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Mortgage Related News

MBS RECAP: Stocks Lose, Rates Recover on Tax Bill Fears

Posted To: MBS Commentary

Bonds began the day in weaker territory partly due to a correction from yesterday's strong run in the afternoon, and partly due to stronger economic data in Europe. Domestic economic data was stronger too, with Retail Sales coming in at 0.8 versus a median forecast of 0.3. The previous reading was also revised up to 0.5 from 0.2. In the past, bonds might have cared more about that sort of data, but at present, there are bigger fish to fry. After yesterday's scheduled detour for inflation and the Fed (2 things that were expected to move markets despite NOT being "the tax bill"), it was back to focusing on the tax bill today. Senators Lee and Rubio threatened to vote "no" on the tax bill unless certain changes were made regarding child tax credit refunds. The release...(read more)

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Mortgage Rates Hold On to Lower Levels After Tax Bill Doubts

Posted To: Mortgage Rate Watch

Mortgage rates held on to yesterday's gains in most cases. Some lenders were even in slightly better shape today, but not enough to have an effect on anything beyond the upfront costs associated with any given rate quote. Rates themselves would be right in line with yesterday's. That's not a bad thing considering yesterday afternoon brought effective rates near their lowest levels of the month. In this case, lower "effective rates" refer to lower upfront closing costs (or higher lender credits) for the prevailing top tier conventional 30yr fixed rates of 4.0%. Bond markets (which underlie interest rate movement) continued to pay more attention to policy developments than the economic data that traditionally has an impact. In today's case, it was news that a few Republican senators may not vote...(read more)

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Automated Appraisals Don't Paint the Whole Picture

Posted To: MND NewsWire

The use of Automated Valuation Models (AVM) is expected to expand following the announced plans of the Fannie Mae and Freddie Mac to waive the requirement for a professional appraisal on qualified purchase loans where the loan-to-value (LTV) ratio is at or below 80 percent. Fannie Mae had previously allowed this waiver only for refinancing, while Freddie will now allow automated evaluation tools for both purchase and refinancing loans when working with its Loan Advisor Suite. CoreLogic's Principal Economists Yanling Mayer, writing in the company's Insights Blog, says these changes come as the industry is hearing of shortages of certified and licensed appraisers, especially in rural areas. But there is still controversy. The Appraisal Institute has raised safety and soundness concerns over eliminating...(read more)

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Downpayments at Record Highs as Home Prices Rise

Posted To: MND NewsWire

Homebuyers ponied up the highest downpayments on record to purchase homes in the third quarter of 2017. ATTOM Data Solutions' (formerly RealtyTrac) Residential Property Loan Origination Report says that the median down payment for a single-family home or condo purchased with financing during the quarter rose to $20,000 from $18,162 in the second quarter of this year. In the third quarter of last year the median was $14,400. The most recent number is the highest in ATTOMs records which date back to 2000. The $20,000 downpayment represents 7.6 percent of the median sales price during the quarter of $263,000. The percentage amount was also a recent high, up from 7.1 percent the previous quarter and 6.1 percent in the third quarter of 2016. It was the highest downpayment percentage since the third...(read more)

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Tax News; State-Level Changes; Jumbo/Non-Conforming Updates; Dot Plot Primer

Posted To: Pipeline Press

There’s a lot of airport travel coming up. It is best to stay cool, calm, and collected . Unfortunately, something else that is cool, and calm, is the entry level market for homes. Thousands of housing stats are spit out every year, and here's another one: Zillow finds about 270,000 fewer homes are sold each year compared to 2006, owing to the rentals. Put another way, the number of single-family homes that are rented out grew by 5 million between 2006 and early 2017. (For perspective, Michigan has 4.6 million units total.) Jumbo, Non-conforming, and High Balance Updates Plaza has a Solutions Program that offers a solution for your borrowers with DTI > 43% , self-employed borrowers with difficult income to document, or for transactions that do not fit standard Agency or Jumbo guidelines...(read more)

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MBS Day Ahead: Big Directional Moves All About Keeping Things SIdeways

Posted To: MBS Commentary

Volume swelled during the first 3 days of the week, culminating in yesterday's CPI/Fed combo and a fairly large move lower in rates. That's what we can observe about the short -term. If we're looking at longer -term trends, however, yesterday's big directional move was all about keeping things sideways. The yields seen just before the CPI data were right in line with the highest since late October. The upper boundary of the consolidation trend was clearly being pushed and the rally that followed the data and the Fed clearly pushed back. As the chart suggests, this makes the sideways momentum even stronger . At this point it's bordering on uncanny. If something other than "time" or the tax bill will challenge this sideways range, it has yet to present itself. Today...(read more)

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MBS RECAP: Bonds Cheer Weak Inflation Data and Fed Forecasts

Posted To: MBS Commentary

Heading into the day, we knew we were looking at 2 key market movers in the form of the CPI data and the afternoon's Fed festivities (which include an announcement, economic projections, and a Yellen press conference). The morning's inflation data got the party started with Core annual CPI coming in at 1.7 again. This was notable it had just ticked up to 1.8 for the first time in 6 months when it was last reported a month ago. The move up to 1.8 looked like the start of a bounce back toward 2%. Today's regression reminds markets of inflation's intractability. Bonds looked ready for the inflation data to tell a different story as rates were pushing against their recent ceiling. The weaker data led to an immediate surge back into the safety of the prevailing range. From there...(read more)

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Mortgage Rates Quickly Lower After Inflation Data and Fed

Posted To: Mortgage Rate Watch

Mortgage rates fell fairly quickly this afternoon following the Federal Reserves updated economic projections. While it is indeed true that the Fed "raised rates" this afternoon, there are two reasons that doesn't matter. First of all, the rate the Fed adjusts (aptly named, the Fed Funds Rate), governs only the shortest-time frames (overnight loans among big banks). Although its effects radiate to longer-term debt like mortgages, the two are far from joined at the hip. Short term rates often move one direction while long term rates move another . More importantly, EVERYONE responsible for trading the bonds that govern interest rates (and I do mean every last person without a single exception) was well aware that the Fed would be hiking rates today. No Fed rate hike has been better telegraphed...(read more)

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Differences Between Previous and Current FOMC Statements

Posted To: MBS Commentary

Information received since the Federal Open Market Committee met in SeptemberNovember indicates that the labor market has continued to strengthen and that economic activity has been rising at a solid rate despiterate. Averaging through hurricane-related disruptions. Although the hurricanes caused a drop in payroll employment in September,fluctuations, job gains have been solid, and the unemployment rate declined further. Household spending has been expanding at a moderate rate, and growth in business fixed investment has picked up in recent quarters. Gasoline prices rose in the aftermath of the hurricanes, boostingOn a 12-month basis, both overall inflation in September; however,and inflation for items other than food and energy remained soft. On a 12-month basis, both inflation measures have...(read more)

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Realtors Raise Last-Minute Red Flags Over Tax Bill

Posted To: MND NewsWire

Realtors are expressing concern over three measures that exist in either the House or the Senate versions of the Republican tax cut bill and have sent a letter to Orrin Hatch (R-UT) and Kevin Brady (R-TX), chairs of the Senate Banking and House Ways and Means Committees respectively, about these issues. The letter was sent as a conference committee is about to begin discussions of changes to the bills that will allow passage of a single version by both side of the Congress. Signed by, current National Association of Realtors (NAR) President Elizabeth Mendenhall, the letter stresses the important of homeownership to the U.S. economy and says the Congress needs to keep in mind where their decisions "can create a tremendously better outcome, not only for current and prospective homeowners, but...(read more)

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Fannie and Freddie Will Wait Until Jan 2nd to Evict You

Posted To: MND NewsWire

Both Freddie Mac and Fannie Mae announced this week that evictions from foreclosed single-family and two-to-four-unit properties owned by the GSEs will be suspended during the holiday season. The moratorium will begin on December 18 and extend through January 2 of next year. The two companies said that legal and administrative proceedings for evictions can continue during the period as well as other foreclosure-related activities. Families, however, must be allowed to continue living in the homes. "We're taking steps to support families and to extend the timeline of help for struggling borrowers during the holidays," said Jacob Williamson, Vice President of Single-Family Distressed Assets at Fannie Mae. "We also encourage homeowners who may be struggling with their mortgage to reach out to...(read more)

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Lender/Appraiser Product; Investor Disaster Updates; Movement's Penalty

Posted To: Pipeline Press

Word on the street has House and Senate negotiators agreeing to scale back the mortgage interest deduction in the latest version of the GOP tax bill. The move means homeowners will now be able to deduct interest on the first $750,000 of a new mortgage, down from the current limit of $1 million. Legislation has been introduced in Congress recommending that the CFPB employee pay structure be aligned with the rest of the government. In the meantime, in other government related news besides Alabama’s vote, Movement Mortgage must pony up $1.1 million for California mortgage servicing violations. “Overcharged borrowers and serviced loans without a state license” – not a long-term recipe for success. Fire and Disaster Updates One should always start with the FEMA website for...(read more)

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For Purchase Applications, This December is Better Than The Last

Posted To: MND NewsWire

Applications for mortgages, both for home purchases and refinancing, declined during the week ended December 8. The Mortgage Bankers Association (MBA) said its Market Composite Index, a measure of loan application volume, was down 2.3 percent on a seasonally adjusted basis compared to the volume a week earlier. On an unadjusted basis, the Index decreased 4 percent. Applications for purchases decreased 1 percent on a seasonally adjusted basis from the week ended December 1, and the unadjusted version of the Purchase Index was down 6 percent. The unadjusted index remained 10 percent higher than during the same week in 2016. The Refinance Index was 3 percent lower than the prior week, but the share of applications that were for refinancing increased to 52.4 percent from 51.6 percent. It was the...(read more)

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MBS Day Ahead: Bonds Navigate Dual Landmines in CPI and Fed Dots

Posted To: MBS Commentary

Today brings 2 key developments in the form of the 8:30am CPI data and the afternoon's Fed announcement. CPI--the Consumer Price Index--was one of the top inflation metrics in terms of market movement. Like other inflation metrics, it faded into obscurity for post of the decade following the financial crisis. Markets simply didn't care about inflation data because the general notion of inflation was so far off the radar. The Nov 2016 presidential election seemed to mark a sharp turning point for inflation hawks. With Trump seen as highly likely to increase deficit spending and perhaps even aggregate demand (via promises of stimulus and tax cuts), there was a legitimate reason to fear an uptick in inflation. But even before that, the Fed had begun to warn that inflation was inexplicably...(read more)

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MBS RECAP: Key Technical Ceiling Holds Firm After Auction

Posted To: MBS Commentary

It was a pretty straightforward day for bond markets, which CONTINUE to operate in an exceptionally narrow, sideways range. That's been the case for close to 3 months now. As such, with yields approaching the ceiling today, a breakout would have been big news, and we haven't quite gotten to the headlines and events that constitute "big news." All that to say that bonds didn't do anything too surprising by maintaining the range today. Still, to see it happen in real time, it looked like our salvation depended upon the 30yr bond auction. Heading into the auction 10yr yields were pushing the key technical ceilings near 2.42%. After stronger auction results were released, bonds immediately found their footing, and managed to avoid returning to the higher levels. On the other...(read more)

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Mortgage Rates Slightly Higher Ahead of Fed

Posted To: Mortgage Rate Watch

Mortgage rates moved modestly higher for the 4th straight business day today. Last Wednesday saw the best levels in a month with some lenders in the best shape since early September. The recent move higher brings rates back into the higher part of the prevailing range. If that all sounds somewhat dramatic, it's not . The "prevailing range" is so narrow that it barely bears mentioning. In fact, quite a few loan scenarios would be quoted the same "note rate" on any day in the past several months. Why, then, are we talking about rates "moving?" Technically, it's the "effective rate" that's moving because lenders use upfront costs to make finer adjustments to the cost of financing. In other words, if two people are quoted 4.0%, and everything about the quotes is the same except for a $200 difference...(read more)

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MBA Sees Sales Falling in Nov Despite Longer-Term Strength

Posted To: MND NewsWire

The Mortgage Bankers Association (MBA) projects a decrease in new home sales in November compared to the previous month, but still sees those sales running well ahead of last year . MBA's Builder Applications Survey (BAS), conducted among mortgage subsidiaries of home construction companies, indicates that sales during the month were down 6 percent from October, but were a healthy 12.2 percent higher than in November 2016. MBA estimates this puts the number of sales during the month at a seasonally adjusted annual rate of 663,000 units compared to 659,000 units in October. On an unadjusted basis, there was an apparent decline month-over-month of 11.3 percent, from 53,000 to 47,000 new homes. The sales estimate is derived using mortgage application information from the BAS, as well as assumptions...(read more)

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Increased Delinquency Not a Sign of Distress - Hurricanes to Blame

Posted To: MND NewsWire

Loans performed well in September , continuing to erase most of the last vestiges of the market's Great Recession distress. The CoreLogic Performance Insights Report for the month says the national delinquency rate is now 5.0 percent. This ties September with August as the lowest rate since 2007. With the rate so low, measures of improvement are becoming slim. The September rate represents only an 0.2 percent year-over-year decline. Early-stage delinquencies, loans that are 30 to 59 days past due, rose 0.3 percent from a year earlier to 2.4 percent. CoreLogic's chief economist Frank Nothaft said this increase, the largest since June 2009, was not an indication of any deterioration in credit but reflected the impact of the late summer hurricanes on Texas, Florida, and Puerto Rico. "September...(read more)

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Upcoming Events; Mortgage and Bank Announcements; MBS Issuance Rankings

Posted To: Pipeline Press

Today I find myself in Florida spending time with American Bancshares. Did you know the area code for Cape Canaveral is 321…as in a countdown? 2017 is counting down. No one has a crystal ball, but the MBA thinks that residential volumes will be down 5% in 2018. Others think that is optimistic. Think you have a lot of planning to do for 2018, and the future? Same thing with gasoline companies: In a world of driverless cars, how are they going to attract the car to their gas station, while the owner will want the least expensive petrol? Upcoming Events For Fannie the new Demographic Information Addendum to the 1003 loan application will be required on all loan applications effective January 1, 2018. This change affects brokers, non-delegated correspondents and correspondent lenders. The...(read more)

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MBS Day Ahead: Focus Remains on Tomorrow

Posted To: MBS Commentary

I wish I could tell you that today was destined to be an exciting opportunity for bonds to embark on some sort of epic journey (or at least to definitively break outside the range that's been containing all movement for months). But alas, the "stuff" that MIGHT be relevant enough to elicit a breakout is at least another day away. That's assuming that the Fed Announcement and CPI data are "relevant enough" tomorrow. In the meantime, we have only Producer Prices on the econ data front today--a far less consequential report than tomorrow's Consumer Price Index. Of potentially more importance to near term trading is the conclusion of this week's accelerated Treasury auction cycle with 30yr bonds at 1pm. If yesterday's 10yr auction was any indication as to...(read more)

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MBS RECAP: Maintaining The Trend Meant Modest Weakness Today

Posted To: MBS Commentary

Bond markets had an uneventful overnight session until just before the start of domestic trading hours. Most market participants were willing to chalk up some early strength to a botched suicide bombing in Times Square (the bomber was the only one seriously injured). While the bombing attempt was certainly visible in early trading, it didn't really change the trajectory for longer-term bond yields heading into the 1pm Treasury auction. The auction itself was pretty bad (not appalling though). On today's light volume trading session, it proved to be the most profound inspiration for bonds. If we look at a 1 or 2 day chart, the auction's impact is definitely noticeable. Look at the bigger picture, however, and it quickly gets lost in the range-bound shuffle. We continue to wait for...(read more)

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Mortgage Rates Unchanged to Slightly Higher

Posted To: Mortgage Rate Watch

Mortgage rates moved modestly higher for the 3rd straight business day, making for a moderate correction from the last Wednesday's 1-month lows. In the recent context, talking about "1-month lows" and 3-day losing streaks is actually far too dramatic when it comes to the actual movement in rates. Most prospective borrowers would be seeing the same rates as last week with the only differences being a slight adjustment in the upfront costs. Even then, many lenders are perfectly unchanged over the past 2 days. Point being: rate volatility has been calm with few exceptions. Today's weakness (i.e. bond market weakness, which corresponds to higher rates) was driven by weak demand at today's 10yr Treasury auction. Mortgage rates aren't based directly on Treasuries, but the latter provide big-picture...(read more)

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Looking Back at Loan Mods: What Worked, What Didn't, and What Can We Learn?

Posted To: MND NewsWire

As banks and government tried to stem the flow of foreclosures during the housing crisis there was a lot of debate (and criticism) about what needed to be done and how to do it. The acting director of the Federal Housing Finance Agency, Edward DeMarco fought tooth and nail to prevent Fannie Mae and Freddie Mac (the GSEs) from being forced to reduce the principal balances of their loans. Barrels of ink were consumed criticizing the Home Affordable Modification Program (HAMP). Servicers were penalized for their misfeasance running it. Servicers set up several proprietary programs to modify loans held in mortgage-backed securities and bank portfolios. In addition, there was much criticism of homeowners who, it was alleged in some quarters, were quick to walk away from mortgages they never should...(read more)

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Construction and Data Validation Products; FHA, VA, HECM Changes

Posted To: Pipeline Press

Lenders making tough personnel decisions can’t “kick the can down the road” like Congress and the President. On Dec. 8, the National Flood Insurance Program (NFIP) was set to expire. Late last week Congress passed, and the President signed, a two-week spending bill to avoid a government shutdown, allowing an extension on the NFIP to 12/22. In the simplest terms, if the NFIP expires, virtually no homes in any floodplain could be bought or sold if that deal involves a mortgage company because anyone buying a home with a federally-backed loan is required to carry flood insurance if that house sits in a flood plain. Any way to run a country? FHA/VA/Ginnie Program Changes Iberiabank Corp and two subsidiaries agreed to pay $11.69 million to resolve allegations they submitted false...(read more)

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MBS Week Ahead: Central Bank Meetings and Fiscal Drama Keep Volatility on The Table

Posted To: MBS Commentary

There are 3 to 4 big players this week when it comes to potential market movers . In no particular order, these include Treasury auctions, central bank announcements, inflation data, and potential tax headlines. The relative importance of any of these factors depends on reality versus expectations. For instance, with respect to the Treasury auctions (which occur earlier than normal this week with 2 today and 1 tomorrow), if demand metrics are in the middle of the range of historical averages and if the yield awards fall in line with expectations, we might not see much market movement at all. Contrast that with any potential tax bill headlines where a simple "yea or nay" has market moving connotations. In general, any news that makes it look like the tax bill is more likely/certain...(read more)

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Joe Sanchez
Terra Linda Realty
Ph: 909-931-1307Fax:909-803-9840
400 North Mountain Ave., Suite 223
Upland, CA 91786 US
BRE License # 01201910
www.terralindarealty.com
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