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MBS RECAP: Bonds Cap Extraordinarily Tame Week Despite Excuses

  • Posted To: MBS Commentary

    We've seen a whole lot more movement in the bond market for a whole lot less motivation than we had this week. Back to back econ data shockers (Philly Fed and Housing Starts) were scarcely able to get yields back up to Monday morning's highs, and yields hadn't fallen very much to begin with. In other words: "Housing Starts Surge 40% Annually to The Highest in 13 Years" isn't really a headline that jives with 10yr yields rising less than 2bps by the close of business. Oh, and stocks hit all time highs on 4 out of the 5 days. Oh, and the phase 1 trade deal signing went off without a hitch. All that to say that bonds were more than entitled to end up somewhere other than smack dab in the middle of the consolidation range that's been in effect for close to half a year...(read more)

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    Sat, 18 Jan 2020 00:16:05 GMT

Mortgage Rates Off Recent Lows

  • Posted To: Mortgage Rate Watch

    Mortgage rates moved slightly higher over the past two days as strong economic data and corporate earnings coaxed investors into riskier assets like stocks. Bonds (which dictate interest rates) are always being bought and sold, but demand varies depending on investors' risk appetite. If demand for bonds falls as it has in the 2nd half of this week, rates move higher. Fortunately, this move has been very small in the bigger picture. Mortgage rates, specifically, have moved even less than rates associated with other bonds. The average lender is still able to offer 30yr fixed rates of well under 4% on top tier scenarios. And the average borrower wouldn't see more than 0.00125% of difference from the lowest rates in more than 3 months. Bottom line, while rates are slightly higher than their best...(read more)

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    Fri, 17 Jan 2020 23:48:00 GMT

Markets Wrapping Things Up Ahead of Long Weekend

  • Posted To: MBS Commentary

    Sometimes the market moves in clear response to a headline event or the scheduled release of an economic report. We have clear examples of this recently. last week's Iran-related escalation (and de-escalation) had massive and immediate impacts that lined up perfectly with key events in the news. This week's most noticeable move followed perfectly on the heels of yesterday's big beat in the Philly Fed Index (an economic report that frequently moves markets when it's much better or worse than expected). Now today, we're seeing a similar level of movement but without any over cause and effect with respect to news or data. That said, there is still something to connect it to! Simply put, markets moved when a certain portion of the trading community began its day and when a certain...(read more)

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    Fri, 17 Jan 2020 15:47:03 GMT

December's Housing Starts Surged to 13-Year High

  • Posted To: MND NewsWire

    While permits fell from the previous month, the U.S. Census Bureau and the Department of Housing and Urban Development said December was another exceptional month for residential housing starts. Those starts soared to a seasonally adjusted annual rate of 1,608,000 during the month, a 16.9 percent increase from November's estimate which was revised from 1,365,000 to 1,375,000. The December number was the highest monthly rate for starts since the same month in 2006 and was 40.8 percent higher than last year's December pace. Both single-family and multifamily construction were strong. Single-family starts rose 11.2 percent to an annual rate of 1,055,000 from the revised (from 938,000) rate of 949,000 in November. Single-family starts were 29.6 percent ahead of last December's rate of 814,000....(read more)

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    Fri, 17 Jan 2020 15:30:31 GMT

Renovation Products; CEOs Can't Ignore LIBOR Transition; Cap. Markets

  • Posted To: Pipeline Press

    I’ve gotta hand it to those writers who put out listings for real estate agents. Maybe if I had a bunch of money I could live in a “secluded retreat” or an “enchanted villa.” I have never lived in a place described as a “retreat,” having stunning or remarkable views or panoramic vistas in a “gorgeous natural setting.” No luxury living, nor a delightful “chalet.” No soaring ceilings in the spacious great room or mudroom, filled with “warm ambiance.” Prestigious enclave? Nope. Has a house ever brought me conveniences and lifestyle? No. I’ve never lived in a house with casual banquette dining, nor in a “one-of-a-kind cottage.” Sure those are the terms real estate agents use to sell houses. They are...(read more)

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    Fri, 17 Jan 2020 14:22:58 GMT

Home Builders Confidence Remains Near 20-Year High

  • Posted To: MND NewsWire

    The National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI) settled back a bit after its 5-point surge in December took it to its highest level since 1999. The Index, a measure of builder confidence in the market for newly constructed homes, dipped 1 point in January to 75, still remaining above that earlier high. NAHB said, "With the Federal Reserve on pause and attractive mortgage rates, the steady rise in single-family construction that began last spring will continue into 2020. However, builders continue to grapple with a shortage of lots and labor while buyers are frustrated by a lack of inventory, particularly among starter homes." The HMI is derived from a monthly survey that NAHB has been conducting for more than 30 years. The association's new home builder...(read more)

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    Thu, 16 Jan 2020 15:33:55 GMT

MBS Day Ahead: Robust Day of Econ Data and Corporate Earnings

  • Posted To: MBS Commentary

    Bonds continue to be well-contained by the prevailing consolidation range--a series of higher lows and static highs that's been in place in its current form since mid October. A big break outside that range could serve as a cue for sustained momentum in the direction of the break. Think of such patterns as the bond market's way to pause and reflect before choosing the direction of new momentum. As for the underlying data and events that could spark such a breakout, this morning's econ data is the most robust of the week with Philly Fed, Jobless Claims, Import Prices, Builder Confidence and the headliner: Retail Sales. But even this line-up isn't up to the task of generating enough bond movement to break the range (update: the data just came out and indeed, bonds are little-changed...(read more)

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    Thu, 16 Jan 2020 14:07:34 GMT

HUD Jobs; Borrower Satisfaction Report; Vendor News and Updates

  • Posted To: Pipeline Press

    For folks who like numbers and trends, according to the U.S. Census Bureau’s national and state population estimates released in December, 42 states and the District of Columbia had fewer births in 2019 than 2018. Natural increase, or when the number of births is greater than the number of deaths, dropped below 1 million in 2019 for the first time in decades. The nation’s population was 328,239,523 in 2019, growing by 0.5 percent between 2018 and 2019, or 1,552,022 people, which is reflective of a multiyear slowdown since 2014. New York state lost the most population, while California had the largest net domestic migration loss, though still remains the most populous state (39,512,223 people). Nationally, net international migration continues to decrease, falling to below 600k between...(read more)

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    Thu, 16 Jan 2020 13:55:46 GMT

MBS RECAP: Most Interesting Part of Today is That it Comes Just Before Tomorrow

  • Posted To: MBS Commentary

    Today marked a rare mid-week "total dud" in terms of bond market momentum developments. This was made all the more striking by the fact that bonds certainly COULD have developed some sort of reaction strategy based on the particulars of the US/China trade deal signing (it included several new clarifications on the deal). But I'd be the first to admit that trying to connect the dots between those boring trade-related details and actionable decisions in the bond market sounds about as tedious (or even impossible) as any trading motivation I can imagine. So bonds punted, yet again, and in so doing, carved out their narrowest trading range in more than a week. Treasuries gained modestly ahead of the 3pm CME close, but inconsequentially so. As discussed in the attached video, yields...(read more)

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    Wed, 15 Jan 2020 20:42:50 GMT

Mortgage Rate Volatility Still a No-Show For 2020

  • Posted To: Mortgage Rate Watch

    Mortgage rates improved modestly today, adding to yesterday's slightly less compelling improvement. Taken together, they keep an air of calm and steady progress intact during a week that ran the risk of stumbling across volatility. One of the key sources of potential volatility was today's signing of the US/China "phase 1" trade deal. Granted, it was only much of a risk in the event that something unexpected happened. Needless to say, nothing unexpected happened! Mortgage rates and the underlying bond market reacted accordingly as they merely went about their business for reasons known only to the traders pushing the buttons behind the scenes (i.e. market movement was so well contained today that we're not able to connect any underlying events with the movement). All of the above having been...(read more)

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    Wed, 15 Jan 2020 19:37:00 GMT

Lower Housing Affordability Linked to Slower Job Growth

  • Posted To: MND NewsWire

    The National Association of Realtors® (NAR) has uncovered another downside to the increasing lack of housing affordability in the U.S. A new study found that, in many areas where affordability has declined over the last five years, so has the rate of job growth. NAR measures affordability by calculating the ratio of the median family income to the metro area's qualifying income for a home mortgage or QI. QI is the income needed so that the 30-year fixed mortgage payment on a median-priced single-family home purchased with a 20% down payment accounts for no more than 25% of income. NAR looked at the top 174 metro areas and ranked them by this measure of affordability. It them analyzed the shift in each area's affordability ranking and the pace of non-farm payroll job growth (generally known...(read more)

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    Wed, 15 Jan 2020 15:36:08 GMT

VA Removes Loans Limits, Increases Fees

  • Posted To: MND NewsWire

    U.S. military veterans and active duty personnel who buy or refinance a home in 2020 will have more buying power if they use a VA loan. They will also pay more money for that loan. The Blue Water Navy Vietnam Veterans Act of 2019, which become effective on January 1, 2020, will eliminate loan limits on VA loans but will also increase many of the associated fees. VA loans are available with a loan-to-value ratio of 100 percent and in some circumstances the leverage can be even higher. The loans however have always been subject to the same limit that applies to conventional and FHA loans. That limit is $510,400 in most U.S. counties this year, with larger limits in defined "high cost" areas. These limits will no longer exist for veterans with full access to the benefit. The removal of loan limits...(read more)

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    Wed, 15 Jan 2020 15:08:30 GMT

MBS Day Ahead: Dear Bond Market, I Challenge You To Do Something Interesting

  • Posted To: MBS Commentary

    Bonds have been able to put in a few days with moderate movement both higher and lower in yield, but have generally been holding inside a range that is even narrower than the one seen during December. December's range, in turn, was narrower than November's, and so on and so on, all the way back to August 2019. Narrowness is one thing, but it's currently being compounded by a lack movement. In other words, while November was narrower than October in terms of the distance between highs and lows, it at least occurred at slightly different trading levels. Dec and Jan, on the other hand, have each occurred INSIDE November's range. This isn't a very common occurrence for the bond market, and when it happens, it's only a matter of time before more interesting movement starts...(read more)

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    Wed, 15 Jan 2020 14:17:03 GMT

Retention, Fraud Prevention Tools; Events and Training Coast to Coast; Capital Markets

  • Posted To: Pipeline Press

    We find ourselves at Wednesday already. How about some numbers for Hump Day? Years ago Arnold Schwarzenegger famously said, “Having more money doesn't make you happier. I have $50 million dollars, but I'm just as happy as when I had $48 million.” JPMorgan Chase's profit surged 21% in the fourth quarter, reaching $8.52 billion, while Wells Fargo reported a 53 percent year over year drop after setting aside $1.5 billion for litigation fees. The US budget deficit reached $1.02 trillion in 2019, according to the Treasury Department. This marks the first time the deficit has topped $1 trillion since 2012. And Atlas Van Lines tells us that California is simultaneously #1 in both people moving into the state and moving out of the state! (Texans can chant, “We’re #2! We’re...(read more)

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    Wed, 15 Jan 2020 14:07:18 GMT

Mortgage Applications Soar to Best Levels in Over a Decade

  • Posted To: MND NewsWire

    Mortgage application activity exploded out of the starting gate during the first full week of 2020 . The Mortgage Bankers Association's (MBA) said its Weekly Mortgage Applications Survey for the week ending January 10, 2020 showed increases in every category, dramatic ones in most, as rates set new recent lows. The Market Composite Index, a measure of mortgage loan application volume, increased 30.2 percent on a seasonally adjusted basis from the week ended January 3, a period that was still in holiday mode. The previous week's results included an adjustment for the New Year's Day holiday. On an unadjusted basis, the Index was up by 67 percent compared with the previous week. The Refinance Index gained 43 percent from the previous week and was 109 percent higher than the same week one year...(read more)

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    Wed, 15 Jan 2020 13:12:18 GMT

How Downsized Building Trends Affect Bedrooms and Bathrooms

  • Posted To: MND NewsWire

    Builders are struggling to construct homes that are affordable to a greater number of buyers, especially those on the entry level, and they are finding building smaller and leaner is one way to go. Using data from the U.S. Census Bureau's Survey of Construction (SOC) and its Quarterly Starts and Completions by Purpose and Design , the National Association of Home Builders (NAHB) has analyzed the steadily declining size of new houses and the shift in the number of bedrooms and bathrooms within. The decline in the average size of homes constructed since 2016 has been slow but steady (the median size is more volatile) and reached 2,464 square feet (sf) in the third quarter of 2019. The one-year moving average is slightly higher at 2,521sf. NAHB chief economist Robert Deitz says the post-recession...(read more)

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    Tue, 14 Jan 2020 20:38:10 GMT

MBS Day Ahead: Yes, MBS Have Definitely Been Outperforming Treasuries In General

  • Posted To: MBS Commentary

    More often than not during the past few months, a quick glance at the MBS Live dashboard reveals that MBS are making better gains than Treasuries. Is this the way it always is? Is something new and different happening? Why hasn't it been as noticeable in the past? First off, this is definitely not the way it always is. Here's a medium term look at the gap between the computed MBS yield (not an objective number, as it relies on an equation that has to guess how rates will move in the future and how borrowers will respond in terms of refi demand) and 10yr Treasury yields. Clearly, the relative performance ebbs and flows, and we're just more able to notice this instance of outperformance for a few reasons. First off, the past month has been some of the strongest outperformance in recent...(read more)

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    Tue, 14 Jan 2020 14:51:19 GMT

Marketing, Pricing, Sales Tools; FHA, VA, and Ginnie Changes

  • Posted To: Pipeline Press

    There are some clever people out there creating abbreviations and acronyms. Megxit? Yes: Prince Harry and Meghan Markle exiting from certain royal duties. Remember when talking about the economic woes of PIGS (Portugal, Italy, Greece, and Spain) was all the rage? Here’s a new acronym to tuck away that has nothing to do with mortgages: FANG. Analysts are wondering if the FANG stocks (Facebook, Amazon, Netflix and Google parent Alphabet) will continue to lead the stock market in 2020. And there are some clever people, and computers, analyzing demographics. Every LO should know that owning a median-priced, three-bedroom home is more affordable than renting a three-bedroom property in 455, or 53%, of the 855 U.S. counties. Lender Services and Products Imagine receiving your borrower’s...(read more)

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    Tue, 14 Jan 2020 14:00:45 GMT

Mortgage Rates Face More Volatility Later This Week

  • Posted To: Mortgage Rate Watch

    Mortgage rates didn't do much today, and that's good enough news considering the average lender is closer to the lower end of the rate range since early October. The only counterpoint would be that there isn't much distance between the highs and the lows during that time (not a bad thing, just a bit of context). In other words, rates are "pretty close" to the lowest levels of the past several months, but they're also not too far from the highest levels. Rates move when the underlying bond market moves, and it's not uncommon to see a slow start on Monday's that lack meaningful data or headline developments (like today). Potential volatility will be increasing from here, however, with several important economic reports by Thursday morning along with the signing of the US/China phase 1 trade deal...(read more)

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    Mon, 13 Jan 2020 22:32:00 GMT

Finding a Balance Between Mortgage Availability and Default Risk

  • Posted To: MND NewsWire

    CoreLogic is continuing its analysis of the potential impact of the January 2021 expiration of the so-called "GSE Patch." Under the Consumer Financial Protection Bureau's (CFPB's) 2013 Ability-to-Repay (ATR) and Qualified Mortgage (QM) Rules, lenders must make a reasonable, good faith determination of a consumer's ability to repay a mortgage loan based on verified financial information generally associated with responsible mortgage lending practices. In most cases, meeting QM requirements provides lenders with a safe harbor from the Rules' legal liabilities. Lenders who fail to comply can be held liable for damages by both the CFPB and the homeowner. The Patch provides a temporary category under ATR and QM rules under which loans eligible for purchase or guarantee by the GSEs Fannie Mae and...(read more)

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    Mon, 13 Jan 2020 18:36:58 GMT

MBS Week Ahead: Limited Econ Data and Phase 1 Trade Deal Signing

  • Posted To: MBS Commentary

    Rather than serve to accelerate or crush the negative bond market momentum building at the end of 2019, 2020 has only compounded the broader sideways trend. It hasn't been as boring as "sideways" tends to be either! Credit the Iran flare-up for most of that volatility. It was responsible for the sharp surge toward lower yields though last Tuesday and the de-escalation gets credit for the slightly less sharp return to weaker levels. Notably, there hasn't been a stampede back to the higher yields from late 2019--a fact that could reflect some lingering doubts about Middle East risks or perhaps even the implications of last week's jobs report (i.e. slower than expected growth and a big drop in average earnings). While it may seem like a bit of a stretch to pin bond market...(read more)

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    Mon, 13 Jan 2020 15:10:24 GMT

Compliance, LO Tools; Deep Dive Into W-2 vs.1099 and the SAFE Act

  • Posted To: Pipeline Press

    Lenders, and all financial sector firms, continue to ruminate on the privacy law in California that now gives people the right to access and delete personal data companies have collected. LOs are ready and willing to delete all client information from their database, right? The law applies to any firm that has clients in the state. SIFMA provided comments on the policy, and other groups have plenty of warnings for financial firms. Pay attention, lest your state enact something similar. Susan Milazzo , the CEO of the California MBA , wrote, “T he CCPA gives consumers the right to ask businesses, that fit certain criteria, to provide them all of the personal information that business has on them and/or ask the business to delete that information.” Lender Products and Services Ready...(read more)

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    Mon, 13 Jan 2020 14:03:00 GMT

Smooth Sailing Until It's Not Anymore

  • Posted To: Mortgage Rate Watch

    Mortgage rates had been moving higher over the past few days. The average lender was at the highest levels of the month as of yesterday morning, but things began to change shortly thereafter. Today's market movement added to the friendly momentum after the big jobs report came out slightly weaker than expected (in general, weaker economic data is good for rates). By the end of the day, the average lender had erased yesterday's weakness, but didn't quite make it back to the levels seen on Monday and Tuesday. That said, I'm splitting hairs by pointing out any difference between the two. The bigger picture continues to be the more interesting point of consideration. For every rate-friendly anecdote there's an equal and opposite counterpoint at the moment. This jives perfectly with the intensely...(read more)

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    Fri, 10 Jan 2020 23:43:00 GMT

Smaller, Smarter: How Builders are Changing Housing and Courting Millennials

  • Posted To: MND NewsWire

    After the housing crash and as the recovery began home builders ratcheted up the size of the homes they were building because the profit margin was higher on larger homes. There was also a lot of competition at lower price points from the numbers of distressed properties for sale. Now they are not only rethinking that strategy but apparently acting to reverse it. Paul Davidson, writing in USA Today , says it is getting easier to find smaller and more affordable newly constructed homes. One builder, Alure Homes, told Davidson that homes priced under $300,000 made up about 50 percent of the company's production last year , up from 20 to 30 percent in the previous six years. Builders have been trying to lower the costs of construction but have been fighting a lot of headwinds . The National Association...(read more)

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    Fri, 10 Jan 2020 19:24:02 GMT

MBS Day Ahead: Bonds Doubling Down on Sideways Bets

  • Posted To: MBS Commentary

    With NFP coming out just slightly weaker than expected and the bond market not undergoing much of a reaction in either direction, the rest of the day becomes a relative non-event in the bigger picture. This is in the same vein as a much bigger anticlimactic de-escalation seen earlier this week with respect to the potential for war to break out in the Middle East. If such a thing had happened, bonds would surely have broken the lower boundary of the prevailing yield range. Since it didn't happen, here we are again... stuck in the middle. Without a war, or a major development on the US/China trade deal, the market will be forced to get back to the business of following along with economic data. That, too, is a challenge due to the lingering and uncertain impact on business confidence (and...(read more)

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    Fri, 10 Jan 2020 15:02:49 GMT