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Mortgage Rates Sideways to Slightly Higher Despite Stock Rout

March 23,2018
by admin

Mortgage rateswere just barely higher in many cases today, although underlying bond markets recovered enough ground by the afternoon to suggest Monday’s rates will recoup those losses. The only catch is that other factors can have an effect on bonds between now and then. If bond markets are weaker by Monday morning, this afternoon’s strength will be overshadowed. Bottom line here: rates will start Monday with a very slight advantage “all things being equal.” Incidentally, the reason we don’t see this advantage today is that the bond market gains were small enough and happened late enough in the day that mortgage lenders didn’t update their rate sheets.

The source of inspiration for the aforementioned bond market strength was a much bigger move in stocks. The latter are generally freaking out about potential trade wars stemming from recent tariff announcements. On many occasions, big drops in stock prices correspond with improvements in rates. Rates fall when investors buy more bonds, and investors often park some of their stock-selling proceeds in the safer haven of the bond market (because there’s typically much less price volatility). Stock weakness isn’t moving rates nearly as much as normal these days because rates continue to face big headwinds that won’t quickly subside (Fed rate hike outlook, Treasury issuance outlook, and general risks of upside economic surprises).

Loan Originator Perspective

Another sedate day in rate markets, as treasury yields again failed to break the seemingly impenetrable 2.8 barrier. Since we’re near the week’s best levels, I’ll definitely be locking new deals closing within 30 days. –Ted Rood, Senior Originator

Once again, the benchmark 10 year note tried the weather below 2.80ish and didn’t like it and quickly bounced. We are very near the lows of the current range of 2.80ish to 2.90ish, so locking is the best move. –Victor Burek, Churchill Mortgage

Current rate volatility continues to warrant locking at Origination. Consumers are more cognizant of rising rate environment due to media coverage and are seeking out alternative Lock Options. Those requests range from a Lock and Shop option to Locks with a renegotiation component in case rates drop during the contract period. -Al Hensling, Mortgage Originator

Today’s Most Prevalent Rates

  • 30YR FIXED – 4.5-4.625%
  • FHA/VA – 4.375%
  • 15 YEAR FIXED – 3.875%
  • 5 YEAR ARMS – 3.5-3.75% depending on the lender

Ongoing Lock/Float Considerations

  • 2017 had proven to be a relatively good year for mortgage rates despite widespread expectations for a stronger push higher after the presidential election in late 2016.

  • While rates remain low in absolute terms, they moved higher in a more threatening way heading into the beginning of 2018

  • The scariest part of the move higher looks like it ended as of early February, and rates have been generally sideways since then

  • Even so, the potential remains for more weakness (i.e. higher rates). It makes more sense to remain defensive (i.e. more inclined to lock) until we’ve seen a more convincing shift lower.
  • 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: Trade Fears Hitting Stocks; Stocks Try to Take it Out on Bonds

March 23,2018
by admin

Bonds showed both their hands early today. The first was seen in the overnight session when decent overseas buying demand pushed yields below the incredibly solid 2.80% floor. Sellers stepped in quickly and pushed yields back into weaker territory for the start of the domestic session.

Bonds’ second hand came out right after the Durable Goods data. The report was plenty strong enough to justify additional bond market weakness (+3.1 vs +1.5 forecast with a 1% beat in the important “cap-ex” numbers). But after only a few minutes of fairly halfhearted weakness, bonds bounced at the same ceiling seen yesterday afternoon.

With a strong floor underfoot and well-represented ceiling overhead, 10yr yields trudged sideways for the rest of the session, apparently intent on making it to the weekend without fanfare. Near the end of the day, stocks embarked on a selling-spree that was aggressive enough to drum up some safe-haven demand in bonds. But for all the weakness in stocks, it still wasn’t enough to get 10yr yields anywhere close to trying to break the 2.80% floor again.

This could speak to frustratingly sideways momentum, or bonds could be biding their time ahead of a holiday-shortened week with front-loaded Treasury auction supply (sometimes we see apprehensive weakness on Friday afternoons when the next week brings Treasury auctions). In that case, we could be waiting all the way until after spring break to see bonds’ truer colors. Here’s hoping they’re green!

MBS Day Ahead: Without a Rally, Bonds Build a Stronger Case For Resistance

March 22,2018
by admin

The past 2 days represented a nice little run for bonds, but unfortunately it may end up looking like one of those fool’s errands that was destined to hit an unmovable brick wall. Actually, in this case, it would be more like a brick floor for rates.

I’m speaking, of course, of the 2.80% level that has plagued all attempts to rally very much in the month of March. As yields managed to bounce at an equally significant ceiling in the low 2.9’s on Wednesday, 2.80 seemed like the most obvious target for any decent rally. The rally unfolded quickly and we hit 2.80 yesterday, and then again last night. Both times, the brick floor was found to be quite intact.

2018-3-23 open

In a nutshell, bonds would need to find a reason to rally back down to 2.80%, and with a jackhammer in tow, if they hope to avoid sending an even clearer message about broader momentum. That message, in my mind, is fairly logical. Simply put, WITHOUT something big and ugly (like a bear market in stocks, a major geopolitical event, etc), it just wouldn’t make much sense for bonds to make any sustained moves toward lower rates against the backdrop of Fed tightening, increased Treasury issuance, and upside economic risks.

Digital Lender Products; Update on Vendors; Rates Edge Higher

March 22,2018
by admin

The Census Bureau defines millennials as those born between 1982 and 2000, which means this year their age ranges from 18 to 36. Many will argue that a 36-year old doesn’t have a lot in common with a current high school senior, but the Bureau has lumped them together forever. Regardless of age group, who doesn’t believe in reducing the difficulty in obtaining home financing? Here is Julian Hebron’s take on how selling a house and buying a new one may soon be as easy as trading in a car – one click. (Lots more on digital trends below.)


Let’s play catch up with vendors – those guys with a knack for combining phonetically spelled names, capitalizing letters in the middle, and then putting a trademark on it. It’s hard to find anyone who can precisely define “digital mortgage,” but it certainly has captured the imagination of every conference out there. There are hundreds of vendors out there, vying for a piece of every lender’s budget, competing for time to give sales pitches. Let’s check in.

AccountChek by FormFree will integrate with Black Knight’s LoanSphere Exchange Digital Solution. AccountChek is currently integrated with Black Knight’s LoanSphere Empower LOS, but the LoanSphere Exchange integration makes AccountChek available to an even broader swath of Black Knight customers without the time and expense of a custom integration.

Texas-based law firm Gregg & Valby, LLP has announced that it will begin integrating with digital mortgage technology provider, eOriginal adding its name to a long list of eOriginal partners and customers, including Fannie Mae. This integration will allow Gregg & Valby customers to offer eClosings to the market. This platform delivers a fully digital mortgage that meets regulatory requirements, is accepted by top lenders provides a competitive advantage and operational efficiencies that cannot be obtained through traditional paper processes.

LBA Ware announced that Wisconsin-based Inlanta Mortgage has completed integration between LBA Ware’s CompenSafe automated compensation calculation platform and LendingQB’s cloud-based loan origination solution (LOS). Through the integration, Inlanta can leverage real-time loan production data to automatically calculate compensation for each of its 100+ loan originators (LOs).

BOFI has developed a highly innovative mobile application called BOFI Realtor. This app was designed to redefine the communication standards between the Bank and the Real Estate Agents representing our borrowers. Through use of the app, (free and available to download on both Google’s Play store and Apple’s App Store), Realtors have direct access to real time loan status of their clients’ BofI loans in the pipeline, key milestones in relation to the close of escrow, loan conditions, real-time mortgage rates and payment calculators.

Simplifile has been approved by the Arkansas Secretary of State as an electronic notary (e-notary) service provider. Representing only the 5th vendor to be approved for e-notary services in Arkansas since the state began allowing e-notarization in 2013, congratulations are extended to Simplifile for this accomplishment. Users in the 23 Arkansas recording jurisdictions and in Simplifile’s e-recording network can electronically notarize documents, thus streamlining their processes and allowing them to keep as much of the real estate transaction electronic as possible.

LendingQB announced its latest integration with PitchPoint Solutions to equip lenders with stronger tools to protect against wire transfer fraud. Through this integration, customers of LendingQB have access to PitchPoint’s Bank Account Verification and Settlement Agent Vetting tools. Bank Account Verification verifies an account holder’s name, routing number and account number via a secure financial network, while Settlement Agent Report vets the settlement company to ensure it is in good standing and our clients are compliant with CFPB and investor requirements. This integration helps lenders deal with increasing levels of wire fraud, which increased 480% last year, totaling more than $748 million in losses. The partnership also enables lenders to comply with Fannie Mae and CFPB recommendations announced in bulletins encouraging lenders to “confirm before you fund”.

Credit Plus has integrated with SimpleNexus. The integration enables mortgage loan originators to obtain credit reports from Credit Plus through customized, mobile solutions. SimpleNexus provides private-label mobile apps that connect mortgage lenders with borrowers and real estate agents, allowing all parties to easily exchange data and documents throughout the lifecycle of a mortgage loan. “This partnership makes it easier for lenders to easily access our credit reports to make smart lending decisions. We’re excited to work with a company that is at the leading-edge of technology,” said Greg Holmes, Managing Partner at Credit Plus.

Matic, a digital insurance agency whose technology enables borrowers to purchase homeowner’s insurance during the mortgage transaction announced an integration with mortgage lender RoundPoint that includes Matic’s one-click “get quote” button. Homeowners whose mortgages are serviced by RoundPoint will be notified by Matic when they could save money by switching to a different A-rated homeowner’s insurance carrier. Homeowners will also be alerted if there’s an opportunity to get more coverage without an increase in premium. “Mortgage servicers rarely get to call their customers and offer a lower escrow payment or more comprehensive insurance coverage without a premium increase — yet these are exactly the kinds of opportunities Matic will bring to RoundPoint customers every day,” said Matic COO Benjamin Madick.

Embrace Home Loans announced the integration of the CompassPPE API and mobile app into their Empower LOS. This integration will provide Embrace employees, including over 200 loan officers, enhanced tools and features within Empower across multiple channels. Some of the most notable features of integrating CompassPPE within Empower include: Quick-pricing of loan scenarios on mobile, tablet, or laptop. Full investor coverage of pricing, guidelines, and LLPAs. Automation of locking, relocking, and extensions.

Industry veterans Mark Hughes, Ann Gibbons and Tom Donatacci announced that they are launching a national due diligence firm: New Diligence Advisors (NDA) LLC. Selene Holdings LLC will be the principal investor in NDA. Hughes will be chief operating officer of NDA, responsible for overseeing production, client satisfaction, technology and rating agency relations. In his new role, he will report to Selene chief executive officer, Joe Pensabene, who will now be chief executive officer and president of NDA, as well. NDA’s comprehensive review service offering includes: credit underwriting, property valuations, regulatory compliance, fraud, document, title, payment history and servicing activity.

Capital Markets

Want a quick answer for anyone asking about the U.S. Government and rates? Congress was able to pass a budget deal for the next two years that will increase spending by $300 billion over the next two years as well as suspend the debt ceiling until March 2019. When combined with the tax bill and an increase in discretionary spending, the stance of federal fiscal policy has moved from neutral to expansionary. As a result, one would expect economic growth to out-pace recent trends, rising inflation and therefore higher interest rates at all points on the yield curve. This budget deal is also expected increase the deficit forecast. Anyone waiting for 30-year fixed rate mortgages back in the 3s soon will be frustrated.

The FOMC policy update and accompanying statement by new Chairman Jay Powell may have been balanced and set few ripples across markets, but it was still overshadowed quickly by what many are now calling a “Trade War”with China. It isn’t a “war” yet, but President Trump signed an order seeking $50 billion in tariffs on Chinese imports as penalty for intellectual property theft. The U.S. Trade Representative will publish details within 15 days, and President Trump added “this is the first of many” orders. China will certainly announce its own set of retaliatory orders, and it remains to be seen just how this will play out, but equity markets wasted no time dropping to recent lows. If it was good for one thing, it was good for bonds – lousy for stocks.

Today’s economic calendar began with February’s Durable Goods orders. Always volatile, it was expected to increase 1.9% MoM, following the 3.6% decline in January, but was +3.1%, ex-transportation +1.2%. February new home sales, at 10:00am, are seen jumping versus the January level (593k) to 615k which would still be the second-lowest in the past six months. Additionally, we have a lot of Fedspeak to digest, starting with Atlanta’s Bostic, Minneapolis’ Kashkari, Dallas Fed President Kaplan, and Boston’s Rosengren. While volatile stocks grab the headlines, Friday commences with the 10-year yielding 2.85% and agency MBS prices worse .125 versus Thursday’s close – so rates are a shade higher.

Jobs, Products, and Business Opportunities

“Growth in 2018? Since that answer is uncertain, maybe, explore selling your company before rates go higher and the mortgage banking headwinds become hurricane force. If you are a mortgage bank operating as a correspondent or a large mortgage broker please send your confidential interest to me for forwarding” and specify the opportunity.

High profile data breaches have become regular news, and according to digital security company Gemalto, over 10.5 million records are lost or stolen every day. No matter your size, you are not immune to a hack and providing a secure process for your borrower as you exchange sensitive information process should be your highest priority. A recently published data security playbook “A Brave New World” provides guidance and immediate steps to improve security in your mortgage business. A must read for all mortgage managers, executives, and originators. Download your free copy here.

Kurt Reisig, Chairman of American Pacific Mortgage, announced APM’s 2018 Spring Sales Summit: Make Your Mark. The Time Is Now. “Come join us as our guest and discover first-hand how APM operates and commits to supporting our Originators with the tools, inspiration and resources to grow your production. There is no doubt that the purchase inventory in most markets is constrained. Our break-out sessions will provide you with inspiration and strategies to sustain and grab market share in 2018. Find out how to Make Your Mark with your social reputation, win referrals, and leverage our unique products and resources to qualify more borrowers.” The first Summit is scheduled for April 11th and travels to 5 different cities. Click here to find and register for a Summit location near you. Or contact Dustin Block (303) 378-3166 or Peter Schwartz (916) 770-0053.”

A fast growing, mid-size mortgage lender located in Philadelphia suburbs is seeking a Controller for its dynamic company. The ideal candidate has 5 years of experience in the mortgage industry, strong sense of self, managerial experience and can make solid financial decisions by enforcing policies and procedures. Job duties will include developing, managing and maintaining corporate and department budgets, protecting assets and managing cash flow while monitoring financial condition of the company by performing internal audits. Competitive compensation package, benefits and 401k included with an outstanding work environment. If interested, send resume to me; please specify opportunity.

Are you an experienced salesperson looking to grow your book of business with an aggressively expanding, well capitalized company? Towne Mortgage Company is looking for an energetic individual to take the wheel to expand its production with direct access to Marketing, Underwriting, and Servicing Departments. Towne is a Direct Lender/Servicer with 37 years’ experience serving our community. Our focus is on supplying our salespeople with the tools they need to be successful, whether that be our Industry leading CRM, Vantage, or our product offerings of Conventional, FHA, 203(k), USDA, VA, Jumbo, and soon to be Day 1 Certainty. This salesperson can expect benefits including Medical, Dental, Paid Time Off, and a 401k Company Match. Interested? Email Cassi Sluka for more information.

Not Everyone Benefits from Home Price Gains

March 22,2018
by admin

Mortgage rates have increased 49 basis points since the first of the year, with the 30-year fixed rate mortgage (FRM) standing at 4.44 percent on March 15 according to Freddie Mac’s Primary Mortgage Market Survey. Given the robust economic fundamentals, Freddie Mac’s economists expect the Federal Reserve to continue tightening short-term rates and long-term rates, including those for mortgages, should follow them higher, they predict to 4.9 percent in the fourth quarter of this year.

Writing in Freddie Mac’s Outlook blog, Len Kiefer, the company’s Deputy Chief Economist says, even with higher interest rates, his team expects that the housing market will post modest growth this year. The spring market looks like it will be a sellers’ market in much of the country because of tight inventories which are pushing prices up, he says.

This is a mixed blessing. “Overall, U.S. housing markets have been on the upswing. While housing market trends have been generally favorable, not everyone has shared equally in the gains,” Kiefer says. “Existing homeowners have largely seen their properties increase in value, helping to build equity. In many parts of the country, home values have more than recovered from the Great Recession, reaching new (nominal) peaks, and the share of underwater homeowners has dropped significantly. However, not every market has fully recovered. In addition, higher house prices are not universally good.”

Kiefer outlines examples where rising prices can be a negative, and others where the positives are not universal.

National home prices are up 37 percent since 2009, much faster year by year appreciation than in the 1990s expansion. But not all gains are equal – not by a long shot. For example, since 2009, homeowners in California and Colorado saw a more than 60 percent increase in their home prices while homeowners in Delaware saw only a 3 percent.

The price increases have led to a record gain in homeowner equity; the Federal Reserve says about $14.4 trillion in the fourth quarter of 2017 alone. Black Knight recently put “tappable equity,” the amount of equity available for homeowners to borrow against before reaching a maximum 80 percent total loan to value ratio, at $5.5 trillion.

But equity gains are also disproportionately spread across the U.S. mostly along the same lines as the price gains. In some states borrowers are still struggling to recover from the housing crash, with many remaining in negative equity. Exhibit 3 shows the change in the share of negative equity in the U.S. by state between 2009 and 2017.

The new tax law will also affect homeowners and their home price appreciation in disproportionate ways. Beginning in 2018, taxpayers may only deduct interest on $750,000 of qualified home loans, or $375,000 for a married taxpayer filing a separate return. These are down from the prior limits of $1 million, or $500,000 for a married taxpayer filing a separate return. Coupled with new limits on the deduction of state and local taxes including property taxes, homeowners in states with high home prices will be the most negatively affected.

Home Equity Lines of Credit (HELOCs) are popular means to access those trillions of dollars of tappable equity. The new tax law ends the provision that allowed interest paid on HELOCs to be deductible no matter how the proceeds were spent. This will disadvantage homeowners who wish to use HELOCs on other expenses, such as student debt or credit card payments. The new tax law does not grandfather the deduction, so taxpayers that already have HELOCs outstanding also will be subject to the new deduction limitations. This change in the tax law could cost families thousands of dollars over the coming years.

Rising home prices are generally a plus for homeowners, but there is a cost; higher property taxes. Most homebuyers chose a 30-year FRM, shielding themselves from payment shocks from higher home prices. What they are not shielded from is higher assessments on their homes and increased property taxes. This is particularly hard on those with fixed incomes.

Some states have laws restricting increases in property taxes; such restrictions, and differing tax rates among states result in considerable differences in property tax levels across the United States. States where property taxes are high are additionally penalized by the new tax law which also limits deductions on state income and property taxes.

Higher home prices have a greater impact on first-time homebuyers, mostly young adults, who may be pushed out of the market. Over the past year, home prices in the U.S. rose by more than seven percent on a national basis, pushing many first-time homebuyers out of the market. Certain individual markets saw even more house price growth. The lower price tiers have also seen the fastest appreciation rates. Some metro areas saw stunning rates of appreciation among median start home prices between the fourth quarters of 2016 and 2017. For example, 31 percent in Salt 9 percent in Salt Lake, 5 and 6 percent in the other three. Given that the median income grew only modestly in many of these markets, many first-time homebuyers were pushed out of the market.

And again, these higher prices create higher property tax obligations, which can be a challenge for homeowners with fixed incomes, and they make it more difficult for potential first-time buyers to enter the market. With construction ramping up slowly to meet housing demand, home prices are likely to continue rising above the rate of inflation, which would further widen the gap between housing market winners and losers.

New Home Sales Still Falling, Prices and Inventory Up

March 22,2018
by admin

There was much better news in February than in January regarding new home sales. Those sales had been reported down by 7.8 percent on top of a 9.3 percent decline in December. Sales pulled out of that nosedive last month, eking out an 0.6 percent increase from January. In addition, the January number was revised up from 593,000 to 622,000.

The U.S. Census Bureau and the Department of Housing and Urban Development said February sales were at a seasonally adjusted annual rate of 618,000 units. The February numbers also served to pull sales ahead of those a year earlier by 0.5 percent.

The estimated numbers were only slightly below the expectations expressed by analysts polled by Econoday. Their projections had ranged from 600,000 to 660,000 units with a consensus of 620,000.

On a non-adjusted basis there were 51,000 newly constructed homes sold during the month. This is a 4,000-unit improvement on the January number but identical to sales in February 2017.

The median price of a home sold during the reporting period was $326,800 compared to $298,000 the previous February. The average price rose from $370,500 to $376,700.

Sales rose 19.4 percent compared to those in January in the Northeast and were 8.8 percent ahead of the previous February. There was a decline of 3.7 percent in Midwest sales, putting the region behind by 8.1 percent on an annual basis.

Sales in the South were up 9.0 percent for the month and 0.6 percent year-over-year, while there was a sharp February slump in the West; sales were down 17.6 percent. They remained 3.1 percent higher than in February 2017.

There were an estimated 305,000 new homes available for sale nationwide at the end of the reporting period, a 2.0 percent gain from January and 16.0 percent more than a year earlier. The inventory was estimated to be a 5.9-month supply at the current rate of sales.

Mortgage Profits Plummeted in Fourth Quarter

March 22,2018
by admin

Per loan profits of Independent mortgage banks and mortgage subsidiaries of chartered banks fell dramatically in the fourth quarter of 2017. The Mortgage Bankers Association (MBA) reported a net gain of $237 on each loan they originated down from $929 per loan in the third quarter of 2017. As bad as the quarter was, profitability was still higher than in the first quarter of 2017 when it dropped to $224.

Production profits plummeted in the fourth quarter of 2017 compared to the third quarter of 2017,” said Marina Walsh, MBA’s Vice President of Industry Analysis. “Purchase volume was lower in the fourth quarter, in part due to normal seasonality. At the same time, there was no substantial pickup in refinancings. While cash-out refinancings grew incrementally to 16 percent of overall production volume in the fourth quarter, from 14 percent the previous quarter, rate-term refinancings continued to be less than 13 percent of overall production volume, on par with the previous two quarters.”

“The end result was lower overall volume and production expenses that grew to $8,475 per loan – the second highest level reported since the inception of our study in 2008. Production revenues per loan also dropped, despite the average loan balance reaching a study-high,” Walsh continued.

Banks reported an average production volume of $505 million, down from $569 million per company in the third quarter of 2017, with banks averaging 2,059 loans each. This was a decline from 2,341 loans from the previous quarter. For the mortgage industry as a whole, MBA estimates for production volume in the fourth quarter of 2017 were lower compared to the previous quarter.

Total production revenue (fee income, net secondary marking income and warehouse spread) decreased to 362 basis points from 375 bps in the third quarter and per-loan production revenues fell from $8,990 to $8,712. The pre-tax production profit averaged 9 basis points (bps), down from an average of 40 bps in the third quarter of 2017.

Net secondary marketing income decreased to 291 basis points in the fourth quarter of 2017, down from 298 bps in the third quarter of 2017. On a per-loan basis, net secondary marketing income decreased to $7,037 per loan in the fourth quarter of 2017 from $7,181 per loan in the third quarter of 2017. Net servicing financial income was $33 per loan compared to $79 the previous quarter.

Loan production expenses – commissions, compensation, occupancy, equipment, and other production expenses and corporate allocations – increased to $8,475 per loan from $8,060. The average of production expenses reported to MBA over the period from Q3 2008 to the fourth quarter of 2017 was $6,153.

The personal costs per loan during the quarter averaged $5,560. In the third quarter of 2017 the number was $5,279 per loan.

Loans originated per production employee decreased slightly to 2.0 loans per month from 2.1. Production employees includes sales, fulfillment and production support functions.

The purchase share of total originations, by dollar volume, was 71 percent, down from 74 percent in the third quarter of 2017. For the entire industry MBA estimates the purchase share during the quarter at 63 percent.

The average loan balance for first mortgages reached a study high of $254,290, up from $251,109 in the third quarter of 2017. The pull-through rate (loan closings to applications) also increased, rising from 73 percent in the third quarter to 76 percent.

Including all business lines, 56 percent of the firms in the study posted pre-tax net financial profits in the quarter of 2017, down from 77 percent in the previous period.

MBA’s quarterly Mortgage Bankers Performance Report received production data from 329 company in the fourth quarter. Seventy-seven percent were independent mortgage companies and the remaining 23 percent were subsidiaries and other non-depository institutions.

Mortgage Rates Back at This Week’s Lows

March 22,2018
by admin

Mortgage ratescontinued lower today on a combination of global reaction to yesterday’s Fed Announcement and apprehension over new tariffs on China. The Fed Announcement was positive due to Jerome Powell’s press conference–an event that happens late enough in the day that overseas markets don’t really have a chance to react. Because of that, domestic markets sometimes hold back a little until they can feel out the global reaction.

In other words, rates were pretty sure they were headed even lower yesterday afternoon, but they wanted to see how the rest of the world felt about it. Turns out, everyone felt pretty good about it, thus delivering the first ingredient in today’s improvement. The tariff and “trade war” narrative was the 2nd ingredient, but it was a bigger deal for stocks, which ultimately saw heavy losses by the end of the day. Bonds–which dictate rates–still had a great day, but shied away from following stocks to new lows in the afternoon.

The net effect is a mortgage rate environment that’s largely in line with Monday’s levels. The bonds that underlie mortgages didn’t get as much love as the broader bond market. Beyond that, mortgage lenders have been hesitant to make major adjustments to rate sheets. The average lenders is still quoting top tier conventional 30yr fixed rates in the 4.5-4.625% range.

Loan Originator Perspective

Bond yields drifted toward recent lows today, as loan pricing improved from yesterday’s. We’re not breaking any recent ranges, but any gains are welcome. I’m still locking early, our rallies these days are agonizingly brief. –Ted Rood, Senior Originator

Today’s Most Prevalent Rates

  • 30YR FIXED – 4.5-4.625%
  • FHA/VA – 4.375%
  • 15 YEAR FIXED – 3.875%
  • 5 YEAR ARMS – 3.5-3.75% depending on the lender

Ongoing Lock/Float Considerations

  • 2017 had proven to be a relatively good year for mortgage rates despite widespread expectations for a stronger push higher after the presidential election in late 2016.

  • While rates remain low in absolute terms, they moved higher in a more threatening way heading into the beginning of 2018

  • The scariest part of the move higher looks like it ended as of early February, and rates have been generally sideways since then

  • Even so, the potential remains for more weakness (i.e. higher rates). It makes more sense to remain defensive (i.e. more inclined to lock) until we’ve seen a more convincing shift lower.
  • 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: Stocks and Bonds Riding Same Train For Mostly Different Reasons

March 22,2018
by admin

Today was simple and straightforward in one sense. Stocks and bond yields (rates) were both moving lower, and that’s something the two have been known to do when investors are moving away from “risk.” But the underlying reasons for the move lower only overlapped a little bit. This was evident in the morning hours when each took turns leading the way while the other held still, and again in the afternoon hours when stocks did a full swan dive while bonds had second thoughts. Or to go back to the train analogy, bonds disembarked earlier in the afternoon.

Bonds drew inspiration initially from follow-through to yesterday’s FOMC reaction–specifically, the reaction to Powell’s dovish press conference. Weaker economic data in Europe also helped fuel bond buying demand. Finally, apprehension surrounding tariffs and prospective trade wars fueled a general “risk-off” trade that affected both bonds and stocks, but the latter more so.

There were a few headlines throughout the day that made for slight bumps for better or worse. Trump’s Mueller investigation attorney resigned, and that contributed to the risk-off vibes. But the bigger correction followed the official announcement of Trump’s China tariffs. Markets were expecting something more concrete and complete (apparently), but the announcement instead tasked the US Trade Office with brainstorming a list of items that would be good candidates for increased tariffs. They have 15 days to get back to Trump, so a trade war isn’t immediately materializing.

Still, a trade war may materialize and that would generally be good for bonds and bad for stocks. Again, it’s a bigger deal for stocks and that was how they traded today. Stocks sank to the lowest levels since early February by the close while bonds didn’t even return to the morning’s lower yields. That’s bond’s way of saying they’re not quite ready to try breaking below 2.80% in 10yr yields. Until and unless that happens, bounces at 2.80% run the risk of acting as short-term floors for rates.

Insurance Products; Trends in Servicing Sales; State’s $0 Down Payment Offer

March 21,2018
by admin

“Skin in the game” is a key component for lower delinquency and foreclosure rates, as borrowers have come up with required down payments. Mortgage investors like that kind of thing. But news broke that Massachusetts has now launched a “No-Money-Down Mortgage Program.” Things are different this time than fifteen years ago, right? Right? Speaking of remembering the past, UBS has settled with New York for $230 million over 15 securitizations from 2006 to 2007. Apparently, the bank sometimes ignored the advice of its own diligence vendors in packaging and selling loans that didn’t conform to its underwriting guidelines.


Servicing values can fluctuate daily based on interest rates, state foreclosure timeframes, product, maturity, risk, etc. Smaller lenders had hoped to retain servicing, creating an annuity cash flow, and a balance sheet advantage, as a hedge against production dropping as rates rose. This has happened, but many companies have found they need to sell large blocks or flow deals to raise capital. Let’s sum up some recent deals to see what the important factors are for buyers and sellers.

For anyone curious about the value of servicing, this commentary had a piece which included a primer on the value of servicing worth a glance.

Phoenix Capital, Inc. (PCI) offered up a $1.25B Fannie Mae and Freddie Mac bulk servicing rights package from “a well-capitalized, experienced MSR Seller” in January. “65% FNMA A/A, 33% FHLMC Gold, 2% FHLMC ARC, 87% Fixed 30, 13% Fixed 15, 0 DQs; 0 FCs; 0 BKs, 3.680% (F30) Note Rate; 3.208% (F15) Note Rate, 0.250% wAvg Net Service Fee, Avg Bal $290K, 18% FL, 17% TX, 16% CA (by Loan ct.), wAvg FICO 759; wAvg LTV 72%, wAvg Age 20 months, 89% Single Family Properties, 93% Owner Occupied Properties, 47% Rate/Term Refinances, 100% Retail Originations, <1% HARP originations.

On the flow side, earlier this month Phoenix Capital, Inc. sent out bid requests for $40 – $60 million per month Fannie Mae and Freddie Mac flow servicing rights “from a well-capitalized seller.” (For information on the bid activity or Phoenix can be addressed to Steve Fleming.) “86% Fixed 30, 14% Fixed 15, <1% ARM, Avg Bal $225K – $243K, 60% Purchase Originations, 17% Retail Originations, 81% Correspondent, 2% Wholesale, 93% Single Family/PUD Properties, 95% Owner Occupied Properties, 33% FL, 28% CA, 8% TX (by UPB), wAvg FICO 734, wAvg LTV 80, 0 HARP refinance loans.”

IMA $6.197B FNMA/FHLMC MSR Offering: 24,739 loans, $250k avg loan size, 4.255 WAC, 754 WaFICO, 75.5% WaLTV, .2513% Servicing Fee, 85% Owner, 10% Investment, 59% SFR, 23% PUD, 13% Condo, 56% Purchase, 25% R/T, with top states: CA (31%), FL (8%), NY (7%) and CO (5%).

IMAC #104661 Got Puerto Rico Auto Loans? $93M, 3,824 loans (1691 new, 2133 used), $31,112 average loan amount, $28, 743 average balance, 3.66% WaNR, 803 WaFICO, 29.16 WaDTI, and an 97.25% WaLTV.

IMAC #104657 $41M Hybrid 7/1 ARMs….90 loans, 4.71 WAC, 57% Orig CLTV, 749 WaFICO, 36.43% WaDTI, 76% Owner, with a top state of CA (99%).

IMAC #104659 $22.3M Jumbo Fixed….27 loans, 4.11%, 72.23% Orig CLTV, 772 WaFICO, 32.11% WaDTI, 83% Owner, with top states: CA (32%) and IL (36%)

IMAC #104646 $50M Jumbo Hybrids & 30 YR Fixed….64 loans (30 30-yr fixed, 5 7/1, and 29 10/1), 3.95% WAC, 73.92% WaLTV, 347 WA Remaining Term, 754 WaFICO, 32.16% WaDTI, 83% Owner, with 100% being FL originations.

MIAC #401147 2nd Lien Flow Arrangement…seller seeks a flow takeout of approximately $20mm a month for 6+% 2nd liens, fixed rate mortgages. The Seller is a Non-Bank originator that is exclusively a 2nd lien originator. The current guides are up to 90 LTV and down to a 660 FICO, all full doc. Current Guides: Fixed rate, 5, 10, 15, 20-year terms, 680 FICO, up to 90 CLTV, 660-679, 85 CLTV, 36/43% Max ratios, min $2,000 Disposable Income, 0x24 Required, 6 mo. ownership required.

MountainView $75mm GNMA/FNMA/FHLMC MSR Offering…Quality features of this portfolio include: 97 percent fixed rate and 100 percent 1st lien product, WaFICO of 715 and WaLTV of 86 percent, Weighted average interest rate of 3.81 percent (3.86 percent on the 30yr fixed rate product), Top states: Utah (62.4 percent), California (20.7 percent) and Florida (10.4 percent)

Average loan size of $235,033

MountainView $420mm FHLMC/FNMA Servicing Offering…Quality features of this portfolio include: 100 percent fixed rate 1st lien product, WaFICO of 714, WaLTV of 97 percent, Weighted average interest rate of 4.51 percent (4.57 percent on the 30yr fixed rate product), low delinquencies, Top states: New York (48.6 percent), California (18.3 percent), Florida (10.7 percent), and New Jersey (10.3 percent). Average loan size of $238,619.

Fiserv Inc. formed a joint venture with private equity firm Warburg Pincus. This joining will include all automotive loan origination and servicing products and related operations of Fiserv, as well as its LoanServ mortgage and consumer loan servicing platform. (So, while not home mortgage related, it indicates a trend.) Fiserv will retain its Secure Lending product for e-contracting and its UniFi mortgage origination solution. The new venture is also expected to create value for current and future Fiserv clients by partnering closely with Fiserv for seamless delivery of account processing, integrated billing and payments and LoanComplete solutions, and through Warburg Pincus’ demonstrated expertise and track record in growing financial technology businesses of scale. The business will continue to be led by Bret Leech, currently President of Fiserv Lending Solutions.

Capital Markets

Things were a little choppy in stocks and bonds Wednesday with post-FOMC (Federal Open Market Committee meeting) volatility. As expected, the March FOMC Statement called for the fed funds target rate range to be increased 25 basis points to 1.50%-1.75% while the accompanying “dot plot” showed that policymakers were leaning towards two more rate hikes by year end. The Committee now expects a total of six hikes by the end of 2019.

In Chairman Powell’s first press conference, he offered a generally upbeat picture of the economy, but did indicate that possible ramifications from a trade war were of concern to the committee. Chairman Powell indicated that the Fed would continue to gradually increase rates as the economy grows and inflation approaches the 2.0% Fed target. Changes to the FOMC statement were minor as well, and those expecting a more hawkish tone may have been disappointed. But it was unlikely that Chairman Powell would drastically alter the Fed’s path in his first official meeting.

In other news, existing home sales increased 3.0% month-over-month in February to a seasonally adjusted annual rate of 5.54 from an unrevised 5.38 million in January, beating expectations. Importantly, notable supply constraints continue to act as a drag on overall sales. High-priced limited inventory is crimping affordability, particularly for first-time buyers. A rising rate environment will only add to the strain on buyers.

The latest decision from the Bank of England kicked off today’s calendar. They kept the overnight rate and the asset purchase target unchanged at 0.50% and £435bn, respectively. (The BOE is expected to raise the rate in two months’ time.) In the U.S. we’ve already had weekly jobless claims (229k – the strong labor market continues). Coming up are the January FHFA House Price Index, expected to increase, the preliminary March manufacturing and service PMIs, February leading indicators, the KC Fed manufacturing index, and the New York Fed weekly MBS reinvestment purchases for the week. In a flattening of the yield curve, rates, somewhat surprisingly, are lower than last night’s close: the 10-year is yielding 2.84% and agency MBS prices are better by .125.


In a recent blog post Vendor Surf co-founder Scott Roller writes about how several dynamics have changed the way vendors are sourced. He details how he’s heard how vendor sourcing has evolved to increasingly rely on digital search and on committees of people who each have different skills and perspectives on vendor sourcing. He shares his thoughts on the future of vendor sourcing models such as how finding, researching and comparing potential service providers will become more of an online event and how RFPs will be issued and managed almost solely online. Scott also points out how innovative providers, no matter how small or large, will get their message out to their desired audiences. He is convinced the trend toward digital is not confined to borrower-facing touch-points. It’s infiltrating all aspects of our business, vendor sourcing included. Read more at

American Financial Network, Inc. (AFN) introduced AFN Protection+, an innovative product that protects a homebuyer’s down payment and includes +Plus SM down payment protection by ValueInsured SM. AFN President John Sherman stated, “The purpose of AFN Protection+ is to offer investment security and peace of mind as borrowers make one of the biggest purchases of their lives”. “AFN recognizes that borrowers need to protect their down payments and is addressing it by offering Protection+,” said Joe Melendez, CEO of ValueInsured. Established in 2001, AFN is a licensed mortgage lender (NMLS #237341) in 47 states, is an approved Fannie Mae/Freddie Mac seller/servicer, and an approved Ginnie Mae issuer. And PVI Agency, LLC dba ValueInsured, is the only provider of down payment protection. ValueInsured’s +PlusSM down payment protection is backed by one of the largest re-insurance companies, with over $8 billion in capital.

Don’t miss today’s free orientation for the Momentifi sales, leadership and business coaching program. “Momentifi Coaching incorporates the six key ingredients that are crucial to create and maintain positive momentum in any business,” says Gibran Nicholas, CEO and founder of CMPS Institute and the Momentifi companies. The Momentifi strategic coaching retreats are all-inclusive, and they take place in 5-star, world-renowned resorts such as the Auberge du Soleil in Napa Valley, and the Esperanza resort in Cabo San Lucas, Mexico. Topics include: (1) how to use the latest StorySelling techniques to experience more influence when you sell and communicate, (2) how to win back more time and improve the profit margins on your time and energy, and (3) how to uncover hidden opportunities and market-proof your business. Gibran will also be reviewing payment plan options and discount opportunities if you bring along your spouse or +1. Click here for your free orientation.

Employment Opportunities

Expanding its program offering, Newfi Wholesale just launched a new proprietary loan product called Sequoia Portfolio Plus. With Sequoia, Newfi makes all credit decisions and exceptions in-house, delivering flexible qualification standards and fast approvals. The company supports loan scenarios and provides same-day exceptions through its team of product experts. Newfi’s goal is a return to make-sense lending, considering a borrower’s unique income and asset circumstances, even for loan amounts as high as $2 million. “We wanted to create a loan program that combines the best of jumbo and non-traditional lending options,” said Newfi CEO Steve Abreu. “With Sequoia Portfolio Plus, we are empowering brokers to serve more homeowners in a tight market.” To support this product expansion, Newfi is actively seeking Wholesale AEs in key markets – resumes should be sent to Steve. Learn more about Sequoia Portfolio Plus here.

GSF Mortgage Corporation announces the acquisition of the Directed Retail Division of Fidelity Guarantee Mortgage Corporation (FGMC). GSF continues to expand its retail origination footprint and welcomes the experienced Loan Officers from FGMC into the GSF family. The acquisition comes with the existing pipeline of this division including experience origination of one-time close construction perm loans, a growing part of the GSF platform. Chad Jampedro, President commented, “The addition of the group will be immediately accretive to GSF and we are looking for a smooth transition to be completed ahead of the spring buying season.” If you are a group or individual interested in a direct conversation, contact Chad Jampedro directly about opportunities with GSF.