Salient to Investors:

Mortgage REITs tumbled on the expectation that more homeowners would be able to prepay mortgages and because lower yields on new investments would squeeze earnings and dividends.

Vitaliy Liberman at DoubleLine Capital said continuation of policies that started last year are basically assured now.

Edward Mills at FBR Capital Markets said housing is a clear winner from the election results.

CoreLogic said 10.8 million Americans owe more on their mortgages than their homes are worth. The MBA said 3.8 million home loans are at least 90 days delinquent. The S&P/Case-Shiller Index is 29 percent below the July 2006 peak.

Walt Schmidt at FTN Financial said Treasury rates are falling and primary mortgage rates may continue to fall on concerned Obama is going to be more inclined to provide refinancing relief to borrowers.

Isaac Boltansky at Compass Point Research & Trading said Obama probably will propose a new head of the Federal Housing Finance Agency as part of a broader package of financial regulators – new leaders would not be confirmed until Q2 2013. Boltansky said HARP has helped 1.5 million people but hasn’t come close to its potential.

Ankur Mehta at the FHFA says some minor tweaks to HARP will be in the cards even if Ed DeMarco is not replaced.

Chris Macke at CBRE said Obama’s re-election means the mortgage interest tax deduction won’t be touched – the credit reduces the cost of owning a home significantly.

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