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New Vendor Creations; Jumbo and No MI Products

October 18,2017
by admin

Yesterday I had some interesting geographic involving the United States that prompted Tony H. to send a few more items. The closest state to Africa? It’s Maine! (Quoddy Head. The largest U.S. city closest to Africa is Boston.) And if one flew directly south from their home in Hickory, NC, one would miss the entire South American mainland – the continent is that far to the east.

Vendor Products and Denver Conference Exhibitions

“Fundingshield, the leader in loan level wire account settlement party verification, issued an alert of an increased expectation of wire fraud this holiday season based on firm analytics, trends over the past 10 years of data, and the current rise in cyber related system breaches. “The data, clearly points to the fact that the holiday season adds to the opportunity for criminals to manipulate the operations within wiring, funding and closing of mortgage loans,” stated Ike Suri Chairman and CEO. We offer a backstop control to lender driven closing and funding processes and third-party verification of closing parties and documents. We recommend a review of your closing procedures and exploring how a partnership with Fundingshield will enhance your controls to protect your funds efficiently as we provide our clients added efficient intelligence backed by the industry’s largest database of validated settlement accounts. Fundingshield will be attending the Denver MBA and would love to discuss our services. Contact or call (800) 295-0135×2 to set up demonstrations or meetings.”

PromonTech, part of the Promontory MortgagePath family of companies, is expected to debut its next generation point of sale solution (POS), the Borrower Wallet, at MBA Annual next week in Denver. The Borrower Wallet is a white-labeled, omni-channel POS that engages with customers on either a self-serve or assisted basis with a loan officer. It makes it easy to enter information, approve automated data collection, upload/e-send documents and stay informed throughout the loan process. “Lenders, regardless of size, can use our platform to level the playing field in an increasingly digital mortgage marketplace and at the same time be assured that they are engaging with their applicants in a compliant manner,” says Promontory MortgagePath chief executive officer Bruce Witherell. To schedule a meeting at MBA Annual to learn more about the Borrower Wallet, contact Tony Pietrocola.

“2018 is going to be a challenging year for mortgage lenders, with a continuing slowdown in originations. This will put tremendous pressure on profit margins. The most effective solution: outsource your back-office processes to String Real Estate Information Services. After 14 years and 20 million transactions, String’s expertise in mortgage and title is unparalleled. String supports the entire mortgage origination life cycle: from start to finish. We shorten your cycle time, turn your fixed costs into variable costs, and improve your margins by up to 20%. If you’re attending the MBA Annual Convention in Denver, schedule a meeting with us to learn how String can improve your P&L within 30 days or less.

LoanBeam, the leader in automated income extraction and calculation, announced that it is collaborating with Freddie Mac to deliver an innovative income verification solution for the mortgage industry. Expected news for most, as LoanBeam has made a lot of noise in the market as of late, signing deals with major lenders, LOS/POS providers, and big data aggregators to improve process flow and reducing turnaround times associated with income calculation. This collaboration between LoanBeam and Freddie Mac is a pivotal step in the mortgage industry’s income verification and automation process, empowering lenders to automate the originations workflow, improve income verification, and enhance the borrower experience. For more information about LoanBeam, visit this website or contact a sales representative for a demo.

Available in English and Spanish, talk’uments is a new consumer information delivery model that displays borrower specific loan data through interactive loan and disclosure technology – from pre-sale through loan closing. Talk’uments increases loan originations, as it eliminates LEP risk and cuts compliance, legal and regulatory costs for all mortgage transactions, and, by providing market ready borrowers with what they want – interactive loan information specific to their loan request (i.e. Loan Product Info, LE and CD review, Application & Closing Docs explanations, and Borrower Responsibilities). Talk’uments is the first of its kind in the field of interactive loan and disclosure technology. For more information or to visit with talk’uments at the national MBA conference (booth 1322), contact George Baker.

Lender Products

In addition to various agency and portfolio products available, Lakeview Loan Servicing has added another unique product offering to allow its clients to support the purchase market. The new No MI product offers consumers the option of putting as little as 3% down and requires no mortgage insurance. Designed to provide the lowest possible payment for 80+ LTV customers, the program allows for a minimum FICO of 680 and reserve funds are not required. No MI mortgages are now available in both Lakeview’s Correspondent and Wholesale channels. Call 85-Lakeview (855-253-8439) for more information.

“AmeriHome Correspondent, the 4th largest correspondent in the nation, is pleased to announce the launch of its new and improved Jumbo Loan Program. Highlights of the program include Fixed and ARM options, loan amounts up to $2,500,000 and LTV’s to 80%. In addition, both Condos and Investment properties are eligible! And of course, these products come with the consistently competitive pricing and industry leading service AmeriHome is known for across the industry.” For more information, please contact your AmeriHome Correspondent Sales Representative, or email

Here’s a new group garnering some attention, and you can join for free: America’s Homeowner Alliance. It is set up for existing and all future homeowners, built to protect and promote sustainable homeownership for all segments of America. If you go to the AHA website and use the promotional code “rcc2017” by the end of 2017 to get your first-year membership free. “Anyone who cares about homeownership should join for free. LOs or escrow agents can give a free first-year membership in AHA as a housewarming gift to any applicants or to anyone closing a loan. You’ll be a hero for your customers and will be doing something great to build the advocacy voice of the homeowner of America.”

Capital Markets

Hawks felt that cyclical pressures would soon push inflation higher and that at least part of the softening in inflation this year was due to one-off factors. The more dovish group was concerned that the longer inflation remains below 2%, the greater the chance that inflation expectations slip and that the current sub-2 percent results become standard.

U.S. Treasuries ended Wednesday on a lower note in tandem with a morning retreat in European debt. The 2s10s spread I mentioned yesterday is now at its flattest in ten years – are rates creeping up in a non-expanding economy? Housing starts declined 4.7% month-over-month to a seasonally adjusted annual rate of 1.127 million, while Building Permits decreased 4.5% to a seasonally adjusted annual rate of 1.215 million. The weakness in starts and permits was concentrated in the South, so the October report should show better results now that hurricane season is over. And the Beige Book showed labor shortages in many areas.

In Fed speak, FOMC Vice Chair William Dudley said he has been surprised by falling inflation and investors should pay heed to the servicing of government debt – investors have been encouraged to ignore total debt load during the recovery from the financial crisis. Dallas Fed President Robert Kaplan said he is worried about a short-term tax cut that would raise the debt load and that full employment has stunted 2017 growth.

In other news, the Senate will probably pass a budget resolution today, but this is a small step in the tax process while shutdown risk does exist: government funding authorization only runs until 12/8). Out today, we’ve had Weekly Initial Claims (222k), the Philadelphia Fed Survey (up nicely), with September Leading Indicators coming up. The day commences with the 10-year yielding 2.30% and agency MBS prices are +.125-.250, so rates are lower versus Wednesday’s close.

Opportunities, Promotions, Lender M&A

Bayview Loan Servicing, LLC has entered into an agreement to acquire the assets of Homeward Residential, Inc.’s wholesale origination business. This acquisition provides an exciting opportunity to expand Bayview’s wholesale channel and continue to build on their growing origination capabilities. Homeward Residential, Inc.’s wholesale team will join the Bayview family of companies and operate as part of the Lakeview Wholesale team to offer a full line of agency and portfolio products as well as expanded benefits to clients.

Bell Bank Mortgage has named Tom Romine senior vice president of mortgage lending. Tom will lead Bell’s mortgage sales team and its initiatives, including steering the mortgage origination growth strategies for the regional bank. “Tom’s extensive knowledge and background in all aspects of the industry bring immense value to this key leadership role within our growing organization,” stated Tony Weick, president of Bell Bank Mortgage. A leader in originating residential mortgages, Bell has built a strong reputation, validated by multiple “Best Places to Work” awards and driven by its bottom line mission statement, “Happy employees! Happy customers!”

Richey May & Co., LLP, a leader in public accounting and advisory services for the mortgage banking industry, is excited to announce its expansion into cybersecurity advisory and compliance services through the hire of JT Gaietto, CISSP. JT has more than 18 years of experience providing enterprise information security and risk management services, with an emphasis on the financial services industry. In his role as Executive Director, Cybersecurity Services, JT will provide Richey May clients with critical security and regulatory compliance support, including incident response, third-party risk management, business continuity, and customer & government due diligence oversight. The addition of JT and his skillset to Richey May enhances the firm’s commitment to the changing needs of lenders around the country. Learn more about JT here.

“If you are an independent mortgage company or retail production team closing $2M to $50M per month and are looking for an opportunity with a nationwide company focused on growth and branch support, contact Bank of England Mortgage today. Since opening our doors in 1898 in England, Arkansas, our family-owned and FDIC insured bank provides big bank benefits with a community bank feel. We have survived the volatility of the mortgage industry for 119 years! In other words, our stability is simply unmatched. Benefit from our flexible and entrepreneurial approach in helping you run your business, and focus on the success of your team. We offer an extensive range of loan products, nationwide lending, the advantage of modern technology, and a distinct marketing approach to ensure your success. Contact your area Bank of England Mortgage regional representative: West – Randolph Winston, (615) 812-5885, Midwest – Jim Lind, (913) 972-0822, Southeast – Roger Phillips, (205) 910-9339, or Northeast – Chris Copley, (717) 440-3346.”

American Pacific Mortgage is launching into the Texas market! Management is looking for highly motivated and quality leaders who want to grow with APM. If you’re interested in the Dallas, San Antonio or Austin market, please reach out to Peter Schwartz (916-770-0053) or Joseph Silvas (817-899-2644). Did you know that APM has been hosting bi-annual Sales Symposiums since the company’s inception? These Symposiums are the perfect event to become informed, inspired, educated, and network with other top producers and branch managers. You will hear incredible speakers to gain industry knowledge and engage in breakout sessions to learn how to take your business to new levels. If you’re considering making a move, watch this personal message from Kurt Reisig, Chairman of APM. The next Symposium will be held in San Diego on October 26th & 27th and is expected to host over 1,200 top producers. Just reach out to Peter Schwartz (916-770-0053), or Dustin Block (303-378-3166), or click here to register.

LoanScorecard announced that Gerald Casey has joined the company as Managing Director, Capital Markets, responsible for developing and executing strategies to help maximize revenues of non-agency capital market participants and investors. Gerald brings 30 years of experience in the financial services industry as a fixed income, residential whole loan trading and technology professional to LoanScorecard. Most recently, he was Managing Director of Hudson Advisors/Lone Star Funds, where he was responsible for residential non-performing whole loan acquisitions, as well as acquiring, underwriting and directing the default servicing at Caliber Home Loans, a wholly-owned operating company of Lone Star Funds. “LoanScorecard is committed to supporting capital and secondary market players as they expand their non-agency and portfolio offerings,” said Ben Wu, the company’s Executive Director. “Adding a leader with Gerald’s experience will allow us to better serve our clients by providing strategic solutions that make their businesses more efficient and effective.”

New American Funding has appointed Scott Bristol as its new Senior Vice President National Sales Manager. Bristol will be instrumental in advancing the growth of the lender’s retail division throughout new and existing markets, helping manage the productivity for Loan Originators nationwide while simultaneously working with regional managers to maximize their profitability.

AmeriFirst Home Mortgage announced that it has added Jamie Brown, a 20+year mortgage industry veteran, as Southeast Regional Manager. Brown oversees and drives AmeriFirst’s deeper expansion into Florida and works out of the independent community mortgage lender’s offices in Winter Park and Tampa, FL.

Freddie Changes Student Loan Debt Calculation

October 18,2017
by admin

A new Bulletin from Freddie Mac makes several changes to its Seller Guide. The most impactful changes relate to the way sellers can calculate student loan debt for inclusion in the monthly payment debt-to-income ratio.

Under the current policy, when a seller cannot provide the monthly payment required on a student debt from information on the borrower’s credit report, it must obtain other documentation with that information to include in the monthly DTI ratio. The new guideline allows the seller to use credit report information where available, but lacking that, to assume the monthly payment is 0.5 percent of either the original loan balance or the current balance, whichever is greater.

Freddie Mac says traditional student loan repayment plans provided for fully amortizing monthly payments and were typically reported by credit bureaus. However, income driven repayment plays that are subject to annual recertification of the monthly payment amount are becoming more prevalent.

Allowing use of the 0.5 percent calculation reduces the risk of potential payment shock if a payment increases after the annual recertification. The borrower, however still has the benefit of using a lower payment amount than would be required under the traditional fully amortizing repayment plan.

Where a student loan is in deferment or forbearance and no information is available from the credit report or mortgage file indicting the anticipated payment, the seller must currently assume 1 percent of the outstanding balance to calculate the DTI. The new rule allows the 1 percent calculation using either the loan balance or the outstanding balance, whichever is greater, where the credit report does not provide a payment amount.

No additional documentation will be needed from the borrower under these new guidelines.

Freddie Mac has also added new guidelines that will allow the seller to exclude student loan payments from the DTI ratio if there is documentation that indicates the student loan has ten or fewer monthly payments remaining until it is forgiven cancelled discharged or, in the case of an employment contingent repayment program, paid. The same exclusion applies if the borrower is eligible for such debt elimination and there is no reason to think it will not occur, or where the loan is currently in forbearance or deferred and will be expunged when that status ends.

The company has also updated its requirements to permit installment, revolving and lease payments as well as mortgage payments to be excluded from the DTI calculation where another party has been making the payments on the debt for the most recent 12 months. The party making those payments will no longer be required as a cosigner or guarantor on the excluded debt.

The new requirements will be effective for mortgages with settlement dates on and after January 18, 2018, but sellers may implement the changes immediately if they wish.

Other issues addressed included in the new Bulletin (Number 2017-23) include technical changes to appraisal requirements, and pool maturity and issuance updates.

MBS RECAP: Stronger Selling and Lighter Volume Raise Doubts

October 18,2017
by admin

Everything seemed so simple last Friday when bonds were surging past technical barriers in strong volume–ostensibly ringing the dinner bell for more bond buying. The fact that everything seemed so simple was also the biggest risk. Perhaps it was “too simple.” Perhaps the technical conclusions were too obvious. The weakness so far this week shows us why.

The weakness was easier to brush off as a modest consolidation of last week’s strength yesterday. At that time, none of the losses were so severe as to suggest we question the reversal leading back from the high yields seen in early October. If that didn’t change today, it became a much closer call.

10yr yields rose more than 4bps and Fannie 3.5 MBS fell a quarter of a point. The selling transpired with precious little justification in terms of fundamentals (economic data, news headlines, or Fed policy). There was also precious little volume, or at least lower volume compared to yesterday.

What we’re left with–for now–is a classic little pain trade for bond bulls; a push back against the obvious technical implications of last week’s gains. Until and unless 10yr yields break above key technical ceilings at 2.37% and 2.40%, this is still just a consolidative move, but admittedly a more uncomfortable one than it was 24 hours ago.

MBS Day Ahead: 2 Simple Lines Means Bonds Stay In The Game

October 18,2017
by admin

The past 3 days were disconcerting for bond markets–especially yesterday, which saw yields move higher at their quickest pace in two weeks. This threatened to reverse the positive trend that looked like it was confirmed by last Friday’s CPI-driven rally. But as we discussed in the recap yesterday, 2 simple levels would need to be broken before it was anything other than a consolidative pain trade.

What we’re left with–for now–is a classic little pain trade for bond bulls; a push back against the obvious technical implications of last week’s gains. Until and unless 10yr yields break above key technical ceilings at 2.37% and 2.40%, this is still just a consolidative move, but admittedly a more uncomfortable one than it was 24 hours ago.

With the benefit of a few more hours of overnight trading since then, things are looking up to begin the day. Or at the very least, bonds have backed away from the “2 simple levels” mentioned above. As long as we hold under 2.37 and 2.40, we’re still in the game. It would be even nicer to see a break below 2.28%, however, to fully signal the start of a new trend.

2017-10-19 open

Like yesterday, today will be more about the trading than the data and events. Morning economic data isn’t top tier, and bond markets are more interested in reacting to tradeflows and technicals anyway.

Early voting begins Monday, October 23, 2017

October 17,2017
by admin

Early voting begins Monday, October 23 and runs through Friday, November 3. HAR has recommended candidates in the Houston Independent School District Board of Trustees races, Missouri City City Council and The Woodlands Township Board of Directors. Click here for a list of recommended candidates.

Below is information on early voting locations in our region.

Click here for Harris County Early Voting locations

Click here for Fort Bend County Early Voting locations

Click here for Montgomery County Early Voting locations

Source: Houston Association of REALTORS®

Mortgage Rates Rise Only Modestly Despite Market Weakness

October 17,2017
by admin

Mortgage rates moved modestly higher today despite bigger movement in underlying bond markets. In part, this is a byproduct of the way rates behaved at the end of last week, when lenders didn’t adjust rates lower as quickly as bond market strength would have suggested. In short, rates are playing it closer to the vest while the bonds that underlie and inform rate movement have been a bit more volatile.

Bonds and rates frequently react to economic reports and other news that speaks to the health of the economy or the rate-setting policies of the Federal Reserve. Although we did have a key report on new home construction and several speakers from the Fed today, rates were preoccupied with less overt motivations. One example would be bond traders who decided to sell bonds today simply because trading levels hit certain targets.

All that having been said, motivations aren’t as important to dissect until we move outside the range we’ve been in since late September. The next clear move outside that range (for better or worse) will be all the more meaningful because of the amount of time rates have been generally sideways and stable in the bigger picture.

Loan Originator Perspective

Rates rose today, as bonds broke the floor on recent ranges. We’re not in a total upward rate spiral (yet), we’re nearing Oct 6th’s levels, which were the highest rates since mid-July. While the hope is we bounce back from today’s hit, that’s never guaranteed. I continue to be in “lock early” mode, just not enough momentum to want to float here. –Ted Rood, Senior Originator

Today’s Most Prevalent Rates

  • 30YR FIXED – 3.875-4.0%
  • FHA/VA – 3.5%
  • 15 YEAR FIXED – 3.25%
  • 5 YEAR ARMS – 2.75 – 3.25% depending on the lender

Ongoing Lock/Float Considerations

  • 2017 has 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. Most of the rate spike was done by the end of 2016 and we’ve generally moved sideways to lower since then

  • The biggest question is whether or not this counter-intuitive trend has an expiration date. Rates haven’t been immune from brief corrections back toward higher levels, and each correction causes concern that the good times are over.

  • Despite those concerns, we’ve seen rates make new lows in April, June, and September. Although rates have been rising since early September, they’d have to move even higher before we’d consider a change in the bigger picture theme.

  • All of the above having been said, past precedent suggests we’re due for a much bigger dose of volatility some time soon.
  • 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.

Houston’s Office Market Recovery Slow, Industrial Demand Remains High

October 17,2017
by admin

>>Click here to access complete statistics and broker commentaries.

Houston Office Market Summary

Houston’s commercial real estate market is optimistic after grappling with Hurricane Harvey amid the continued energy recovery, according to quarterly market research compiled by Commercial Gateway, the commercial division of the Houston Association of Realtors (

For office space, direct negative net absorption of 39,995 square feet was recorded; Class A and C showed positive absorption of 246,119 square feet and 18,230 square feet, respectively, while Class B reported negative absorption of 304,344 square feet. Move-ins at 609 Main including four different firms who preleased space in the new building accounted for almost 263,000 square feet of the Class A positive absorption. Year-to-date overall totals are positive for the year primarily due to the first quarter occupancy of 600,000 square feet by BHP Billiton in its new headquarters building, although the firm is leaving behind more than 320,000 square feet that is currently on the sublease market.

Space left behind by various firms occupying new properties along with sublease spaces converting to direct space will continue to affect the vacancy rate. The current 16.7% direct vacancy rate is unchanged from last quarter, but up from the 15.5% recorded during the same quarter in 2016. Class A space overall is 16.0% vacant, Class B is 19.1% vacant and Class C is 11.4% vacant.

Total sublease space saw a slight decline this quarter with almost 9.1 million square feet compared to second quarter’s 9.4 million square feet and year-end’s 10.2 million square feet. Although some spaces have been leased, such as the largest block of 431,307 square feet taken by NRG in One Shell Plaza, others have turned into direct availability. Others have been taken off the market but are still available. NRG will be leaving vacant space and possibly adding to the sublease market in three buildings in the Central Business District (CBD): 1201 Fannin (GreenStreet), 1000 Main and 1300 Main.

The effects of Harvey resulted in sublease space taken as displaced companies and governmental entities lease short-term space. (Please see brokers’ commentaries for more detail.) But the amount of sublease space continues to play a large role in the dynamics of the marketplace. Today’s sublease space represents about 4% of our total tracked office market, but if counted as vacant, the overall vacancy changes from 16.7% to 21.0%. Currently, 83 of the sublease listings representing 2.3 million square feet have terms expiring by year-end 2018 while another 69 listings representing 1.4 million square feet are set to expire by the end of 2019.

The under-construction market in Houston currently totals 13 buildings and 2.4 million square feet and overall is 53% preleased. Properties completed during the third quarter include Generation Park’s first spec building at 250 Assay Street, which is about 80% preleased, along with two 25,000-square-foot buildings on Memorial, which are collectively 23% preleased. Four buildings totaling 354,499 square feet broke ground during third quarter, the largest being CityPlace 1 in Springwoods Village with 149,500 available square feet.

Concessions are becoming more commonplace in the market, even though quoted rental rates have remained steady. At $28.73 overall, rental rates showed a slight increase from the past quarter and from a year ago. Class A rates, now at $34.78 citywide and at $42.35 in the CBD, experienced slight increases from last quarter’s $34.30 citywide and $41.50 in the CBD. Quoted rents for sublease space decreased from $25.41 last quarter to $23.00 this quarter.

Houston Industrial Market Summary

Houston’s industrial market dominated the commercial market during the third quarter with expansions resulting in positive direct net absorption of almost 3.3 million square feet, according to statistics compiled by Commercial Gateway.

This quarter’s absorption represents the 31st consecutive quarter – more than seven years – of positive absorption, with four quarters recording more than 3 million square feet each and 10 recording more than 2 million square feet each. The third-quarter absorption totals were positive for all types and included almost 2.8 million square feet of warehouse-distribution space along with 265,857 square feet of net absorption of light industrial space. Manufacturing properties recorded 204,346 square feet while flex/R&D space absorption was 36,261 square feet. Overall, 24 properties recorded 50,000 square feet or more of absorption this quarter, with eight of those recording 100,000 square feet or more.

About 2.6 million square feet in seven buildings came online during the third quarter. The absorption of 2.4 million square feet of new space this quarter included both FedEx’s 1.1 million square-foot distribution facility in the Northwest near the Grand Parkway and U.S. Highway 290 and Amazon’s 855,000-square-foot fulfillment center off the Beltway in Pinto Park. Two other build-to-suits were also completed and occupied this quarter: Floworks International’s affiliated companies occupied its 225,000-square-foot facility in the South while Pepperl+Fuchs completed and occupied its 110,000 square-foot distribution center in West Ten Business Park in the west. For the year, 32 properties totaling almost 4.7 million square feet were completed and are currently 12.2% vacant.

Vacancy rates have decreased slightly to 5.8% from 6.0% last quarter but are the same as in Third Quarter 2016. Vacancy for warehouse/distribution space citywide is 6.2% with manufacturing space at 2.6%.

Construction activity has slowed when compared to previous years, with only 36 projects totaling more than 3.4 million square feet underway. The largest project currently is a build-to-suit project, Amazon’s 1.0 million square-foot distribution project in Katy, followed in size by Cedar Port’s 501,020 square-foot building in the Southeast. Including Amazon, eight warehouse-distribution projects with more than 100,000 square feet are underway with three 100% preleased.

The bulk of projects under construction is concentrated in the North/Northwest, with 14 buildings totaling 1.7 million square feet or 49.1% followed by the Southeast with six projects totaling 1.2 million square feet or 33.9% of the total. Overall, the under-construction market is 43% preleased.

New projects and large leases continue to be announced, with the most recent new project breaking ground in early October, a speculative 673,785-square-foot distribution facility being developed by Oakmont Industrial Group in Katy’s West Ten Business Park. Houston-based Pontikes Development has announced a 3-million-square-foot speculative project to be built in Baytown. Both Lowe’s and Home Depot recently signed leases up to 300,000 square feet to handle consumer demand, while other large deals are in the market.

Rental rates have increased this quarter to $7.22 from $6.48 last quarter but are similar to rents recorded in early 2016. Rates for sublease space dipped slightly to $6.45 from $6.52 last quarter.

Sublease space also decreased slightly this quarter to 3.5 million square feet but is a slight increase when compared to the same quarter last year.

Founded in 2001, Commercial Gateway, the commercial division of the Houston Association of REALTORS® (HAR), is a commercial information exchange of commercial real estate professionals engaged in every aspect of property sales and leasing, appraisal, property management and counseling.

Source: Houston Association of REALTORS®

Mortgage Applications Regain Footing

October 17,2017
by admin

The volume of mortgage applications increased last week for the first time since early September. The Mortgage Bankers Association (MBA) said its Market Composite Index, a measure of that volume, rose 3.6 percent on a seasonally adjusted basis during the week ended October 13. It did decline 7 percent on an unadjusted basis from the week ended October 6, a week was shortened by the Columbus Day holiday. The week’s results included an adjustment to account for that event.

The increase in the Composite Index was the result of gains in both refinance and purchase mortgage applications. The seasonally adjusted Purchase Index was up 4 percent compared to the previous week although the unadjusted version fell 6 percent. The Purchase Index was 9 percent higher than during the same week in 2016.

Refinancing also gained ground, ending a four-week slide. That index rose 3 percent although the share of total applications that were for refinancing ticked down to 48.6 percent from 49.0 percent.

Refi Index vs 30yr Fixed

Purchase Index vs 30yr Fixed

FHA mortgage applications made up 10.4 percent of the total, compared to 10.3 percent the prior week, while the VA share ticked down to 10.5 percent from 10.6 percent. USDA loans applications increased their share from 0.7 percent to 0.8 percent.

Mortgage interest rates showed little movement from the previous week. The direction of both contract and effective rates was mixed.

The average contract interest rate for 30-year fixed-rate mortgages (FRM) with conforming loan balances of $424,100 or less decreased to 4.14 percent from 4.16 percent. Points were unchanged at 0.44 and the effective rate declined.

Rates for the 30-year FRM with jumbo loan balances greater than $424,100 ticked up 2 basis points to 4.13 percent. Points increased to 0.32 from 0.31 and the effective rate was up.

The contract interest rate for 30-year FRM backed by the FHA was unchanged from the prior week at 4.00 percent. Although points increased from 0.36 to 0.37 the effective rate also was unchanged.

Fifteen-year FRM had an average rate of 3.45 percent with 0.43 point. The previous week the rate was 3.44 percent with 0.36 point. The effective rate was also higher than a week earlier.

The average contract interest rate for 5/1 adjustable rate mortgages (ARMs) decreased to 3.31 percent from 3.33 percent.Points decreased to 0.40 from 0.43, drawing the effective rate lower. ARM applications made up 6.1 percent of all those received, down from 6.6 percent a week earlier.

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

MBS Day Ahead: Time For That Mid-October Craziness in Bonds

October 17,2017
by admin

Ah mid-October… All too often in the 2009-2014 time frame, we’d seen abrupt reversals of trends at this time of month. We haven’t really been on the lookout for that old behavior because 2014 seemed to mark a shift in that trend. 2014 itself was easily attributed to the massive sell-off in Chinese stocks. 2015 was mysteriously sideways. And 2016 was understandably sideways ahead of the election.

Even in 2017’s version of October so far, we haven’t seen nearly the same amount of back-and-forth seen in the 2009-2014 time frame, but as of this morning we are arguably seeing the same pattern begin to play out as bonds are abruptly weaker just days after confirming a positive shift.

Analysts scrambled to explain the move overnight and there’s really no cohesive conclusion. Here’s a snippet from this morning’s update on MBS Live that lists some of the theories.

  • a tradeflow-based correction to yesterday’s tradeflow-based curve flattening (in other words, traders showed a bit too much love for long-term vs short-term yields yesterday, and now the opposite is true
  • a technical rejection of the 2.28% level, accelerated by the break back above the 2.314 pivot point
  • stronger employment data in the UK
  • a speech from Mario Draghi that failed to deliver the dovish message that market participants were looking for
  • a major technical bounce in European bonds after significant outperformance of US bonds in recent days

This list could go on and on, because none of these are clearly responsible. Case in point: $/Yen has been grinding steadily higher throughout the European session (it began slightly beforehand, in fact), suggesting there was upward momentum in store for yields regardless of the motivations cited.

I will say that the bigger moves and the bigger instances of volume followed the Draghi speech and the UK employment data. But the bounce itself could also be chalked up to exhaustion of the strong overall European bond market rally, with yields hitting a double bottom in German Bunds just before the selling spree began. Even then, the fact would remain that $/Yen were already on the way up by then, so perhaps traders knew the plan coming into the day and just had to wait for the liquidity of the European session to begin trading it. $/Yen would offer a more liquid way to do so ahead of time.

And here’s a chart that shows all of the above playing out:

2017-10-18 open

In the bigger technical picture, a weaker close today would set us up for a reversal in momentum just DAYS after confirming a positive shift. While we have overcome such reversals in the past, it’s not the most confidence-inspiring position to be in when it comes to making lock/float decisions. Naturally, we wouldn’t want to lock if things progress like they did in July, but we wouldn’t want to PLAN on that happening. So it’s a tough call here. The best bet at this point is to wait to see if there’s additional negative momentum that takes yields up and over early October highs. That would be the more definitive sign of a negative shift.

2017-10-18 open2

Hurricanes Impact on Housing Could Last

October 17,2017
by admin

Fannie Mae has lowered its third quarter projections for GDP growth by 0.2 percent to an annualized 2.4 percent based on its assessment of the overall impacts of the recent hurricanes. The company’s Economic and Strategic Research (ESR) Group says the storms appeared to have slowed consumer spending growth and dragged modestly on consumer and business confidence. They also disrupted home sales, a sector already suffering from tight inventory. The overall economic impacts of the storms are expected to be short-lived so the fourth quarter estimates have been revised up slightly to reflect a rebound in activity and the start of rebuilding efforts. Their GDP growth forecast for all of 2017 remains at 2.2 percent.

The ESR is not quite as optimistic about next year. They expect a boost from hurricane rebuilding, but have cut their projections for economic growth to 1.8 percent. Any modest upside risk to growth from possible tax cuts will be offset by restrictive trade policies and geopolitical concerns. They also see a downside risk from monetary policy. The announcement last month that the Fed will begin to taper its balance sheet had little immediate impact on interest rates or mortgage spreads however the long-term effects of balance sheet reduction and increases in the fed funds rate are uncertain and could lead to rate volatility.

While the hurricanes’ effects on the overall economy may end up as a blip, they may exacerbate the slowing of the housing market. Harvey already impacted home sales in August and Irma is expected to lead to an additional pullback in September. Existing home sales fell in August for the third straight time and hit a 12-month low, with sales especially hard hit in the South and the West. Despite slowing sales, the number of homes on the market also dropped for the 27th consecutive time when compared to a year earlier, this time by 6.5 percent. Fannie’s economists say supply seems to be the problem, not demand, as homes are selling fast; continuing to average 30 or fewer days on the market. New home sales also dipped to a new 2017 low in August. While Hurricane Harvey likely drove the decline in sales in the South, they were also down in the Northeast and the West.

Pending home sales don’t bode well for improvement, they decreased in August for the fifth time in six months to a 20-month low and were down year-over-year for the fourth time in five months. Contract signings declined in the South, but were down most sharply in the Northeast, suggesting that Harvey was not the only factor restraining activity.

Another leading indicator, purchase mortgage applications, had their second consecutive loss in August, despite falling mortgage rates. However, purchase demand rebounded slightly in September. Refinance applications have fared better than the purchase segment, rising in September for the second consecutive month and the fourth time in five months.

Fannie’s economists have downgraded their home sales forecast, now looking for total home sales to be flat in 2017 versus a 3.3 percent rise in the prior forecast.

August’s homebuilding activity did not appear affected by Harvey. Multifamily starts were down, but single-family starts, helped by gains in the West and South, posted a modest rise. The hurricanes are anticipated to show up in September construction data. Counties designed as Individual Assistance counties by the Federal Emergency Management Agency (FEMA) in Texas and Florida together accounted for about 13 percent of single-family permits in the United States and 26 percent of permits in the South in 2016. It is unusual for homes to be rebuilt from the ground up following a hurricane, and repairs of existing structures are not counted as housing starts, but will be included in the home improvement component of residential investment. Furthermore, structural repairs in the hurricane disaster areas will likely face significant delays, given ongoing shortages of skilled labor and material such as lumber, whose prices have risen sharply this year.

The ESR still expects a 30-year fixed-rate mortgage to average 3.9 percent in the fourth quarter of this year.

As in every October, estimates of single-family (1-4-unit properties) mortgage originations for the prior year are updated based on annual benchmarking to the newly released Home Mortgage Disclosure Act (HMDA) data. The company has lowered its estimated purchase originations by $9 billion, largely because of the hurricanes. However, they have revised their estimate of refinance origination by $9 billion, thus keeping their 2016 total mortgage originations estimate unchanged at $2.05 trillion. As a result of the benchmarking, the 2016 refinance share edged up one percentage point from the prior estimate to 49 percent. The projected mortgage originations for 2017 were upgraded by $109 billion, with refinance originations accounting for the majority of the increase.

For all of 2017, total mortgage originations are expected to decline approximately 13 percent from 2016 to $1.79 trillion, with a 12-percentage point drop in the refinance share to 37 percent. Mortgage originations are projected to fall further by about four percent to $1.72 trillion in 2018, as a decline in refinance originations outweighs an increase in purchase originations, leading to an expected further drop in refinance share to 31 percent.