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MBS RECAP: Stock Selling Helped, But Bonds Were Already Rallying

  • Posted To: MBS Commentary

    At the start of the overnight session (yesterday night), 10yr yields were up around 1.58%. By 1030am ET, they'd already fallen to 1.525%. Up until that time, we hadn't heard so much as a peep out of global equities markets even though they would go on to get credit for the day's big move in bonds. If you're picking up what I'm layin' down here, the point is that bonds were already most of the way to their destination well before stocks had a chance to exert influence. Nonetheless, the stock swoon in the 11am hour managed to impress. The S&P lost more than 40 points in short order and bond yields were compelled to plumb new lows for the day, even if those lows were only 2bps below the morning's best levels. Although coronavirus headlines got a lot of attention...(read more)

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    Thu, 20 Feb 2020 21:35:58 GMT

Mortgage Rates Back Near Multi-Year Lows

  • Posted To: Mortgage Rate Watch

    Mortgage rates haven't been this low for this long in years--3.5 years to be exact. Brexit was the talk of the town in the middle of 2016 and it resulted in rates very close to all-time lows for well over 3 months (all of July, Aug, Sept). Although rates aren't quite as low this time around, they average lender is still quoting 3.5% or lower on top tier scenarios. That's only happened on a consistent basis in 2016 and 2012. Moreover, the current stint is approaching a month in length. Combine that with the fact that rates haven't been over 3.875% since the middle of 2019, and the current mortgage environment is more than worthy of being viewed in the same legendary light as 2012 and 2016. In 2012 it was the European crisis and massive central bank bond buying. In 2016 it was Brexit and massive...(read more)

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    Thu, 20 Feb 2020 20:52:00 GMT

Consolidation Setting Sights on Next Week

  • Posted To: MBS Commentary

    In case you're just joining us, there's a consolidation going on in the bond market. That means yields are trading in a progressively narrower range after making a relatively bigger move. It happened in grand fashion in the second half of 2019 and we're seeing a smaller scale example so far in 2020. The "relatively bigger move" in question January's drop in rates, precipitated by the ramping-up of coronavirus fears. In many significant ways, coronavirus continues keeping a lid on yields, even though traders are also considering things like Fed policy, the 2020 presidential election, and economic data. Econ data would be a lot more significant if it weren't for coronavirus. Reason being: the current crop of reports must now be taken with a grain of salt because...(read more)

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    Thu, 20 Feb 2020 15:23:45 GMT

Lower Rates Helped Raise January Closing Rate

  • Posted To: MND NewsWire

    The slight drop in mortgage rates in January stabilized refinance originations according to the January Origination Insight Report from Ellie Mae. The 3 basis point dip to an average rate of 3.96 percent kept the refinancing share of closed loans at 46 percent, unchanged from December . Conventional loan refinances increased from 53 percent in December to 55 percent in January, while the refinance share of VA and FHA loans declined by 4 and 3 percentage points respectively. Conventional loans accounted for 71 percent of all loans closed during the month, up 1 point. FHA's 16 percent share was 1 point lower than in December as was the 8 percent share of VA loans. Adjustable rate mortgages had a 6.3 percent share, up a point from December. The time to close all loans remained at 48 days for the...(read more)

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    Thu, 20 Feb 2020 15:20:45 GMT

HELOC, Construction, and Title Products; Digital Borrower Solutions

  • Posted To: Pipeline Press

    Morgan Stanley buying E-Trade is causing some chatter this morning, and last night’s Democratic debate had plenty of chatter. (Some would use a stronger term than “chatter.” By the way, here’s a quick, easy quiz about which candidate agrees with your views.) Our industry is filled with “chatter,” the latest example being rumors of PHH and Citi re-entering the correspondent channel. (One small mortgage banker retorted, “If they do, I hope that Citi doesn’t try to charge me a pair off fee on a best efforts lock like it did before!”) Perhaps the competition will lead to a better secondary market price for some loans for some lenders, and counteract some of the potential lost profits from FHA loans IF Chase and Wells return to offering that...(read more)

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    Thu, 20 Feb 2020 13:50:53 GMT

A Sharp Increase in January Housing Permits Defies Predictions

  • Posted To: MND NewsWire

    Residential construction data was mixed at the kick-off of the new year. Permits increased significantly while both housing starts and completions pulled back from December numbers. The U.S. Census Bureau and Department of Housing and Urban development reported that permits for residential construction were issued in January at a seasonally adjusted annual rate of 1,551,000. This is 9.2 percent higher than the December estimate of 1,420,000, revised from the 1,416,000 permitting rate originally reported. The uptick in permitting during January as well as in the fourth quarter of last year has boosted the rate 17.9 percent higher than in January 2019. Permits were substantially higher than even the most optimistic predictions from analysts polled by Econoday. They forecast results in a range...(read more)

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    Wed, 19 Feb 2020 15:53:23 GMT

Compliance, Servicing, Renovation, Broker Products; Shifts in Freddie and Fannie

  • Posted To: Pipeline Press

    Everyone is looking to increase production and cut expenses. MI companies, for example, are re-focusing on their highlighting their value proposition while evaluating their cost structure: what good does it do to have personnel calling on branches when many loan officers work from home and rarely go into the office? For lenders, the MBA’s calculations for the cost to produce a loan in the 4th quarter will be out in mid-March. But it is worth remembering that its last study showed the cost in the third quarter was $7,217 for non-depository lenders, down from the all-time peak of $9,300 in the first quarter of last year. Costs tend to be lower in the middle part of the country versus the coasts for several reasons, including the cost of land and building. Here in Charlotte there is a decent...(read more)

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    Wed, 19 Feb 2020 14:57:02 GMT

MBS Day Ahead: Bonds Trying to Find Footing on a Ceiling

  • Posted To: MBS Commentary

    Thinking about the bond market in terms of rates and yields affords certain analytical luxuries. One is the ability to think in "upside down" terms where fans of low rates hope to break floors and find footing on ceilings. The most recently established floor for 10yr yields was 1.575 as of the end of last week. Yields had bounced there several times without any solid attempt to break through. The over-the-weekend gains changed things. With yields beginning the week yesterday at 1.54% and change, we had a clear first line of defense at the 1.575 ceiling. Traders didn't waste much time testing its strength yesterday as there was a very quick move from 1.54 to 1.575 early in the day. But the ceiling held and it endured 2 additional bounces in the overnight session. Now in the domestic...(read more)

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    Wed, 19 Feb 2020 14:26:03 GMT

Refi Applications Ebb, But The Boom Goes On

  • Posted To: MND NewsWire

    Mortgage loan applications submitted during the week ended February 14 declined for the first time since mid-January. The Mortgage Bankers Association said its Market Composite Index, a measure of mortgage loan application volume, decreased 6.4 percent on a seasonally adjusted basis compared to the week ended February 7. On an unadjusted basis, the Index lost 5 percent. The Refinance Index also fell for the first time in for weeks , decreasing 8 percent from the previous week. However, it was still 165 percent higher than the same week one year ago . Refinancing applications accounted for 63.2 percent of total applications, down from 65.5 percent a week earlier. The seasonally adjusted Purchase Index decreased 3 percent but was up 2 percent on an unadjusted basis. Applications were 10 percent...(read more)

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    Wed, 19 Feb 2020 13:34:37 GMT

Fannie Mae Upgrades GDP, Many Housing Forecasts

  • Posted To: MND NewsWire

    Fannie Mae says the U.S. economy appears to be sustaining itself despite both the problems faced by Boeing and the fears about the global impact of the coronavirus. The company's Economic and Strategic Research (ESR) group is upgrading its forecast for business fixed investment (BFI) in the second half of 2020 and beyond and have upgraded expectations for the GDP in both 2020 and 2021 by a tenth percent to 2.2 percent and 2.1 percent respectively. The company's economists also expect greater strength in every part of the housing market over the next 18 months. The group did substantially downgrade their annualized GDP forecast for the first quarter of this year from 2.3 percent to 1.9. They state that this does not reflect a change in their view of underlying growth but rather that expected...(read more)

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    Tue, 18 Feb 2020 20:33:38 GMT

Mortgage Rates Head Back Toward Long-Term Lows

  • Posted To: Mortgage Rate Watch

    Mortgage rates are starting the new week off on a stronger note after concerns over coronavirus impacts moved markets over the weekend. While coronavirus won't spell the end of humanity, it will undoubtedly have an impact on global commerce. This was reinforced over the weekend as Apple warned that sales would be impacted. That's a fairly high profile endorsement of fears that skeptics had been downplaying for weeks. When investors account for a slower global economy or even something as simple as "uncertainty," we generally see less of a willingness to buy stocks accompanied by increased demand for bonds. As demand for bonds increases, bond prices rise and bond yields fall. Bond yields are tantamount to "interest rates." While the coronavirus epidemic may fall out of the spotlight in the coming...(read more)

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    Tue, 18 Feb 2020 20:01:00 GMT

Mortgage Rates Head Back Toward Long-Term Lows

  • Posted To: Mortgage Rate Watch

    Mortgage rates are starting the new week off on a stronger note after concerns over coronavirus impacts moved markets over the weekend. While coronavirus won't spell the end of humanity, it will undoubtedly have an impact on global commerce. This was reinforced over the weekend as Apple warned that sales would be impacted. That's a fairly high profile endorsement of fears that skeptics had been downplaying for weeks. When investors account for a slower global economy or even something as simple as "uncertainty," we generally see less of a willingness to buy stocks accompanied by increased demand for bonds. As demand for bonds increases, bond prices rise and bond yields fall. Bond yields are tantamount to "interest rates." While the coronavirus epidemic may fall out of the spotlight in the coming...(read more)

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    Tue, 18 Feb 2020 20:01:00 GMT

Builder Confidence Survey Shows Optimism is Still High

  • Posted To: MND NewsWire

    Builder confidence dipped a notch in February but still remains at elevated levels. The National Association of Home Builders (NAHB) says its Housing Market Index (HMI) which it sponsored with Wells Fargo, edged 1-point lower to 74. Even with this change, the Index remains high. Readings over the last three months represent the most optimistic outlook on the part of builders since December 2017. The HMI is the result of a survey conducted by NAHB each month among its new home builder members. NAHB chief economist Robert Dietz said, " Steady job growth, rising wages and low interest rates are fueling housing demand in a market that lacks inventory, particularly at the entry-level. At a time when demand is on the rise, regulatory constraints along with a shortage of construction workers and a...(read more)

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    Tue, 18 Feb 2020 15:40:09 GMT

MBS Week Ahead: Bonds Begin Week With an Upbeat Signal

  • Posted To: MBS Commentary

    The ability of the bond market to defy the cues seen elsewhere in the financial market has been relatively impressive over the past few weeks. It could even be a bit puzzling, at times. Specifically, global financial markets freaked out about coronavirus. Stocks and bond yields fell abruptly. Coronavirus case count growth then stopped accelerating and financial markets began to move in the other direction. This was especially true for the US stock market, and I would go so far as to say "mostly true" for Chinese equities markets. But bonds generally continued calling those bluffs. As a new week begins, those bets look a little less reckless, and any additional gains would make them look downright prescient. Bonds are leading the charge because, unlike stocks (which can follow flights...(read more)

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    Tue, 18 Feb 2020 14:13:26 GMT

Broker, Sales, Processing Products; Coast-to-Coast Training and Events

  • Posted To: Pipeline Press

    Odd times that we’re living in. Here in New Orleans (“Anything worth doing is worth overdoing!”) some of the talk is about the Boy Scouts of America declaring bankruptcy due to sex abuse lawsuits, some of the talk is about the coronavirus “How Epidemics Impact Lending” ), but the primary conversation topic is about how most lender’s January locks have beaten any other January. Everyone’s above average! For lenders and vendors, the good times from 2019 seem to have flowed through. 2020 is off to a fine start and with little reason for U.S. rates to shoot higher, our industry should continue to help millions of borrowers. Lender Products and Services NEXT has been cultivating a reputation for high-quality networking and conference programming ever since...(read more)

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    Tue, 18 Feb 2020 13:32:11 GMT

MBS RECAP: Super Sideways Bonds Add To The Mystery

  • Posted To: MBS Commentary

    Until today, even though bonds were already in a sideways pattern, we would have to have given the nod to the uptrend in rates vs the downtrend (2 competing trends are colliding, forming a consolidation pattern). Today's gains complicated that assessment and left the pattern more or less perfectly flat. Seeing as how a 3 day weekend is on top, that's actually not a huge surprise, even if it's different than what we were expecting yesterday. One good that came of today's session was the bond market's abundant willingness to react to economic data that was likely to be the week's most important. Specifically, Retail Sales revisions painted a bleaker picture of the consumer sector--especially when viewing the data in "core" format (i.e. excluding autos/gas/food...(read more)

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    Fri, 14 Feb 2020 22:27:11 GMT

Mortgage Rates Hangin' Tough Despite Stock Market Recovery

  • Posted To: Mortgage Rate Watch

    Mortgage rates have primarily been at the whim of the general tone of coronavirus news for the past few weeks. That meant a swift move to multi-year lows followed by an uneven correction back toward higher levels. But the correction has been anything but threatening, and it stands in stark contrast to a much sharper correction seen in the stock market (i.e. stocks quickly got over coronavirus fears and returned to all-time highs). Why are rates able to hang tough at levels that are still quite close to long-term lows while other parts of the market seem to have moved on? Although the US stock market has moved on to some extent, Asian equities markets have not. They are pricing in the global economic impact that will ultimately be seen due to coronavirus. Granted, that impact may not be huge...(read more)

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    Fri, 14 Feb 2020 21:02:00 GMT

MBS Day Ahead: Uncertainty Actually Means Uncertainty

  • Posted To: MBS Commentary

    I'll admit, there are times where I point out some chart-based evidence of uncertainty in the bond market and I feel like we're just delaying an inevitable move. The most recent sideways consolidation felt like that yesterday. Sure, yields were locked inside a nice, linear consolidation range, but with the coronavirus situation apparently improving and US stocks at all-time highs, it felt like we were merely waiting for rates to eventually break higher. What a difference a few hours can make! Stocks are still pretty close to those all-time highs, but bonds have moved to heavily favor the lower end of the recent range. Whereas I noted that the upwardly-sloped trend line was better established yesterday, today's gains quickly level the playing field (i.e. both of the red lines in...(read more)

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    Fri, 14 Feb 2020 15:32:01 GMT

Servicing, 203(k) Products; Conventional Conforming Underwriting Shifts

  • Posted To: Pipeline Press

    Does anyone out there care that credit-card debt rose to a record $930 billion in Q4 2019? (Total mortgage debt hit $9.56 trillion.) How about that the origination cost of over $8,000 per loan hits low balance loan borrowers more than high balance borrowers? Do you break out your “tech spend” per loan? Has it gone from hundreds to thousands of dollars? Residential lending is truly a numbers game. According to Informa Financial Intelligence January 2020 Mortgage Originations Data, rate-lock volume has increased 71% YoY and 42% MoM across all channels, while funded volume has increased 70% YoY and fallen 10% MoM. In the Retail channel, lock volume has increased 78% YoY and 48% MoM, while funded volume has increased 94% YoY and fallen 17% MoM. Average 30-year Conforming FRM funded...(read more)

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    Fri, 14 Feb 2020 14:14:47 GMT

Fannie/Freddie Report Growing Net Worth Under new Policy

  • Posted To: MND NewsWire

    Both of the government sponsored enterprises (GSEs) posted strong earnings for the fourth quarter of 2019 as well as for the entire year. They are now reporting growing net worth after achieving revisions in the 2012 version of their agreement with the U.S. Treasury that allows them to retain their earning. Fannie Mae reported net income of $14.16 billion for 2019 and fourth quarter earnings of $4.37 billion. The annual income was down from $15.96 billion in 2018, but quarterly income was $402 million higher than that generated in Q3. Net revenues for the year rose from 21.93 billion in 2018 to $22.14 billion last year and from $5.23 billion in the third quarter to $5.85 billion. Revenue includes both net interest income and income from fees. Interest income increased from $5.23 billion in...(read more)

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    Fri, 14 Feb 2020 13:14:46 GMT

Proposed 2021 Budget Would Increase G-Fees

  • Posted To: MND NewsWire

    The 2021 Federal Budget prepared by the White House is given little chance of passing Congress but there are a couple of provisions buried in the hundreds of pages of text that might be of interest to MND readers. One is a 10-basis point increase in g-fees , the guarantee fees the government sponsored enterprises (GSEs) Fannie Mae and Freddie Mac charge lenders for guaranteeing loans. The White House estimates the new fee will generate $34 billion over the next 10 years. The current fee averages about 55 basis points including a 10-basis point fee put in place in 2011 to fund the Temporary Payroll Tax Cut. Legislation enabling that fee will expire in 2021 and it is estimated to have generated $31 billion over the last ten years. What is unclear is whether the new fee would be in addition to...(read more)

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    Thu, 13 Feb 2020 16:03:10 GMT

MBS Day Ahead: Beware The (Ongoing) Bounce

  • Posted To: MBS Commentary

    Fancy chart overlays and technical studies are frustrating in the sense that they give us another angle to understand and discuss market movement, but they fall far short of reliably predicting the future. Spoiler alert: that holy grail won't ever exist when it comes to legally tradeable, publicly available market insight because, if it did exist, word would get out, the trade would become crowded, and it would no longer be a money maker. But let's forget I said all that so I can sell you a bit of this snake oil. It's like taking elderberry extract when you think you might be getting sick. If you don't get sick, was it the elderberry? Will you ever know? Same story with momentum technicals in the bond market. Both shorter and longer-term momentum technicals hit overbought levels...(read more)

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    Thu, 13 Feb 2020 15:15:41 GMT

LO Jobs; Subservicing, Broker, Originator Products; Vendor Alliances Increasing

  • Posted To: Pipeline Press

    Do we really have nine more months until the actual election? While you’re answering questions, does someone in your office speak Spanish? Tagalog? Mandarin? Canine ? The minority homeownership rate rose to 48.6% year over year in the fourth quarter of 2019, up slightly from the fourth quarter of 2018, according to new data from the Census Bureau’s Housing Vacancies and Homeownership survey . This year over year gain is higher than the gain in the overall U.S. homeownership rate (up 0.3 percentage points to 65.1%) and marks the highest minority homeownership rate since 2011. (White homeownership stands at nearly 74 percent.) San Francisco has its share of minorities, lots of homeless people, a permit process that is one of the most onerous in the nation, and a mayor who is pushing...(read more)

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    Thu, 13 Feb 2020 14:17:17 GMT

Q4 Mortgage Delinquencies Reach All-Time Low

  • Posted To: MND NewsWire

    The fourth quarter report on mortgage delinquencies from the Mortgage Bankers Association (MBA) continues to show problem loans at historically low levels. MBA's National Delinquency Survey puts the seasonally adjusted delinquency rate at 3.77 percent of outstanding loans. This was a 20-basis point (bp) decline from the previous quarter and a 29 bps year-over-year improvement. Foreclosure starts were unchanged at a rate of 0.21 percent. "The mortgage delinquency rate in the final three months of 2019 fell to its lowest level since the current survey series began in 1979," said Marina Walsh, MBA's Vice President of Industry Analysis. "Mortgage delinquencies track closely to the U.S. unemployment rate, and with unemployment at historic lows, it's no surprise to see so many households paying their...(read more)

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    Thu, 13 Feb 2020 13:18:54 GMT

Home Price Gains Picked Up Speed in Q4

  • Posted To: MND NewsWire

    Inventory issues remain a major concern and are pushing home prices in urban America still higher. The National Association of Realtors'® (NAR's) quarterly report on metropolitan home prices says 170 or 94 percent of the 180 metropolitan statistical areas (MSAs) it tracks, posted appreciation in their median home price during the fourth quarter of 2019. Ninety-three percent had gains in the third quarter. The national median existing single-family home price was up 6.6 percent from the median of $258,000 a year earlier. The annual rate of appreciation was 5.1 percent in the third quarter. "It is challenging - especially for those potential buyers - where we have a good economy, low interest rates and a soaring stock market, yet are finding very few homes available for sale," said Lawrence...(read more)

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    Thu, 13 Feb 2020 13:16:03 GMT