Mortgage News Daily

  • Posted To: MBS Commentary

    Government shutdowns make good news. When risks of a shutdown flare up (especially with today's sort of political theater) it tends to dominate the news coverage. This creates the risk that shutdown news is perceived to impact bonds in a way that isn't really accurate. This was the case today, to some extent. Shutdown headlines dominated the afternoon news cycle right at a time when bonds were weakening. So was it the shutdown headlines causing the issues? Not hardly. In fact, the shutdown headlines would have arguably been good for bonds. Instead, bonds were simply backtracking after having been led into stronger territory by European markets. The latter were on the move due to the latest round of Brexit-related headlines, which basically conveyed "no additional negotiations"...(read more)

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    Created: 12/11/2018 2:37:14 PM
  • Posted To: Mortgage Rate Watch

    Mortgage rates rose almost imperceptibly today, with a few lenders not showing any detectable changes from yesterday. Still, it was the first time since November 30th that rates were higher than the previous day (on average). Today's move was so small that most lenders accounted for it in the form of upfront costs. This means that borrowers would be quoted the same rate as yesterday, but with a small increase in upfront costs. For those who read yesterday's commentary (which said we may have just seen temporary lows in rates as the current move was running out of steam), none of this should come as a surprise. In fact, given the pace of the improvements in recent weeks, it's arguably a good thing to take a break because it could help rates hold in stronger territory for longer. The most obvious...(read more)

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    Created: 12/11/2018 1:46:00 PM
  • Posted To: MND NewsWire

    CoreLogic reports that mortgage delinquency rates were little changed in September. The percentage of mortgage loans that were 30 or more days delinquent and including those in the process of foreclosure declined by 0.6 percentage point on an annual basis, to a national rate of 4.4 percent. Early delinquencies, those 30 to 59 days past due were down from 2.4 percent in September 2017 to 2.2 percent. Other delinquency rates are reflected in the graphic below. Serious delinquencies, those more than 90 days past due or in foreclosure were either down or unchanged in every state. Rates however increased in 10 metro areas. The improvements were despite the considerable disruption along the southern Atlantic Coast caused by Hurricane Florence in September. Seven of the eight metropolitan areas that...(read more)

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    Created: 12/11/2018 8:45:55 AM
  • Posted To: Pipeline Press

    I’m a capital markets guy. “Bespoke luxury” isn’t in my vocabulary. First-time home buyer prices and floorplans aren’t in the cards at the new Aston Martin apartment building in Miami . If you buy one of the 47 most expensive apartments, they come with a new DB11. And, not to be outdone, Porsche also has a residential building – thanks to Jim P. for passing that along. (But owners won’t be building any sculptures to flip off town officials in the name of “art” or “expressionism” like a fellow did in Vermont.) You can bet those developers are hoping the market doesn’t sag – but it appears that the market is sagging in some areas already, or at least not going up as fast. Is that a surprise? “No tree grows to...(read more)

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    Created: 12/11/2018 6:25:50 AM
  • Posted To: MBS Commentary

    Consolidation ... That's that word we use to refer to sideways and frequently narrower trading ranges that follow a period of more directional movement (you can click on the word to go to a full definition). Consolidation is the best case scenario right now, when it comes to defining the modest weakness seen yesterday and so far this morning. In other words, we would hope that we're merely seeing a consolidation of the strong rally of the past 5 weeks as opposed to a reversal. Would a consolidation be better than a continuation of the rally? In my mind, yes! We don't want the rally to progress too far too quickly for a variety of reasons. As with most things in the natural world, slower and steadier is more sustainable. Next week's Fed announcement would be an ideal finish line...(read more)

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    Created: 12/11/2018 6:19:06 AM
  • Posted To: MBS Commentary

    Bonds struggled to find inspiration for the first few hours of the domestic session, but it was soon in ample supply thanks to Brexit-related headlines ( like this one ). The result was a broad-based risk-off move that saw bonds move back to their strongest recent levels. Notably, though, that's as far as bonds got. Specifically 10yr Treasury yields were once again blocked by a floor in the mid 2.82% range. This has been an on-again off-again pivot point of high significance since late May, 2018. Sometimes, bonds approach such pivot points with the intention of breaking through. That seems like a lot to ask of this rally, given the ground that's already been covered. At the very least , it seems like we'll need help from economic data in the rest of the week, and at the very least...(read more)

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    Created: 12/10/2018 2:44:59 PM
  • Posted To: Mortgage Rate Watch

    First things first: the average mortgage lender improved modestly today, compared to last Friday's levels. This leaves mortgage rates at their lowest levels in several months. That's great news and indeed, the last few weeks have been the best few weeks we've seen in more than a year. That having been said, we're now reaching the stage where the strong move in underlying financial markets may be running out of steam. "Running out of steam" could mean one of several things . In the best case, this is just the obligatory pause that almost all such market movements encounter before ultimately continuing in the same direction. The less pleasant eventuality would be that today could mark the lowest rates we'll see for a while. There's no way to know which variety we'll get, but history suggests...(read more)

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    Created: 12/10/2018 1:57:00 PM
  • Posted To: MND NewsWire

    Both Freddie Mac and Fannie Mae have announced the suspension of eviction lockouts for single-family and two- to four-unit properties for the holiday season. The moratorium will begin December 17 and end January 2. Fannie Mae said it will allow legal and administrative proceeding for evictions to proceed during the 16-day period, but families will be allowed to remain in the home. "We believe it is important to extend the timeline of help for struggling borrowers during the holidays," said Jacob Williamson, Vice President of Single-Family Real Estate at Fannie Mae. "We encourage homeowners who may be struggling with their mortgage or facing possible foreclosure to reach out to Fannie Mae or your servicer to get help. We want to help pursue those options whenever possible." The GSE's said the...(read more)

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    Created: 12/10/2018 10:23:56 AM
  • Posted To: MND NewsWire

    We know that home price growth is slowing , and cash-out refinancing has been coming back, still it is a bit of a stunner to find that homeowner equity actually declined in the third quarter of this year. Black Knight's current issue of its Mortgage Monitor reports that the amount of total equity (home value net of mortgage balance) held nationally by homeowners at the end of the third quarter was down by $160 billion compared to the second quarter of the year and now totals $9.8 trillion. Of that total, $5.9 trillion is considered "tappable," that is equity that can be withdrawn by the homeowner without hitting a maximum 80 percent combined loan-to-value (CLTV) ratio. That also fell, down by $140 billion quarter-over-quarter, the first decline since the housing recovery began in 2012. Both...(read more)

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    Created: 12/10/2018 9:25:55 AM
  • Posted To: MND NewsWire

    The stereotype of a second home usually involves a tropical beach, a boat dock on a lake, or skiers whizzing past a picture window, but the National Association of Home Builders (NAHB) says that is not reality. Or at least not all of it. Na Zhao, writing in NAHB's Eye on Housing blog says there are a good amount of second homes and lots exist in non-vacation-y areas. NAHB estimates there are 7.4 million homes, or 5.6 percent of the total housing stock that qualify for the second home mortgage tax deduction. That information comes from the Census Bureau's 2016 American Community Survey (ACS.) As might be expected, the state with the largest stock of second homes was Florida with 1.1 million; 15 percent of all such homes in the country. Roughly half of the total is located in Florida and seven...(read more)

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    Created: 12/10/2018 8:14:34 AM
  • Posted To: Pipeline Press

    The focus is on the holidays but there is plenty of 2019 wedding planning occurring. Despite that, according to the U.S. Census Bureau, adults are increasingly delaying saying, “I Do” as the median age at first marriage continues to climb by approximately 2% compared to 2003. And in 2018, there were 8.5 million unmarried opposite-sex couples living together . Remember decades ago when that was a cause of concern for processors and underwriters? Lender Products and Services Live Well Financial (NMLS #1177) is excited to announce that industry veteran Dan Mahoney has joined the company as an Account Executive with its wholesale division. Dan brings more than 20 years’ experience to Live Well which offers Conventional, FHA, VA, and reverse mortgage loan products to its partners...(read more)

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    Created: 12/10/2018 6:08:02 AM
  • Posted To: MBS Commentary

    We've had an impressive winning streak recently and have acquired gains worthy of a watchful, protective eye. Will this be a durable rally or a fleeting victory? That question can't be answered without seeing how economic data and events unfold in the coming weeks. Perhaps even more important will be the tenor of the Fed Announcement next week. One thing I can tell you to expect is at least one day of correction--one red day that pushes back against all the recent positivity. Whether or not that day brings friends is another matter, and a much more significant question than whether or not we'll simply see one red day. In other words, the red day is just something that's always going to happen when bonds string together this sort of winning streak. We can watch various technical...(read more)

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    Created: 12/10/2018 5:01:18 AM
  • Posted To: MBS Commentary

    This morning's trading--both before and after NFP came out--basically acted as additional time for debate . Both MBS and Treasuries bounced quickly, but symmetrically around yesterday's closing levels before finally choosing a direction. Actually, the direction may have been chosen for them to some extent, as it was the stock market that made the first move. To bonds' credit, they didn't lose their cool in the first hour and a half of trading as stocks moved higher. Once it became clear that equities were heading down and out, bonds finally followed. 10yr yields hit their lowest closing levels since late August. MBS haven't bounced back quite as much relative to late-summertime levels, but they're getting close. NFP itself didn't seem to matter much, although I suspect...(read more)

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    Created: 12/7/2018 1:23:26 PM
  • Posted To: Mortgage Rate Watch

    Mortgage rates held on to their recent improvements today after the important Employment Situation (the big "jobs report") showed November job creation was lower than expected. In general, weaker job creation is good for interest rates because it speaks to slower economic growth and inflation (both of which are enemies of rates). This report was particularly important because a strong result would have cast doubt on several speeches from members of the Federal Reserve. Those speeches have warned about slower economic growth in 2019 and the potential for fewer rate hikes than previously anticipated. There were no clear winners or losers at first--probably because job creation is still historically solid. Additionally, the unemployment rate remained ultra low, and wage growth remained above 3...(read more)

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    Created: 12/7/2018 12:55:00 PM
  • Posted To: MND NewsWire

    Three researchers from the Urban Institute (UI) recently analyzed the new capital standards rule proposed by the Federal Housing Finance Agency (FHFA) for Fannie Mae and Freddie Mac (the GSEs.) The proposed rule includes two alternative leverage ratio proposals. Under the first, the GSEs would be required to hold capital equal to 2.5 percent of total assets and off-balance sheet guarantees, the second, to hold capital equal to 1.5 percent of trust assets and 4 percent of non-trust assets. The second approach differentiates between the greater funding risks of non-trust assets and the lower funding risks of the trust assets while increasing the capital requirements for both relative to the current statutory requirements. On Thursday we summarized their analysis of how well the rule might align...(read more)

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    Created: 12/7/2018 10:24:50 AM
  • Posted To: MND NewsWire

    Fannie Mae's Home Purchase Sentiment Index (HPSI) for November rose slightly, but within the 0.5-point increase was some increased confidence about personal finances and the wisdom of buying a home. The index, which consolidates responses from a subset of questions on the company's National Housing Survey, rose to 86.2 from 85.7 in November. The index is 1.6 points lower than in December 2017. A survey high record was set in the net share of Americans who reported their income was up significantly over the last 12 months. A 5-point increase brought the net share to 24 percent. Fifty-seven percent of respondents told pollsters it was a good time to buy a home while 34 percent disagreed. This resulted in net positive responses of 23 percent, up two points from October. The other component of...(read more)

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    Created: 12/7/2018 8:51:10 AM
  • Posted To: Pipeline Press

    The year has sped along, and here we are at Pearl Harbor Day already. Although mortgage rates have lagged, what has pushed Treasury rates down? Released earlier this week, the Federal Reserve's latest report on economic conditions, known as the Beige Book, says most of its 12 regions achieved satisfactory growth in November but also says there is "increased uncertainty" among businesses over the influence of U.S. tariff policy. The report highlights rising costs for manufacturers and problems for farmers due to counter-tariffs imposed by China and others. (The Trump Administration’s trade fight with China has been particularly hard in Nebraska, with its Farm Bureau estimating that retaliatory tariffs let to a loss of more than $1 billion so far in 2018, which is about 11 to 16 percent...(read more)

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    Created: 12/7/2018 6:17:15 AM
  • Posted To: MBS Commentary

    Powell's speech last week at the Economic Club of New York marked the beginning of an official shift. Until then, while the Fed had its dovish dissenters, the consensus was "steady as she goes" with respect to regular rate hikes in the coming quarters. The only uncertainty was whether or not the Fed would hike 2 more times in 2019 before leveling off (maybe it would be 3 times, maybe 1 time...). But seemingly overnight, the consensus is now that we're only likely to see one hike in December, and perhaps NO hikes in 2019. This has been a big adjustment for financial markets. You might think that stocks would enjoy this shift (after all, the news has been eager to tell you that stocks are tanking because of rates), but no... This move was actually led by the longer end of the...(read more)

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    Created: 12/7/2018 5:33:02 AM
  • Posted To: MND NewsWire

    Access to mortgage credit moved higher in November, largely due to improved access to conforming mortgages. The Mortgage Bankers Association's Mortgage Credit Availability Index (MCAI increased 1.1 percent to 188.8. A decline in the MCAI indicates that lending standards are tightening, while increases in the index are indicative of loosening credit. The Conventional MCAI increased (2.4 percent) and the Government MCAI decreased (0.1 percent). Of the component indices of the Conventional MCAI, the Jumbo MCAI rose 1.1 percent, while the Conforming MCAI gained 4.0 percent. "The supply of credit continues to drift higher, driven once again by growth in the conventional credit space, while credit supply in government loans was essentially unchanged from the previous month," said Joel Kan, MBA's...(read more)

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    Created: 12/7/2018 5:30:56 AM
  • Posted To: MND NewsWire

    While there has been a lot of talk since the recovery took hold about the lack resiliency in the residential construction sector, the issue is now moving from an academic discussion to one on the verge of alarm. As Freddie Mac's Economic and Housing Research Group writes in the company's Insights blog, "The inadequate level of U.S. housing supply is a major challenge facing the housing market in 2018 and likely for years to come." The Insights' authors, Sam Khater, Chief, and Len Kiefer, Deputy Chief Economists, and Ajita Atreya and Venkataramana Yanamandra, both senior quantitative analysts, estimate the U.S. needed 370,000 more than the 1.25 million units that were added to the stock in 2017 to satisfy demand. In the forty years starting in 1968 to the start of the Great Recession in 2008...(read more)

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    Created: 12/7/2018 5:27:24 AM
  • Posted To: MBS Commentary

    Without discussing what tomorrow may bring for bond markets, we can safely say that today was big. Both in terms volumes and outright trading levels, we haven't seen a bigger combo since the big stock sell-off in early October, and that came near the top of the rate range. Today was arguably much more significant because it occurred as rates were already pushing multi-month lows. Today was big in a good way in the sense that yields made it all the way down to 2.826%. But the same level raises risks of a technical bounce. After all, 2.82% is the resistance level we've been watching for the past 2 sessions and we bounced fairly hard there today (10's ended at 2.89%). At the risk of stating the obvious, a lot could be riding on tomorrow's jobs report. We have NFP built up to pass...(read more)

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    Created: 12/6/2018 2:29:59 PM
  • Posted To: Mortgage Rate Watch

    Mortgage rates dropped significantly yet again today, adding to an already impressive week of improvement and bringing most lenders into their best territory since September 13th, 2018. The average lender improved by more than an eighth of a percentage point in just the past 3 business days and by nearly 3/8ths of a point from the highs seen in early November. This comes out to roughly $70/month for a $300k loan, or an upfront savings of $4500 if you were to buy your rate down (paying points) back in early November. Much of the move has come courtesy of a rapid shift in expectations about the economy and Fed policy. Investors have been worrying about the longevity of the current economic cycle more and more as it ages. By some measures, this is already the longest economic expansion ever (and...(read more)

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    Created: 12/6/2018 1:19:00 PM
  • Posted To: MBS Commentary

    Good times are rolling in the bond market, even if they're rolling much more for Treasuries as opposed to MBS. Nonetheless, MBS will continue to benefit as long as Treasuries are rallying, and the latter is beginning the day at new multi-month lows. Seeing 10yr yields under 2.9% may feel sudden, but it's actually quite logical . We know rates had been moving higher in general due to 3 main problems: increased Treasury issuance, increased growth/inflation risk, and a Federal Reserve that had no qualms about continuing to remove accommodation. We know that rates had been trading in this 2.8-3.0% range all summer. Then in September and October, they were pushed higher by surprisingly strong economic data (some of which, like average hourly earnings, pointed toward inflation) and even tougher...(read more)

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    Created: 12/6/2018 6:09:34 AM
  • Posted To: Pipeline Press

    I still receive questions about HMDA. It’s good to know about the 2018 edition of A Guide to HMDA Reporting: Getting it Right! (the Guide). Developed by the Federal Financial Institutions Examination Council, it provides a summary of certain key requirements of the Home Mortgage Disclosure Act (HMDA). Features include “Where to Look” hints, and the complete Consumer Financial Protection Bureau’s (CFPB) Small Entity Compliance Guide in Appendix B. Copies of the previously published resources, such as the CFPB’s Reportable HMDA Data: A Regulatory and Reporting Overview Reference Chart are also included as sections of The Guide . Lender Products and Services Don’t let the changing landscape or current market conditions inflate your loan origination costs. Get...(read more)

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    Created: 12/6/2018 5:58:34 AM
  • Posted To: MND NewsWire

    In June the Federal Housing Finance Agency's (FHFA) issued a proposed capital standard for the government-sponsored enterprises (GSEs), Freddie Mac and Fannie Mae. Three Urban Institute researchers have analyzed the rule with an eye to answering two questions: how well it will align risk and capital across the various mortgage attributes and how the capital requirement might vary across the business cycle. Requiring too much capital raises mortgage rates and reduces homeownership; too little results in insolvency and financial crisis. The proposed rule includes two alternative leverage ratio proposals. Under the first, the GSEs would be required to hold capital equal to 2.5 percent of total assets and off-balance sheet guarantees. This approach would require them to hold a minimum amount of...(read more)

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    Created: 12/6/2018 5:44:32 AM