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Homeowner Equity Reaches All-Time High in Q2

September 19,2019
by admin

Total home equity, not surprisingly, increased again in the second quarter of the year. CoreLogic’s quarterly Homeowner Equity Insights report, which looks only at properties with one or more mortgages, puts the aggregate increase at $428 billion year-over-year, a 4.8 percent gain. The company says that 63 percent of residential properties have a mortgage.

“Home values have continued to rise in most parts of the country this year and we are seeing the benefit in higher home equity levels. The western half of the U.S. has experienced particularly strong gains in home equity recently,” according to CoreLogic CEO and President Frank Martell. In July 2019, South Dakota and Connecticut were the only two states to post annual home price declines. These losses mirror the states’ home equity performances during the second quarter as both reported negative home equity gains per borrower.”

The number of mortgage properties that were underwater, owning more on the mortgage or mortgages than the property is worth, totaled 2 million homes or 3.8 percent of all mortgaged properties. This is 151,000 fewer underwater properties (a 9 percent decrease) from the second quarter 2018 total. At that time the negative equity rate was 4.3 percent.

Frank Nothaft, CoreLogic Chief Economist, said “Borrower equity rose to an all-time high in the first half of 2019 and has more than doubled since the housing recovery started. Combined with low mortgage rates, this rise in home equity supports spending on home improvements and may help improve balance sheets of households who could take out home equity loans to consolidate their debt.”

Negative equity at the end of the second quarter of 2019 had an aggregate value of approximately $302.7 billion. This is down quarter over quarter by approximately $2.6 billion, from $305.3 billion in the first quarter of this year.

Negative equity peaked at 26 percent of mortgaged residential properties in the fourth quarter of 2009, based on the CoreLogic equity data analysis which began in the third quarter of 2009.

When broken down by household, the aggregate increase in equity averages a gain of $4,900 since the end of Q2 2018. Idaho had the highest year-over-year average increase at $22,100.

Rates Move Lower for Eighth Consecutive Month, Driving Refis

September 19,2019
by admin

Thirty-year mortgage loans closed in August carried an average interest rate of 4.07 percent according to Ellie Mae’s Origination Insight Report. Rates were down for the eighth consecutive month, easing back from an average of 4.18 percent in July.

Ellie Mae said the month-over-month decline in rates continues to drive up the share of originations that are for refinancing. They accounted for 43 percent of all loans closed during the month compared to 38 percent in July. That increase drove purchase originations under a 60 percent share for the first time this year. The refi share popped up by 3 percentage points for all three major loan types.

“Interest rates continue to decline and we’re seeing homeowners capitalize on the refinance opportunity throughout the month of August,” said Jonathan Corr, president and CEO of Ellie Mae. “As we enter the fall and the market expects further rate cuts from the Fed, we will watch to see if the share of refinances continues to climb further.”

The conventional loan share of originations picked up 3 percentage points month-over-month, accounting for 69 percent of loans closed. Most of that gain came at the expense of FHA loans which declined 2 points to a 17 percent share. VA loans held steady at 10 percent.

Closing rates improved; the rate for all loans was 77.3 percent, up from 77.0 percent in July. Closing rates on purchases increased to 80.0 percent in August from 79.3 percent in July, while closing rates on refinances dropped slightly to 72.5 from 72.9 percent the prior month. Ellie Mae computes the closing rates from a sample of applications submitted three months earlier.

The time to close all loans was unchanged at 42 days while the time to close a refinance loan decreased 1 day to 39 and the time to close a purchase loan increased from 43 days to 45 days in August.

The Origination Insight Report mines data from a sample of approximately 80 percent of all mortgage applications that were initiated on its proprietary mortgage management system. The company says its report is a strong proxy of the underwriting standards employed by lenders across the country.

Fraud, Broker, and LO Products; Correspondent/Wholesale Changes

September 19,2019
by admin

A mile is 5,280 feet. And Central Park Tower on West 57th St. in Manhattan now stands at 1,550 feet, about a third of a mile. I mention this because it is now the tallest residential building in the world, and if you’d like to pony up $6.9 million for a unit, now’s your chance. When the builder starts cutting prices, we’ll know that we’re in a slowdown, but until then the press can focus on overseas economies slowing, trade concerns, and persistently weak inflation in the U.S. possibly leading to a U.S. slowdown. Many believe that at some point all this talk of a slowdown or recession in this country will become a self-fulfilling prophecy. It is interesting that President Trump wants the Fed to cut rates to zero, the sign of a stumbling economy which is not what we have. More below in the capital markets section.

Lender Products and Services

Have you seen the NewRez Wholesale enhanced Product & Pricing Engine (PPE)? “Busy brokers have enough to do. Our upgraded engine lets you lock, price, and compare loans – making the process quick, easy and convenient! Self-service tools serve to reduce cycle times, increase capacity, and enable you to lock or update locks all through the click of a button. Contact your AE today to learn more! See our new video highlighting the benefits of our enhanced PPE.”

Caliber Home Loans, Inc. can help our wholesale business partners stand out in a crowded marketplace when they access our new and improved broker marketing platform, CaliberPRO! Approved business partnersare invited to use our complimentary marketing materials hosted on CaliberPRO, Professional Resources On-demand, houses customizable marketing materials to help you promote products ranging from Conventional, Government, Jumbo, Non-Agency, and much more! To get login credentials contact your dedicated account executive. If you are not currently an approved business partner email us at to get started!”

FundingShield shared its latest market analytics on wire fraud & settlement risk where it reported an uptick of 32% of issues on the loans it reviewed during the first half of 2019 versus 2018. FundingShield co-sponsored the California MBA’s inaugural Mortgage Innovators Conference where Ike Suri (CEO & Chairman) & Adam Chaudhary (President) discussed API driven wire fraud prevention technology alongside other HousingWire Tech 100 2019 winners. The links to their interviews at the Mortgage Innovators conference by Shred Media and Mortgage Media (link) are available for view. The firm also presented on a panel at MBA’s Risk Management, QA & Fraud Prevention Forum in Chicago discussing strategies to prevent wire fraud. FundingShield will be attending Digital Mortgage in Las Vegas as well as presenting at the MBA Annual in Austin, please contact to set up a meeting or demo to see how FundingShield can prevent fraud while lowering operating costs.

Mortgage brokers, have you ever had a mortgage qualification question that you wished you could just ask Alexa or Siri about and instantly get the solution? That’s what QLMS provides with, “The Answer.” This tech tool is like having an underwriting sitting in your office at all times. You can ask it things like “What are the required waiting periods following the discharge or dismissal of a bankruptcy?” and get an instant answer 24/7/365. The response from the industry has been overwhelming. More than 100,000 questions have been asked, and answered, since it launched. Not only can you get an instant answer to questions like this, but you can get your clients approved quicker and focus on what matters most – growing your business. Reach out to your QLMS account executive for more details, or connect with QLMS here to learn how the lender can better help you serve your clients.

Marketing Managers, how difficult is it to produce compliant marketing that is targeted, localized, and customizable, while meeting your Loan Officer’s deadlines? Usherpa’s Launch Pad Custom Email Wizard and branded Marketing Portal were designed for corporate marketing teams so you can create materials that align with your unique company vision and brand strategies. Why switch between multiple systems to build content on demand when you can seamlessly design email campaigns within Usherpa CRM? Launch Pad is your one-stop shop to getting the right messages out at the right time, whether it’s a Lunch & Learn invitation for an individual LO, a companywide targeted drip campaign, or internal messaging. Effortlessly build a library of collateral that is directly linked to Loan Officers’ databases and Loan Origination System. Don’t hesitate, learn how Usherpa’s HTML email wizard leverages your efforts while saving an impressive amount of time.

Where can you get 11X return on every dollar you spend? There is only one place smart lenders go to get these returns consistently: Sales Boomerang. Why would you say no to 11X or better ROI? You can’t, and you shouldn’t. Believe me, your stake holders will thank you. “Now, we don’t let opportunities walk out the door thanks to timely notifications” Michael Guidotti from American Pacific Mortgage. Lenders get on average an 11X return but many are posting 15X, 20X, 25X and all the way up to 60X returns from every dollar invested into Sales Boomerang. “Sales Boomerang is a game changer for us, because we’ve never had access to such information before” Stephen Barton from Eustis Mortgage. If volume is not your problem today then profit and customer retention need to be at the top of your list. Check out the long list lenders already using Sales Boomerang

Correspondent and Wholesale Snippets

Wells Fargo Funding has updated its policy to reflect, effective September 24, loans using nontraditional currencies such as Bitcoin, digital assets, and other cryptocurrencies (including liquidated cryptocurrencies) for income, down payment, closing costs, or reserves are ineligible for purchase. Also noted, Wells is removing its insurance rating requirements for Non-Conforming Loans secured against cooperative (co-op) properties. (Gosh, banks thinking about cryptocurrencies and money laundering… should be a surprise to no one.)

Effective for Provident Funding loans uploaded on or after 9/9/2019, an appraisal waiver loan level pricing adjustment of .25% will be applied to any loan where the appraisal waiver (ACE/PIW) is exercised.

Plaza Home Mortgage®has new updates to its Solutions Non-QM guidelines and pricing.

PRMG posted numerous updates in its TPO Resource Center updates 19-12. Topics include: Policies, Procedures and Information, Training/Instructional Material, General, FHA, and VA Forms plus Training/Instructional Material.

PennyMacissued an announcement regarding its policy on e-signing documents in both origination and closing processes.

Fifth Third has adopted a new email encryption process. For the first encrypted email you receive from Fifth Third you will need to complete a quick and simple one-time registration by downloading the attachment from the email. Once registered, you’ll use your new password to open any future secure emails from Fifth Third. Any issues such as locked accounts and password resets should be directed to

Citadel Servicing Corporation (“CSC”) surpassed $3 Billion in servicing under management taking only 9 months to add $1 Billion to their already growing servicing portfolio. CSC is the only Vertically Integrated lender solely dedicated to the Non-QM / Non-Prime mortgage market. With their range of innovative products and the most competitive rates in the industry, CSC is once again showing why they are leaders in this niche market. “We are continuously looking at ways to improve what we do and how we do it. Working with our partners to find cost effective ways to service the needs of our customers. Over the past 12 months we have invested in systems which allow us to provide efficient and easier ways to service our customers.”, said Eric Friedman, SVP Director of Servicing.

Capital Markets

We all know that lower interest rates don’t promote increased spending after a point, and that the ups and downs of the stock market are a dubious measure of a successful economy. Meanwhile, to remind folks, this week we learned that housing starts in the US reached a 12-year high (due to condo and apartment construction) and U.S. manufacturing production increased 0.5% in August. But the U.S. budget deficit for fiscal 2019 increased to almost $1.07 trillion in August, the highest amount in seven years, due to military spending and higher interest costs on government debt contributed to the gap as revenue fell short of expenses by more than $214 billion. Is anyone listening?

The Fed added a third dose of liquidity to U.S. funding markets Thursday, helping rates retreat as investors warned that fresh bouts of stress are possible, and U.S. Treasury prices improved/rates fell (the 10-year yield closing -1 bp to 1.77 percent) after several policy statements from central banks across the globe. Global growth momentum seems to be tangibly slowing, as the Organization for Economic Cooperation and Development (OECD) lowered its 2019 global growth forecast to 2.9 percent from 3.2 percent, representing a post-global financial crisis low. The U.S. growth forecast was reduced by 40 bps for 2019, and the OECD’s global growth forecast for 2020 was reduced by 40 bps to 3.0 percent. Trade wars have slowed global growth momentum to a level last seen during the financial crisis, and governments aren’t doing enough to prevent long-term damage, as the group cut almost all of the economic forecasts it made just four months ago due to protectionist policies taking an increasing toll on confidence and investment.

In central bank news, the Bank of Japan made no changes to its policy stance, Norges Bank raised its deposit rate due to strong activity in Norway’s energy sector, the Swiss National Bank left its policy rate unchanged, and the Bank of England left its key rate and asset purchase program unchanged.

Domestic releases saw existing home sales in August beat estimatesas they increased from the July reading. Total sales were 2.6 percent higher than the same period a year ago and at their strongest pace since March 2018 as low mortgage rates and a lower inventory of homes for sale offset each other to drive sales growth. The Conference Board’s Leading Economic Index was unchanged in August, as known negatives including weaker manufacturing activity, declining stock prices, and a flattening/inverted yield curve hurt the reading. And the Philadelphia Fed Survey decreased in September but still beat expectations.

There are no major economic releases today although the Fed Presidents have resumed their speaking engagements. So we’ll hear from Boston’s Rosengren, New York’s Williams, Vice Chair Clarida, and Dallas’ Kaplan. We begin the day with Agency MBS prices little changed and the 10-year yielding 1.78%.


A full-time mortgage trainer is wanted in San Francisco Bay Area. JVM Lending is an extremely innovative and tech-centric mortgage company with a unique “no loan officer” model and a very strong focus on culture. JVM is looking for a full-time trainer to train newly hired Mortgage Analysts, Closing Specialists, and Business Development Officers. The JVM training program is already fully developed for each position, organized, and ready to go. Our trainer will be expected to keep the training programs up to date, continue to make improvements, collaborate with department managers and teams to manage its contents, possess current mortgage industry knowledge, and be willing to work in a fast-paced environment. JVM’s trainer will also be involved in management, hiring and retention decisions. To learn more, please contact Tiffany Nordgren.

Hamilton Group Funding continues its double-digit growth trend, recently hitting record breaking lending volume in the company’s 16-year history. The company is seeking dynamic Servicing Manager and Closing Manager candidates to report directly to our EVP, Chief Financial Officer. These positions will be based in our Corporate office in Sunrise, Florida. HGF is proud to be named one of South Florida’s Top Workplaces for the third year in a row. We have an entrepreneurial and family-oriented culture and are licensed to offer residential mortgages in 24 states through 25 branch offices. Inquiries can be made to Brandy Meiteles.”

“Citi was named in LinkedIn’s Top Companies 2019 for where the U.S. wants to work now, and we are excited to announce that our mortgage business continues to grow. If you have consumer lending or mortgage experience, and are passionate about selling, then take a look at our Direct to Consumersales positions in both our St. Louis and Dallas locations. Apply online here. We are also hiring industry leading Home Lending Officers in our Distributed Retail greater metropolitan markets of Tri-State (NY/NJ/CT), Capitol (DC/MD/VA), South Florida (Miami), Chicago, Southern California and Northern California. If you are a mortgage professional looking to join a world class global bank to serve the needs of home ownership and home financing across the U.S. search and apply here. For additional information on any of these opportunities, Contact Citi Corporate Recruiter Brendan Connarton (716-560-5739).”

Thrive Mortgage believes in technology that enhances the client experience and increases the efficiency of the Originator. Last year, Thrive launched iThrive, their Intelligent Mortgage Platform, to create a vastly superior lending experience. Their drive to become the leader in lending innovation has led to impressive “Contract-to-CTC” times of lower than 14 days. Beginning in October, Thrive will implement the third phase of their iThrive platform adding advancements designed to bring the entire loan process into the palm of the borrowers hands all the way through closing. Dan Windell, Training & Development Manager, stated, “Borrowers benefit from an incredibly simplified interface and communication tools that update at every milestone. The LO manages their files more efficiently from prequals, to pricing options and locks, to disclosures. All of it handled through a single, interconnected app.” To learn more about available growth opportunities, please reach out to us at

MBS Day Ahead: Bonds Just Hoping for an Orderly Escape; Bigger Decisions on Hold

September 19,2019
by admin

In the day just passed, bonds trading was exceptionally calm in the wake of Wednesday’s Fed day. As I mentioned in the recap, it was one of the least volatile moves relative to expectations of any Fed day reaction I can remember. The consolidative vibes suggest either indecision or apathy, post-Fed. The clear takeaway from a strategy standpoint is that bonds really and truly are going to be heavily data-dependent in the coming weeks, barring some technical clue that gives away traders’ underlying predispositions.

In the day ahead, all we can do is keep an eye out for those technical clues and simply bide our time as the bond market does the same. The Fed will be more than willing to cut rates all the way to zero if the econ data justifies the move, but they aren’t going to do it just because they’re worried about a trade war and a global economic contraction. On the other side of the policy spectrum, it seems highly unlikely that the Fed will be hiking rates any time soon, but they would certainly be willing to do so if inflation began creeping or if the market was showing the ill effects of an overly-accommodative stance.

Bottom line, the recent story on 10yr yields is best told as a rejection of last week’s highs following by a hearty shrug of “I dunno” from bond traders. 1.91-1.94 would be the scariest danger zone to watch in terms of overhead ceilings. 1.80-1.84 (not highlighted) would be the warning track.

20190920 open

In addition to domestic rate technicals, we’ll be following European monetary policy developments as the ECB played a much bigger role in the recent back-up and recovery than the Fed. There’s a realistic case to be made for September’s weakness being driven by ECB trepidation.

20190920 open2

Think The Fed Cut Mortgage Rates? Think Again

September 18,2019
by admin

Here is exactly what yesterday’s Fed rate cut did to mortgage rates: ABSOLUTELY NOTHING! No Fed rate cut (or hike) will EVER do ANYTHING directly to mortgage rates because the Fed doesn’t set mortgage rates.

Don’t let the caps-lock fool you into thinking I’m some angry guy with a keyboard who’s simply ranting for some self-serving purpose. Of all the people you’ll talk to today and of all the articles you’ll read on this topic, you should trust me the most. I don’t say that lightly or very comfortably, for that matter. It sounds terribly cocky, but in this case, it’s also terribly honest.

For more than a decade, if markets are open and mortgage companies are quoting rates, I’ve religiously been tracking trends, patterns and plain old boring statistics. I use actual wholesale rate sheets from multiple lenders every day to synthesize an average mortgage rate that consistently outperforms survey-based mortgage rate data. In short, if you could only talk to one person to get a highly authoritative take on mortgage rate movement, I’m your guy.

There’s no catch. I won’t do your loan for you and I have nothing to gain from you believing me. I don’t care if you tweet this or share it or print it up and use it to build a fire. This is purely a public service announcement for what I see as one of the most misunderstood events in the rates market. That said, you SHOULD share it profusely unless you want your friends to continue sounding dumb and wasting time when they try to talk about day-to-day mortgage rate movement. You’re about to be a lot smarter than that…

If you’re comfortable simply believing one simple thesis without a bunch of boring explanation, here you go: “While mortgage rates are influenced by the Fed’s policy changes in the bigger picture and over longer time-frames, they are absolutely not tied to the Fed’s decision to cut rates. When the Fed hikes or cuts its policy rate, mortgage rates can and frequently DO move in the opposite direction (or not at all).”

If you need more info underlying that thesis, take a look at one or both of the articles I wrote over the past 2 days:

No, The Fed Rate Cut Won’t Affect Mortgage Rates

HIGHER Mortgage Rates Despite Fed Rate CUT. Here’s Why

For those who don’t click the link and who conclude I’m missing a very important connection between the Fed and mortgage rates, you should really visit one of the links! Long story short, I’m aware of the connections, and I’ve spent a great deal of time and energy educating readers on them. I intentionally avoided doing that in this article in order to add emphasis and decrease the potential sedative effects associated with reading financial market jargon.

MBS RECAP: Indecisive, Sideways Trading After Fed Day

September 18,2019
by admin

Relative to the expectation for yesterday’s Fed events to cause volatility, the movement we’ve seen in the bond market has been fairly pitiful in response. Seriously folks… I can’t think of a bigger gap between they hype and the outcome with respect to Fed days. Today was merely “The Anticlimax: Part 2.”

In the overnight session, yields respected the exact some highs as the previous overnight session. During domestic hours, bonds rallied just enough to get close to yesterday’s best levels before retreating to something almost perfectly between the two.

This is a classic, albeit miniature, consolidation pattern. It could signal a measure of equilibrium between buyers and sellers at current levels, but more likely, it’s simply a sign of indecision and apathy after the Fed failed to provide inspiration to retest the levels seen after last week’s ECB announcement.

Tomorrow’s data calendar won’t be much help when it comes to basing trading decisions on economic data (it’s empty). There will be a few Fed speakers throughout the day, but whether they offer anything new or different beyond yesterday’s Fed info deluge remains to be seen.

Fannie Mae Turns Bullish on Construction, Best Levels Since May

September 18,2019
by admin

Fannie Mae says consumer spending will continue to support the economy. The company’s Economic Summary for September cites increases in auto and retail sales, real disposable personal income, and real personal consumption expenditures (PCE) as evidence of that strength. In the monthly report, written before release of the very strong census data on August’s residential construction, they also say that the recovery in new single-family construction spending suggests that residential fixed investment may be slightly stronger this quarter than they previously expected.

As a result of these two factors, the economists upped their forecast for growth in real gross domestic product (GDP) by one-tenth of a percent in the third quarter but revised their view of nonresidential fixed investment to a negative number. They now project top-line GDP growth in 2019 at 2.2 percent and have downgraded the full year estimate for next by one-tenth to 1.6 percent.

The risks to the forecast include confusion in the U.K. over the never-ending Brexit issue and renewed evidence that the U.S. manufacturing sector may be dragged into the global slowdown. There are also indications that the resilience of consumer spending may be starting to wear thin, with weak growth in employment and a sharp turn downward in consumer sentiment.

Fannie Mae is growing bullish on housing and says the third quarter started off in line with their earlier expectations. Existing home sales rose to 5.42 million annualized units in July, a 2.5 percent increase and the second highest rate of sales since April 2018. New single-family and multifamily residential construction spending had the best month since May with a 0.9 percent uptick and retail sales at home improvement stores, a proxy for home remodeling spending, moved higher. These positive developments suggest a modest rebound in residential fixed investment in the third quarter, which would end six consecutive quarters of declines.

Uncertainty over U.S.-China trade tensions and financial market volatility are problems for homebuying sentiment, but Fannie’s economists see the continued growth in employment, solid wage gains, and the low mortgage rates as supporting housing demand. The Fannie Mae Home Purchase Sentiment Index (HPSI) inched up in August to 93.8, a new survey high, suggesting continued buying interest on the part of consumers.

As the report was written, the 30-year fixed mortgage rate was 3.49 percent, the lowest weekly level since October 2016 and only 18 basis points above the rate trough of the expansion in 2012. The decline in rates means fewer homeowners have mortgages with rates lower than those prevailing and could be freeing more to both list their existing homes and buy another.

The authors add that their survey data does not suggest enough of a shift in the existing home supply to alleviate overall supply constraints. Inventories of existing homes, which had increased on an annual basis for ten months, fell in July for the second time in as many months. The 1.6 percent decline brought the inventory down to its lowest point since Fannie Mae first tracked it.

July’s pending sales almost completely erased the June gain so a pullback in existing home sales in probable in both August and September. Further, the average number of purchase mortgage applications posted the largest decline in August since February, suggesting a weakening sales pace in September and early October. The lack of listings has prevented home sales from responding to lower interest rates as strongly as they have in the past and given the weak response, Fannie has revised its existing sales forecast down slightly; 2019 sales will be 0.3 percent lower than last year’s levels.

The lack of inventory should, however, support new construction. The economists expect single-family housing starts to move modestly upward through the remainder of the year, even as builders continue to face labor and land constraints. New home sales will also rise, but not as fast as starts. The year-to-date sales have allowed home builders to draw down the excess inventory that had built up at the end of last year. In coming months homebuilders will have to rely more heavily on starts to fulfill sales demand, and sales will be increasingly limited by the pace of construction.

The authors appear pleased that builders seem increasingly focused on entry-level products. The median square footage of new single-family construction fell 4.3 percent in the second quarter to the lowest level since 2011. This should aid affordability, especially for first-time homebuyers. But building smaller homes has a downside; it is more labor intensive per dollar of construction. Combined with the shortage of construction labor, residential fixed investment has not boosted the overall economy in recent quarters. “Given the supply and demand fundamentals, the decline in mortgage rates has been a price accelerator exacerbating the affordability challenge for entry-level buyers,” the report says.

Fannie Mae has updated its estimate of for single-family (1- to 4-unit properties) mortgage originations for 2017 and 2018 in its regular benchmarking to the Home Mortgage Disclosure Act (HMDA) data. Their higher estimated purchase originations for the two years resulted in an upwardly revised path for purchase originations in 2019 and 2020 as well. The benchmarking also resulted in higher refinance originations in 2017 and 2018, with the refinance share of total originations unchanged at 36 percent in 2017 and revised upward by 1 percentage point in 2018 to 30 percent.

The decline in the mortgage rate forecast since last month led to an upward revision in the refinance origination forecasts for both 2019 and 2020. The new projection is for total originations to rise by 11.6 percent from 2018 to $1.97 trillion in 2019, with a refinance share of 35 percent. The following year total originations are expected to decline by 6.8 percent from this year to $1.84 trillion as projected declines in refinance activity outpace essentially flat purchase activity, with the refinance share dropping to 31 percent.

Originator, Servicing, Correspondent Products; Why Extensions Cost Money

September 18,2019
by admin

The residential lending industry continues to evolve. Lenders are coming and going, moving in and out of business channels. (The latest example being Union Bank, as UBOC is rumored to be in the process of reducing its overall approved broker client base and focusing on deposit relationships). And lenders still report full pipelines but cautiousness in hiring Ops staff. Winter is coming. How many loans do processors process in a month? Or underwriters underwrite? Are there economies of scale at big banks versus independent mortgage banks Here’s a write-up on some stats. Loan officers know that the customer is king, and that there are other measures besides DTI that determine a sound borrower. Goldman Sachs and other major banks are experimenting with alternative metrics to decide whether to loan to a customer. Instead of relying on financial history, lenders are using metrics such as shopping habits and whether phone bills are paid on time. Even magazine subscriptions!

Lender Products and Services

Citibank, N.A. continues to innovate as it looks to serve its expanding Correspondent customer base. Effective September 1, all Mandatory trades have the benefit of a 2-way pair off feature. Citi’s 2-Way Pair Off Program allows customers to be reimbursed the change in the value of their commitment in the event the market is lower (in price) at time of pair off. “Given TBA margining practices, Citi’s 2-Way Pair Off Program can be another tool in your tool belt to help manage your margin call risk. This feature will be available for all trades including bid tape and AOT. Learn more about this and other programs Citi has to offer by contacting our National Client Services Team at 800-967-2205 or for new seller consideration complete our Prospective Mortgage Correspondent Questionnaire.”

Wouldn’t it be great if you brought servicing under your own roof so you could control the customer experience? We get it. We’ve all asked ourselves this question. Things like this always sound good, but as this TMS CAREspondent blogputs it, it’s always better if you don’t own the boat, but have a friend who owns the boat and takes you out on it. No muss, no fuss. Learn how bringing servicing under your own roof can be quite the unexpected headache, along with the answer you’re actually looking for when it comes to achieving the best customer experience.

Matic, provider of homeowners insurance tools for mortgage lenders, has launched two new solutions to round out its suite of originator products: Insurance Estimator and LOTools.

Insurance Estimator is a first-of-its-kind product that provides lenders an automated way to predict HOI for Loan Estimates, mortgage & affordability calculators, and other financial tools at the earliest points in the loan life cycle. LOTools is an out-of-the box solution (no setup required) that lets individual loan officers and their teams obtain instant HOI quotes by entering just five data points. LO Tools returns real quotes from one of Matic’s 26 carriers in under 60 seconds for use on Loan Estimates, and LO’s can choose to connect their borrower to Matic to finalize the policy. Email Shelly Madick with inquiries about these new solutions or about Matic’s LOS and POS modules, which are revolutionizing HOI for today’s lenders.

LoanScorecard has more than doubled its non-QM client base in 2019, and its customer list reads like the ‘who’s who of non-QM lenders.’ The advanced technology is powering the eligibility portals used by leading wholesalers and providing operational efficiencies for their correspondent channel by delivering automated underwriting findings reports for non-QM and non-agency loans with the same ease and instant decisioning found in the agency AUS platforms. So whether you’re already in the space or looking to enter the non-QM market, learn how LoanScorecard can enhance broker and lender connectivity and confidence, and increase underwriting accuracy and efficiency. Contact LoanScorecard’s Director of Business Development Raj Parekh for more information.

Capital Markets

For MLOs who locked their borrowers at the lows, I continue to be asked about why extending a rate lock, if even for a few days for something beyond the control of the borrower, costs money. A good answer came a while back from James Hedvall, Director of Capital Markets of Mann Mortgage. “The cost to extend a best efforts lock reflects the cost incurred by Secondary Marketing to move the corresponding hedge to reflect the new closing date. It’s an easier concept to understand if you acknowledge the inequity of hedging a mortgage pipeline: best efforts locks, which may or may not close, are given for FREE to Loan Officers, then hedged with mandatory security instruments. When a lock extension is granted, the hedge needs to reflect the change in delivery dates.

“For example, when a loan comes in with a 45-day lock, your hedge model will pull from your LOS the estimated closing date, to best execute that loan for delivery into the secondary markets. In the process it determines what month security needs to be sold to off-set the 45+ days of interest rate exposure that loan will incur. If that 45-day lock was taken out September 1st, with an October 15th estimated funding, a November security would probably be sold as the hedge instrument; a ‘only 7 days’ extension might just mean that loan now best executes into a December commitment, meaning you now must buy-back your November coverage, and sell a December security to match the new closing date. This ‘roll,’ from a front month security, to a back month has a transactional cost. Much of the fee charged to extend a loan with your secondary group reflects this cost.” Thanks James!

It was just a couple weeks ago that slowing global growth, the inverted yield curve, and U.S./China trade tensions were driving talk of an upcoming recession. Since that time, we have seen economic data come in above market expectations and the U.S. 10-year Treasury rise 41 bps since reaching a low of 1.46%. The consumer has shrugged off much of the negative economic talk as August retail sales rose 0.4 percent and July’s gain was revised upwards to 0.8 percent. While not quite as strong as the second quarter, these numbers have lifted analysts’ expectations for third quarter GDP. Meanwhile, core consumer price increases have warmed, increasing to a 2.4% annualized rate in August and pushing the 3-month annualized rate to a 13-year high. The rise in core goods suggests that producers are passing through tariff costs to the consumer. Despite the warming inflation picture, solid consumer spending and a stock market near a record high, a Fed rate cut was widely expected this week. Fed president Powell has recently stated that there is no playbook for the current market conditions and seems to be content with giving the Fed room to maneuver as the global economic outlook remains uncertain.

Yup, as anticipated, the Federal Reserve announced yesterday that it will cut the fed funds rate range by 25 basis points to 1.75-2.00 percent. In addition, the Fed voted to lower the interest rate paid on excess reserves (IOER) to 1.80 percent, or 20 basis points below the top of the range for the fed funds rate, which should help balance the fed funds market’s recent volatility. The tone of the policy announcement was mostly positive. The Fed noted that labor market conditions remain strong, overall economic activity is increasing and household spending has been rising at a strong pace. On the downside, business fixed investment and exports have weakened. Inflation continues to run below the Fed’s near-2-percent symmetrical target.

The FOMC voted 7-3 in favor of the decision, with St. Louis Fed President Bullard, voting for a 50-bps cut. Meanwhile, Boston Fed President Rosengren and Kansas City Fed President George, voted in favor of keeping the fed funds rate range unchanged. The Fed’s dot plot showed that seven out of 17 Fed officials expect that another rate cut will be made in 2019, though the median projection does not point to any more rate cuts in 2019 or 2020. Remember, the dot plot does not show where the chairman is on the plot, nor does it show who is a voting member of the FOMC and who is not.

The economic projections released by the Fed were little changed from June, with data showing a slight increase in the median forecast for real GDP growth (Q4/Q4) in 2019, from 2.1 percent in June, to 2.2 percent yesterday. The year-end unemployment rate forecast for 2019 also edged up, from 3.6 percent in June, to 3.7 percent. Core inflation expectations for year-end 2019 remained the same as in June, at a 1.8 percent increase.

During his press conference, Chairman Powell downplayed the recent strain on the repo market, indicating that the Fed will use its toolkit to keep overnight rates in the expected range. Fed Chairman Powell did acknowledge that “organic balance sheet growth” may be resumed earlier than anticipated. Under relentless public pressure from President Donald Trump, who alternatively pleads with, admonishes or insults him, Fed Chair Jerome Powell said “moderate” policy moves such as Wednesday’s interest rate cut should be sufficient to sustain the U.S. expansion. Right on cue, President Trump released a Tweet criticizing the Fed’s move as inadequate.

The curve flattened as a result, including the 10-year closing -3 bps to 1.79 percent (the 2-year rate was UNCH), impressive considering the Fed actually cut the more market relevant rates (RRP and IOER) by 30 bps to 1.70 percent and 1.80 percent, respectively, versus 25 bps in the fed funds corridor, which should also support general collateral rates (which more closely tracks IOER) with the RRP now paying even less than funds.

MBA SVP and fabled Chief Economist Dr. Mike Fratantoni weighed in, saying “Although the financial markets fully anticipated today’s Federal Reserve decision to lower their target for the Fed Funds rate, the level of uncertainty in respect to the global and domestic economy and future monetary policy has been quite high. This is why there’s been a wild swing in mortgage rates over the past month. Yesterday’s news does little to reduce uncertainty. The trade war with China, and now conflict in the Middle East, certainly add to the overall uneasiness. While it is not surprising that FOMC voters cannot agree on the outlook for monetary policy, as indicated by the three dissenting votes today, the disagreement itself also adds to the uncertainty. Looking ahead, we expect that the recent refinance wave from homeowners, spurred by the drop in mortgage rates in August, will tail off as the year progresses. For the purchase market, significantly lower mortgage rates compared to last year, coupled with a still strong job market, should continue to support homebuyer demand.”

Let’s turn to today. Chair Powell in his press conference sought to downplay this week’s liquidity squeeze, of a kind not seen since the Great Recession, though others haven’t been so sanguine, as a third round of repurchases is planned for today. Following yesterday’s Fed events, today brings several central bank decisions, the BoJ, SNB and Norges Bank. A busy U.S. calendar today includes Weekly Initial Claims, Continuing Claims, Q2 Current Account Balance, and the September Philadelphia Fed Survey, before August Existing Home Sales and August Leading Indicators. In between the two Treasury auctions today, the NY Fed will purchase up to $481 million GNII 3 percent ($358 million) and 3.5 percent ($123 million). Gotta catch a plane, so don’t have a read yet on rates.


ClearEdge Lending continues to grow at a rapid pace in the Northwest with a new full-service branch office in Walnut Creek, CA. The company is looking for experienced Account Executives to join its team who will continue to help expand the company’s Non-QM presence. ClearEdge’s aggressive rates& products, technology, and 20+ years of Non-QM expertise aids the originator at the point-of-sale by focusing on simplicity and speed. As both the lender and end investor, this enables ClearEdge to make quick credit decisions and provide brokers with excellent team support. Those interested in taking their career to the next level and grow in an exciting market with ClearEdge Lending should email Rouvaun Walker, VP of Sales. He is seeking AE’s in Northern California, Oregon, Washington, Utah and Colorado.

“Summer 2019 at Caliber Home Loans, Inc. has been one for the record books! We’ve broken our own sales records not once, but TWICE. We had an amazing month in July, funding over $6 billion, and in August we broke our own record by funding $7 billion overall. Such strong mid-year performance can be attributed to proprietary technology, streamlined operations and talented producers. Caliber is a modern mortgage lender that’s breaking its own sales records and providing products for today’s borrowers. We have no plans of slowing down and are excited to carry this strong momentum to the end of the year and beyond. We’re stronger than ever and we want you to join us. To learn more, visit our website or email SVP of Recruiting, Jeremy DeRosa.”

MBS Day Ahead: Bonds Set to Battle Potentially Important Level

September 18,2019
by admin

In the day just passed, the bond market finally got a chance to sink its teeth into the much-anticipated Fed announcement/forecasts/press conference. Traders were hoping to get a read on whether the Fed rate cut cycle is being treated like a fine-tuning adjustment or the beginning of a sustained shift. Of course there was no way for the Fed to know that, let alone communicate it. As we expected, Powell basically said “it depends.” Bonds were a bit let down by that, and the somewhat more hawkish Fed funds forecasts. Yields retreated from their anticipatory lows of roughly 1.75%, but nonetheless managed to stay in positive territory on the day.

In the day ahead, bonds will battle with the same 1.75% level after an overnight rally. 1.75% or thereabouts has come into play several times since the big rally at the beginning of august. Most of the activity around those levels has come in higher volume. This is one of those times when technical analysis–even if only with respect to “pivot points”–is most useful. Simply put, yesterday was highly charged and 1.75% (technically 1.744%) was the best we could manage. Yields then went higher after the key event, so it stands to reason that a move back below 1.75% would be significant.

20190909 open

2018’s Home Sales Slump Now Fully Erased

September 18,2019
by admin

While the increase wasn’t as strong as in July, last month’s existing home sales posted a second straight month of gains and, as previously, the National Association of Realtors® (NAR) credited falling interest rates. Sales of previously owned single-family houses, townhouses, condominiums, and cooperative apartments were up 1.3 percent compared to July when sales rose 2.5 percent. The seasonally adjusted annual rate of 5.49 million units was 2.6 percent higher than the August 2018 pace of 5.35 million. The increase was felt in three of the four major regions while the West continues to demonstrate some weakness.

The month’s results were better than predicted. Analysts polled by Econoday had expected them to come in at an annual rate of 5.30 to 5.42 million with a consensus of 5.38 million.

Single-family home sales rose from 4.84 million in July to 4.90 million in August, a 1.2 percent gain and 2.9 percent above the August 2018 rate. Existing condo sales rose 1.7 percent from July to 590,000 annual units, largely unchanged from the previous August.

Lawrence Yun, NAR’s chief economist, said, “As expected, buyers are finding it hard to resist the current rates. The desire to take advantage of these promising conditions is leading more buyers to the market.”

The median existing home price for all housing types in August was $278,200, up 4.7 percent from the median a year earlier of $265,600. It was the 90th straight month of year-over-year gains. The median existing single-family home price also rose 4.7 percent to $280,700. Condo prices were up 5.2 percent to a median of $257,600 in August.

“Sales are up, but inventory numbers remain low and are thereby pushing up home prices,” said Yun. “Homebuilders need to ramp up new housing, as the failure to increase construction will put home prices in danger of increasing at a faster pace than income.”

Inventory fell in August, down from 1.90 million available homes to 1.86 million and 2.6 percent fewer homes than a year earlier. Unsold inventory is at a 4.1-month supply at the current sales pace, down from 4.2 months in July and from the 4.3-month figure recorded in August 2018. Properties typically remained on the market for 31 days in August, up from 29 days in both July and the prior August. Forty-nine percent of homes sold in August were on the market for less than a month.

Yun criticized the quarter point cut in the Fed Funds rate made by the Federal Reserve on Wednesday. “[The Fed] should have been bolder and made a deeper rate cut, given current low inflation rates,” he said. “The housing sector has been broadly underperforming but there is huge upward potential there that will help our overall economy grow.”

First-time buyers were responsible for 31 percent of sales in August, the same as a year and investors and second home buyers accounted for 14 percent, up from 11 percent in July. All-cash sales accounted for 19 percent of transactions in August, about equal to July and moderately below August 2018. Distressed sales remained negligible, representing 2 percent of August sales, a 1-point decline from a year earlier.

“Rates continue to be historically low, which is extremely beneficial for everyone buying or selling a home,” said NAR President John Smaby. “The new [FHA] condominium loan policies, as well as other reforms NAR is pursuing within our housing finance system, will allow even more families and individuals in this country to reach the American Dream of homeownership.”

There were month-over-month increases in existing home sales in the Northeast, Midwest, and South and sales in all four regions bested their 2018 numbers. Sales in the Northeast increased 7.6 percent from July to an annual rate of 710,000 units, 1.4 percent higher than in August 2018. The median price fell 0.3 percent on an annual basis to $303,500.

Existing-home sales grew 3.1 percent in the Midwest to an annual rate of 1.31 million, topping sales from a year earlier by 2.3 percent. The median price jumped 6.6 percent to $220,000.

In the South there was a gain of 0.9 percent in sales to a rate of 2.33 million and sales were 3.6 percent higher year-over-year. The median price of $240,300 was a 5.4 percent annual increase.

While sales remained 1.8 percent higher on an annual basis, the West was an outlier in August. Existing home sales declined 3.4 percent to 1.14 million. Prices, however, continued their strong appreciation, rising 5.7 percent to $415,900.