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Mortgage Related News

MBS RECAP: Bonds Pull Out Come-From-Behind Victory Thanks to Stocks

Posted To: MBS Commentary

For those who pay any sort of attention to technicals or simply to "key levels" in the bond market, Friday was the gloomiest day we've had in a while. It was the first time that a major overhead ceiling had been broken in more than 2 weeks of mostly sideways momentum. The level in question--2.75% in 10yr yields--wasn't the most important technical level in the world, but it had seen no less than 6 bounces since December 31st. Ending the week near 2.79% meant it was likely defeated barring a surprisingly strong showing over the weekend. There was a surprisingly strong showing over the weekend! Rather, the strength began late last night as Asian markets began losing ground. Stock losses spilled over into US markets and ultimately helped bonds pick up enough ground to call the...(read more)

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Mortgage Rates Dodging Some Risk For Now

Posted To: Mortgage Rate Watch

Mortgage rates were higher heading into the end of the previous week. To make matters worse, as of Friday afternoon, it didn't look like the average lender had fully accounted for the losses in the bond market. Bonds dictate interest rate movement. When it comes to mortgages, lenders are paying close attention to trading levels in bond markets, but only change their rate sheet terms if markets move enough. This is known as a "mid-day reprice." Bonds were weak enough for some lenders to reprice on Friday, but most didn't. That meant we were likely to see that bond market weakness reflected in this morning's new rate sheet offerings. As it happened, bonds staged a somewhat impressive recovery with help from investor concern about global growth. Oftentimes, a big loss in equities markets can send...(read more)

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Big Changes at Fannie/Freddie, Is Conservatorship Nearing an End?

Posted To: MND NewsWire

MarketWatch is reporting that Federal Housing Finance Agency (FHFA) along with Treasury and other parts of the administration are about to reveal a plan to end the 10-year plus conservatorship of the two GSEs Fannie Mae and Freddie Mac. Joseph Otting, who is keeping the FHFA director's seat warm until former director Melvin Watt's replacement is confirmed, is said to have told a full FHFA staff meeting on Thursday that there should be a blueprint announced in about a week. An FHFA spokesperson confirmed that a plan was at the meeting discussed but said there were no details or timelines proposed. MarketWatch quoted the spokesperson as saying, "Acting Director Otting held the internal meeting to meet FHFA staff and establish open lines of communication. He mentioned, as he previously has, that...(read more)

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Rising Inventories Tempering Prices, Existing Home Sales Resume Slide

Posted To: MND NewsWire

Existing home sales finished up the year on a decidedly sour note. After putting together consecutive increase in October and November and ending a six-month losing streak, the National Association of Realtors® reports sales plummeted 6.4 percent in December. Sales of previously owned single-family houses, townhouses, condos and cooperative apartments were at a seasonally adjusted annual rate of 4.99 million compared to 5.32 million in November. Existing home sales, which were already at a 7-1/2 year low in November and down 7.0 percent from a year earlier are now 10.3 percent lower than from the 5.56 percent pace last December. Single-family home sales were at a seasonally adjusted annual rate of 4.45 million, compared to 4.71 million in November, and 10.1 percent below the 4.95 million...(read more)

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Fannie/Freddie Changes Run the Gamut, Including Shutdown Underwriting Shift

Posted To: MND NewsWire

“Some people are so poor, all they have is money.” How about “26 of the World’s Richest Own the Same Wealth as Poorest Half” in the world!? To the best of my knowledge the PUGS (partial U.S. government shutdown) is not helping anyone’s wealth and is impacting U.S. citizens. Freddie and Fannie released policy and procedure updates caused by the shutdown – more below. Lender Products and Services What’s the mortgage version of “having your cake and eating it too”? Well, thanks to United Wholesale Mortgage, it means having access to superb service, technology, partnership tools…AND price! UWM has dropped its rates across the board for conventional, government and jumbo products. It gives the nation’s No. 1 wholesale lender...(read more)

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MBS Day Ahead: Bonds Fight to Hold Under Important Ceiling Amid Data Darkness

Posted To: MBS Commentary

After today's Existing Home Sales data (which is unaffected by the government shutdown because it's published by the National Association of Realtors), there will be no other bigger-ticket economic reports this week. Most of the blame for that lies with the fact that there simply isn't much on the economic calendar on this holiday-shortened week. But the most important blame is reserved for the ever-present government shutdown which will prevent the release of Durable Goods on Friday--the week's only truly big-ticket report. It's our expectations--or at least our hope--that the absence of big-ticket economic data will keep bond markets in a sufficient state of uncertainty as to prevent the break of a key ceiling just overhead at 2.82%. As always, such ceilings may end up...(read more)

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MBS RECAP: One of Three Things is Going on With Bonds

Posted To: MBS Commentary

Bond markets sold-off today in a slightly more alarming way than we've seen so far in 2019. This was accompanied by 11th straight trading session where stocks closed higher than they opened, as well as the best S&P prices in more than a month. One of three things could be going on. At face value, this is alarming . The first option is that all of the above is cause for concern. After all, we were worried about stocks and bonds reversing course in 2019 after the strong and correlated move in late 2018. This is the worst case scenario, but not necessarily a guaranteed scenario. The 2nd option is that all of the above is a 'false alarm.' Perhaps stocks are overly optimistic about a trade deal. Perhaps markets are too smart for their own good thinking they know what will happen...(read more)

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Mortgage Rates Nominally Higher Despite Bond Market Warning

Posted To: Mortgage Rate Watch

Mortgage rates rose gently today. Most mortgage borrowers (and many mortgage professionals, for that matter) wouldn't be aware of slightly more alarming risks lurking underneath the surface. Those risks involve the broader bond market from which mortgage-related bonds take their directional cues. More simply put, if US Treasuries are improving, mortgage-backed bonds tend to improve as well. The level of correlation varies though. For nearly all of 2018, mortgages weren't improving as quickly as the most widely-used rate benchmark: 10yr Treasury yields. That began to change recently--especially when 10yr yields began moving higher 3 weeks ago. During that time, we've seen moderate moves higher in 10yr yields met with modest moves higher in mortgage rates. Today was another one of those days...(read more)

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Has RESPA's Servicer Rule Reduced Foreclosures?

Posted To: MND NewsWire

In accordance with requirements of the Dodd-Frank Wall Street Reform and Consumer Protection Act, the Consumer Financial Protection Bureau (CFPB) recently conducted five-year assessments of two rules it promulgated under the act. We summarized their assessment of the Ability-to-Repay/Qualified Mortgage rule last week. What follows is a brief summary of the assessment of the Real Estate Settlement Procedures Act's (RESPA's) servicing rule. Many provisions of the rule relate to servicer obligations to review delinquent borrowers for foreclosure avoidance options such as loss mitigation. These include requiring servicers to make certain disclosures, take certain procedural steps, and meet prescribed timelines when borrowers are applying for and being evaluated for these options. The data showed...(read more)

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MBS Day Ahead: Bonds Break One Ceiling, But The Next One is More Important

Posted To: MBS Commentary

Ever since bottoming out in early 2019, 10yr Treasury yields faced a pretty clear line in the sand from a technical standpoint. 2.82% stuck out like a sore thumb overhead due to multiple instances where it acted as a floor in 2018. It may have seemed too far away to worry about 3 weeks ago, but with 2.75% being broken yesterday/today, 2.82% is next in line. Would a break above 2.82% be the end of the world for bonds? Not necessarily. In fact, in the biggest of pictures, as long as yields don't break above 3.26%, the longer-term outlook could remain positive. It would just be getting off to a rockier start compared to a scenario where yields are instead able to hold fairly steady in the 2.75-2.82 range until finding a reason to rally. Either way, the longer-term outlook will depend on bonds...(read more)

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Condo, Sales, and Business Intelligence Products; Freddie and Fannie Program Changes

Posted To: Pipeline Press

For the first time in history, the six biggest banks — JPMorgan Chase, Bank of America, Wells Fargo, Citigroup, Goldman Sachs and Morgan Stanley — made $100 billion in profit in a year. Yowzah! There’s a lot going on out there, and Ben Smidt put out his “Mortgage Expert Insights on Business Planning Strategies” that is worth a gander. Every basis point counts, right? With the increase in short-term rates, for non-depository lenders, does your accounting team tell you how much it costs every day to have a funded but unsold on your warehouse? If they haven’t, they should. Conventional Conforming Changes For the most part Freddie and Fannie have motored on, regardless of the PUGS (partial U.S. government shutdown). Let’s see what they’ve been up...(read more)

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New Home Sales Pull Back Amid Global Uncertainty

Posted To: MND NewsWire

Applications for new home purchases dropped in December , falling 6.8 percent behind those a year earlier. The deficit from November was even larger, a decline of 13 percent. The Mortgage Bankers Association (MBA) estimates that those numbers, which do not include any adjustment for seasonal patterns, translates into new home sales during the month at an annual rate of 552,000 units, a 12 percent decrease from the estimated November pace of 627,000 units. On an unadjusted basis, MBA says there were 37,000 new homes sold during the month, down 17.8 percent from the 45,000 new home sales in November. "New home sales declined for the second straight month in December, from 627,000 units to 552,000 units, as factors such as a volatile stock market and economic uncertainty , both here and abroad...(read more)

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MBS RECAP: Trade Headlines Provide Sneak Peak for Bond Market Vulnerability

Posted To: MBS Commentary

The Wall St Journal ran a story this afternoon suggesting Treasury Secretary Mnuchin was pushing for a compromise deal to ease Tariffs on China in order to grease the skids for trade talks. As a result, stocks and bonds lost their cool --relatively. Case in point, in the 30 minutes following the headline, nearly 350k 10yr Treasury futures contracts traded. To put that in perspective, the 30 minutes following the January 4th jobs report saw just over 250k. To be fair to the jobs report, it created lasting volume throughout the day whereas the trade-related headlines made for a much more condensed dose. Even so, the reaction speaks to importance of trade-related updates as the US works on hammering out a deal with China. We could also argue that it speaks the deprivation that markets have been...(read more)

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Mortgage Rates Holding Ground But Volatility Could Increase

Posted To: Mortgage Rate Watch

Mortgage rates were technically steady today. In fact, as of this writing, most lenders are offering slightly better terms compared to yesterday, but only by barely-detectable amounts. The afternoon brought volatility in financial markets owing to trade-related headline. That volatility isn't moving in a good direction for mortgage rates at the moment. The takeaway is that, all other things being equal, lenders will be offering slightly weaker terms tomorrow morning, assuming they don't see quite enough weakness to adjust today's offerings with only a few hours left in the day. Combine the volatility risk with the fact that rates are still very close to their lowest levels since last April, and this is still a compelling opportunity for potential homebuyers or owners interested in refinancing...(read more)

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Subservicer, Non-Agency Products; World Debt Increasing; Primer on "Duration" and Mortgage Pricing

Posted To: Pipeline Press

Time has a way of slipping by. For example, I’ve really been meaning to transfer a bunch of Lotus 1-2-3 and Quattro Pro spreadsheets I have off of some floppy disks and onto my laptop but never seem to get around to it. Speaking of time passing, Moody’s send out a warning that if the partial US government shutdown (PUGS) continues it could create problems for the U.S. bond market. Entities that depend upon federal money for revenues or paying debts could experience "liquidity strains." As we know the lack of liquidity will take a company, or person, down to their knees faster than anything. Yet nothing is certain but death and taxes, and the IRS plans to recall thousands of workers now on furlough because of the PUGS. Lender Products and Services Wrapping up a record-breaking 2018...(read more)

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MBS Day Ahead: There Are Only So Many Ways To Say It

Posted To: MBS Commentary

Unless you've missed the past few days of commentary, you've heard me say something about the sideways uncertainty in markets as investors wait for a government shutdown resolution. There are only so many ways to say it. So I'll let someone else say it this morning. The following is from the head of US Rates Strategy at BMO Capital Markets, Ian Lyngen: "Treasuries are in a classic holding pattern as we await further clarity on a variety of fronts. The government shutdown remains front and center, if for no other reason than the dearth of economic data the closure has created and mounting concerns the stalemate will impact the real economy." It can't be said with much more clarity. Even if we want to argue the shutdown, itself, isn't a major market mover, it's...(read more)

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Will New FHFA Head Follow his Instincts or Bow to Reality?

Posted To: MND NewsWire

"The most important question in housing policy heading into the new year has nothing to do with interest rates, housing supply, or home sales," Urban Institute (UI) non-resident fellow Jim Parrott says. "It's what kind of director of the Federal Housing Finance Agency (FHFA) Mark Calabria will be ." Calabria has been named to replace Melvin Watt as director of the agency that regulates the Federal home Loan Banks and the GSEs Fannie Mae and Freddie Mac. FHFA has also been conservator of the GSEs since 2008. Parrott says the agency has "an enormous hand in who in this country can get a mortgage and on what terms ." He adds, "And in Mark Calabria, the Trump administration has nominated one of Fannie and Freddie's greatest skeptics, raising the prospect that they, and the market that depends on...(read more)

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MBS RECAP: Bonds Looking Reluctant to Make Bigger Moves Without Data

Posted To: MBS Commentary

Today would have been Retail Sales day were it not for the government shutdown. This also prevented Business Inventories from reporting (not an insignificant piece of data even if not on par with Retail Sales). Tomorrow will see the New Residential Construction numbers (housing starts and building permits) stay silent due to the shutdown. This isn't an environment where bond traders are eager to make big bets. That much is evident in the general sideways grind of the past week and a half. Some of the only times that we see "big bets" are in response to trading levels being coaxed out of the prevailing range by other factors. That was the case today as 10yr Treasury yields approached their highest levels of the year. Before the ceiling could be challenged, a big trade came through...(read more)

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Mortgage Rates Up Slightly, But Still in Great Shape

Posted To: Mortgage Rate Watch

Mortgage rates rose modestly today after spending the past 2 days moving sideways. It was really yesterday's market weakness that caused today's move. Mortgage rates are most directly affected by the trading of mortgage-backed securities (MBS). When MBS are weaker, rates rise. MBS were weaker throughout the day yesterday, but not by quite enough for lenders to go to the trouble of revising their rate sheets for the worse. Instead, lenders simply waited until this morning to make the changes implied by the market. This delayed reaction is common when the market movement on any given day isn't quite enough to justify lender reprices. In the bigger picture, rates have been in a holding pattern, possibly waiting for some indication that the government shutdown will end. When such a thing happens...(read more)

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Manufactured Home and Capital Markets Products; Radian Expands; Big Banks' Mortgage Volumes

Posted To: Pipeline Press

As pricing battles rage in the wholesale channel, there has been plenty of news of layoffs in residential lending over the last six months industry-wide, due to reasons like becoming more efficient, lower volumes, or fewer delinquencies, the most recent being BB&T and Mr. Cooper (page 7). What would actually be newsworthy is if a well-known company had no change or layoffs in the last six months! You can bet land use has changed over the decades, and I received this question: “Rob, I have to give a presentation to a bunch of real estate agents. Have you seen anything on how land is used across the nation?” This is the last good piece I saw: Here you go . Lender Products and Services Manufactured home lending has been a challenge for lenders. Chattel lending is only being done...(read more)

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Builder Confidence Buoyed by Lower Rates

Posted To: MND NewsWire

After falling an aggregate of 12 points in November and December the National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI) appears to have stabilized. The HMI, a measure of home builders' confidence in the market for newly constructed homes, gained 2 points in January, rising to 58. This one 1-point higher than analysts polled by Econoday had predicted. "The gradual decline in mortgage rates in recent weeks helped to sustain builder sentiment," said NAHB Chairman Randy Noel. "Low unemployment, solid job growth and favorable demographics should support housing demand in the coming months." The HMI is derived from a monthly survey that NAHB has been conducting for 30 years among its builders who specialize in new residential construction. The survey asks builders...(read more)

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MBS Day Ahead: This Morning's Retail Sales Report is Emblematic of The Bond Market's Issue

Posted To: MBS Commentary

There will be no Retail Sales report this morning due to the government shutdown. This provides a perfect example of the issue the bond market is currently facing. It begins with the state of flux in the economy and in monetary policy. Now more than ever , arguably, the Fed is on the lookout for clues in economic data. They need to know whether it makes any sense to keep hiking rates or if there are some indications that things could be slowing down. To be fair, the Fed has already shared anecdotes about growth concerns, but then something like the last NFP report comes along and compels the Fed to keep rate hikes on the table. Fed policy aside, market participants would also like a read on how the economy is doing, considering the uncharted territory in which we continue to operate (i.e. longest...(read more)

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Millionaires Cash-Out Too; Big Refis for Big Homes

Posted To: MND NewsWire

Somewhere in this country there are 230 homes with mortgage balances between $10 and $20 million dollars. According to a post written by Arthur Jobe in the CoreLogic Insights blog, 75 percent of them were originated since 2013, and 180 represent refinances. Those refinances were largely originated since 2013 as well. These homes are unlikely to be in your neighborhood (or ours) although you would have the best shot if you live in California, home to 55 percent of the super jumbo refinances. Seventeen percent are located in Florida, and smaller percentages (4 to 6 percent) in Massachusetts, Connecticut, New York, and Texas. Of course, even zillionaires like to save money, and adjustable rate mortgages (ARMs) are particularly popular for loans of this magnitude due to their lower initial rates...(read more)

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Purchase Mortgage Applications Reach 8 Year High

Posted To: MND NewsWire

January 11 ended the first full business week in a while and mortgage activity responded accordingly. The Mortgage Bankers Association (MBA) reported a strong rebound when, despite a government shutdown, business returned more or less to normal. MBA's Market Composite Index, a measure of mortgage loan application volume, increased 13.5 percent on a seasonally adjusted basis from the week ended January 4, reaching its highest level since last February. On an unadjusted basis, the Index was up 45 percent. Purchase mortgage applications moved higher for the sixth time in the last eight weeks, resuming the upward trajectory that was interrupted by the Christmas holidays. That index was up 9 percent on a seasonally adjusted basis to its highest level since April 2010. The unadjusted Purchase Index...(read more)

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NAR Survey Finds American Dream Depends on Affordability

Posted To: MND NewsWire

Homeownership as an American dream is alive and well according to new data from the National Association of Realtors® (NAR) 2018 Housing Opportunities and Market Experience (HOME) Survey. The survey was conducted across all 12 months of last year. Sixty-four percent of respondents were homeowners, 27 percent were renters, and 9 percent were non-homeowners living with a family member without paying rent. NAR just released Aspiring Home Buyers Profile , which focuses on survey responses from non-homebuyers, both those who rent and those living with a family member. Of the non-owners, 45 percent were 34 years or under, 59 percent make an income of under $50,000, and 43 percent live in suburban areas. Across the quarters of 2018 non-homeowners were consistent in their desire to own a home in...(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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