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Purchases Drag Down Mortgage Application Volume

August 15,2017
by admin

A decline in applications for home purchases nearly overwhelmed the gain made by refinancing activity during the week ended August 11. The Mortgage Bankers Association reported that its Market Composite Index, a measure of application volume, managed to increase a meager 0.1 percent on a seasonally adjusted basis when compared to the previous week. The unadjusted index fell 1 percent.

The seasonally adjusted Purchase Index decreased 2 percent from one week earlier and the unadjusted Purchase Index was down 3 percent. The unadjusted index remained 10 percent higher than the same week in 2016.

Refinancing rallied yet again, with the Refinance Index rising 2 percent from the week ended August 4. In addition, the refinancing share of applications increased to 47.8 percent from 46.7 percent a week earlier. It was the largest share for refinancing since February.

Refi Index vs 30yr Fixed

Purchase Index vs 30yr Fixed

The portion of applications that were for FHA mortgages and for USDA loans were unchanged from a week earlier at 10.2 percent and 0.8 percent respectively. VA applications accounted for 10.5 percent of the total, down from 10.7 percent.

Interest rates for fixed-rate mortgages (FRM) continued their recent downward trend. The average contract interest rate for 30-year FRM with conforming loan balances ($424,100 or less) was at its lowest point since last November, 4.12 percent compared to 4.14 percent a week earlier. Points were unchanged at 0.38, and the effective rate decreased.

Jumbo 30-year FRM, loans with balances greater than $424,100, had a contract rate averaging 4.04 percent, down 3 basis points week-over-week. Points rose to an average of 0.27 from 0.26, and the effective rate moved lower.

The average contract interest rate for 30-year FRM backed by the FHA decreased to 4.01 percent from 4.02 percent. Points increased to 0.40 from 0.38 and the effective rate did not change.

The rate for 15-year FRM was unchanged at 3.41 percent, with points decreasing to 0.35 from 0.41. The effective rate decreased from the previous week.

The average contract interest rate for 5/1 adjustable rate mortgages (ARMs) increased to 3.34 percent from 3.31 percent,and points rose to 0.29 from 0.21. The effective rate increased. The ARM share of activity decreased to 6.6 percent of total applications from 6.8 percent the prior week.

MBA’s Weekly Mortgage Applications Survey has been conducted since 1990 and covers over 75 percent of all U.S. retail residential mortgage applications. Respondents include mortgage bankers, commercial banks and thrifts. Base period and value for all indexes is March 16, 1990=100 and interest rate information is based on loans with an 80 percent loan-to-value ratio and points that include the origination fee.

More and More eClosings; Credit Score Trends: 850 FICO a Goal?

August 15,2017
by admin

I’ve only been in this business since the mid-80s, and as a capital markets person always find it amusing when an owner says, “If it wasn’t for TBA pair off costs, we would REALLY be making money!” For the antithesis of making money, on this date 10 years ago news broke that First Magnus…well… didn’t make money. (And just look at those Fed Fund rates!)

Vendor updates

Here’s the latest from The Mortgage Collaborative, which holds its summer “eclipse” conference in Nashville next week. “The Mortgage Collaborative, the nation’s only independent mortgage cooperative, announced a new partnership with national compliance solutions provider, Strategic Compliance Partners. The new relationship with Strategic Compliance Partners adds another best-in-class mortgage compliance company to their preferred partner network. The Mortgage Collaborative network is more than 110 lenders strong, with an aggregate annual origination volume of over $190 billion.

The Mortgage Collaborative also announced a new pilot with a focus on affordable lending support and education for select lenders that are members of TMC’s network, using educational resources and materials provided by Fannie Mae. “The new Affordable Lending Outreach Pilot Program was developed to promote the cooperative’s lender members’ initiatives to expand lending to low-income to moderate-income borrowers, rural and manufactured housing communities. It will help participating lender members expand educational events with nonprofit organizations, enhance partnerships with community groups to promote affordable lending options, train targeted populations and assist with the cost of homeownership counseling for consumers.”

First Choice Loan Services Inc., a Berkshire Bank Company, announces the launch of a new customer relationship management (CRM) tool powered by the Certified Mortgage Planning Specialist (CMPS) Platform. “Aimed to equip the loan originators of First Choice Loan Services with the leading mortgage industry tools, CMPS Platform is designed to improve productivity and increase business. This is accomplished by providing increased efficiencies in prospecting, communications, pipeline management, and marketing.”

To make online closings available to borrowers across the country, UWM partnered with Arlington, VA-based Notarize, the nation’s first digital platform for legally notarizing documents online.

Notarize, the first digital platform to legally notarize documents online, announced Notarize for Mortgage, the first platform to enable an entirely online mortgage closing process. With the launch, Notarize has successfully completed the first-ever online mortgage closing in partnership with lender United Wholesale Mortgage (UWM) and Stewart Title. Verified by Fannie Mae and Freddie Mac, the Notarize for Mortgage platform digitizes the entire closing process with technology to securely coordinate lenders, title companies and borrowers online. Dwell time is reduced from 17 days to one, effectively eliminates the 280 pages typically required to close a mortgage, and reduces the average cost for a lender to issue a mortgage, which has risen from $2,291 in 2008 to nearly $8,887 today.

Lender Greater Nevada Mortgage and mortgage technology provider Pavaso have teamed up in Nevada to complete the first residential hybrid “eClosings” in state history. “These otherwise traditional home closings were made historic by Greater Nevada’s use of the Pavaso Digital Close platform, through which the typically hefty package of documents was digitally delivered to the buyers three days before closing. This allowed the homebuyers to review each document online, to understand them, and ask questions prior to closing. At the closing table, they digitally signed all documents, with exception of a few documents that are required by state law to be ‘wet’ signed. Each wet-signed document was automatically barcoded when printed from Pavaso’s system so that, upon the physical signing of the required documents, the forms could be digitally scanned and imported back into the system.”

Docutech and Veritax have expanded their integrated services to enable lenders to easily obtain the tax transcripts needed to enroll in Fannie Mae’s DU validation service. Once enrolled in DU, lenders can receive Fannie Mae’s Day 1 Certainty. Veri-Tax is authorized to provide 4506-T tax transcripts through the Fannie Mae DU validation service. “By expanding the integration between Veri-Tax and Docutech, lenders that use Docutech’s ConformX platform can easily satisfy Fannie Mae’s requirements by placing and retrieving tax transcript orders seamlessly within ConformX, where borrower information is already stored, while shortening the loan process by days.”

Spiegel Accountancy Corp., a professional accounting firm that serves the mortgage industry and small businesses nationwide, has formed a professional alliance with 5X Solutions, a mortgage research, data analytics technology company. It is the only accounting firm to have an alliance with the mortgage business intelligence company.


Trends in credit scores

Average credit scores have eclipsed their October 2006 peak, hitting 700 this year. iServe’s Brent Nyitray opined, “US consumer debt levels are at all-time highs; however, debt service is at a low.” Debt service is one’s mortgage, car, installment, and credit card debt as a percentage of income.

It seems that 1.4% of U.S. consumers have a FICO credit score that is a perfect 850. The number is hugely consequential when it comes to securing credit, and many aspire to that top figure and will use all the idiosyncrasies of the algorithm to get there. Indeed, the percentage of Americans with 800+ credit scores is steadily rising.

Underwriters are keeping an eye on Artificial Intelligence (AI) issuing credit decisions. Does it work, or does it merely create the illusion of good credit decisions?

There is the Alt-Prime Program from Excelerate Capital. Its features include: NO MI 661 Fico minimum, Up to 50% DTI, CONDOs Up to 85% LTV-Full Doc and Refi C/O up to 85% LTV-Full Doc.

Remember that Fannie Mae announced its new policy addressing debt-to-income ratios. Now, the new debt ratio guideline tops out at 50, up from 45. As a quick refresher probably not needed by anyone reading this, a debt-to-income ratio, or debt ratio, compares monthly credit obligations with gross monthly income from the individuals on the mortgage application. This is quite a change and something that shouldn’t be ignored

NYCB Mortgage Banking’s seller guide has been updated with changes effective August 14th, 2017. DTI Enhancements 12.0 Liabilities and Debt-to-Income Ratios referencing alimony/child support/separate maintenance. The policy update allows more flexibility on the treatment of alimony paid by the borrower. An additional update now allows for timeshares to be treated as installment loans rather than mortgage debt, even if they are identified as mortgage debt on the credit report (or other documentation). Also included in the updates, Conforming Std ARM Expansion to 95% LTV/CLTV/HCLTV plus other enhancements.


Capital markets

Relations between the U.S. and North Korea have been moving markets. Interestingly, Tesla CEO Elon Musk says people should be more concerned about artificial intelligence (AI) than North Korea, saying it has “vastly more risk than North Korea.” Musk pointed to the fact that AI has defeated some of the world’s best video game players in a game that is much more complex than chess or Go. And don’t forget that Facebook’s AI created its own language between bots that had to be shut down.

Switching back to rates, U.S. Treasuries ended Tuesday on a lower note due to further easing of tensions with North Korea. An improvement in global risk appetite contributed to a lower start after it was reported that North Korea will not follow through on its threat to envelop Guam in fire…for now. A better-than-expected retail sales release also helped nudge rates up, given that this feeds directly into GDP estimates.

The 10-year yield touched a high of 2.28%, vs. Monday’s 2.22% close – certainly still within the range we’ve been in all summer. Price-wise the 10-year worsened .375 while the 5-year T-note and agency MBS prices sold off .125-.250 depending on maturity, coupon, and type.

For news, this morning we’ve had the MBA’s survey of retail applications for last week (+.1%). Coming up are July housing starts and permits, and at 2PM ET, 8AM in Hawai’i, is the Fed releasing the minutes from the July meeting: look for more confirmation of a September announcement regarding the commencement of tapering which is expected to start in October in addition to assessing odds of another rate hike this year with December heavily favored. We start Wednesday with the 10-year yielding 2.28% and agency MBS prices nearly unchanged versus last night.


Jobs and Announcements

“Choose a career you love and you will never have to work a day in your life. This is the story behind our most recent addition to the Axia team, Deirdre Rogers – who will lead our corporate training efforts. Deirdre was most recently at Fannie Mae in numerous capacities, but most of you will remember her as the SVP – Head of National Correspondent Sales at Thornburg Mortgage. In her 40 years, she has done it all, seen it all and still loves it all. ‘Those of us that do this for a living are blessed to make a difference in the lives of those that become homeowners in every sense of the word.’ Welcome to Axia Home Loans, Deirdre! What’s your passion in mortgage? What’s your purpose in life? We want to hear about it: contact Shelly Schwieso, SVP of Bus. Dev.”

In retail job news, Capital Markets Cooperative, a Computershare Company, is looking for Mortgage Loan Originators with an NMLS license to join its growing team in the Jacksonville, FL Area! “We offer a competitive base salary plus commission. Contact us for an interview!” Click here and page down once for the complete job posting, or contact Gail Cunningham, Corporate Recruiter with any questions (720-563-8120).

For over 20 years, Freddie Mac has provided superior underwriting capabilities to lenders. “Now, we’re leveraging the power of big data and advanced analytics to build game-changing solutions into Loan Product Advisor – our next-generation underwriting solution. Our goal is to drive efficiency in your loan manufacturing process, ultimately helping you cut costs and giving you rep and warranty relief sooner. For example, our automated collateral evaluation will speed up, simplify and save money in your appraisal process – you’ll get your borrowers to closing faster, while receiving immediate certainty for collateral rep and warranty relief. Loan Product Advisor’s automated asset and income validation will reduce paperwork helping to quickly confirm qualifications for borrowers. Finally, you can now expand homeownership opportunities through automated assessments for borrowers without credit scores. Plus, Loan Product Advisor is a simpler, more intuitive tool with easier navigation and data visualization, Ready to learn more? Visit our Loan Product Advisor web page.”

Paul Clifford of Simplifile writes, “Simplifile continues to expand its e-recording network, which now allows settlement agents in more than 1,653 jurisdictions nationwide to electronically transmit deeds, mortgages, and other real estate documents for fast, secure, and efficient recording. Last week, we announced the addition of 17 new counties across the Midwest and Western United States. We also celebrated the achievement of Hawaii’s first-ever Land Court e-recording. Just imagine having to manually record a mortgage when the only recording office is on another island!”

Congratulations to a good friend of this commentary and industry veteran, Allen Friedman, celebrating 8 years with iServe Residential Lending as its Western Regional Sales Manager. Co-CEO Ken Michael writes, “Allen’s longevity and success over the years speaks volumes, but this type of stability is just as representative of iServe’s attractiveness as an employer as it is Allen’s accomplishments.” Few better ways to measure a company, its management and team members, than the longevity of its employees. This commentary has enjoyed its relationship with Allen and iServe and looks forward to our association for many more years to come.

“Are you a compliance officer, MLO trainer, or origination manager interested in working with a start-up team of mortgage execs who are reshaping the industry? Neat Capital is a jumbo-focused mortgage originator that has developed proprietary technology that gives borrowers real-time feedback as they progress through their application. By underwriting borrowers in the application itself, applicants receive a smoother, more transparent process while originators spend substantially less time chasing documents. The result is a faster overall process, with an average clear-to-close time of 12 days. The team at Neat is expanding across the board and we are currently seeking a Compliance Offer and an Inside Sales Manager to be based out of HQ in Boulder, CO. Detailed descriptions – as well as other positions – are available here or resumes can be sent to careers@neatcapital.com.”

Congrats to Sherry Valladares. LenderLive Network LLC announced that Sherry has joined the firm as its Northeast Correspondent Lending Regional Account Manager. She will work with current and prospective clients, including mortgage banks, community banks and credit unions participating in or considering the LenderLive correspondent program.

MBS Day Ahead: How Much Might Today’s Fed Minutes Matter?

August 15,2017
by admin

Today’s biggest calendar item is the release of the FOMC Minutes at 2pm. The Minutes provide synopsis of the meeting that took place in the 2 days leading up to the official Fed announcement in late July. That announcement was very little changed from the previous announcement, but the Fed did take the opportunity to telegraph September’s widely anticipated launch of the balance sheet normalization program.

The normalization program was laid out in detail at the Fed’s June meeting (here it is, if you’re interested). In a nutshell, the Fed buys between $20-40 bln/month currently in MBS alone The wide range is a factor of the original MBS prices/coupons.

The Fed was always buying MBS, even the higher rate stuff in 2013/2014. Clients with higher rates were more and more likely to refi in early 2015 and especially mid-2016. Because the Fed reinvests the principal of any MBS prepayments, and because a refi pays off the entire principal balance, the Fed bought more MBS in months where lower rates were creating more rapid prepayments. When rates are higher or flatter, there are fewer prepayments coming in, and thus the reinvestment amounts are lower (here’s a list where you can see how much it varies).

If you pull up that list, or if you just take my word for it that the slower months are closer to $20 bln, then the Fed’s normalization plan is quite interesting to MBS. Reason being: it caps the amount of monthly reinvestment reductions at $20bln. That means on the slow months of MBS repayments, the Fed won’t be buying any MBS. Although the Fed has been clear to say this would be a gradual and reversible process, we have yet to see MBS “price-in” that reality.

The risk is that markets are waiting until they have confirmation of each reduction in the reinvestment amount before showing us their full reaction. I don’t think that’s a major risk or that it’s worth any major change from current trading levels, but it could be worth an unfriendly bump when the time comes. To whatever extent today’s Minutes confirm or clarify the timing and, more importantly, the expected pace (if there is any “expectation”) of reinvestment tapering, bond markets might have a bit of a reaction.

Something new and different would have to come to light in the Minutes in order for us to see a major reaction–perhaps a refocusing of discussion on rate hike timing. After all, THAT seems to be where the disagreement has been among various Fed speakers who’ve taken the podium since the July Announcement. Some want to hike more. Others want to stop completely for now. Today’s Minutes may give us a better idea of where the majority sits on that issue.

Construction Indicators Slide, Housing Starts Suffer

August 15,2017
by admin

After posting unexpectedly high numbers in June, all three residential construction indicators lost ground in July, and one, housing starts, is now running below its year-ago rate. While the softening is primarily in the multi-family sector, starts have declined in four of the last five months and permits in three of the last four.

The U.S. Census Bureau and the Department of Housing and Urban Development said privately owned housing starts were at a seasonally adjusted annual rate of 1,155,000 units, a 4.8 percent decline from June’s estimate of 1,213,000, which was revised down from 1,215,000. July starts were down 5.6 percent from the 1,223,000-unit annual rate in July 2016.

Starts failed to meet even the lowest predictions of analysts polled by Econoday. Their estimates ranged from 1.174 million to 1.250 million with a consensus of 1.225 million.

Single family starts were at a rate of 856,000, down 0.5 percent from a month earlier but 10.9 percent higher than the same month in 2016. Multifamily starts plunged 17.1 percent to 287,000 units and are down 35.2 percent year-over-year.

On a non-seasonally adjusted basis there were 109,000 residential starts in July compared to 116,300 in June. Single family starts dropped from 84,100 to 81,100.

The performance of permits was like that of housing starts, down 4.1 percent to a seasonally adjusted annual rate of 1,223,000 units. Permits however held on to an annual increase of 4.1 percent. The June permitting rate was revised higher, from 1,254,000 to 1,275,000.

Analysts had expected permits to decline, with a consensus estimate of 1.246 units. Here again the drop was outside the low end of the range of 1.230 to 1.270 million units.

Authorizations for single-family homes were at a seasonally adjusted rate of 811,000, unchanged from June and 13.0 percent higher on an annual basis. Multi-family permits were 12.1 percent lower than the previous month at 377,000. This was down 11.7 percent year-over-year.

On a non-adjusted basis, there were 100,400 permits issued compared to 127,900 in June. Single-family permits fell from 81,800 to 69,100.

Housing units were completed in July at a seasonally adjusted annual rate of 1,175,000, a decline of 6.2 percent from the June estimate of 1,252,000. June completions were originally estimated at 1,203,000. July completions were 8.2 percent higher than a year earlier.

Single family homes were completed at a rate of 814,000, down 1.6 percent from June but 8.8 percent ahead of the previous July. Multifamily completions fell by 14.9 percent for the month but were 6.9 percent higher for the year.

On a non-adjusted basis, there were 100,500 housing units completed in July compared to 111,200 in June. Single family completions fell from 71,700 to 66,800.

At the end of the reporting period there were 1,089,200 estimated units under construction nationwide. The number of single family units in process is estimated at 485,000. There were 143,700 permits issued under which no construction had started; 75,700 of those were for single-family homes.

Housing starts in the Northeast fell 15.7 percent from June and were 3.7 percent lower than a year earlier. Permits were higher by 19.2 percent month-over-month and 17.0 percent on an annual basis. Completions dropped by 24.3 percent from June’s rate, but remained 13.5 percent higher than the previous July.

In the Midwest, there was a decline of 15.2 percent in housing starts, but the rate remained 14.0 percent higher on an annual basis. Permits were also lower, down 17.4 percent and 9.0 percent for the two respective periods. There were 18.1 percent fewer units completed than in June, but the rate was 1.1 percent higher July-to-July.

Starts in the South eked out a 0.6 percent increase from June and were down 16.5 percent year-over-year. Permits dipped 1.4 percent for the month but were up 1.3 percent on an annual basis. Completions were up 15.3 percent for the month and 18.5 percent higher than a year earlier.

The West saw starts down 1.6 percent month-over-month but 6.8 percent above the previous year. The permitting rate fell by 7.9 percent from June but rose by 14.1 percent year-over-year. Completions were 25.4 percent and 8.9 percent lower than their respective earlier numbers.

Pitiful Housing Supply Slighted Dampened Q2 Home Sales

August 15,2017
by admin

Headstrong is a rather interesting word, but the National Association of Realtors® (NAR) chose it to describe the continuing imbalance between supply and demand in the housing market. NAR blames this imbalance for slightly tempering home sales as well as pushing continued robust price growth in the second quarter of 2017.

NAR says the national median existing single-family home price in the second quarter rose 6.2 percent from the same quarter in 2016, an increase from $240,700 to $255,600. This is a slight moderation from the 6.9 percent year-over-year price growth logged in the first quarter of this year, but the most recent median price still set a new peak, surpassing Q3 2016’s median of $241,300. NAR says single-family home prices increased compared to the same quarter of 2016 in 154 or 87 percent of the 178 metropolitan statistical areas it tracks.

Lawrence Yun, NAR chief economist, says home prices in most metro areas continued their fast ascent in the second quarter because supply remained at “pitiful” levels. “The 2.2 million net new jobs created over the past year generated significant interest in purchasing a home in what was an extremely competitive spring buying season,” he said. “Listings typically flew off the market in under a month – and even quicker in the affordable price range – in several parts of the country. With new supply not even coming close to keeping pace, price appreciation remained swift in most markets.”

Added Yun, “The glaring need for more new home construction is creating an affordability crisis that needs to be addressed by policy officials and local governments. An increasing share of would-be buyers are being priced out of the market and are unable to experience the wealth building benefits of homeownership.”

Twenty-three or 13 percent of the metro areas had double digit price increases, another slight moderation from the first quarter when there were 30 areas with such gains. However, the 87 percent of markets with increases in the second quarter was 2 percentage points more than rising markets in the first quarter.

Existing home sales during the quarter were down slightly from Q1, moving from a seasonally adjusted annual rate of 5.62 million to 5.57 million, an 0.9 percent decline. Second quarter sales were still 1.6 percent higher than in the same quarter of 2016.

Yun’s “pitiful” supply of existing homes numbered 1.96 million at the end of the second quarter, 7.1 percent fewer than were for sale a year earlier. The average supply during the second quarter was 4.2 months – down from 4.6 months a year earlier.

Family income rose during the quarter to a national median of $71,529, but NAR said this was not enough to offset weaker affordability arising out of higher mortgage rates and home prices. To purchase a single-family home at the national median price, a buyer making a 5 percent down payment would need an income of $56,169, a 10 percent down payment would require an income of $53,213, and $47,300 would be needed for a 20 percent down payment.

“Mortgage rates have subsided in recent months, which has only somewhat helped take away some of the sting prospective buyers are experiencing with the deteriorating affordability conditions in many areas,” added Yun. “Household incomes may be rising and giving consumers assurance that now is a good time to buy, but these severe inventory shortages will likely continue to be a drag on sales potential the second half of the year.”

Four of the five most expensive housing markets in the second quarter were in California. San Jose, was number one with a median price of $1,183,400, followed by San Francisco at $950,000, and Anaheim-Santa Ana, at $788,000. San Diego at $605,000 was just behind urban Honolulu’s median of $760,600.

The five lowest-cost metro areas in the second quarter were Youngstown, Ohio $87,000; Cumberland, Maryland, $98,200; Decatur, Illinois, $107,400; and Binghamton and Elmira, New York, at $109,000 and $111,600 respectively.

Condos and cooperative saw slightly less appreciation than single-family homes. The national median existing-condo price was $239,500 in the second quarter, up 5.4 percent from a year earlier ($227,200). Eighty-seven percent of the 61 metro areas tracked showed gains in their median condo price from a year ago.

Total existing-home sales in the Northeast rose 1.3 percent in the second quarter and are 0.4 percent higher year-over-year. The median existing single-family home price in the Northeast was $282,300, a 3.2 percent annual increase.

Sales in the Midwest increased 4.2 percent quarter-over-quarter, but are 0.5 percent lower than a year ago. The median existing single-family home price increased 6.6 percent to $204,000 on an annual basis.

The South saw sales dip 3.0 percent in the second quarter but they remain 2.5 percent higher on an annual basis. The median existing single-family home price was $229,400, up 6.7 percent.

There was a 3.7 percent decline in quarter-over-quarter sales in the West, but the pace was up 3.1 percent from the same quarter in 2016. Median single-family prices rose 7.5 percent to $372,400.

Rates Rising as North Korea Talks Baseball

August 15,2017
by admin

Mortgage rates continued higher today as markets reacted to news that North Korea would tactically abstain from launching nuclear weapons at Guam because it was having such a good time watching the “foolish and stupid conduct of the Yankees.” Perhaps Kim Jong Un is a Sox fan? Someone should tell him that series is over and that the Mets might not put up as much of a fight.

Or perhaps “Yankees” referred to America in general. Either way, markets took solace in the absence of global nuclear war by buying stocks and selling bonds. Net selling pressure in bonds pushes rates higher. Strong economic data in the morning only added to bond market weakness.

Fortunately, movement in rates continues to be muted by historical standards. Most consumers would still be seeing the same rates quoted today that were available last Friday (which were the lowest since November 2016) with the only adjustments being slightly higher upfront costs.

Loan Originator Perspective

Bond markets weakened this PM, while staying within recent ranges. Today’s movement wasn’t a trend, but bears watching if it continues. I’ve been preaching “lock sooner rather than later” in the absence of meaningful direction, and that’s still my attitude. My pipeline is locked, with the exception of a few new loans closing well over 30 days from now. –Ted Rood, Senior Originator

The risk on trade is back in play with the most recent geopolitical headlines regarding N Korea. We are still in the most recent range however, although leaning in the higher part of the range. For my clients that are closing in 30 days we are locked. Outside of 30 days and for my less risk averse clients we are floating, but on a short leash watching technical pivot points in treasuries. –Geoff Allison, Blue Skye Lending, NMLS #200002


Today’s Most Prevalent Rates

  • 30YR FIXED – 4.00%
  • FHA/VA – 3.75%
  • 15 YEAR FIXED – 3.375%
  • 5 YEAR ARMS – 2.75 – 3.25% depending on the lender



Ongoing Lock/Float Considerations

  • Investors were relatively convinced that the decades-long trend toward lower rates had been permanently reversed after Trump became president, but such a conclusion would require YEARS to truly confirm

  • Instead of continuing higher in 2017, rates instead formed a narrow, sideways range, and held inside until April. Investor perceptions are shifting such that fiscal reforms and other policy developments will need to live up to expectations in order to push rates higher. Geopolitical risks would also need to avoid flaring up (more than they already have)
  • For the first time since the election, we’re in a rate environment where you wouldn’t be crazy not to lock at every little opportunity/improvement. Until/unless it’s broken, the highest rates of early-2017 mark the ceiling, and we’re now waiting to see how much lower we can go from here.
  • Rates discussed refer to the most frequently-quoted, conforming, conventional 30yr fixed rate for top tier borrowers among average to well-priced lenders. The rates generally assume little-to-no origination or discount except as noted when applicable. Rates appearing on this page are “effective rates” that take day-to-day changes in upfront costs into consideration.

MBS RECAP: Bonds Threaten Momentum Shift

August 15,2017
by admin

Today was mostly about North Korean de-escalation, and somewhat about stronger economic data. If you haven’t heard 43 times already, North Korea graciously decided to hold off on their little plan to nuke Guam (though the little plan of marching up and down the square remains intact for now). Considering that nuking Guam (or more likely, “attempting” to nuke Guam) would have led to Nuclear war or something equally unpleasant, bond markets had some gains to give back. Reason being: bonds benefited from “flight-to-safety” demand as investors shed risk amid last week’s nuclear uncertainties.

All of the above being the case, most of the day’s bond losses were seen in the overnight session (the initial headlines about Guam came out last yesterday). The morning’s economic data didn’t help. Retail Sales came out stronger than expected. In fact, every report was at least as good as median forecasts, but it was Retail Sales that naturally garnered the most attention.

Tomorrow brings the Minutes from the most recent FOMC meeting. It’s a chance to get a deeper look at the conversation that underlied the rather boring Fed Announcement from July. That said, major Fed communications always reserve the right to move markets, and that’s especially true when major policy changes are expected in the near-term future.

Fannie 3.5s lost 6/32nds , but because the losses were intact at the open, there wasn’t much reprice risk throughout the day. 10yr yields ended the day 4+bps higher at 2.266, reinforcing a bigger-picture bounce at the 2.21-2.22 technical level. If yields proceed to break over 2.28, it would be an even stronger vote in favor of momentum toward higher rates. Ultimately, we’d need to see the reaction to next week’s Jackson Hole symposium before expecting any truly big breaks outside recent ranges.

MBS Day Ahead: The Blessing and Curse of The Geopolitical Risk Cycle

August 14,2017
by admin

Geopolitical risk is one of the most intuitive market movers for bonds. Threats of nuclear attacks from North Korea (as well as the rhetorical response from the US) are a classic example of geopolitical risk. Were there to be an actual nuclear attack, it would surely result in massive stock losses and bond market gains. The underlying concept is this: anything that creates uncertainty about the future of world’s economies–let alone the world itself–motivates investors to move money to safe havens like cash and government bonds.

Although the risks may not be terribly likely to materialize, they have to be accounted for nonetheless. Through this part of the geopolitical news cycle, the headlines are nothing but a blessing for bond markets, even though the underlying events would be a curse for the real world.

The roles are reversed when and if the geopolitical risk is defused. Bonds are cursed by a weaker bounce, and the real world is blessed by the absence of nuclear war. This is what we’re seeing this morning as North Korea abruptly declared it won’t be attacking Guam and will wait to see what the crazy old USA does next. If you get a chance to read a news article or two on this topic, some of the English translations are quite entertaining, depending on your sense of humor. In any event, “foolish yankees” could be a good band name (especially for a Damn Yankees cover band).

Stronger economic data and corporate bond issuance are adding to the overnight selling pressure. Bonds are essentially beginning their day right in line with the 2.28% technical level that served as support at the beginning of last week.

2017-8-15 Open

Lender’s New Capital Partner; Conferences and Training Coast to Coast

August 14,2017
by admin

The science of persuasion? Any good salesperson, or LO, can talk someone into buying just about anything using scarcity, reciprocity, commitment, social proof, authority, and liking. Here’s a good article to share with your loan officers. A good site to review if you want to go to a conference and your company’s travel budget is frozen.

Upcoming Events, Conferences, and Training

On August 16th, learn how to navigate through Plaza Reverse Mortgages with Mark Reeve, Plaza’s Reverse Mortgage National Director. This webinar will review Reverse Mortgage basics including Plaza’s reverse loan programs, the origination process, compensation, recent industry changes, and more.

Would you like to learn more about how to submit condominium loans and help ensure a smooth process with Wells Fargo Funding? Log into the website and locating the access information in the News from Wells Fargo section. Condominium Review Options Webinar includes: Wells Fargo Funding project review options, Helpful tips for choosing the right review options, Available resources, tools and contacts.

Monday the 21st Plaza Home Mortgage is offering up a class on the fundamentals of calculating income for self-employed borrowers from personal and business tax returns. “Recognize cash flow adjustments, what are required deductions and what are allowable add backs. Learn when a Profit and Loss Statement is needed and understand business structures related to Sole Proprietorships (Schedule C), Partnerships (Form 1065), S-Corporations (Form 1120S), Corporations (Form 1120).

Check out the Ellie Mae educational calendar offering in-depth classroom training on topics as broad as Quality Control or Originating FHA loans as well as virtual online classes.

October Research LLC is hosting a “Countdown to HMDA” on Thursday, September 7th for all the latest information to ensure compliance in preparation of January 1st. This educational live event, hosted by October Research, LLC will help you learn what action steps need to be taken in the coming months and what you should be working on right now.

MBA of Southwestern Pennsylvania is kicking off the fall, on September 11th, featuring special guest Dwayne D. Woodruff, former Pittsburg Steeler Cornerback. Join the fun at the River Casino, Andrew’s Restaurant from 5:00-8:00 pm. The cost is $55 and includes a dinner buffet and $10 in slot play.

AllRegs by Ellie Mae offer a fabulous class for mortgage newbies. Essentials of Mortgage Banking is a 4-day session covering topics from origination, operations, underwriting, closing, secondary marketing and servicing. Along with a few dozen confusing industry acronyms. The next session begins Sept 19th in Pleasanton, CA so hurry up and register.

Join NEMBC in Newport RI for its annual three-day conference, September 13th-15th, and get the most recent and up-to-date information to help you develop your strategies for success. Register online for the full conference or one-day programs.

The VLMA is accepting registration for its annual September 21st and 22nd, “Road to Success” convention. Featuring renowned speakers and plenty of networking opportunities all of this at the Hilton Richmond Hotel and Spa.

IMN’s Mortgage Risk Management Strategies Forum, scheduled for October 2-3 at the Fairmont in Santa Monica. The audience will consist of a “Who’s Who” of C-Level folks from within Mortgage Originators/Credit Unions (Risk Management/Compliance Professionals), Non-Bank Issuers/Investors, Govt Agencies/GSEs, and various Service Providers/Vendors in the Mortgage industry – please see below for the current attendee list. Contact Matt Gessel for details and possible complimentary passes.

The MBA New Jersey Northeast Conference of Mortgage Brokers and Professionals is scheduled in Atlantic City N.J. on October 9th – 12th. This year’s program is chalked full of dynamic speakers, continuing education programs, commercial and residential programs, and a special session that has our industry and legal experts answering your questions in a one-hour session that will be followed by your meeting with each expert at round tables to have face to face discussions about issue important to you.

If you are a professional working in the single-family sector of the real estate finance industry, registration is underway for the MBA Annual Convention & Expo October 22nd-25th in Denver.


Capital Markets

“Risk on, risk off” has been influencing the markets since things with North Korea have been escalating, and yesterday we began the week with improved risk tolerance since there was no additional escalation of tension between U.S. and North Korea. Reports suggest that the U.S. and China are still trying to exert influence through diplomacy and China ending some exports.

It’s all but given that the Federal Reserve Open Market Committee will put forth its plan for lessening its balance sheet later this year, and that its members are estimating one more hike in December. But the press doesn’t have much else to talk about, so every speech attracts a little attention. The latest example was NY Fed President William Dudley saying that he is in favor of another rate hike in 2017 if the economy evolves as expected. Mr. Dudley added that he expects inflation to move slightly higher and that an announcement about the balance sheet is likely to be made relatively soon.

So, on Monday the 10-year note worsened over .250 in price to yield 2.22%, 5-year notes worsened .125, but agency MBS prices were nearly unchanged – they held in there like champs! This morning we’ve already had retail sales (+.6%, ex-auto +.5%, stronger than expected), import / export prices (+.1%, +.4%) and the Empire State Manufacturing Survey (more than doubling to 25.2). Coming up is the NAHB Housing Market Index for August from the builders. We start Tuesday with rates higher than Monday’s close: the 10-year is yielding 2.28% and agency MBS prices are worse .125-.250.


Jobs and Products

“Let’s talk market share as it relates to ‘Brand Awareness.’ Android and Apple control over 90% of worldwide mobile platform market share. Uber and Lyft, relatively young companies, own over a 70% ridesharing market share in the US. The moral of the story: when technology begins to disrupt an industry, consumer behavior drives major consolidation in industry brands. Over the past 12 months, according to Corelogic figures, the top 10 US mortgage companies owned only 20-23% market share combined. Concurrently, technology is beginning to disrupt our business in a big way. It’s not surprising that loanDepot has come through its major technology investment and begun the strongest national brand campaign, including national TV exposure, we’ve seen from a retail mortgage lender in years. You can click here to see its first commercial. Since launching the campaign on May 1st, loanDepot has experienced over 1,250,000 unique website visitors attributed to the campaign alone. Branding is tough, and as loanDepot and other industries have shown, you must go all in if you expect to win. Contact Cassidy O’Sullivan to learn more!”

“Tired of always worrying if rates go up another tick or two today, and that it kills a couple of your deals? Worried about how to always re-invent yourself? Maybe it’s time to make the transition to becoming a Reverse Mortgage Specialist. Daily rate changes, don’t hurt you the same way as forward mortgages. Business still thrives and it’s thriving today! Specializing in Reverse Mortgages is a great life. The Reverse Mortgage Specialists at RFS have that great life. No more waking up in the morning wondering where to go network or if there are already a bunch of MLOs already in that networking group. Because the Reverse Mortgage Specialist is rare and valued. If you are ready to make the transition in your business and start introducing your book of business to the next stage of mortgages for your aging client base, talk to us. RFS a premier Reverse Mortgage Bank with unparalleled training and support. RFS is all about building your brand and your business, not the other way around. We truly want you to make a lot of money. Unusual? Yes, it is: contact us at 858-355-7398.”

Freedom Mortgage is very pleased to welcome David McPherson to its Wholesale Lending Division as the Regional Manager of the Northwest Region. David has over 25 years’ experience in Wholesale, Correspondent, and Branch Management and will play a key role in helping to grow market share and manage profitability. With his strong track record of growing sales and contributing to company goals, David will be an exceptional addition to Freedom Mortgage. David is actively recruiting experienced top-producing Wholesale Account Executives in the OR, WA, ID, MT, WY, CO, UT, NM and AK markets. To learn more or to join our team, please contact David at (360) 901-3266, or email him. Freedom Mortgage is a top 10 national lender with over 25 years serving customers and is licensed in all 50 states.

“You spend your time, talent, and expertise getting loan applications and taking care of your borrower. You’ve earned their trust. What you need now is a company that will back you up; a company who understands what it takes to get where you are now. A company that knows how to get loans closed on time. That’s Assurance Financial. We’re growing, and we’re looking for the best and brightest to grow with us. Will it be you? We hire the best, and we compensate well. If that’s you, call Sales Recruiting Manager Paul Peters, CMB at 225-239-7948 or visit LendTheWay.com/Careers . It’s just a phone call, but it could change the way you think about your work.”

Western Bancorp, a Silicon Valley-based tech-enabled wholesale originator, is pleased to announce that it has joined the Eli Global family of companies. Eli Global is a privately held, multinational investment firm that has created a loose confederation of autonomously managed and entrepreneurial businesses serving a wide range of industries. Eli Global makes long-term investments in entrepreneurs and provides capital for growth. “With Eli Global as our new capital partner, we will grow our wholesale origination footprint, enter into new channels and make strategic investments in technology that will allow us to become a leading innovator in the wholesale mortgage fin-tech revolution.” – Rick Soukoulis, Founder of Western Bancorp. Rick Soukoulis has a long legacy of developing innovative technology, and with the support of Eli Global, Western Bancorp expects to rapidly expand its wholesale origination volume, develop technologies to support a frictionless broker experience, and improve workflow processes. Rick and the existing leadership of Western Bancorp will run the business as an independent operating entity within the Eli Global family.

“Tired of always worrying if rates go up another tick or two today, and that it kills a couple of your deals? Worried about how to always re-invent yourself? Maybe it’s time to make the transition to becoming a Reverse Mortgage Specialist. Daily rate changes don’t hurt you the same way as forward mortgages. Business still thrives and it’s thriving today! The Reverse Mortgage Specialists at RFS have that great life. No more waking up in the morning wondering where to go network or if there are already a bunch of MLOs already in that networking group. Because the Reverse Mortgage Specialist is rare and valued. Talk to us if you are ready to make the transition in your business and start introducing your book of business to the next stage of mortgages for your aging client base. RFS a premier Reverse Mortgage Bank with unparalleled training and support. RFS is all about building your brand and your business, not the other way around. We truly want you to make a lot of money. Unusual? Yes, it is. Contact us at 858-355-7398.”

National mortgage lender Waterstone Mortgage Corporation announced Dan Spaulding has joined the company as the regional vice president of retail production responsible for overseeing operations and retail growth throughout the Midwest.

Nice Rebound in Builder Confidence – NAHB

August 14,2017
by admin

Builder confidence made a strong comeback this month, surprising analysts and belying some of the gloom expressed by the National Association of Home Builders (NAHB) earlier this week about construction labor problems. NAHB said the NAHB/Wells Fargo Housing Market Index (HMI) rose 4 points from its July reading to 68.

“Our members are encouraged by rising demand in the new-home market,” said NAHB Chairman Granger MacDonald. “This is due to ongoing job and economic growth, attractive mortgage rates, and growing consumer confidence.”

The HMI dropped 2 points in July, to its lowest point since last November. At that time NAHB attributed the slippage to concerns over the costs of construction. This week the trade group said labor shortages faced by home builders were, in most occupations, the most severe in 17 years.

Analysts polled by Econoday had expected the index to recover slightly, but the actual HMI number was higher than any predicted. The range was 63 to 66 with a consensus of 65.

“The fact that builder confidence has returned to the healthy levels we saw this spring is consistent with our forecast for a gradual strengthening in the housing market,” said NAHB Chief Economist Robert Dietz. “GDP growth improved in the second quarter, which helped sustain housing demand. However, builders continue to face supply-side challenges, such as lot and labor shortages and rising building material costs.”

The HMI is constructed from responses to a survey NAHB has conducted for more than 30 years among its new-home builder members. They are asked to provide their perceptions of current single-family home sales and sales expectations for the next six months as “good,” “fair” or “poor.” The survey also asks builders to rate traffic of prospective buyers as “high to very high,” “average” or “low to very low.” Scores for each component are then used to calculate a seasonally adjusted index where any number over 50 indicates that more builders view conditions as good than poor.

All three HMI components posted gains in August. The component gauging current sales conditions rose four points to 74 while the index charting sales expectations in the next six months jumped five points to 78. Meanwhile, the component measuring buyer traffic increased a single point to 49.

Looking at the three-month moving averages for regional HMI scores, the Northeast rose one point to 48. The West, South and Midwest all remained unchanged at 75, 67 and 66, respectively.