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400 North Mountain Ave., Suite 223, Upland, CA 91786
Phone  909-932-9226 Fax  909-803-9840

Mortgage Related News

Compliance and Documentation Products; Loan Limit Changes in the Primary Markets

Posted To: Pipeline Press

Lots of folks in the mortgage biz like statistics and odds. They may not remember them, but they like them. (As Marcus L. writes, “People still play the lottery even though most of us can't get the USB in the first time correctly and those odds are 50/50.”) Plenty of home loans are impacted by student debt. For every 100 students who enroll full-time in college or university, 42 percent will graduate within four years and 18 percent more will graduate within six. This means that 40% of college students get all the benefits of student debt without obtaining a degree. And put another way, of those 60 students of every hundred who graduate, 42 will leave with student loans and five will default on those loans by the age of 33 . For the 40 who don’t graduate, 10 will default on...(read more)

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MBS RECAP: Bonds Continue Calming Before Next Storm

Posted To: MBS Commentary

Whether or not next week's Fed announcement proves to bring a winter storm for bond markets remains to be seen. That said, if anything is going to do the trick, that's the best chance we have. Between now and then, bonds aren't quite sure what to do with themselves, as evidenced by their relative absence of movement today. It wasn't as if bonds simply ended unchanged after being much higher and lower on the day. There just wasn't much movement in either direction. The only temporary exception was seen in the morning hours before the domestic open in response to the European Central Bank's announcement and subsequent Mario Draghi press conference. As soon as European markets closed for the day, bond yields quickly returned to pre-ECB levels and drifted sideways into the...(read more)

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Mortgage Rates Edge Back Down Toward Long-Term Lows

Posted To: Mortgage Rate Watch

Mortgage rates fell moderately today, helping them move part of the way back down toward their lowest levels in more than 3 months (seen back on Friday). The average lender continues quoting rates that are roughly 3/8ths of a percentage point lower than the highs from early November. Last Friday's low rates marked the culmination of the strongest winning streak for rates of 2018. We've been in a bit of a holding pattern since then, with next week's scheduled announcement from the Federal Reserve likely serving as the motivation for the next (and probably last) big wave of momentum for the year. "Big wave" is more of a relative term, perhaps. It may only end up being "big" relative to the current, fairly flat week leading up to it. Loan Originator Perspective Bonds continued hovering in recent...(read more)

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Not Just the Season; MBA Predicts New Home Sales Down Sharply

Posted To: MND NewsWire

The Mortgage Bankers Association (MBA) added a little more evidence to the pile indicating a rather rapid slow-down in the housing market. MBA's Builder Application Survey (BAS) data for November shows mortgage applications for newly constructed home purchases falling by 14 percent compared to October. The MBA data is not adjusted to account for seasonal variations, and while sales nearly always decline this time of year, applications were also down 11 percent compared to November 2017. Based on the survey data and assumptions about market coverage and other factors, MBA estimates new home sales were running at a seasonally adjusted annual rate of 627,000 units in November. This is down 6.8 percent from the October estimate of 673,000 units. On an unadjusted basis the estimate is for 45,000...(read more)

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MBS Day Ahead: Clear Correction May Be Finding Clear Ceiling

Posted To: MBS Commentary

The first 3 days of this week have offered a clear correction/consolidation to the strong rally of the previous month. This had as much to do with timing and technicals as anything else. In other words, the rally brought yields so much lower, so quickly (relative to other attempts to rally in 2018) that it would have been a surprise to see it continue, especially in the week leading up to an important FOMC Announcement. In fact, much of that rally is predicated on the FOMC Announcement happening in a certain way next week. Given the recent Fed speeches, markets expect more dovishness next Wednesday. The drop in yields equates to the "pricing-in" of the dovishness. Reasonably strong jobs data last Friday (weaker NFP, but strong unemployment and wages) caused investors to question the...(read more)

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Books by Lenders, For Lenders; False Claims Act Rears it's Head; LO Products and Services

Posted To: Pipeline Press

“Why do people pay to go up tall buildings and then put money in binoculars to look at things on the ground?” It turns out that, in terms of grabbing their pieces of ground, first-time home buyers were more active in the first three quarters of 2018 than at any time since 2005, per Genworth Mortgage Insurance . Lenders wish they would be as active: Mortgage lenders are facing an even less profitable environment as purchase and refi biz fell for the ninth straight quarter. Fannie Mae's Q4 2018 Mortgage Lender Sentiment Survey found that the outlook for profit among lenders in the fourth quarter reached an all-time survey low across all loan types: GSE-eligible, non-GSE-eligible, and government. "Competition from other lenders" was cited by survey participants as the top reason for...(read more)

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MBS RECAP: MBS Handily Outperform Treasuries as Consolidation Continues

Posted To: MBS Commentary

Today's trading session was far less eventful than anything else seen in the past few weeks, both in terms of movement and volume. Although Treasury yields were higher, most of the increase came in the overnight session, and additional volatility was minimal throughout the day. By the time we get to MBS (as opposed to Treasuries), things were even more calm . Fannie 4.0 coupons were almost perfectly unchanged compared to 10yr Treasuries which lost more than a quarter of a point in price. At least some of the pressure may have been due to the fact that it's a 3/10/30yr auction week with today being 10's. It's not uncommon for bonds to lose a bit of ground heading into auctions Today was no exception with most of the losses coming BEFORE the somewhat weak 10yr auction. The morning's...(read more)

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Mortgage Rates Could Go Even Higher

Posted To: Mortgage Rate Watch

Mortgage rates rose more noticeably today as a part of a 3 day bounce after hitting the lowest levels in roughly 3 months at the end of last week. Whereas yesterday's increases weren't really worth mentioning, today's hurt--depending on the scenario. In general, this bounce was to-be-expected. Granted, we can't ever know exactly how big such bounces will be or how long they'll last, but when rates improve for as many days in a row as they recently had, a bounce is increasingly inevitable. So how bad is this one? Not too bad so far. I'm not thrilled about the "3 days" part, but really it's only been today that counts (the other two days were effectively flat). As such, tomorrow and Friday become a bit more important by way of assessing any momentum ahead of next week's Fed Announcement (which...(read more)

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Lenders Looking to New Tech as Pessimism Over Profit Margins Grows

Posted To: MND NewsWire

Lenders continue to be pessimistic about their profit outlook as 2018 draws to an end. Fannie Mae said its fourth quarter 2018 Mortgage Lender Sentiment Survey found the profit outlook reported by respondents at an all-time survey low. This was true whether they were talking about purchase or refinance mortgages or about GSE-eligible, non-GSE-eligible, or government loans. It was the ninth consecutive quarter that lender outlook has declined. Smaller slices of a shrinking pie sums up the reasons given by lenders for their lowering outlook, especially for refinancing. When asked whether refinancing demand had increased over the past three months for any loan type, or if they expected it would over the next three months, positive answers did not break 5 percent. Responses to the same questions...(read more)

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MBS Day Ahead: Bonds Have Lots on Their Mind, But Beware The Bounce

Posted To: MBS Commentary

As we begin the third day of moderate weakness in bond markets, it's safe to say that we're looking at the correction and/or consolidation that we expected to see as of the end of last week. Bonds wouldn't have needed any other reason apart from the preceding rally to bounce. But as that process unfolds, it's been complicated by other competing stimuli. These include but are not limited to Brexit-related drama, trade war news, the stock lever (stock prices and bond yields moving together), the Treasury auction cycle, and year-end trading position housekeeping. Depending on when you look, you might see one of these factors having more of an influence than another. For example, yesterday saw US bonds take more guidance from Europe while today has seen more of a stock lever effect...(read more)

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Non-QM and Warehouse Products; STRATMOR Tech Insight Study

Posted To: Pipeline Press

Who among us has pushed for abolishing the mortgage-interest deduction, supported getting rid of government subsidies for the 30-year fixed-rate mortgage, putting Fannie and Freddie into receivership, and supported ending the sweep of F&F’s profits into the Federal Government? The answer is Dr. Mark Calabria, currently working for Mike Pence, and if confirmed by the Senate, he’ll replace Mel Watt as the Director of the FHFA , overseer of Freddie and Fannie. As mentioned yesterday in this commentary, there are plenty of ways the government can reduce its footprint in home lending: lowering LTVs, raising gfees, cutting back on non-owner or high-balance lending, adjusting the QM patch for DU & LP approval, and so on. Confirmation will take months, but given this personnel change...(read more)

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White House Nominates Calabria as New FHFA Chief

Posted To: MND NewsWire

Almost exactly 10 years after he helped pass the legislation that established the Federal Housing Finance Agency (FHFA), Mark Anthony Calabria has been nominated by the White House to be its director. If his nomination is confirmed by the Senate, Calabria, currently the Chief Economist in the Office of the Vice President, will succeed Melvin Watt whose five-year term expires in January. Calabria has a long history in housing and housing finance. He was a senior aide to the Senate Banking Committee in 2008, helping to draft the Housing and Economic Recovery Act of 2008 (HERA), which created the Federal Housing Finance Agency and was a Deputy Assistant Secretary at the Department of Housing and Urban Development during the second Bush administration. He has also held positions at the Cato Institute...(read more)

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Mortgage Applications: Trade Fears Drive Rates Lower, Borrowers Respond

Posted To: MND NewsWire

Borrower activity continued to pick up last week as interest rates retreated to September levels and mortgage applications extended their recent winning streak. The Mortgage Bankers Association (MBA) said its Market Composite Index, a measure of application volume, increased 1.6 percent on a seasonally adjusted basis during the week ended December 7. On an unadjusted basis, the Index lost 1 percent from the previous week's level. The Refinance Index rose 2 percent compared to the week ended November 30, and the share of applications that were for refinancing bettered the previous week's 9 month high of 40.4 percent, rising to 41.5 percent. The seasonally adjusted Purchase Index increased for the fourth straight week, this time by 3 percent. The Purchase Index was down by 2 percent on an unadjusted...(read more)

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MBS RECAP: Bonds Continue Circling Wagons (Nothing To Do With Shutdown News)

Posted To: MBS Commentary

Government shutdowns make good news. When risks of a shutdown flare up (especially with today's sort of political theater) it tends to dominate the news coverage. This creates the risk that shutdown news is perceived to impact bonds in a way that isn't really accurate. This was the case today, to some extent. Shutdown headlines dominated the afternoon news cycle right at a time when bonds were weakening. So was it the shutdown headlines causing the issues? Not hardly. In fact, the shutdown headlines would have arguably been good for bonds. Instead, bonds were simply backtracking after having been led into stronger territory by European markets. The latter were on the move due to the latest round of Brexit-related headlines, which basically conveyed "no additional negotiations"...(read more)

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Mortgage Rates Flattening Out After Much-Needed Winning Streak

Posted To: Mortgage Rate Watch

Mortgage rates rose almost imperceptibly today, with a few lenders not showing any detectable changes from yesterday. Still, it was the first time since November 30th that rates were higher than the previous day (on average). Today's move was so small that most lenders accounted for it in the form of upfront costs. This means that borrowers would be quoted the same rate as yesterday, but with a small increase in upfront costs. For those who read yesterday's commentary (which said we may have just seen temporary lows in rates as the current move was running out of steam), none of this should come as a surprise. In fact, given the pace of the improvements in recent weeks, it's arguably a good thing to take a break because it could help rates hold in stronger territory for longer. The most obvious...(read more)

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September Delinquencies Mostly Unaffected by Disasters, Eased Underwriting

Posted To: MND NewsWire

CoreLogic reports that mortgage delinquency rates were little changed in September. The percentage of mortgage loans that were 30 or more days delinquent and including those in the process of foreclosure declined by 0.6 percentage point on an annual basis, to a national rate of 4.4 percent. Early delinquencies, those 30 to 59 days past due were down from 2.4 percent in September 2017 to 2.2 percent. Other delinquency rates are reflected in the graphic below. Serious delinquencies, those more than 90 days past due or in foreclosure were either down or unchanged in every state. Rates however increased in 10 metro areas. The improvements were despite the considerable disruption along the southern Atlantic Coast caused by Hurricane Florence in September. Seven of the eight metropolitan areas that...(read more)

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CRM and Recruiting Products; December Training; Dr. Calabria and FHFA Leadership

Posted To: Pipeline Press

I’m a capital markets guy. “Bespoke luxury” isn’t in my vocabulary. First-time home buyer prices and floorplans aren’t in the cards at the new Aston Martin apartment building in Miami . If you buy one of the 47 most expensive apartments, they come with a new DB11. And, not to be outdone, Porsche also has a residential building – thanks to Jim P. for passing that along. (But owners won’t be building any sculptures to flip off town officials in the name of “art” or “expressionism” like a fellow did in Vermont.) You can bet those developers are hoping the market doesn’t sag – but it appears that the market is sagging in some areas already, or at least not going up as fast. Is that a surprise? “No tree grows to...(read more)

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MBS Day Ahead: Bounce Risk Remains; Hoping For Pre-Fed Consolidation

Posted To: MBS Commentary

Consolidation ... That's that word we use to refer to sideways and frequently narrower trading ranges that follow a period of more directional movement (you can click on the word to go to a full definition). Consolidation is the best case scenario right now, when it comes to defining the modest weakness seen yesterday and so far this morning. In other words, we would hope that we're merely seeing a consolidation of the strong rally of the past 5 weeks as opposed to a reversal. Would a consolidation be better than a continuation of the rally? In my mind, yes! We don't want the rally to progress too far too quickly for a variety of reasons. As with most things in the natural world, slower and steadier is more sustainable. Next week's Fed announcement would be an ideal finish line...(read more)

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MBS RECAP: Bonds Hit Resistance Right in Line With Last Week's Floor

Posted To: MBS Commentary

Bonds struggled to find inspiration for the first few hours of the domestic session, but it was soon in ample supply thanks to Brexit-related headlines ( like this one ). The result was a broad-based risk-off move that saw bonds move back to their strongest recent levels. Notably, though, that's as far as bonds got. Specifically 10yr Treasury yields were once again blocked by a floor in the mid 2.82% range. This has been an on-again off-again pivot point of high significance since late May, 2018. Sometimes, bonds approach such pivot points with the intention of breaking through. That seems like a lot to ask of this rally, given the ground that's already been covered. At the very least , it seems like we'll need help from economic data in the rest of the week, and at the very least...(read more)

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Mortgage Rate Rally May Be Pausing

Posted To: Mortgage Rate Watch

First things first: the average mortgage lender improved modestly today, compared to last Friday's levels. This leaves mortgage rates at their lowest levels in several months. That's great news and indeed, the last few weeks have been the best few weeks we've seen in more than a year. That having been said, we're now reaching the stage where the strong move in underlying financial markets may be running out of steam. "Running out of steam" could mean one of several things . In the best case, this is just the obligatory pause that almost all such market movements encounter before ultimately continuing in the same direction. The less pleasant eventuality would be that today could mark the lowest rates we'll see for a while. There's no way to know which variety we'll get, but history suggests...(read more)

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A Gift From Fannie/Freddie - Evictions Suspended for the Holidays

Posted To: MND NewsWire

Both Freddie Mac and Fannie Mae have announced the suspension of eviction lockouts for single-family and two- to four-unit properties for the holiday season. The moratorium will begin December 17 and end January 2. Fannie Mae said it will allow legal and administrative proceeding for evictions to proceed during the 16-day period, but families will be allowed to remain in the home. "We believe it is important to extend the timeline of help for struggling borrowers during the holidays," said Jacob Williamson, Vice President of Single-Family Real Estate at Fannie Mae. "We encourage homeowners who may be struggling with their mortgage or facing possible foreclosure to reach out to Fannie Mae or your servicer to get help. We want to help pursue those options whenever possible." The GSE's said the...(read more)

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Black Knight and the Case of the Disappearing Equity

Posted To: MND NewsWire

We know that home price growth is slowing , and cash-out refinancing has been coming back, still it is a bit of a stunner to find that homeowner equity actually declined in the third quarter of this year. Black Knight's current issue of its Mortgage Monitor reports that the amount of total equity (home value net of mortgage balance) held nationally by homeowners at the end of the third quarter was down by $160 billion compared to the second quarter of the year and now totals $9.8 trillion. Of that total, $5.9 trillion is considered "tappable," that is equity that can be withdrawn by the homeowner without hitting a maximum 80 percent combined loan-to-value (CLTV) ratio. That also fell, down by $140 billion quarter-over-quarter, the first decline since the housing recovery began in 2012. Both...(read more)

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NAHB Says Second Homes Aren't Just Vacation Destinations

Posted To: MND NewsWire

The stereotype of a second home usually involves a tropical beach, a boat dock on a lake, or skiers whizzing past a picture window, but the National Association of Home Builders (NAHB) says that is not reality. Or at least not all of it. Na Zhao, writing in NAHB's Eye on Housing blog says there are a good amount of second homes and lots exist in non-vacation-y areas. NAHB estimates there are 7.4 million homes, or 5.6 percent of the total housing stock that qualify for the second home mortgage tax deduction. That information comes from the Census Bureau's 2016 American Community Survey (ACS.) As might be expected, the state with the largest stock of second homes was Florida with 1.1 million; 15 percent of all such homes in the country. Roughly half of the total is located in Florida and seven...(read more)

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Broker and Front-End Products, Subservicer Webinar; Rates Watching Overseas' Markets

Posted To: Pipeline Press

The focus is on the holidays but there is plenty of 2019 wedding planning occurring. Despite that, according to the U.S. Census Bureau, adults are increasingly delaying saying, “I Do” as the median age at first marriage continues to climb by approximately 2% compared to 2003. And in 2018, there were 8.5 million unmarried opposite-sex couples living together . Remember decades ago when that was a cause of concern for processors and underwriters? Lender Products and Services Live Well Financial (NMLS #1177) is excited to announce that industry veteran Dan Mahoney has joined the company as an Account Executive with its wholesale division. Dan brings more than 20 years’ experience to Live Well which offers Conventional, FHA, VA, and reverse mortgage loan products to its partners...(read more)

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MBS Day Ahead: How We Guard Our Newfound Gains

Posted To: MBS Commentary

We've had an impressive winning streak recently and have acquired gains worthy of a watchful, protective eye. Will this be a durable rally or a fleeting victory? That question can't be answered without seeing how economic data and events unfold in the coming weeks. Perhaps even more important will be the tenor of the Fed Announcement next week. One thing I can tell you to expect is at least one day of correction--one red day that pushes back against all the recent positivity. Whether or not that day brings friends is another matter, and a much more significant question than whether or not we'll simply see one red day. In other words, the red day is just something that's always going to happen when bonds string together this sort of winning streak. We can watch various technical...(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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