefix. Reinstated loans must be current at least four consecutive months at the time of securitization into pools with the "R" prefix. For the initial securitization this month, Freddie Mac has elected to securitize reinstated loans that have been current for at least 12 consecutive months. These PCs may back new Freddie Mac REMIC and Giant securities in the future.

Freddie Mac has purchased a significant number of delinquent mortgage loans from PC pools and held those loans in the company's mortgage-related investment portfolio. Freddie Mac continues to pursue resolutions of the delinquencies while these loans are held in the portfolio.

"By securitizing mortgage loans that were delinquent but reinstated to performing status, Freddie Mac will provide additional needed liquidity to the market using our traditional mortgage security vehicles," said Mark Hanson, Freddie Mac vice president, Securitization and Cash Execution. "This new avenue for securitization also will provide more flexibility for Freddie Mac to manage its mortgage-related investment portfolio."

(Reuters) - New U.S. claims for unemployment benefits dropped to a seven-month low last week, a government report showed on Thursday, suggesting the labor market was gaining some traction. Initial claims for state unemployment benefits fell 5,000 to a seasonally adjusted 388,000, the Labor Department said, from an upwardly revised 393,000 the prior week.

Economists polled by Reuters had forecast claims rising to 395,000 from the previously reported 390,000. The claims data covered the survey period for November's nonfarm payrolls. Claims dropped 16,000 between the October and November survey weeks, implying an improvement in nonfarm employment. The unexpected decline in claims last week was the latest sign that the economy maintained speed in the fourth quarter, further reducing the risk of a new recession.

Initial claims have now held below the 400,000 mark that is normally associated with some healing in the jobs market for a second straight week. The four-week moving average of claims, considered a better measure of labor market trends, fell 4,000 to 396,750 -- the lowest since April.

The number of people still receiving benefits under regular state programs after an initial week of aid dropped 57,000 to 3.61 million in the week ended Nov. 5 Economists forecast so-called continuing claims rising to 3.64 million from a previously reported 3.62 million.

The number of Americans on emergency unemployment benefits slipped 18,358 to 2.94 million in the week ended Oct. 29, the latest week for which data is available. A total of 6.77 million people were claiming unemployment benefits during that period under all programs, down 62,278 from the prior week. (Reporting by Lucia Mutikani, Editing by Andrea Ricci)

Although the "benefit" is wearing off as the domestic session gets underway, the "tediously familiar" part of this morning's headline remains in full effect as last night constituted a strikingly cliche example of risk-off trading.

The usual suspects are in play and indeed, there seems to be two varieties of "mad libs" available to recap overnight action, Today's is the one that reads " ____________ (major newspaper) cites renewed concerns over Europe's _________ (choose component of EU economy, while __________ (EU Country) had a very ___________ (choose negative descriptor) auction." In this case, it was WSJ, bank funding costs, Spain, and horrid... (hmm,,, maybe we could do this as a game of Clue as well, but Mad Libs do seem more fitting.

Either way, the WSJ article made rounds. The Spanish auction drew a mere 1.45 bid-to-cover and the yield was much higher than expected. Italian yields continue to hover near 7%. Stocks sold and bonds rallied. While 10yr yields are about a bp better, MBS start the day roughly flat versus yesterday, currently 1 tick down at 101-23.

Morning data includes Jobless Claims, Philly Fed, and Housing Starts, beginning with the first two in about 15 minutes.