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MBS Day Ahead: Brace For Nonsense in The News

March 21,2018
by admin

One of my favorite things to do is to push back on news media bandwagons with indignation and incredulity. Today provides a great opportunity for that because stocks are starting off weaker and most media outlets seem to be focused on the wrong stuff, or rather, only focused on one thing. Specifically, the announcement of new China-specific tariffs is said to be driving stocks and bond yields lower. Balderdash! Sort of…

Yes, China tariffs have been a market mover this week, but they’re not the only consideration today. Tariffs were a big deal on Monday, and at that time, I would agree there was a solid correlation with stock market weakness. In fact, one could argue that stocks set the tone on Monday and that tariffs were partly responsible for that (even though plummeting Facebook stock got the most attention). Either way, the news was definitely already making the roundsby then.

The overnight market movement (today) is a different story. The cat is out of the bag on China tariffs, and a comment from the White House that the announcement will come today is not much of a surprise. Moreover, stocks didn’t begin to move lower until European markets opened (as seen in the chart below).

2018-3-22 open

The fact is that domestic markets are always curious to find out how Asia and Europe will react to a big Fed announcement. I’d go so far as to say we don’t even see the full reaction to the Fed until overseas markets have had their input. In today’s case, their input was moderately favorable for bonds–hence the additional gains this morning.

But if bonds are happy because the Fed Chair came across as “accommodative” yesterday, we’d also expect stocks to take heart (they like an accommodative Fed too!). But European markets sold stocks due to a vast majority of the day’s economic data (in Europe) coming in weaker than expected. This stoked the fires of bond buying as well, thus pulling even more money out of stocks as money managers adjust stock vs bond allocations. Somewhere in all that mess you likely have a bit of additional impact from the apparent official/final announcement of China tariffs later today, but the point is that it’s not today’s only news and possibly not even the biggest news.

“Significant” Reduction in Closing Times – Ellie Mae

March 21,2018
by admin

The 5-point surge in the share of refinancing loans that closed in January didn’t survive the month. Ellie Mae’s Origination Insight Report shows that share dropped from 45 percent to 43 percent in February. Refinancing lost market share for both VA and conventional loans but held steady at an already low 28 percent of FHA mortgages. Purchase loans grew their share 2 percentage points, rising to 57 percent.

“As expected, we are seeing the percentage of refinances taper back off to the projected industry levels,” said Jonathan Corr, president and CEO of Ellie Mae. “And with interest rates on the rise, we’re seeing the purchase market begin to gain some momentum. We know that the shift to a purchase market will drive the shortened time to close and we will watch to see if the trend continues into the spring and summer months.”

The distribution of loans across guarantors was unchanged from January at 19 percent FHA loans, 67 percent conventional, and 10 percent VA. The VA share has not changed since February 2017.

The time to close all loans decreased by two days to 42 in February with the time to close purchase loans falling from 47 days to 45 and refinancing from 40 to 37 days. Ellie Mae called the decline from the average of 47 days in 2017 “significant.” The required time to close each loan type decreased from January to February, FHA loans from 47 days to 43 days, conventional loans from 43 to 41 days, and VA loans from 50 to 47 days.

The average interest rate for 30-year fixed rate loans closed during the month rose from 4.330 in January to 4.480 in February, the highest rate since May of 2014. The percentage of closed ARMs held at 5.5 percent for the second month.

Closing rates decreased slightly with rates for all loans decreasing from 70.9 percent to 70.6 percent and closing rates on refinances dipping from 65.5 percent to 65.0 percent. Closing rates on purchases held at 75.7 percent for the second month. To calculate closing rates Ellie Mae samples loan applications initiated 90 days earlier, in this case in November 2017.

Overall FICO scores for closed loans held steady at 721 for the second month. LTV increased from 77 to 78 and DTI held at 26/40.

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

Ignoring Trend, Home Prices Surged in January

March 21,2018
by admin

Home prices took a big leap in January, at least according to the Federal Housing Finance Agency’s (FHFA’s) seasonally adjusted House Price Index (HPI). The 0.8 percent increase from December was the largest since last February and reversed what had been a gradual and uneven decline. The November to December 2017 change, originally reported as an 0.3 percent gain, was revised to 0.4 percent.

On a year-over-year basis the HPI was up 7.3 percent, compared to 6.7 percent in December. It was the largest increase since at least January 2016.

Among the nine census divisions. the largest increases were posted in the New England and Pacific divisions, each up 1.2 percent month-over-month. The sole decline was in the West South Central division (Oklahoma, Arkansas, Texas, Louisiana) where prices fell 0.7 percent.

The 12-month changes were all positive, ranging from a low of 5.1 percent in the West South Central division, to 10.0 percent in the Mountain Division (Montana, Idaho, Wyoming, Nevada, Utah, Colorado, Arizona, New Mexico.)

The FHFA monthly HPI is calculated using home sales price information from mortgages sold to, or guaranteed by, Fannie Mae and Freddie Mac. The Purchase-only HPI was indexed to 100 in January 1991. The current national reading is 235.7 and ranges from 197.3 in the East North Central division (Michigan, Wisconsin, Illinois, Indiana, Ohio) to 303.1 in the Mountain division.

Black Knight: Prepayments are Falling, Hurricane Effect Lingers

March 21,2018
by admin

As interest rates rise and refinancing declines, the impact is beginning to manifest in the loan prepayment rate. The single month mortality rate (SSM) followed a 15 percent decline in January with another 9 percent loss in February. Black Knight says, in its “first look” at February loan performance data, that the SSM during the month was 0.72 percent, the lowest since 2014.

After dropping sharply in the prior month, improvement in the national delinquency rate slowed in February. Black Knight said there was only a 0.21 percent month-over-month decline in the rate of loans 30 or more days past due, but not in foreclosure. Those delinquencies declined by 4,000 to 2.198 million, 4.30 percent of all active mortgages. Delinquencies were up on an annual basis, rising by 2.10 percent or 63,000 loans.

The company said that the slowing rate of decline in delinquencies was directly attributable to mortgages on properties affected by Hurricane’s Harvey and Irma. Those delinquencies had dropped by 17 percent in January but were down only 5 percent in February.

Serious delinquencies, 90 days or more but not yet in foreclosure, that were attributable to the hurricanes saw an even smaller decline, only a 3 percent. There are still 128K such seriously delinquent mortgages in Texas, Florida, and Georgia. Nationwide, 697,000 loans meet seriously delinquent criteria, down 10,000 from January and 56,000 over the previous 12 months.

There was a 25 percent decline in foreclosure starts, coming after those starts hit a 12-month high in January. There were 46,700 foreclosure actions begun during the month, the third lowest total since late 2000 and down 19.34 percent compared to January 2017.

The foreclosure inventory, loans in the process of foreclosure, which had also grown in January, declined by 6,000 loans or 1.81 percent in February and is at a new post-recession low of 331,000 loans. The inventory is 30.30 percent, 139,000 loans, smaller than last February.

Completed foreclosures as a share of seriously delinquent loans and those in the process of foreclosure dropped by 19.68 percent from a post-holiday moratorium spike in January to a rate of 1.40 percent. This is a -24.97 percent annual change.

The state that continues to have the highest percentage of non-current loans, 10.69 percent, is Mississippi. It was followed by Louisiana (9.11 percent), Florida (8.21 percent), Alabama and West Virginia (7.53 and 6.96 percent respectively.) Seriously delinquent loans were highest in Florida, Mississippi, Louisiana, Texas, and Alabama. Those rates ranged from 3.84 percent down to 2.13 percent.

Black Knight says it will provide a more in-depth review of this data in its monthly Mortgage Monitor report, which will be available by April 2, 2018.

Mortgage Rates Higher, Then Lower After Fed Announcement

March 20,2018
by admin

Mortgage ratesrose to new 4-year highs this morning as lenders took a defensive stance ahead of the afternoon’s Fed Announcement. The caution proved to be warranted, at least at first, as bond markets reacted negatively to the first phase of Fed-related information.

Notably, the Fed Announcement itself wasn’t the issue. If anything, it was moderately friendly for rates. Instead, it was the Fed’s rate hike outlook (released concurrently with the policy announcement) that did the damage. But again, we’re talking about underlying bond markets here. Lenders’ rate sheets already reflected that damage preemptively.

When new Fed Chair Jerome Powell began his press conference half an hour later, bond markets (which underlie rates) began to improve. Just over an hour after the initial drama, bonds moved into moderately positive territory on the day and most lenders offered positively-revised rate sheets (i.e. stronger bond markets allowed mortgage lenders to drop their rates). After those reprices, the average lender returned in line with yesterday’s rates (which are still pretty close to 4-year highs, but a welcome sight after this morning’s offerings).

Loan Originator Perspective

Continue to favor locking as early as possible. For those who like risk, it does look like support is holding on the 10 year around 2.92. Many follow the strategy of lock the lows, float the highs. We are now at the highs…but float at your own risk. –Victor Burek, Churchill Mortgage

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: After Miraculous Recovery, Bonds Upgraded to “Not Quite Dead”

March 20,2018
by admin

If you’re not up to speed on a few of the funniest scenes from Monty Python and The Holy Grail, this analogy is going to be tough to follow. In the interest of not posting a link that could eventually die (you never know with copyrighted material on youtube), your best bet would be to google “Monty Python not dead yet.” And if all that sounds like too much work, here’s a quick recap: a man with a bell and a wooden cart full of dead bodies is making his way through plague-stricken England, periodically shouting “bring out your dead!” Another man, apparently carrying a dead body approaches to take advantage of the offer. We soon learn the apparent corpse is “not dead yet” and hilarity ensues.

Today’s apparent corpse was the bond market about half an hour after today’s Fed Announcement. Bonds were already in a defensive stance ahead of the Fed events and the 2pm data seemed to justify the defensiveness. The announcement itself was actually a non-issue. In fact, had that been the only data released at 2pm, there’s a chance it would have resulted in a modest bond rally. Instead it was the Fed’s economic projections that did the damage. Specifically, the “dots” (a tally of Fed members’ rate hike forecasts) migrated dangerously close to a median view of 4 rate hikes in 2018. In short, the Fed’s rate hike outlook accelerated a bit more than markets anticipated.

10yr yields were as high as 2.936 by 2:30pm–near death to be sure. As Powell began his press conference, rates began to stabilize. When Powell made a few comments that could have been interpreted in a positive way for bond markets, rates fell. Little by little, our apparent corpse piped up and made its case for staying off the death cart–at least for today.

Refi Applications Near 10-Year Low, But Purchases Improve

March 20,2018
by admin

Purchase mortgage applications continued to gain strength during the week that ended March 16 but failed to compensate for a declining volume of refinancing activity. The Mortgage Bankers Association (MBA) said its Market Composite Index, a measure of application volume, was 1.1 percent lower on a seasonally adjusted basis than during the week ended March 9. On an unadjusted basis the index was down 1.0 percent.

The volume of applications for home purchase financing was up 1 percent from the previous week on a seasonally adjusted basis and 2 percent higher unadjusted. The latter index was 6 percent higher than during the same week in 2017.

The improvement in purchase mortgage applications were more than offset by a 5 percent drop in the Refinance Index. The share of applications for refinancing retreated to the lowest level since September 2008, 38.5 percent. Applications for refinancing had accounted for 40.1 percent of the total a week earlier.

Refi Index vs 30yr Fixed

Purchase Index vs 30yr Fixed

FHA loans accounted for 10.3 percent of all applications, down 0.1 point from the prior week, and the VA share rose from 10.3 percent to 10.7 percent. Applications for USDA financing eased back to 0.8 percent of the total from 0.9 percent the prior week.

Mortgage interest rates were mixed. The average contract interest rate for 30-year fixed-rate mortgages (FRM) with balances at or under the conforming loan limit of $453,100, dipped 0.1 point to 4.68 percent. Points increased to 0.46 from 0.45 and the effective rate was unchanged.

The average rate for 30-year jumbo FRM, loans that exceed the conforming rate, was unchanged from the previous week at 4.55 percent. Points increased to 0.37 from 0.33 pulling the effective rate higher.

Thirty-year FRM backed by the FHA had an average rate of 4.69 percent compared to 4.73 percent the prior week. Points moved higher, to 0.81 from 0.76. The effective rate decreased from last week.

The average contract interest rate for 15-year FRM increased to its highest level since April 2011, 4.12 percent with 0.51 point. The prior week the rate was 4.07 percent with 0.46 point. The effective rate was also higher.

The share of applications for adjustable rate mortgages (ARMs) declined slightly, from 7.1 percent to 7.0 percent. The average interest rate for 5/1 ARMs decreased to 3.83 percent from 3.93 percent,but points jumped to 0.68 from 0.45. The effective rate was lower.

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.

LO and Sales Products; Training and Events; Don’t Bet Against the Fed

March 20,2018
by admin

Ever wanted to read a story, or recommend it to those who might find it interesting, titled, “Blockchain-Based Residential Real Estate Network Democratizes Investment Barriers and Solves Mortgage Debt Conundrum?” Here’s your chance, since it was just published. (Yes, it is a bit of a sales pitch, but it gives one an idea of the status of this subject.) For something more applicable to LOs in the present, XINNIX’s Casey Cunningham is hosting a complimentary webinar today “An Innovative Approach to Engaging Teams for Real Results” today at 3PM ET. The webinar will cover XINNIX’s findings on the exact correlation of engagement to production. Recent participants have quadrupled their recruiting and driven loan officer production from 3 to 5 units a month.

Upcoming Events and Training

Many title agents and title insurance companies are likely to be involved in some form of Merger & Acquisition transaction. To showcase what’s happening in title M&A moving forward, join Houlihan Lokey for the next String Opportunity-2018 Webinar on March 27th for “Title M&A In 2018 – What You Need To Know.”

Register for the CAMP luncheon on March 28th and learn how to drive more purchase business with ARCH MI’s roadmap to homeownership. Space is limited so register early.

Lenders are looking to form permanent business arrangements to facilitate cross selling opportunities. Recent legal decisions, including the PHH case and developing trends can assist lenders in successfully evaluating and setting up these ventures. Register for the Offit Kurman Attorneys at Law March 30th webinar to hear its discussion on marketing, referrals, and joint ventures from a legal and risk perspective.

The 19th Annual Department of Veterans Affairs (VA) Lenders Conference, hosted at the Hilton Miami Downtown, will be held April 10-12. Come “discuss a variety of topics and issues related to the VA-Guaranteed Home Loan program.”

The MGIC April training webinar schedule is posted for registration opportunities.

In the month of April, National Mi is offering 3 trainings thru its National MI University as follows: Wednesday, April 11, 2018 – Fannie Mae HomeReady Mortgage Overview. Thursday, April 12, 2018 – Self-Employed Borrower. Thursday, April 19, 2018 – How to Manage Generational Differences in the Workforce. Click here for training details and registration.

Wells Fargo Funding, in cooperation with Freddie Mac and National MI, is hosting an in-market, first-time homebuyer/affordable product event in Fort Worth, TX on April 4th from 2:00 – 5:00 p.m. Central (followed by a networking hour from 5-6:30 p.m.). The focal point of this event is to help lenders grow market share in the affordable/first-time homebuyer space covering strategies to connect with first-time homebuyers, Freddie Mac’s Home Possible and provide tips for strengthening your marketing and networking. Representatives from NAHREP, NAREB and Avenue CDC will also be in attendance. If interested, contact a member of your regional sales team or send an email to

The California MBA’s Inaugural Chairman’s Conference is coming up on April 8th-10th at The Lodge at Torrey Pines. the event is limited to ‘C-Suite’ executives at companies that are members of the California MBA. Feature great speakers, including U.S. Rep. Ed Royce (R-CA), senior member of the House Financial Services subcommittee on Financial Institutions and Consumer Credit, and is the Chairman of the House Foreign Affairs Committee.

Don’t miss the opportunity to register for CMLA’s Rocky Mountain Mortgage Lenders Expo on April 12th. Key note speakers include Luis Benitez, Director or the Colorado Outdoor Recreation Industry Office, Steve Scanlon, Rewire, CEO, Ken Perry, The Knowledge Coop, President & Founder and Bronwyn Morrissey, CEO of Bronwyn

Capital Markets

An old adage for bond traders is, “Never bet against the Fed.” The Federal Reserve is much more transparent than in the past as the various Fed Presidents tootle around the nation on speaking gigs. What have the Fed presidents been saying? Boston Fed President Rosengren said he can imagine more than 3 rate hikes this year, along with continued balance sheet loosening to keep the economy growing. Fed Kansas City President George said she is concerned the slow pace of the central bank’s balance sheet unwinding could destabilize markets. She also noted that the economy is currently growing at a moderate pace with full employment and price stability, and the risks to the current outlook seem to be more on the upside.

Dallas Fed President Kaplan said he supports 3 rate hikes this year given the unemployment rate is at 4.1% and represents full employment. Fed Governor Brainard said she expects inflation will hit the Fed’s target this year, so she too supports multiple rate increases. Fed Chair Powell told Congress his personal outlook for the economy has strengthened since Dec 2017; leading pundits to project a faster pace to rate hikes in 2018 and beyond. In good news for banks, he also said the next few years look quite strong and that the country should see robust demand from both consumer and business investment. San Francisco Fed President Williams said he supports 3 or 4 rate hikes this year and that the economy is performing as Fed officials have expected. St. Louis Fed President Bullard said the Fed should not take too aggressive a path on interest rate increases or it could go too far, too fast.

Inflation data at the forefront of the previous week as both the consumer price index and producer price index posted gains. Both the headline and core CPI indexes rose 0.2 percent for the month and the year-over-year headline reading showed prices increased by 2.2 percent. Producer prices also rose by 0.2 percent for the month and were up 2.8 percent year-over year. Nonfuel import prices increased 0.5 percent; the largest since 2011.

While it is still too early to conclude that these price increases are affecting consumer spending, retail sales were down 0.1 percent overall in February though excluding auto sales, total sales rose 0.2 percent. Housing starts were down 7.0 percent in February to a 1.24-million-unit pace following January’s strong start to the year. Housing completions increased to a seasonally adjusted annual rate of 1.32 million units, a 7.8 percent increase from January. The beginning of the year is usually a volatile time for housing starts.

Rising oil prices, budget deficit concerns surrounding reports individual tax cuts could be made permanent, trepidation ahead of today’s FOMC announcement, and a CNBC survey that revealed a growing expectation for higher interest rates caused Treasuries to close lower Tuesday. Supposedly the Trump Administration is preparing to announce $60 billion worth of tariffs on Chinese imports. Additionally, “Phase Two” of the tax plan, which could possibly make individual tax cuts permanent, could be announced around the middle of April. This comes as there is still no agreement in Congress on the allocation of funds for government spending. Passage needs to be secured by midnight Friday to avert a government shutdown. Yawn.

The FOMC statement today, including the expected 25bp rate hike, along with updated Summary of Economic Projections will be released at 2:00pm ET, where increases in both near term growth and inflation forecasts would not be surprising versus December. The market still trades with little regard for inflation given how flat 10s/30s are in addition to near identical breakeven spread in 5-, 10- and 30-year spreads. In addition, given the recent ramp higher in LIBOR, a case can be made that nearly 4 hikes are already priced into the Eurodollar curve. The Fed will take a break from normal desk operations today but will return tomorrow by buying an expected $830 million in 3.5% and 4% securities.

Ahead of today’s Fed events, MBA mortgage applications for week ending March 16 were released: overall -1% with purchases +1% but refis -5%. The Q4 current account deficit widened to $12.2 billion, whatever that means. At 10AM, February existing home sales, expected to fall to 5.32 billion, are due out. Finally, at 2:30PM ET, Fed Chair Powell will hold his first press conference as head of the Fed.We start the day with agency MBS prices unchanged from Tuesday’s close and the 10-year yielding 2.90%.


Floify, the mortgage point-of-sale system for modern LOs, has just reached another major milestone by surpassing 300,000 registered users on their industry-leading platform! This staggering and widespread adoption of Floify has proven the system’s unique ability to meet the diverse needs of LOs and borrowers alike. Since its inception, Floify has grown into a full-fledged mortgage automation solution that streamlines nearly every aspect of the mortgage origination process. Several of Floify’s successes have been attributed to the company’s aggressive approach to building integrations that increase efficiencies with partners like Equifax, AccountChek, Jungo, Byte Software, PerfectLO, SharperLending and their network of 40 CRAs, and more… If you have been considering Floify, now is a great time to take advantage of this incredible solution. To see how Floify can help you streamline your mortgage workflow and get the inside scoop on their upcoming integrations, request a live demo.

Here are 3 sets of results from 3 separate lenders that have been using Sales Boomerang for less than a year: 106 deals for a total of $23MM in volume, 86 deals for a total of $21MM in volume, 77 deals for a total of $15MM in volume. These are results from just three of the many lenders that are using Sales Boomerang. Plug Sales Boomerang into any CRM and enrich your data with near real time Borrower Intelligence. What can you track? Credit Watch, Market Watch, Listing Alerts, Equity Watch and Rate Watch.

Triserv, a national provider of appraisal management services, proudly announces the availability of its new premier integration with Black Knight Financial Services’ RealEC, “which adds an enhanced level of efficiency and automation to the appraisal ordering process within all RealEC based LOS systems including Prime Alliance, Empower, and Mortgage Cadence. Existing customers will notice enhanced response times as all orders are auto-managed by the integration, and appraiser status changes are now communicated via the integration to the lender in real-time, improving speed and transparency on all orders. Triserv is pleased to join the relatively small number of AMCs that boast this full integration with RealEC. Triserv is also fully integrated with the following: Mercury Network (Enterprise Vendor Framework), UPF/Appraisal Firewall, Ellie Mae Encompass (PSDK Top Tier), AppraisalScope, Lending QB (Meridian Link), InHouse Connexions, MortgageBot, LoanLogics, FNC, Calyx Point and Calyx Path, and E-trac.”

Jobs and New Hires

TowneFI is Towne Mortgage Company’s newest formation, combining the best of AmeriCU for Credit Unions and Homeowners Mortgage for Community Banks and Ag Banks, serving both markets for over 25 years. TowneFI is looking for a seasoned, high-energy, Senior Account Executive to partner with Towne to expand its book of business. This rarely available position will have access to multiple operation centers and all products including FHA, 203K, Fannie Mae HomeStyle, HomePath, HomeReady, DU Refi Plus, VA, USDA, and Manufactured Programs. The candidate will have the ability to add an array of account types including Community Banks, Credit Unions, and Ag Banks with execution channels including Retail, Wholesale, and Mini-Correspondent offerings. Come join a growing team! Email Cassi Sluka, HR. us at

Are you a loan servicing expert with a passion for customer service? Center Street Lending is seeking a Vice President of Servicing, “who understands and truly cares about the customer experience and has the know-how to effectively manage loan servicing. The position is based in their headquarters in Irvine, California. Center Street Lending has built a reputation as a premier private money, portfolio leader focused on residential real estate entrepreneurs and customer obsession. Established in 2010, Center Street Lending has consistently and profitably grown year over year, with volume doubling in 2017. If you are interested joining this growth-oriented lending company, contact Robin Gray.”

From Minnesota comes word that Marketplace Home Mortgage, L.L.C. has added Carey Hoel as its VP of Commercial Lending.

LoanCare announced that Rodney Moss will succeed Gene Ross in the role of executive vice president of strategy and business development for LoanCare, and that Ross will retire after almost three decades at the company.

Congratulations to Ms. Mellody Hobson who JPMorgan Chase announced was elected to its Board of Directors. Ms. Hobson, age 48, has served as President of Ariel Investments, LLC, a Chicago-based investment management firm, since 2000. In addition, she serves on the Boards of Starbucks Corporation and The Estée Lauder Companies, Inc

MBS Day Ahead: Fed Day: A User Manual

March 20,2018
by admin

This is a quick guide designed to help you approach this afternoon’s Fed events in a logical and useful way.

What’s Happening Today and When?

At 2pm ET: The Fed’s official policy announcement will be released along with updated “economic projections” (aka “dots”).

At 2:30pm ET: Powell will begin his first press conference as Fed Chair

How do I figure out what’s going on?

If you have the ability to tune in to MBS Live at 2pm, you will see newswire bullet points posted into the live chat. A few minutes later, you will also see an update or alert shortly thereafter discussing the market’s first reaction to the news.

Can I just access the primary material that the newswires are based on?

Yes! Links to the announcement and economic projections will appear on this page (on the March 20-21 line) a moment after 2:00pm ET. You’ll need to click on the PDF version of the “projection materials” in order to see the proverbial “dots.”

What’s all this talk about “dots?”

This refers to the “Dot Plot” that the Fed uses to visually display individual Fed member forecasts for the Fed Funds Rate. It’s grown to be quite a closely followed barometer of Fed sentiment and thus a big potential market mover.

OK, so the dots are important. How about the announcement itself?

Today’s announcement is seen as 3rd fiddle to the dots and to Powell’s press conference. We already know the Fed will hike rates today, and that they won’t be making appreciable changes to forward guidance (i.e. they won’t lay out a new strategy for future policy decisions).

Yeah, what about Powell’s press conference?

This is his first one, so it’s a bit of an unknown. If his congressional testimonies were any indication, there’s certainly a chance that he’ll be the most candid Fed Chair we’ve seen. If he’s candid about a more hawkish outlook, that would be bad for rates. If, on the other hand, he says something about uncertainty/hesitation due to recalcitrant inflation/growth/productivity, it could be very good for bonds. Either way, any big revelation from Powell can overshadow the message from the dots.

So, what does that mean?

It means we could see one reaction at 2pm and another at 2:30pm. These could be synergistic (which would make for the biggest potential movement), or in opposition (which would imply a reversal of the initial move by the end of the day).

Should I lock or float?

If you have to ask, you should lock. Floating is serious business on Fed days. Lock desks often shut down at 2pm or at the very first sign of volatility after 2pm. This means it can be hard to get a lock in before a reprice, no matter how closely you’re watching markets. Granted, if you have plenty of experience with a particular lender and you know they aren’t prone to this behavior, you could still consider a tactical float, but the risks involved cannot be overemphasized.

Hurricanes Weren’t the Only Delinquency Disaster Last Year

March 20,2018
by admin

Natural disasters were the backdrop for mortgage loan performance in 2017. CoreLogic has previously reported on delinquencies in Houston and throughout Florida in the wake of Hurricanes Harvey and Irma and in Puerto Rico after Hurricane Maria. In the company’s Loan Performance Report for December, Chief Economist Frank Nothaft said the West Coast was not immune from the impact of multiple disasters.

“The wildfires in Sonoma and Napa [California] counties began October 8 and destroyed or damaged thousands of homes,” Nothaft said. “Two-and three-month delinquency rates have spiked in these two counties, more than doubling between October and December. The after effects of Hurricanes Harvey. Irma, and Maria continue to appear as well. Serious delinquency rates in the Houston and Miami metropolitan areas doubled between September and year-end and quadrupled in the San Juan area of Puerto Rico. “

The disasters were felt in nationwide delinquency figures. After declining steadily for several years, the rate of mortgages that were 30 or more days past due, including those in foreclosure, did not budge from December 2016 to December 2017, remaining at 5.3 percent. CoreLogic president and CEO Frank Martell said, “These natural disasters have stalled or reversed the decline in the 30-to-119-day delinquency rates that we had seen previously.”

The percentage of mortgages in some stage of foreclosure, that is the foreclosure inventory, did decline on an annual basis, dipping from 0.8 percent in December 2016 to 0.6 percent at the end of 2017.

In addition to delinquency rates, CoreLogic also examines transition rates that indicate the percent of mortgages moving from one stage of delinquency to the next. The share of mortgages that transitioned from current to 30-days past due was 1 percent in December 2017, unchanged from December 2016. By comparison, in January 2007, just before the start of the financial crisis, the current-to-30-day transition rate was 1.2 percent and peaked in November 2008 at 2 percent. The 30-to-60-day transition rose nearly 2 percentage points from December 2016, to 18.8 percent. The transition from 60 to 90 days past due, a period that corresponded with nearly all the natural disasters, jumped nearly 10 points, to 38.1 percent.

Serious delinquencies, defined as 90 days or more past due including loans in foreclosure, declined in every state but Florida and Texas, where they increased, and Alaska and North Dakota where the rates were unchanged. The same situation prevailed in the Core Based Statistical Areas (CBSAs). Delinquencies increased in 33 areas, all in the aforementioned states, with the majority of them in Florida. The rate was unchanged in 11 CBSAs while the remainder saw their rates improve.