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Mortgage Related News

MBS RECAP: Quietest Day of The Week Despite Several Interesting Tidbits

Posted To: MBS Commentary

We've been watching the intraday trading ranges in bond markets to keep an eye on just how flat things have been in the wake of last Wednesday's big trading day (due to econ data and the Fed). "Inside day" is a term that comes up when things are this flat. It refers to a day's trading range falling "inside" the previous day's range. This week has been notable in that Tuesday and Friday were both inside days. That's particularly striking today as it required a narrow trading range of a mere 2.44bps (2.142 - 2.166). Adding to the intrigue is the fact that there were a few tradeable headlines--especially from Fed speakers who seemed to be singing more dovish tunes on the prospect for inflation to frustrate the policy path. Then again, the grudgingly slow...(read more)

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Rates Cap Impressively Sideways Week Near Long-Term Lows

Posted To: Mortgage Rate Watch

Weeks like this are the reason that some mortgage rate analysis is only done once a week. There haven't been any significant developments in financial markets--at least not as far as bonds (which dictate rates) have been concerned. And there certainly hasn't been any significant movement in mortgage rates themselves. In fact, with the exception of a modest dip last Wednesday, mortgage rates have been essentially flat for the entire month of June . As we've discussed all week, being "flat" at current levels is a good thing considering lenders continue quoting conventional 30yr fixed rates in a range from 3.875% to 4.0% on top tier scenarios. Almost any borrower will have seen the exact same interest rate quote throughout June. Any detectable variation has come in the form of upfront costs. These...(read more)

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Diversity Not Destined to Dampen Homeownership

Posted To: MND NewsWire

The final installment of a series of working papers produced by the University of Southern California (USC), in partnership with Fannie Mae, looks at the decade-spanning 10-point plunge in the homeownership rate of young Americans. Homeownership has declined, starting even before the housing crisis, across nearly all age groups, but has been most notable for those aged 25 to 44. Prior papers in the series have looked at the role two factors play in increasing young-adult homebuying; parental financial support, and receipt of a bachelor's degree. A third paper found that the correlates of homeownership varied under different credit and economic conditions. The study attempted to simulate how future changes in the characteristics of young adults might affect changes in their homeownership rate...(read more)

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New Home Sales Rebound; Prices Crush Previous Record

Posted To: MND NewsWire

The report on May new home sales, released this morning, paints a much brighter picture than last month's release of April data. In that report, the U.S. Census Bureau and the Department of Housing and Urban Development said new home sales had dropped 11.4 percent from their March level, to a seasonally adjusted annual rate of 569,000 units. Today that rate was revised up to 593,000. May sales improved on that report. They were up by 2.9 percent from April to a seasonally adjusted estimate of 610,000, cracking the 600,000 mark for only the fourth time since the housing crisis began. Sales are now 8.9 percent higher than in May 2016 when the estimate was 560,000. On a non-seasonally adjusted basis, sales in May were 1,000 units higher than in April, at 58,000. May's annual rate of sales...(read more)

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Legal and Compliance News - Servicing Enforcement Action

Posted To: Pipeline Press

Rumors continue to swirl, this time about Orange County’s Americash. Yes, the drop in refi volume is showing, and even if you made it through the bad first quarter, it’s not a cake walk out there. On the other hand, I wish I owned stock in George Clooney. As if he needs help with two new twin mouths to feed, he received news that Diageo will purchase Casamigos, the tequila company he cofounded and owns roughly a third of, for up to $1 billion. But the jury’s out about owning stock in Warren Buffett’s Berkshire Hathaway: it has committed $1.5 billion to a credit facility for Canada’s Home Capital Group Inc. “The investment in Home Capital , which has acknowledged responsibility for mortgage fraud, also lets Berkshire deploy a small piece of its $96.5 billion...(read more)

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MBS Day Ahead: Bond Traders Eyeing The Exits As Flat Week Winds Down

Posted To: MBS Commentary

You've heard of "innocent until proven guilty." This week of trading in bond markets has been "flat and boring until proven volatile." For many, it's the first full week of summer. For others, it's the week where their kids finished school. And for everyone, it's a week without much by way of significant economic data that lies just before a "month/quarter-end" trading week. To say that traders have been increasingly tuned out is an understatement. Today epitomizes that "tuning out" theme , not only because it's the last day of the week described above, but also because yields are starting out in the same old range that's been dominating since Fed day (last Wednesday). In other words, it looked potentially boring on paper, and...(read more)

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MBS RECAP: Bonds Modestly Stronger, But Sideways Theme Remains

Posted To: MBS Commentary

Yesterday's recap went into some detail about the market phenomenon that can result in intense periods of sideways momentum (and trader apathy) during certain weeks of certain summertime months. Long-story short, this week was a great candidate for what some market participants refer to as the summer doldrums, and so far it is not disappointing. Back in the day, we might have looked forward to another weekly release of Jobless Claims data, but it hasn't been a market mover for quite some time. FHFA Home Prices were also on the data calendar, and while we've never really looked to data that old (it applies to April) for trading level guidance, the results were nonetheless interesting to housing/mortgage market folks. The FHFA clocked an increase in the annual pace of appreciation...(read more)

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Mortgage Rates Sideways to Slightly Lower

Posted To: Mortgage Rate Watch

Mortgage rates have been so little-changed in recent days that yesterday's coverage wouldn't need to be changed in order to apply perfectly today. Indeed, the 3rd paragraph is a word-for-word repeat. To be fair though, we would need to update yesterday's reference to "especially over the past 5 days." That "5" would now be a "6," obviously. Any detectable difference in today's rate quotes would come in the form of slightly lower upfront costs versus yesterday. The actual interest rate quote remains unchanged. This sideways trend could easily continue for several more days. The absence of change continues to be a good thing given that rates remain very close to their lowest levels in more than 8 months. Only a handful of recent days have been any better. 4.0% is the most prevalently-quoted conventional...(read more)

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FHFA Home Prices Continue Strong Gains

Posted To: MND NewsWire

April data from the Federal Housing Finance Agency (FHFA) indicates that, once again, there was no moderation in the pace of home price increases . FHFA's Housing Price Index (HPI), which is based on loans sold to or guaranteed by the two GSEs, Fannie Mae and Freddie Mac, increased 0.7 percent from March. Further, the March Index, originally reported to have gained 0.6 percent from the previous month, was revised upward, also to 0.7 percent. There was an even larger jump in the pace of appreciation on an annual basis. The year-over-year HPI was up by 6.8 percent compared to 6.4 percent in March. For the nine census divisions, seasonally adjusted monthly price changes from March 2017 to April 2017 ranged from an 0.1 percent decline in the East South Central division to a 1.6 percent gain in...(read more)

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Prepayment Rate and Refinanceable Population Have Both Soared

Posted To: MND NewsWire

Prepayments, apparently spurred by the recent retreat in interest rates, soared in May. Black Knight Financial Services, in its "first look" at the month's mortgage performance data, said there was a 23 percent increase in prepayments, historically a good indicator of refinancing activity , from April to May, bringing the incidence to the highest so far in 2017, 1.06 percent. The company said the first quarter of this year was a bad one for refinancing, with originations falling 45 percent from the fourth quarter of 2016 as interest rates took off. However, the easing of rates over the last few months may change the outlook for the second and third quarters, a projection that seems to be confirmed by the increase in prepayments. With rates back below 4 percent, Black Knight said the number...(read more)

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Purchase Loans, Closing Rates Improved in May

Posted To: MND NewsWire

Originations are increasingly tilted toward home purchase mortgages per the latest Origination Insight Report from Ellie Mae. The May data show the share of those mortgages gained another three percentage points to represent 68 percent of all closed loans. The share of refinance originations has dropped from 47 percent at the beginning of 2017 to a current level of 32 percent. The purchase share of Convention loans increased from 57 percent to 61 percent and the purchase share of FHA ticked up 1 point to 82 percent and VA's to 73 percent from 71. The average 30-year note rate of closed loans was down for the first time this year , to 4.33 percent from 4.41 percent in April, but that average rate was still 27 basis points higher than in May 2016. The percentage of Adjustable Rate Mortgage (ARM...(read more)

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Multiple Vendor Updates; Internal Audit Service; Alight Raising Capital

Posted To: Pipeline Press

This week’s Sindeo's closure reminds lenders of the basic premise: if you didn't make money in 2016, what makes 2017 any different? Your competitors won't wait for you. Correspondent, wholesale, and warehouse partners won't "look the other way" and be too lenient when there's a lot of money at stake. Trust but verify the financial soundness of your counterparties! Here's today's second public service note. Anyone with a website knows that the Title III of the Americans with Disabilities Act (ADA) requires that businesses and nonprofit services providers make website accessibility accommodations to enable the disabled public to access the same services as clients who are not disabled. You can listen to my commentary by pressing "listen" at the top right . If you have questions about your...(read more)

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MBS Day Ahead: Clearly a Waiting Game, but For How Long?

Posted To: MBS Commentary

With the trading activity seen in the wake of last Wednesday's high-volume/high-movement day, it's clear that bond markets have been in a holding pattern ever since. As can be seen in today's chart, and as we discussed in detail on MBS Live yesterday, every subsequent trading day has fallen "inside" Wednesday's range (thus the term "inside days"). That range can be seen in the white lines. The teal lines introduce another concept: consolidation . In other words, not only have yields held inside a sideways range, they've also generally been offering lower highs and higher lows. This results in a narrowing range that implies a breakout by month-end. If we see a fairly strong break of the teal lines, it i ncreases the odds of the corresponding white line...(read more)

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MBS RECAP: Summertime Sideways

Posted To: MBS Commentary

With the taper tantrum in 2013 and Brexit in 2016, two of our most recent examples of summertime bond trading have been pulled very far from historical trends. Namely, the summer months tend to see narrower ranges and flatter trajectories compared to other times of the year. This usually starts in June and coincides with warmer weather as well as kids getting out of school. This isn't to say that the next 2.5-3 months are guaranteed to be sideways for bond markets. It's just a convenient scapegoat when we've seen trading like today's (which marks the 5th straight day locked inside the range set last Wednesday). Today brought the first major economic report of the week (depending on one's definition of "major," but it was more major than we've had up until now...(read more)

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Mortgage Rates are Barely Budging (And That's Great!)

Posted To: Mortgage Rate Watch

Mortgage rates have been locked in an exceptionally narrow range for most of the month of June, but especially over the past 5 days. Given that mortgage rates are determined by the bond market where trading levels move constantly throughout the day, it can be useful to consider what's been happening with those trading levels. Long story short, they haven't been remotely close to moving any higher or lower than the highs and lows seen last Wednesday. In other words, Wednesday's range set the boundaries of the current playing field for rates, and they haven't left the field since then. In terms of actual changes in mortgage rates, we're talking about a few tenths of a percent in either direction, and that's in terms of EFFECTIVE rate (the actual interest rate plus the loan-related upfront costs...(read more)

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Existing Sales Rise, Prices Peak, Time-to-Sell at New Low

Posted To: MND NewsWire

Existing home sales weren't expected to strengthen in May, in fact analysts were looking for a slight decline. Sales however did manage to recover from a significant April loss while inventories increased slightly and the median sales price rose to a new high. The National Association of Realtors® (NAR) said completed sales of existing single-family houses, townhouses, condos, and cooperative apartments rose 1.1 percent to a seasonally adjusted annual rate of 5.62 million. This was a 2.7 percent year-over-year gain. April's sales had tumbled by 2.3 percent compared to the previous month. Those sales were revised lower still, from the original rate of 5.570 million to 5.560 million. Analysts polled by Econoday had expected sales to be in the annual range of 5.450 million to 5.650 million...(read more)

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Borrower Satisfaction Survey; CRT's Help in Secondary; Credit Risk Increasing in Primary Market

Posted To: Pipeline Press

Welcome to the first day of summer. Hey, I don’t where you’re going to be exactly two months from now, but on August 21, besides marking the anniversary of Hawai’i’s statehood, there are various places to watch the total eclipse . Here's a cartoon simulator - enter a town or city and then hit the arrow on the bottom left. (If its sunny for you all day, sorry.) Servicing News Lien releases and assignments are critical to moving loans into the secondary market and present a specific set of compliance challenges for servicers and investors. MetaSource's latest whitepaper tackles "The 3 Biggest Mistakes Servicers & Investors Make". In a servicing-related matter, the California Department of Business Oversight issued a brief bulletin for licensees to be able to identify...(read more)

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Refis Take Another Step Toward 50% of All Mortgage Apps

Posted To: MND NewsWire

The volume of applications for refinancing expanded for the third consecutive time during the week ended June 16. The Mortgage Bankers Association (MBA) said the increase offset another down week for purchase mortgages, giving overall mortgage volume a slight uptick from a week earlier. The MBA's Market Composite Index, a measure of overall application volume, increased 0.6 percent on a seasonally adjusted basis from the week ended June 9. On an unadjusted basis however, the Composite Index dipped 0.4 percent. The Refinance Index gained 2 percent from the week before, putting it at its highest level since last November. The share of applications that were for refinancing rose to 46.6 percent from 45.4 percent. Applications for purchase mortgages declined for the fifth time in the last six weeks...(read more)

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MBS Day Ahead: Oil's Impact on Markets: a Slippery Slope

Posted To: MBS Commentary

Here we are again with oil falling into new lows for the year and suddenly, it's the inspiration for everything according to most mainstream financial media. Slippery puns aside, don't fall for it! Sure, oil prices matter. And they can even have varying levels of impact on stocks and bonds--exactly as the mainstream financial news claims. But there is quite a wide range of variation, and it's been far from consistent over time. One of the biggest issues is that the watershed moment for oil in late 2014 and early 2015 wasn't all about oil. It was just as much about European QE (which was a battle during late 2014 and finally enacted in early 2015). Massive expansion of monetary policy in Europe that coincided with potential contraction in the US had profound effects on currency...(read more)

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MBS RECAP: Bonds Erase Yesterday's Weakness Without Much Help

Posted To: MBS Commentary

Today had no significant news or events on the calendar, thus leaving traders to watch other traders for cues. To some extent, several Fed speakers got some attention, but the best we can do here is to pick out only the comments that reinforce the rally and tell you about those. And that doesn't seem very fair, considering the there were Fed comments that argued for bond market weakness. Treasuries improved modestly overnight with help from Europe (friendly comments from Bank of England president and weak inflation in Germany). The spillover was minimal , however. Gains improved during domestic hours when US traders and European traders were active at the same time. After Europe was out of the day, so were bond market gains. Yes, it really looks that simple: slight strength in Europe +...(read more)

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Rates Fall Slightly to Remain Near 8-Month Lows

Posted To: Mortgage Rate Watch

Mortgage rates were steady to slightly lower today, with underlying bond markets essentially erasing the damage seen yesterday. This was neither here nor there for the mortgage world as most lenders didn't adjust rates much higher yesterday (despite bond weakness). Thus, they didn't have much to do today when bonds strengthened. In general "bond market strength" = lower rates and vice versa. There were no significant economic reports or major market-moving headlines today--at least not for rates. Oil prices and political headlines might make the evening news, but neither were directly responsible for the bond market improvement. The absence of change continues to be a good thing given that rates remain very close to their lowest levels in more than 8 months. Only a handful of recent days have...(read more)

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Rise in Purchase Mortgages Boosts Credit Risk

Posted To: MND NewsWire

New home purchase mortgages became a little riskier in the first quarter of 2017 per CoreLogic. The company said its Housing Credit Index (HCI), which measures trends in six mortgage credit risk attributes, edged up to 105.6, a 3.6-point increase from the same quarter in 2016. This puts the HCI at about the same level as its average score of 105.9 over the period of 2001 to 2003, a period that CoreLogic considers a normal baseline for credit risk . The six attributes measured by the HCI are: borrower credit score, debt-to-income ratio (DTI), loan-to-value ratio (LTV), investor-owned status, condo/co-op share and documentation level. The slight loosening in the credit index during the past year was partly due to a shift in the mix of purchase versus refinance originations because purchase loans...(read more)

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MBA Objects to FHFA Non-Bank Servicer Proposal

Posted To: MND NewsWire

Mortgage Bankers Association President and CEO David H. Stevens, has released a statement objecting to one of the three recommendations made this week by the Federal Housing Finance Agency (FHFA) in its annual report to Congress. FHFA said it intends to ask Congress to allow it to add certain regulated counterparties, specifically non-bank servicers , to its examination schedule. The agencies said that its regulated entities, Fannie Mae and Freddie Mac (the GSEs) and the Federal Home Loan Banks, contract with third parties for services to support the secondary mortgage market . "While oversight of these counterparties is important to safety and soundness of FHFA's regulated entities" the reports says, "it is currently exercised only through contractual provisions where possible." FHFA says...(read more)

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Hedging Economic Bets

Posted To: MND NewsWire

Fannie Mae's Economic and Strategic Research Team hedged a few bets in its June economic summary. It laid out some wild cards while predicting that the current expansion, which marks its eight-year anniversary this month and is the third longest of the post-World War II area, should continue its moderate growth next year. One of those wild cards is the potential for fiscal stimulus. Fannie's team says the odds the Congress will enact major pieces of legislation, including health care, tax reforms, and infrastructure investment, by the end of this year have diminished, r educing the possibility of any meaningful impacts from fiscal stimulus before 2018 . Another fiscal policy uncertainty this year is the need to raise the debt ceiling, probably in November, to avoid a government shutdown and...(read more)

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Reverse Mortgage Primer; LO Jobs and Products

Posted To: Pipeline Press

“People who don’t give up attract other people’s attention.” As do people whose humor is stuck in 4th grade – like mine usually is. For example . Reverse Mortgages - Attracting Forward Lenders Given that 10,000 people a day are turning 62 (the minimum age to take out a reverse mortgage), plenty of "forward" lenders are looking at the channel, or are fostering divisions to capture the business & revenue. Reverse mortgages are a "costly blessing" to older people who have valuable homes, but not a lot of ready money . They allow people to borrow money to spend now, that only must be repaid (plus interest) when they, or their estate, finally sells their home. Real estate agents and financial planners are often offered help by lenders doing reverse mortgages: "We...(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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