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Mortgage Related News

MBS Week Ahead: Another Week, Another Chance to Run Same Old Play

Posted To: MBS Commentary

This is the off-season for bonds, but they still have to show up for the game every day. The coaching staff (aka the traders turning the cogs of the underlying bond market) have been running the same play every day since June 27th . It's a play that's been working on both offense and defense, thus providing an easy button for the entire team (even if it's also a "boring button"). No one gets hurt, and no one has a ridiculously good time--typical off season. So what's the play in question? Simply put, bond market players have been tasked each day with playing harder and harder defense whenever yields rise toward 2.88. On offense, they only push hard enough to get yields to 2.825, as seen on the following chart with numerous bounces on the lower teal line. I included...(read more)

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Broker Products; Blockchain Transaction; Input on DACA Loans

Posted To: Pipeline Press

When Costco rolled out its mortgage option to members, many lenders were very concerned. But despite great potential, Costco/First Choice has not become the #1 lender in America. I heard something interesting last week: Costco doesn’t make much money selling products, it makes all profits from membership fees . Despite Bank of America’s great quarterly results this morning, lots of lenders aren’t making much money selling their products either, unfortunately, and the number of residential lenders who haven’t adjusted their headcount, compensation plans, or business models in reaction is dwindling . (The latest example is job cuts at State Farm .) If a branch or channel hasn’t been profitable for a while, ask what’s going to happen, if anything, to reverse...(read more)

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Permit to Completion - Builder Timeline Depends on Where and Why

Posted To: MND NewsWire

Despite complaints about labor, lot, and material shortages, builders needed no more time to build a home last year than they did in 2016. The time did increase compared to 2015 by about two weeks. Using data from the Census Bureau's Survey of Construction (SOC), the National Association of Home Builders (NAHB) concludes that the average time to build a single-family house was 7.5 months. The actual building time was about 6.5 months following a typical delay of around 30 days after the permit was authorized. Data from the 2015 survey showed the time from permit to completion at 7 months. The range however is wide, from less than a month to more than 6 years. Much depends on who is building the house, for what purpose, and where. , writing in NAHB's Eye on Housing Blog, says that houses built...(read more)

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MBS RECAP: Bonds Gain Despite Data Surprise and Stock Rally

Posted To: MBS Commentary

Before any discussion about market movement in July, we have to set the stage with some disclaimer about "slow summertime trading." That was the subject of this morning's commentary ( read it here , if you like). With that out of the way, we're equipped to pay the appropriate amount of attention to today's seemingly interesting events. First up, we had a reasonably strong move in European bonds overnight help set a mildly positive tone for the start of domestic trading. The biggest volume spike of the early morning came at 8:30am in response to the Import Price data, which came in much lower than expected. Bond yields/prices, themselves, only moved a bit, however--a fact that likely reflects the nearness of yields to the lower end of their prevailing range. The other notable...(read more)

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Lowest Rates Since May, But There's a Catch

Posted To: Mortgage Rate Watch

Mortgage rates fell by an observable amount today-- one of the few times they've done so in recent weeks. Technically, today's average lender is offering the best we've seen since May 31st. That sounds pretty great, right?! Unfortunately, there's a fairly big catch. While today's rates are indeed the best in a month and a half, the range during that time has been so excruciatingly narrow that most prospective mortgage borrowers will find the distinction fairly meaningless. In almost all cases, the actual NOTE rate at the top of your loan quote will be the same as it has been for weeks. The only change in lenders' rate sheets is in the upfront cost associated with that rate. In other words, if you'd seen a quote of 4.75% with 0 points yesterday, today's quote would be more like 4.75% with a...(read more)

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MBS Day Ahead: Get Used to Coconuts, Probably

Posted To: MBS Commentary

I know I made a Looney Tunes reference last week, but another one is in order. For those that aren't familiar, Yosemite Sam is stranded on a desert island and sits down to a smorgasbord of coconuts, prepared in various ways: "tossed coconut salad, fresh coconut milk, New England boiled coconut," he says, feigning excitement just before breaking down and proclaiming "oooh I hate coconuts!!!!" Yosemite Sam's coconut menu plan is akin to trying to find a way to make something new and interesting out of summertime bond market movement. The fact is that at some point in June or July, almost every year, bonds end up either pausing or reversing, and volumes generally begin declining in July, finally bottoming out in September, almost like clockwork. In the chart above,...(read more)

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Construction, Warehouse Products; Free LO Comp Webinar; Shifting UW Criteria

Posted To: Pipeline Press

Events and Training Don't miss out on the Lenders One 2018 Summer Conference in Salt Lake City, Utah, August 5-8, at The Grand America. In an age of disruption, it's never been more important to learn from peers and industry leaders. Keynote speakers Alison Levine and David Robertson will share ways to get ahead in a tough market, and attendees will be able to select from 16 curated education sessions led by industry experts. Topics include: improving margins, generating business through MarTech, rethinking your compliance strategy and five Secondary Market panels. Touted as the most valuable part of conference, Lenders One has expanded networking opportunities for members to connect with peers and explore best practices. Reserve your spot by this Friday, July 13, or contact Lauren Ketchum...(read more)

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Mortgage Rates Still Can't Find Inspiration

Posted To: Mortgage Rate Watch

Mortgage rates stood a very decent chance to experience the highest volatility of the week today thanks to the most important economic data of the week being released this morning. The Consumer Price Index (CPI) is the most widely-followed inflation metric in the U.S. and inflation is a big deal for the bonds that underlie rates (including mortgages). On numerous occasions over the past 2 years, we've witnessed clear connections between variations in CPI data and subsequent volatility in rates. But not today... The biggest issue today was that CPI ended up being pretty boring. In other words, the actual numbers were very close to the forecast. Bonds (and thus, interest rates) didn't have much of a reaction. Even then, we may well wonder how big of a reaction we would have seen if the data was...(read more)

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MBS RECAP: Bonds Hold Steady Despite Big Ticket Events

Posted To: MBS Commentary

Welcome to summertime in the bond market, where each day is narrower than the last! The same can be said for the past 2 weeks and the past several months, for that matter. By a wide margin, the 3-day trading range surrounding the apex of the Italian political drama easily contains every minute of trading since then. To put that in perspective, that 3-day range was 2.78-3.01% in 10yr yields. Today's range was 2.84-2.87%. The only interesting thing that can be said for bonds during that time is that they've generally moved lower in yield and generally been willing to remain near those lows. Today didn't do anything to change the summertime tone. We even had the week's most anticipated economic data (at least for the bond market) in the form of CPI. Unfortunately for those hoping...(read more)

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Inflation Data Shows Deceleration in Housing Costs

Posted To: MND NewsWire

While the Labor Department's Employment Situation Report for June showed wages plodding along at a 2.7 percent annual increase, unchanged from May, it is still being outstripped by rising costs, especially for housing. Today's Consumer Price Index (CPI) report shows consumer costs overall were up 2.9 percent with the shelter portion rising 3.4 percent over the last 12 months. Shelter is one of the categories in the CPI's "market basket," the goods and services that the Bureau of Labor Statistics (BLS) considers necessary for day-to-day living. The CPI does not include housing units which it views as capital or investment rather than consumption items. Shelter is viewed as a "service" provided by that investment and is thus a consumption item. The cost of shelter is broken down into two components...(read more)

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New Home Sales Need More Trees and Contractors

Posted To: MND NewsWire

The Mortgage Bankers Association (MBA) is projecting a decline in new home sales for June, putting them significantly behind those in June 2017. MBA's Builder Applications Survey (BAS) shows mortgage applications for the purchase of newly constructed homes were down 12 percent from May and 8.8 percent year-over-year. The survey's results are not adjusted to reflect seasonal patterns. "Applications for new home purchases fell in June, both compared to last year at this time and relative to May, which fits the seasonal pattern. So far this year, new home applications are up 2.5 percent relative to the first 6 months of 2017. Our sense is that builders remain constrained by the tight job market for construction labor and rising input costs, particularly lumber costs ," said Mike Fratantoni, MBA...(read more)

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Full Radio Interview With Fed Chair Powell

Posted To: MBS Commentary

In a fairly rare turn of events, Fed Chair Powell gave a rather lengthy radio interview with Marketplace's Kai Ryssdal. Here's a rather lengthy transcript. Note: This is far from "required reading" given that there's been essentially no market reaction, but it is nonetheless useful insight for those who like to dissect every communication from the Fed Chair (not a bad habit for anyone who cares about big picture market themes. Dissecting all of Bernanke's communications helped us get ahead of what was happening during the taper tantrum, for instance). Here's the interview: Kai Ryssdal : So this is a weird way to start this interview. But the thing is that Fed chairmen don't do a whole lot of interviews. And this is, I think your first broadcast interview, right...(read more)

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MBS Day Ahead: Stocks and Bonds Telling Different Stories

Posted To: MBS Commentary

This morning's key data release is already out and it's already proven to be a dud (MBS Live members can read the update HERE ). So we'll head to higher altitude to check in with bigger picture trends to see what might be on markets' minds. The stock vs bond relationship has been interesting lately--more interesting than it had been a few months ago when bonds were much more willing to react to Italian drama (thus making for sporadic correlations). Now it's summertime! That means, all things being equal, that bond traders are more willing than normal to look elsewhere for cues. And one of the biggest 'elsewheres' is the stock market. With that in mind, we can see ample correlation between the two in the top section of the following chart. In the lower section, we...(read more)

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UW and API products; FHA/VA/Ginnie Updates; DACA Policy

Posted To: Pipeline Press

Chris Whalen notes, “The failure of Bear Stearns & Co a decade ago illustrates the key lesson of financial markets, namely that non-banks are dependent upon 1) banks and 2) clients for liquidity. And no amount of capital will save a non-bank that has a deficit in terms of confidence. In times of market stress, credibility and character are far more important than capital.” On the flip side, Angelo Mozilo famously observed that a liquidity crisis will take a company down faster than anything. Any questions? IndyMac’s Mike Perry had a statement on his blog yesterday titled, “ Not Too Big To Fail: Mike Perry talks about IndyMac Bank and the financial crisis ten years on .” FHA/VA/Ginnie News First off, anyone hoping for a mortgage insurance premium cut this year...(read more)

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MBS RECAP: Volatile Day, But Inside The Same Old Range

Posted To: MBS Commentary

Today was the most active trading day of the week--something that looked destined to be the case considering markets began gyrating right at the start of the Asian session. The initial volatility came in response to the announcement of another $200 bln in US Tariffs on Chinese goods. Logically, stocks lost ground and bonds rallied. After hitting the apex of that move before Europe even got out of bed, stocks and rates began inching higher as if to say "we've done this dance before and we're not going to freak out as much this time." That sentiment was rewarded by stronger data on wholesale inflation (PPI at 8:30am). Bonds weakened a bit more and stocks continued to rally. The next key consideration for bonds was the 1pm 10yr Treasury auction, which went well, but only after...(read more)

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Mortgage Rates Calm Ahead of Key Data

Posted To: Mortgage Rate Watch

Mortgage rates played the same role they've been playing for weeks by holding fairly steady today. At the average lender, if you're looking for an average loan and you have above average qualifications, you'll have seen the same interest rate at the top of any loan quote since late June. Adjustments have only come in the form of the upfront costs associated with any given "note rate." The markets that underlie rate movement experienced some volatility today as a new round of tariffs was announced yesterday evening. "More tariffs," in general, are bad for stocks and good for rates because they create economic uncertainty and/or fear of economic weakness. A weaker economy does less to promote stock price growth and more to cause demand for safe haven investments like bonds (higher demand for...(read more)

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Black Knight: Tappable Equity Skyrockets, But HELOC Loans Decline

Posted To: MND NewsWire

This month's Mortgage Monitor Report from Black Knight, Inc. is again about equity, but this time with a twist regarding the way homeowners are treating it. The company says that the tappable equity held by homeowners increased by $820 billion dollars over the 12 months that ended in March, $380 billion in the first quarter of 2018 alone. Those numbers equate to 16.5 percent growth year-over-year, and 7 percent for the quarter. Equity growth is generally highest in the first and second quarters of the year, but the first quarter growth this year was up 30 percent from the same quarter in 2017. It was the highest single-quarter increase recorded by Black Knight since it began keeping records in 2005. Tappable equity is the share of equity that a homeowner can borrow before reaching a maximum...(read more)

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MBS Day Ahead: New Tariff Announcement Keeps Bonds In Recent Range

Posted To: MBS Commentary

The first two days of the week were largely spent lamenting the slow and inconsequential nature of summertime trading in the bonds market. At least that's how I spent them. Superstitious market watchers would quickly point out that such lamentations invite unexpected volatility. While I wouldn't go so far as to use either of those words ("unexpected" or "volatility"), there is definitely more going on today compared to the past 2 days. Looking at the candlestick chart on MBS Live (or anywhere else, for that matter) it would be easy to get the wrong idea about the increased activity. Today's candle looks quite a bit tamer than the previous 2 days. That visual suggestion belies reality though. Volumes as of 9:30am are already right in line with Monday's at...(read more)

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TPO Products; OB/Resitrader Deals; New Tariffs Announced

Posted To: Pipeline Press

U.S. capital markets folks have a way with words. Henry Jonas writes, “I started in this business in a Secondary Marketing in ‘86. Outside of maybe 1994 I cannot remember margins this thin. I went to Kroger and bought the jumbo economy pack of toilet paper with sheets thicker than my margins. The old saying is, ‘If watermelons cost 50 cents to produce, selling them for a quarter and just getting a bigger truck, won’t solve your problems.’ Companies are still making it, but it is tougher than a truck stop steak right now.” Regarding volume, business bank lending is beginning to pick up – banks have suffered through several quarters of tepid loan growth, but signs suggest trends may now be improving. The Fed suggests bank lending rose over 5% in CQ2 ...(read more)

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Mortgage Application Volume Ignores Holiday, Purchases Make Strong Showing

Posted To: MND NewsWire

Despite the Independence Day holiday which both shortened and bisected the week, mortgage activity rallied significantly during the week ended July 6. The Mortgage Bankers Association said its Market Composite Index, a measure of mortgage application volume, increased 2.5 percent on a seasonally adjusted basis compared to the week ended June 30. The holiday did take a toll on the unadjusted numbers with the overall index dropping 18 percent. The week's results were driven by strong growth in the volume of purchase mortgage applications . That index was up 7 percent from the previous week on a seasonally adjusted basis although it declined 15 percent unadjusted. The unadjusted index was 8 percent higher than during the same week in 2017. The Refinance Index lost another 4 percent, falling to...(read more)

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MBS RECAP: Once More With Less Feeling

Posted To: MBS Commentary

If we look solely at the US trading hours, yesterday and today form a nearly perfect 2-day trend just slightly higher in rate. Fannie 4.0 MBS prices have similarly shed 3/32nds (0.09) in a well-behaved trend channel. If we include the full trading session, however, yesterday was the bigger deal and today was an afterthought. On the other hand, yesterday was extremely slow in terms of volume. Today wasn't too much better, but it was active enough to suggest yesterday's selling wasn't a fluke. We won't see the first opportunity for bonds to digest any major econ data until Thursday morning (CPI) although tomorrow's PPI report is certainly a step up from today. We'll also get the 10yr Treasury auction in the afternoon, which is more relevant than today's 3yr version...(read more)

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Mortgage Rates Slightly Higher So Far This Week

Posted To: Mortgage Rate Watch

Mortgage rates didn't move for most lenders today. Remaining lenders were just slightly higher than yesterday, thus keeping this week's modest upward bias intact. In the slightly bigger picture, we had a fairly friendly consolidation in rates heading into last Friday and have been giving back the gains since then. While we're technically able to talk about rate "movement" on a day to day (and even minute by minute) basis, the average mortgage borrower isn't seeing big changes. In fact, in terms of the NOTE rate (the one at the top of a loan quote that determines the payment), there hasn't been any change in 2 weeks. It's only in the form of the more granular EFFECTIVE rate, which takes upfront costs into consideration, that we can observe any movement. In other words, we're looking through...(read more)

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Jumbo Guidelines Loosening Quicker Than The Rest

Posted To: MND NewsWire

The Mortgage Bankers Association attributed an increase in its Mortgage Credit Availability Index (MCAI) last month to increased competition among lenders for the jumbo prime mortgage market. MBA said its index increased 0.2 percent in June to 181.0. An increase in the Index indicates that credit standards are loosening. Due to competition which MBA's Chief Economist and Senior Vice President Mike Fratantoni categorized as "fierce," the Jumbo MCAI rose 9.3 percent from May to June and is now over 300. The Index was benchmarked to 100 in March 2012. The increase in that index component was offset by a decline in the Government MCAI which was down 3.9 percent. Fratantoni attributed recent tightening in government lending, which put that index, at its lowest point since the summer of 2016, to...(read more)

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MBS Day Ahead: Bonds Playing Defense Amid Slow Summer Backdrop

Posted To: MBS Commentary

Yesterday saw the lightest Treasury volume of any full trading day so far this year. That's no great surprise in July, as this tends to be the month that marks the true start of summertime absences among market participants. If you've encountered the term " doldrums " before, that's what we're dealing with. The doldrums used to be a much bigger deal back in the day before important trades could still be made from most vacation destinations. But even now, there's still a palpable shift in the pace of trading, on average (there are isolated exceptions, but they tend to be big). Bonds have been doing pretty well in June and early July, with a downtrend in yields since the week with the Fed and ECB announcements. Muddying the waters a bit was the fact that the latest...(read more)

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Training and Recruiting Products; Banking News; Loan Financing Needed

Posted To: Pipeline Press

Pesky technology… it just won’t go away. Online lending platform fintech player (including mortgages) SoFi has launched a banking app (SoFi Money) in beta testing and expects it to be ready later this year. It includes a debit card that allows P2P payments and accepts mobile check deposits, offers combined checking and saving accounts for 1.1% interest, and up to 6 ATM withdrawals per month. The product will allow it to be both a financial hub and recommendation engine for its members. JPMorgan Chase has launched an all mobile bank called Finn targeting millennials and allows customers to do all their banking from their phone like opening accounts, making deposits, sending money, using Zelle, and accessing ATMs across the US. And Ellie Mae launched Encompass Consumer Connect allowing...(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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