MBSs were created in 1970 to increase capital flows into mortgage markets. Until their creation mortgages were generally held as whole individual loans by the initial lender (S&Ls and banks) and serviced (collecting payments and paying taxes and insurance) by contracted servicers. The formation of a marketable securities opened the mortgage markets to investors such as pension funds and life insurance companies, investors with a longer term investment horizons. MBSs are issued by private firms (banks and large mortgage bankers) or these days by FNMA, Freddie Mac and GNMA for FHA and VA loans. Most MBSs carry guarantees from the originator of the MBS or with private mortgage insurance. A ortgage-backed security is a bundling of like mortgages into a pool of hundreds of mortgages, then formed into a tradable bond backed by the individual mortgages. An MBS is generally a pass-through bond which simply means that the payments of principle and interest on all of the pooled mortgages are passed through from the servicer (collector) of the bond directly to the investor after the servicer subtracts the servicing fee.

Originators of individual mortgages upstream them to larger consolidators (correspondents, banks or wholesalers). Consolidators have choices; they can bundle mortgages and issue MBS securities, selling the security to Wall Street; or create the security and hold it as an asset. Consolidators can also sell mortgages as whole loans (or sometimes individual loans) to Wall Street firms that will then form the MBS. The third avenue is to sell them to FNMA or Freddie Mac where these agencies create and sell the MBS.

Although mortgage markets generally take their lead from how treasury markets move; there are occasions when the mortgage markets are either strong or weak relative to treasuries. Tracking MBS markets is critical to mortgage originators because the prices of MBSs are the price changes that are reflected in daily pricing; the need to know the moment by moment price changes of MBSs is the only way to keep completely informed on how pricing changes will occur at the origination level.

Yes it is; but to do so one has to have direct access to how MBSs are trading moment to moment, such as provided by TBWS pricing and Rate Alerts. Having the same access as wholesalers to market movements allows astute originators the ability to adjust pricing, lock loans and advise clients ahead of changes coming from lenders. Beating lender re-pricing can prevent losses due to worsening prices, or increase profits when prices are improving. There are risks to trading, but done with care usually can be rewarding when viewed over a period of time.

The Treasury issues treasury debt across a time horizon, known as the yield curve. Treasury issues 2 yr notes, 3 yr notes, 5 yr notes, 7 yr note, and 10 yr notes; also 30 yr bonds. All treasuries with terms from over 1 yr to 10 yrs are known as notes, 20 yr and higher are called bonds.

All interest rates, whether mortgages, corporate bonds, car loans or home equity loans are influenced by what the world sees as risk free US treasuries. As treasury rates move so do the rest of the rates in line with the direction of treasuries. Tracking treasury market direction is necessary to understanding the direction of all other rates, including mortgage rates because in general, they are viewed similarly by the investment community at large.

MBS securities in the TBA market (to be announced, new originations) mature every month. Lenders that form MBSs or sell to institutions that form them have to decide when they are able to package and deliver. MBS prices typically have price declines (drops) on each coupon every month moving out the calendar to cover costs to carry. On the 10th of every month the current month MBS delivery is due; the next day lenders begin to price product out to the next delivery month (or these days two months out); the drop as it is known, varies with short term borrowing costs; on the roll-over day, the next day lenders' prices are lowered by the drop rate which can vary from 4/32 to 12/32 for every month out and depending on current market conditions, regardless whether the market is improving or worsening.

A candlestick chart is another way of charting daily price movements for a given security. Until the late 1980s candlestick charts were relatively unknown in the US, being a mainstay in Japan since the 1700's. Candlestick technical analysis has become a mainstay for serious technicians since early 1990. Until then no wire service or news service offered Candlestick charts making it difficult for technicians to create them; since then every charting service and news service now offer Candlesticks along with the traditional bar charts. There are many newsletters and internet sites today capable of creating Candlesticks; but what is not widely used is the actual technical factors used in conjunction with the charts. A candlestick chart is no different than the traditional bar chart; both show the trading range for the day, both show the open price and the close price. The top or bottom of the Candlestick shows the open or close. The color of the candlestick represents the color for an up or down day (green usually meaning up and red signifying a day when prices that close lower than the previous day). The wick (vertical line in the center of the Candlestick) simply shows the high and low for that trading day or period. Japanese Candlesticks are thought to be easier to use than traditional bar charts because they present a clearer "picture" of general rate movement and volatility.

Moving averages are simply the average price of a particular market over a measured number of days. Individual technical traders have their favorite averages depending on the speed (or smoothing) they like when comparing a current price (or yield) to a specific average period. Averages are widely used and followed by most in the markets, it doesn't take much technical analysis training to use a moving average and should always be checked when making an investment or trade. If the daily price exceeds its stated Moving Average (MA) that is considered bullish; trading below its stated average, bearish.

Bar charts or candlestick charts are visual pictures of market movements everyday over time. Technical traders look for areas that in the past where a market found support or resistance, using that information as areas to be closely monitored. The theory is that where prices changed directions in the past may be areas where they will once again find support or resistance. Not infallible (as fundamentals do change over time), but near term support and resistance levels are quite useful; where prices failed previously it is likely they may fail again at those levels. and where stop l oss orders accumulate. So to capsulate: While sometimes fallible, observing Support and Resistance levels can be likened to ceilings and floors over a given time period.

Rate Alert ties a real time, automatically triggered movement alert system with a compilation of economic news, technical market analysis using a multitude of studies, trends and the near term outlook based on upcoming news and events that might move markets in either direction. Rate Alert issues float or lock recommendations twice each day based on our professional staff and market trader(s). Spending over $10,000 per month on proprietary, institutional grade trading information; we digest and analyze all potential and anticipated market impacting news as well as applying 10 or more technical studies and trading systems to guide our users. Stated simply; Rate Alert members are the most informed Originators in the industry. We continually monitor the crucial markets all through the day. While nothing is infallible and 100% accurate all the time, we pride our work as being the most accurate forecasts available to originators that exist today. Sophisticated originators deserve good information and our mission is provide it affordably.