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

MBS Day Ahead: Turkey Causing Road Rage; Another Look at Moving Average Misdirection

Posted To: MBS Commentary

I found myself driving in the truck for more than an hour yesterday evening--long enough to hear the news cycle repeated several times. During that time, I was emphatically warned about this " new " and " surprising " issue of Turkey's financial crisis. Apparently this has the potential to send shockwaves through global financial markets. Other people get road rage when other drivers are less than courteous, or due to ridiculous traffic perhaps. I get road rage when news radio misses the mark on financial market movers. I explained this to the officer that pulled me over for ostensibly making menacing gestures toward other drivers. He was going to give me a ticket anyway until I pulled out the laptop to put together the following chart for him. After he saw it, he apologized...(read more)

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Construction Numbers Post Sluggish Recovery

Posted To: MND NewsWire

As analysts had predicted, both housing permits and starts recovered , albeit only slightly, in July after a poor showing the previous month. The U.S. Census Bureau and the Department of Housing and Urban Development now report that housing permits are being issued at a pace higher than in 2017, but housing starts are still lagging the earlier number. Permits for privately owned residential construction were issued in July at a seasonally adjusted annual rate of 1,311,000 units. This is an increase of 1.5 percent from the June rate of 1,292,000 (revised from 1,273,000 units). July's permitting rate is now 4.2 percent higher than that of July 2017. Analysts polled by Econoday had predicted permits would be at a rate ranging from 1,280,000 to 1,325,000. Their consensus was slightly below the...(read more)

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Tech and Vendor Updates; White Paper on Reasons for Margin Compression

Posted To: Pipeline Press

Trillions of dollars of securities are tied to LIBOR, but the London Interbank Offered Rate is scheduled to be phased out at the end of 2021. Companies servicing adjustable rate mortgages tied to LIBOR are concerned, understandably, about the transition to another index. So far, the front runner substitute seems to be the Secured Overnight Financing Rate. Floating-rate bank bonds tied to SOFR could be brought to market within months . A name to watch: TD Securities. TD Bank has aided issuance of SOFR-based bonds from the World Bank and Fannie Mae. Technology and Vendor News Lenders can now participate in STRATMOR’s Technology Insight Study, a unique STRATMOR study that gets at the heart of the mortgage technology experience from the lender’s viewpoint. perspective. Time is running...(read more)

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Economic Environment Depressing Millennal Homeownership

Posted To: MND NewsWire

It shouldn't be news to anyone that the homeownership rate of the Millennial generation continues to be anemic. While it has improved slightly since 2015, the Urban Institute's (UI's) new research shows that, at that point it was 37 percent, 8 percentage points lower than the homeownership rate of Gen Xers and baby boomers at the same age. This translates into 3.4 million fewer homeowners among these 75 million young adults. UI researchers Laurie Goodman, Jung Hyun Choi, Jun Zhu, writing in the Institute's Urban Wire blog, say that demographic and lifestyle choices, delayed marriage, increasing diversity, have played a role in the decline, it is the economic environment that has been most determinative. They cite three external factors that are hampering the generation, most of whom turned...(read more)

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MBS RECAP: Bonds Dragged Into Snowball Rally by Stocks (Not Turkey)

Posted To: MBS Commentary

Headlines continue overstating the connection between US market movements and the financial drama in Turkey. Today was especially damaging to the case for correlation as Turkish Lira improved significantly even as US stocks and bond yields sank. The conventional wisdom has been arguing for the OPPOSITE relationship lately (i.e. weaker Lira pushes bond yields and stock prices lower). US markets weren't too troubled by Turkey today. Rather, it was steep losses in Chinese stocks overnight that correlated most readily with declines in US stocks. The stock slump prompted a fair amount of bond buying demand. The trick for bonds was that traders were widely betting on rates moving higher post-Turkish-crisis. As such the unexpected buying demand set of a wave of short-covering resulting in a bit...(read more)

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Mortgage Rates Barely Lower Despite Bond Market Cues

Posted To: Mortgage Rate Watch

Mortgage rates fell only modestly today despite a much stronger move in broader bond markets. I spend a lot of time espousing the fact that rates are based on bonds, so it's fair to wonder how days like today happen. Indeed, interest rates are based on bonds, but there are a wide variety of rates and bonds! It's a common misconception that mortgage rates are actually and firmly linked to the 10yr Treasury yield. In reality, this only appears to be the case because the bonds that underlie mortgage tend to move in the same direction as 10yr Treasuries. The magnitude of their moves is also generally the same, but there are notable exceptions. Today was one such exception. In terms of bond prices, 10yr Treasuries did twice as well as mortgage bonds (technically MBS or 'mortgage-backed securities...(read more)

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Builder Confidence Retreats Once Again

Posted To: MND NewsWire

Rising concerns about costs and labor shortages continue to take a toll on home builder sentiment according to the August Housing Market Index (HMI). The Index, a joint product of the National Association of Home Builders (NAHB) and Wells Fargo, dipped another point to 67. The HMI has been moving in a narrow range between 68 and 70 since March. The index scored an 18 year high in of 74 last December and has trended lower since. The August number is the lowest so far this year. The index is a distillation of information gathered through a monthly survey that NAHB has been conducting for 30 years. New home builder members of the association are asked to provide their , perceptions of current single-family home sales and sales expectations for the next six months as "good," "fair" or "poor." The...(read more)

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MBS Day Ahead: Foreign Markets Helping Bonds (Not Turkey)

Posted To: MBS Commentary

From New York, traders have been looking east for at least some level of inspiration from Turkish market volatility. As we've discussed exhaustively, however, that's far from the only game in town. Today brings fresh evidence. In looking east this morning, traders passed right over Turkey and continued on to China, where a sharp move lower in equities futures drove a moderately big sell-off in US equities futures. Bonds picked up some " risk-off " demand as a result, and that ultimately proved to be a good defense against a stronger Retail Sales number this morning. As the chart points out, there was a staggeringly big flattener trade just before Retail Sales. This one was actually reported on the CME's block trade screen, so there's no guesswork. Simply put, a big...(read more)

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Fulfillment, Non-QM Products; Corporate Name Changes; What is a Mirror Security?

Posted To: Pipeline Press

Bond prices and mortgage rates, like nearly every commodity, are driven by supply and demand. I mention this because early last week prices of US government bonds declined while the yield on the benchmark 10-year Treasury note increased (although it reversed itself due to turmoil in Turkey). Investors bought $34 billion of three-year Treasury notes amid relatively soft demand, with the week bringing the first sales of Treasury notes since the Treasury Department announced it is looking to increase its borrowing in the second half of 2018 to $769 billion, a 63% year-over-year increase. Just something to keep in the back of your mind if you’re hoping for lower rates, or relying on them to help your business model. Corporate Name Changes After 17 years, Georgetown Mortgage, LLC, has outgrown...(read more)

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Mortgage Applications: Purchase Volume Declines, Refis Stabilize

Posted To: MND NewsWire

It was another week of decline for mortgage applications as those for home purchase slid for the fifth week in a row. The overall volume of applications, as measured by the Mortgage Bankers Association's (MBA's) Market Composite Index, declined by 2.0 percent on a seasonally adjusted basis during the week ended August 10. On an unadjusted basis the volume lost 3 percent compared to the prior week. The seasonally adjusted Purchase Index decreased by 3 percent and was down 4 percent unadjusted. The unadjusted version was also 3 percent lower than during the corresponding week in 2017. The Refinancing Index did stabilize, remaining at the same level as the previous week. The share of total applications designated for refinancing rose 1 percentage point to 37.6 percent. Refi Index vs 30yr Fixed...(read more)

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MBS RECAP: Bonds Fight Off Sharper Retreat Ahead of Data

Posted To: MBS Commentary

Bonds began the day in moderately weaker territory as Turkish tensions eased overnight. That certainly wasn't the only game in town as far as market movers were concerned though! On several occasions throughout the day, US bond markets could be seen moving in the opposite direction to that implied by Turkish Lira, etc. We're left with the general sense that bond yields were pulled lower than they'd otherwise like to be by the Turkey-related drama from late last week, and that there's a slew of reasons for them to be gradually moving back from whence they came (2.9-3.0% range). As of this afternoon, that looks to be exactly what they have in mind. 10yr yields are heading out the door up just over 2bps, trading near 2.90%. Fannie 4.0 MBS are down an eighth of a point at 101-21...(read more)

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Mortgage Rates Edge Higher Ahead of Retail Sales Data

Posted To: Mortgage Rate Watch

Mortgage rates were sideways to slightly higher today, depending on the lender. With the exception of the past two days, this leaves us at the best levels in more than 3 weeks. In general, that move was made possible by financial drama in Turkey, but caveats abound. It's taken a massive amount of pain in Turkish markets/currency to result in a fairly modest move for US interest rates in the bigger picture. Moreover, US rates continue paying attention to multiple sources of inspiration. Turkey was just one among many in that regard, and even then, only when Turkish market movement was its most extreme. More so than yesterday, today brought some hope that the worst is over for Turkey. While that's good for Turkey, it's not good for rates in the US, all other things being equal. That said, it...(read more)

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Florida, Houston Delinquencies Still Reflecting 2017 Storms

Posted To: MND NewsWire

The effects of Hurricane Irma continue to be felt in the Southeast, with Florida the only state to report an increase in its delinquency rate in May. The rate in the state was up 1 percentage point compared to May 2017 and gave Florida the third highest rate in the nation at 6.2 percent. CoreLogic, in its Loan Performance Insights Report, said the rest of the nation continues to improve, although Texas, still impacted by Hurricane Harvey, saw rates remain the same as a year earlier. The national rate was 4.2 percent compared to 4.5 percent in May 2017, the lowest rate for a May in 12 years and within 0.1 percent of the previous low in May 2006. The rate is also well below the pre-crisis period of 2000 to 2006 when the share of delinquent mortgages averaged 4.7 percent. Within the national number...(read more)

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MBS Day Ahead: With or Without Turkey, Bonds Face Same Challenges

Posted To: MBS Commentary

Turkish Lira bounced in the overnight session--not in any epic fashion, but enough to result in a bit of spillover for stocks/bonds. 10yr yields rose as high as 2.9022 before cooling back down. Notably, yields fell even as Lira maintained its token recovery. This simply reiterates yesterday's point that US markets have their own agenda . Although they may periodically pay some attention to big swings in Turkey, they have already shown an ample willingness to trade against the grain of Lira volatility. With that in mind, the recent floor around 2.85% looks like the next major technical level for 10yr yields, whether we're looking at US markets keeping a close eye on Turkey or not caring at all. In other words, this was a bounce that bonds had decided on yesterday, independent of further...(read more)

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New Bankruptcy Products; Remote Training This Week; Agency Changes Continue

Posted To: Pipeline Press

A Zen master visiting NYC approaches a hot dog vendor and says, "Make me one with everything." The hot dog vendor fixes a hot dog and hands it to the Zen master, who pays with a $20 bill. The vendor puts the bill in the cash box and closes it. "Excuse me, but where’s my change?" asks the Zen master. The vendor responds, "Change must come from within." Most believe that, despite thoughtful and continuous efforts by those in the industry, there won’t be any change coming from Congress this year, perhaps even next, on Freddie and Fannie’s status. There’s not a lot of urgency, nor is it an election issue, nor, it can be argued, are consumers being hurt by current policies and procedures. The FHFA and industry will be adjusting things as time goes on regarding guidelines...(read more)

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MBS RECAP: Mismatch Between Headlines and Bonds

Posted To: MBS Commentary

Another day, another chance for market watchers and pundits of all types to make mountains out of Turkish molehills. Yes, the financial crisis in Turkey is important and it's still a thing , but no... it's not the most important market mover for bonds or stocks at the moment. There's only a very small possibility that it's even the biggest risk to the global financial market. Stocks and bonds agreed today, as neither covered any special new ground despite another big drop in the value of Turkish currency. There were also some unsubstantiated headlines that caused a bit of intraday volatility--but that was mostly limited to Turkish markets. 10yr Treasuries, for instance, were unchanged to slightly weaker . Same story for MBS. Had domestic markets been taking any compelling cues...(read more)

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Mortgage Rates Hold Steady at 3-Week Lows

Posted To: Mortgage Rate Watch

Mortgage rates stayed steady at the lowest levels in more than 3 weeks as financial markets are still accounting for additional risks relating to Turkey. Simply put, Turkey is in the midst of a debt/currency/banking crisis and investors are worried about some sort of domino effect among banks that are heavily invested in Turkish banks. All this is worth a bit of "safe-haven" demand for US Treasuries, which offer essentially risk-free returns and a liquid place to park money temporarily. When investors buy more bonds--all other things being equal--it causes bond prices to rise . When bond prices rise, investors are technically willing to accept lower interest payments, and it's that part of the equation that speaks to lower interest rates on US Treasuries and mortgage rates. Bottom line: drama...(read more)

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MBS Week Ahead: Drama's Diminishing Returns

Posted To: MBS Commentary

Did anyone else have to sit through the drug addiction video (or was it a book?) in grade school (or was it middle school?) where the main character kept returning to this amazing fantasy of driving an exotic sports car. Each time, he had to drive farther and faster to get the same enjoyment. You get the idea. Same story for bond markets when it comes to overseas economic/political/debt drama. We need more and more in order to fuel an ongoing rally. As of this morning, we just took a hit of the same drug that made us high on Friday, and... ...nothing happened. Perhaps, if the Turkish drama spirals out of control in a bigger way, bonds will be more willing to entertain a break below that white dotted line. Until then, we're left to wonder if this little diversion has run its course. There...(read more)

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Subservicing, Non-QM Products; Agencies Active in Capital Markets

Posted To: Pipeline Press

Don’t think that correct mortgage documentation is important? Think again, or ask Citigroup. The Federal Reserve said Friday it had fined Citigroup $8.6 million over poor quality mortgage documentation practices at its CitiFinancial subsidiary in 2015. The Fed Citi mishandled customer files as it was preparing to wind down its mortgage servicing business, doing so in 2017. But there is good news! The Fed said that the problem was corrected, and the Fed is terminating a separate 2011 enforcement action against Citigroup on a separate residential mortgage loan servicing matter, citing sustainable improvements by the bank. Dot those i’s and cross those t’s! Capital Markets The various high-ranking officials within the Federal Reserve know just as much about the direction of the...(read more)

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MBS RECAP: The T-Word

Posted To: MBS Commentary

Tired of hearing about Turkey yet? This is what happens when fairly quiet markets are interrupted by a thunderous roar from an unexpected place. Newscasters, analysts, and armchair economists you'll talk to over the weekend are all happy to finally have SOMETHING to discuss other than Elon Musk, Apple being a trillion dollar company, or whether or not Keke loves them. Long story short, there's nothing too meaningful going on in the world of interest rates this week, and the Turkey thing would be worth discussing even during busier times of year. As such, it's going to feel like the only thing anyone is talking about for a while yet. Unfortunately, it's pretty simple: it takes a LOT of drama out of Turkey to generate a merely moderate response in US bond markets. Moreover, when...(read more)

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Mortgage Rates Noticeably Lower on Global Market Drama

Posted To: Mortgage Rate Watch

Mortgage rates , and indeed most interest rates, are tied to movement in the bond market. In turn, bonds tend to benefit when big, scary stuff is shaking global economic confidence. In today's case, the debt crisis in Turkey did just that. Investors sought safe haven in bonds, and rates moved to the lowest levels since July 20th. Lest you think that Turkey is a constant arrow in the quiver of potential market movers for rates, understand that things have had to get pretty bad for US markets to unequivocally respond. This has been a festering for several days (even months, depending upon how nervous or clairvoyant you might be by nature). Today was really the first day that where there's no doubt that Turkey is in the drivers' seat for global financial markets. See how weird that sounded? You...(read more)

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Aging Housing Stock; Problem and Opportunity

Posted To: MND NewsWire

An aging housing stock is usually thought of as a problem. Older homes can be more expensive to maintain and easily fall into enough disrepair to be a health or safety hazard or completely uninhabitable. Construction since the housing crisis has not kept pace with the homes that age out or are otherwise removed from the housing stock and this means that the overall age of the U.S. housing stock is gradually aging. Na Zhao, writing in the National Association of Home Builders' (NAHB's) Eye on Housing blog says data from the 2016 American Community Survey (ACS) puts the median age of owner-occupied homes at 37 years compared to a median age of 31 years in 2005. The aging trend, as the figure below shows, accelerated during the Great Recession. Na Zhao, while not denying that the increasing age...(read more)

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MBS Day Ahead: Let's Talk Turkey

Posted To: MBS Commentary

Turkey (the country, not the lunch meat) is the 17th biggest economy in the world in terms of GDP. That's roughly 20% bigger than the next closest country, Saudi Arabia, and 4 times bigger than Greece. All that to say, Turkey isn't a completely insignificant piece of the global economy. So the fact that they're having a rather epic debt crisis is making the news. I discussed this a bit yesterday, and at the time, we weren't seeing enough correlation spill over from the plummeting Lira to US markets. Not only that, but by far and away, yesterday's biggest domestic market movements were completely independent. Bonds big move lower in yield followed the Producer Price Index. At that time, Lira were doing nothing. And it was the same story with the quick stock sell-off at 3...(read more)

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Correspondent Product; Corp. Structure Changes - A Wealth of M&A

Posted To: Pipeline Press

This week in Salt Lake City, mPower hosted an event at the Lenders One Summer Conference, drawing nearly 400 people. The executive panel, led by MBA's Tricia Migliazzo, presented challenges and solutions in today's workplace and shared insights for what it takes to lead in the mortgage industry. The session marks the 13 th in-person mPower programming event for 2018. mPower, MBA Promoting Opportunities for Women to Extend their Reach, is MBA’s networking and professional development platform for women in real estate finance. Corporate Changes and M&A Corporate changes continue, whether it is at small lenders across the nation, National MI, or last week’s news from Wells Fargo for its warehouse clients. “The Mortgage Banker Finance Group (MBFG), Wells Fargo Securities'...(read more)

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Affordability at 10-Year Low, Tariffs and Rate Hikes Made It Worse

Posted To: MND NewsWire

We now have an unfortunate sign that the recovery is complete. The National Association of Homebuilders (NAHB) says housing affordability is the lowest level since just before the housing crisis hit. The NAHB says the Wells Fargo Housing Opportunity Index (HOI) shows that a combination of rising home prices and higher mortgage rates now means that only 57.1 percent of new and existing homes sold during the second quarter of 2017 were affordable to families earning the U.S. median income of $71,900. This is down from the 61.6 percent of homes sold in the first quarter that were affordable to median-income earners and is the lowest reading since mid-2008. The index reflects the increase in the national median home price to $265,000 in the second quarter, the highest median price ever recorded...(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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