ALLIED EQUITY A Diversified Mortgage Company
400 North Mountain Ave., Suite 223, Upland, CA 91786
Phone  909-932-9226 Fax  909-803-9840

Mortgage Related News

Enforcement Action Webinar; Non-QM Snapshot; German 10-year Yield Drops Below 0%

Posted To: Pipeline Press

Congrats to former President Jimmy Carter. As of today he is no longer just the oldest living U.S. president, but now is the longest-living in the nation's history. Created in 1986 LIBOR was not around during his presidency, but the transition away from using LIBOR is also making news. The Alternative Reference Rates Committee, a Federal Reserve-backed advisory panel, says it wants to see, by June, a computer model for mortgages that incorporates an alternative interest-rate benchmark to replace Libor. Daniel Coates, a Federal Housing Finance Agency official and a panel member, says that is "a really aggressive deadline." (LIBOR, by the way, is owned by ICE , who also, for the folks playing along at home, owns MERSCORP Holdings who brings us MERS .) Lender Products and Services On March 26...(read more)

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MBS RECAP: Bonds Take a Day to Digest Fed Day as Stocks Finally React

Posted To: MBS Commentary

Apparently it took the 9:30am NYSE opening bell ringer for stocks to truly realize what just happened. The Fed announcement on Wednesday was their way of saying "sorry" to stocks for the "steady as she goes" approach to tighter monetary policy in December. As of Wednesday the Fed's median outlook for the Fed Funds Rate is now half a point lower for 2019-2020 and whereas Powell said in December that the balance sheet runoff was on autopilot with no reason for that to change, the just-announced change has the Fed completely doing away with balance sheet runoff on October 1st, and taking a $15bln/mo bite out of it starting in May. So just to be clear... that's by far the biggest downward adjustment in the Fed's rate hike outlook we've seen in more than a decade...(read more)

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Mortgage Rates Move Deeper Into Long-Term Lows

Posted To: Mortgage Rate Watch

Granted, we're not back to the sub-4% mortgage rates that dominated much of the past 8 years, but breaking into the high 3% range is a valid consideration after the past few days. Yesterday's surprising Fed news hit the rates that were already holding near their lowest levels in well over a year. The net effect has been a decisive break lower with the average lender easily able to offer 4.375% on a typical 30yr fixed scenario. Many lenders are at 4.25%, and the interesting thing about 4.25% is that it currently doesn't cost much more to buy your way down to the next lower rate: 4.125%. All of the above has to do with the upfront prices associated with interest rates. For instance a lender is going to earn more money from a 4.375% rate than a 4.25% rate, so they're willing to pay a bit more...(read more)

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Both Closing Times and Pull Through Rates Improved in February

Posted To: MND NewsWire

Ellie Mae's Origination Insight Report for February is headlined by both a decrease in closing times and, more significantly, further declines in mortgage interest rates. The company said the average interest rates for loans originated on its platform during the month was 4.86 percent. This was 15 basis points lower than the January average. Closing times were shortened by two days to 43. Timelines for refinancing were down three days to 35 and purchase loans took 47 days, two fewer than in January. Purchase loans represented 66 percent of the total, up 1 percentage point from the previous month. The share of adjustable rate mortgages declined to 7.6 percent from 8.6 percent. "Purchase percentages have increased following both the holiday season and the 30-year note rate decline," said Jonathan...(read more)

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Vendor Management, Appraisal, and Compliance Products; FHA Changes Turning Heads

Posted To: Pipeline Press

Want a growth industry? How about aging? PulteGroup's Del Webb 55+ brand will build 10 new Del Webb communities , planned to open over the next 18 months. Boomers welcome! Another growth industry is…Wite-Out?! Often used as the butt of jokes about using it to “fix” mortgage applications, correction fluid sales are doing fine (+1%) as Wite-Out sales rose 10 percent in 2017 versus the flat U.S. stationary and office supply market. So someone out there is using it. Lender Services and Products Maxwell’s industry-leading digital mortgage point-of-sale continues to get even better. Maxwell just announced their integration partnership with pricing leader Optimal Blue, enabling loan officers to run and save scenarios from within a borrower file. Maxwell’s elegant integration...(read more)

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MBS Day Ahead: Anything Other Than a Crushing Defeat is a Big Victory

Posted To: MBS Commentary

In case you missed yesterday, it was a doozy. Here are a few links that would help you get caught up: Here's Why Bonds Loved The Fed (And It's NOT The DOTS) Fed Officially Announces Big Bond-Buying Change yesterday's Fed Announcement bullets (MBS Live members) Fed Bond-Buying Shocker: What Happened and Why Markets Are Reacting (MBS Live members) Long-story short, the Fed announced an end of the balance sheet runoff process by October 1, 2019, and a decrease of $15bln/month in the runoff amount starting in May 2019. Any decrease in the runoff amount is equivalent to an increase in Fed bond-buying. To be clear, that's an extra $15bln a month in May, another $15bln a month in October, PLUS another $15bln or so from MBS proceeds (which weren't part of the plan over the next...(read more)

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Delinquencies Increase, But Still Down on the Year

Posted To: MND NewsWire

Mortgage performance, usually at its best in February and March, because it is assumed that tax refunds allow people to catch up on financial obligations. But, with data in on February, Black Knight says this year may be an exception to that rule. In its First Look at the month's numbers the company says loan delinquencies rose in February for the first time in 12 years. There were 74,000 more loans that were 30 or more days past due than in January, an increase of 3.7 percent. Even with that spike, there were still 9.5 percent or 179,000 fewer delinquencies than in February 2018. At the end of the month 2.02 million loans nationwide were delinquent but not in foreclosure, a rate of 3.89 percent. Other performance measures continued to improve. Serious delinquencies, loans 90 or more days past...(read more)

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Homebuying Attitude Perked Up in Q1

Posted To: MND NewsWire

Consumer attitudes about buying a home seem to be slowly swinging back to positive . The National Association of Realtors ® , in its Housing Opportunities and Market Experience (HOME) survey for the first quarter, found 37 percent of respondents strongly believe now is a good time to buy. Only 34 percent expressed that sentiment in the fourth quarter 2018 survey although recent responses are still down from 38 percent one year ago. Only 35 percent of respondents said that this is not a good time to buy a home, compared to 37 percent in 2018's fourth quarter. The survey also found that a majority of those polled, 53 percent, felt the economy is improving, down from 59 percent at the end of last year. The opinion was strongest among those earning $100,000 or more and those who live in rural...(read more)

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MBS RECAP: Here's Why Bonds Loved The Fed Today (And It's NOT The DOTS)

Posted To: MBS Commentary

You may see news stories about the Fed shifting its rate hike outlook (conveyed in a dot plot often referred to as "the dots") to "zero hikes in 2019," but that's not today's big news. Today's big story is exactly the one we were looking for: a concrete announcement on the Fed's bond-buying plans. Specifically, the Fed's previous policy of allowing its balance sheet to shrink by a predetermined amount every month is officially on borrowed time . Starting in May 2019, the Fed will lower the maximum runoff amount from $30bln to $15bln per month. Simply put that's an immediate $15bln month injection of new bond buying demand. If I had to guess (and I don't anymore), I'd say that is both sooner and a bigger move than the market was expecting....(read more)

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Mortgage Rates Surge to New Long-Term Lows After Fed

Posted To: Mortgage Rate Watch

Mortgage rates broke a week-long streak of silence today following a policy announcement from the Federal Reserve. Even before today's Fed announcement, we knew we'd likely be seeing a move in rates. We just didn't know in which direction, or at what pace. As it happens, we were treated to the best case scenario on both accounts (i.e. rates moved lower at a fast pace). As we discussed yesterday, it was the Fed's balance sheet that got most of the attention from financial markets. This refers to the Fed's loan portfolio consisting of Treasuries and mortgage-backed-bonds (both forms of loans that entitle the Fed to collect interest and principal payments). As those payments came in, the Fed had previously been putting the money back into new loans (buying new bonds to replace the old ones). They...(read more)

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The Fed Officially Announces Big Bond-Buying Change

Posted To: MBS Commentary

Market participants sensed that the Fed was suddenly changing its tune with respect to its balance sheet back in January. The balance sheet primarily refers to all the bonds the Fed purchased as a part of the various Quantitative Easing plans conducted throughout the recovery to the Great Recession. At the time, those QE plans technically involved "printing money." But it wasn't just money dropped from helicopters. The money was used to buy investments--in this case Treasury and Mortgage-Backed-Securities debt. Those bonds earn the Fed some income and they also get the principal returned when the bonds mature. The Fed HAD been using that incoming principal to buy more of the same bonds until 2018, when they began letting the balance sheet "runoff" by a controlled amount...(read more)

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What Changed in The New Fed Statement?

Posted To: MBS Commentary

Below are the differences in the first paragraph of the current Fed statement as compared to the previous version from January 30th, 2019. There were no changes beyond the 1st paragraph. The full statement can be found HERE . Information received since the Federal Open Market Committee met in DecemberJanuary indicates that the labor market hasremains continuedstrong tobut strengthenthat andgrowth thatof economic activity has beenslowed risingfrom atits a solid rate in the fourth quarter. JobPayroll employment was little changed in February, but job gains have been strongsolid, on average, in recent months, and the unemployment rate has remained low. HouseholdRecent spendingindicators haspoint continued to growslower strongly, while growth of household spending and business fixed investment...(read more)

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Fannie Mae Predicts Slower Growth, Fewer Rate Hikes

Posted To: MND NewsWire

Forecasts of slowing economic growth have been the norm for some time, but it is easy to sense greater confidence lately among those making them. Fannie Mae's March Economic Developments report is predicting growth will slow from 3.1 percent in 2018 to 2.2 percent over the course of this year. The company's economists see the boost from the Tax Cuts and Jobs Act fading, business investment and consumer spending slowing, and a number of other factors, including several global ones and others related to trade. They also see the risks to their forecast being primarily on the downside, although some of those risks have lessened over the last month. There have been some negative milestones in recent months. Personal consumption expenditures slowed from 3.5 percent in the third quarter to 2.8 percent...(read more)

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Sales, Investor, Construction Products; Servicing Study; Citi's Penalty

Posted To: Pipeline Press

Why do us capital markets folks seem to speak a different language? To better understand what secondary marketing folks deal with every day, here’s a piece titled, “Best Execution in Mortgage Secondary Markets” for anyone wanting to know what’s involved after a loan funds. (The information hasn’t changed much, if at all.) Yes, numbers are critical in the mortgage process, as is fair lending. For anyone paying attention to new contributors in lending, they should read this about ZestFinance , a company using Artificial Intelligence (AI) in an attempt to remove discrimination through its ZAML Fair software . Lender Products and Services Are you ready to increase your mortgage production? Give Cindy 90 days to show you how! Sign up for your FREE 20-minute coaching...(read more)

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MBS Day Ahead: Fed Announcement: March Madness Edition

Posted To: MBS Commentary

Today's only key event will be the Fed Announcement , which is actually 3 events in 1. At 2pm, we'll get the policy announcement itself as well as the Fed's updated economic projections (aka, the "dots"). Then at 2pm, Jerome Powell begins the post-announcement press conference. If the statement itself is light on details surrounding the Fed's balance sheet runoff plans, look for more details in the press conference. To reiterate the crux of our Fed-related discussions in recent weeks, today's big variable is the status of the balance sheet runoff . Ending the runoff is functionally equivalent to the Fed beginning a new bond buying program. After saying the runoff was on auto pilot with no reason to change in December, Powell and the Fed quickly came to the point...(read more)

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Builders Less Concerned about Material Costs

Posted To: MND NewsWire

One problem solved? Perhaps, but there are always others waiting in line. The National Association of Home Builders (NAHB) asks its new home builder members annually, as part of its January NAHB/Wells Fargo Housing Market Index survey, to name what they expect to be their top business problems in the coming year. In 2018 the cost of materials led the list, followed by issues regarding labor. Eighty-seven percent of respondents in the 2018 survey cited materials while 82 percent named the cost and availability of labor. This year the former problem sank to a potential issue for 69 percent, and 82 percent still cited labor shortages, returning it to its pre-2018 position as the most widespread challenge facing builders. That still leaves materials in second place and the importance of other problems...(read more)

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Mortgage Apps: Refinancing Revives as Rates Retreat

Posted To: MND NewsWire

Mortgage rates continued to slide during the week ended March 15 and the volume of mortgage application activity picked up in response. The Mortgage Bankers Association said its Market Composite Index, a measure of mortgage loan application volume, increased 1.6 percent on a seasonally adjusted basis from the previous week and was up 2 percent on an unadjusted basis. It was refinancing that drove the numbers for the week with that index rising 4 percent. The share of refinancing also grew slightly from to 38.6 percent of the total during the week ended March 8 to 39.2 percent. Purchase applications rose a modest 0.3 percent on a seasonally adjusted basis while the unadjusted Purchase Index was up by 1.0 percent both from the prior week and from the same week in 2018. Refi Index vs 30yr Fixed...(read more)

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MBS RECAP: Bonds Officially Held January's Range Ahead of March Fed Announcement

Posted To: MBS Commentary

Bonds began the day in weaker territory following overnight headlines suggesting European leaders would be going up to bat for a compromise Brexit deal. "Less bad" economic data in Germany also contributed to European bond market selling. At the start of the domestic session--particularly the 8:20am CME Open--there was a glut of sell trades in the bond market. This resulted in what was, at the time, the biggest volume spike of the day (by far) and a noticeable uptick in yields. Technical levels were first to provide support with 10yr yields bouncing at 2.63%. After that, US/China trade headlines helped take yields to their lowest levels of the domestic session just before 1pm, though the rally proved to be short-lived. Bonds ended the day slightly weaker but close enough to 'unchanged'...(read more)

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Rates Unchanged for 4th Straight Day. That Should Change Tomorrow

Posted To: Mortgage Rate Watch

Mortgage rates were flat for the 4th day in a row today in a sign that investors have largely taken their seats for tomorrow's big show. The Fed will release its new policy statement at 2pm tomorrow, and while they're not expected to hike rates this time around, there are other important considerations that could have a big impact on rates. One of the considerations is the fact that March is one of the months where the Fed updates its economic projections. Investors largely tune-in to these for a glimpse at the collective rate hike outlook. This has caused big market movement in the past, but something else could be even more important tomorrow. The Fed has increasingly mentioned the impending end of its balance sheet runoff , which refers to its policy of NOT buying bonds with the money it...(read more)

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Once Considered Inferior, Automated Appraisals Are Helping Stem Default Risk

Posted To: MND NewsWire

Although lacking in popularity, it appears that automated appraisals have obtained their intended results. Urban Institute (UI) researchers Laurie Goodman and Jun Zhu found the changes have helped to lower default rates. They suggest that, in turn, some lender processes and potentially pricing should be changed as well. The two looked at the characteristics of three broad categories of mortgages: Purchase mortgages, used to buy a home. Rate and term refinance mortgages, used to reduce the interest rate or extend the length of an existing mortgage. Cash-out refinance mortgages, which are obtained when a homeowner wants to tap the equity that has accrued in their home. It has been assumed, based on loan characteristics like loan to value (LTV) ratios, debt-to-income (DTI) ratios and FICO scores...(read more)

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MBS Day Ahead: Looks Like We Made It

Posted To: MBS Commentary

Rates staged an impressive rally in November and December before bottoming out on the first trading day of 2019. The bounce was fairly abrupt at the time and it roughly coincided with 2017's highs. It was as if the bond market was saying those days are behind us and we won't be going back any time soon. After the January 4th bounce, there was some concern that we'd zoom right back up to previous levels from the 2018 range. But support kicked in by the 18th at an interesting level (2.80%). Why interesting? Because it marked the boundary of the range that was intact for most of 2018, and remember, the bond rally that ended 2 weeks prior bounced right at the boundary for the 2017 range. Long story short , bonds were beginning to carve out a new range in no-mans-land, in between the...(read more)

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Sales, Marketing Products; Lender Training; MBS Platform Updates

Posted To: Pipeline Press

At roughly $8,500 per loan and continuing to defy gravity, scholars disagree on whether vendors lower the cost of originating a residential loan. But then again, scholars disagree on everything. (We can expect new cost figures from the MBA early next week but most expect it to increase somewhat on lower volume.) There are over 1,400 vendors that “touch” residential lending, and plenty of lenders are overwhelmed in deciding who is doing what, and which can best help their clients. (I wish that I had a dollar for every lender, vendor, or tech company that either capitalized some middle letter in their name or took the conventional spelling of a word and changed it.) A random sampling of vendor news below. Lender Products and Services The MBA Tech Conference is next week in Dallas...(read more)

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MBS RECAP: After Green Binge, Bonds Take "Sick" Day

Posted To: MBS Commentary

For the bond market St Paddy's day was a 2 week celebration of "green" (as in the color of price gains or falling yields on trading terminals) beginning on March 4th. Eight of those 10 business days saw yields move lower with last Friday marking the 2nd lowest closing levels in well over a year. It's only natural for bonds to need a bit of a break after all that partying. They joined plenty of other revelers who may have had too much green recently in taking the day off today. Granted, there wasn't any sort of official market closure, but it would have been hard to notice if there was! Volume was in line with the lowest levels of the year for a full business day and volatility was nowhere to be found. The absence of volatility is a victory of sorts, considering yields...(read more)

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Mortgage Rates Hold 14-Month Lows

Posted To: Mortgage Rate Watch

Mortgage rates didn't budge today--a logical result with no signs of life in underlying bond markets. In the current case, this is just fine with us considering the bond market has gone silent while remaining at the best levels in 14 months. Specifically, mortgage-backed-securities (MBS, the most important ingredient in determining mortgage rates) are at 14 month highs. When MBS are higher, rates are lower (14-month lows in this case). 10yr Treasury yields, on the other hand, spent a few hours at stronger levels on January 3rd, 2019. The only reason I bring up the modest discrepancy between Treasuries and MBS is to illustrate a point that we should keep in mind this week. Treasuries are capable of moving much more quickly than mortgage rates. That's why Treasuries made it to lower rates in...(read more)

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Builder Confidence Holds Steady After Recovering From 2018 Lows

Posted To: MND NewsWire

The National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI) held steady in March , after partially recovering from substantial loses at the end of 2018. The Index, a measure of new-home builders' confidence in the market for newly constructed homes was unchanged at 62 on a 100-point scale. The index finished 2018 at 56, a more than three-year low, after dropping an aggregate of 12 points in November and December. NAHB says affordability still remains a key concern for builders. The skilled worker shortage, lack of buildable lots and stiff zoning restrictions in many major metro markets are among the challenges builders face as they strive to construct homes that can sell at affordable price points. Derived from a monthly survey that NAHB has been conducting for 30...(read more)

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Joe Sanchez
Allied Equity
Ph: 909-932-9226Fax:909-803-9840
400 North Mountain Ave., Suite 223
Upland, CA 91786 US
CA DRE License # 01201910, NMLS: 359382, Company ID: 359090
www.alliedequity.com
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