Mortgage News Daily

MBS MID-DAY: Treasuries Green, MBS Red

Matthew Graham — Thu, 23 May 2013 16:47:46 GMT

MBS Live : MBS Morning Market Summary Mortgage markets are less than thrilled with the broader move into higher rates that was effectively confirmed yesterday, and we have 2 negative reprice alerts on MBS Live , early in the session to show for it. Although Fannie 3.0s managed to open in the green, it was only a byproduct of a resounding rally in Treasuries overnight from 2.06+ to 1.96 by 4:30am New York time. From then on out, Treasuries leaked higher in yield into Jobless Claims. MBS were dipped briefly into negative territory, but managed to "fade" the Claims data (FADE: jargon for trading in such a way that runs counter to the conventionally accepted suggestion of the data), but only for so long before stronger home sales data and the Fed's Treasury buying operation (which proved difficult...(read more)

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Home Price Gains Triple Inflation, but Not Without Distressed Sales

Jann Swanson — Thu, 23 May 2013 16:10:59 GMT

Posted To: MND NewsWire

As has every other price-related report, the one issued by the Federal Housing Finance Agency (FHFA) today confirmed the upward momentum of home prices in the first quarter of 2013. FHFA's Home Price Index (HPI) rose 1.9 percent, the seventh consecutive quarter that the seasonally adjusted, purchase-only index has risen. The 1.9 percent quarter rise may actually understate a growing momentum; the seasonally adjusted index rose 1.3 percent just in March, the last month of the quarter. This was the 14 th consecutive increase in the monthly HPI. Since the first quarter of 2012 home prices have increased 6.7 percent . FHFA points out that the cost of other goods and services have risen 1.4 percent over the last four quarters so the inflation adjusted rise in home prices is 5.2 percent, 3.71 times...(read more)

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FHFA Watchdog Sends Milestone Report to Congress

Jann Swanson — Thu, 23 May 2013 13:44:51 GMT

Posted To: MND NewsWire

The fifth Semiannual Report from the Office of Inspector General ( OIG ) of the Federal Housing Finance Agency ( FHFA ) was released to Congress today. The report, prepared under the direction of Steve A. Linick, Inspector General, catalogues the audit and evaluation work done by OIG between October 1, 2012 and March 31, 2013 and the current status of FHFA, the government sponsored enterprises ( GSEs ) Fannie Mae and Freddie Mac, and the Federal Home Loan Banks ( FHLBanks ). It also recounts investigative activities in support of federal and state prosecutors pursuing instances of fraud in the housing industry. In a letter accompanying the report Linick said that his office is mindful that the long term success of FHFA is necessarily affected by the uncertainty surrounding the fate of the GSEs...(read more)

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The Day Ahead: MBS in Full Melt-Down Mode. What Next?

Matthew Graham — Thu, 23 May 2013 10:58:00 GMT

Posted To: MBS Commentary

The idea of "tapering" the Fed's long term asset purchases isn't as new as the past two weeks might make it seem. It was most visibly introduced in early February when both Bullard and Fisher spoke out in favor of the notion. But a quick count of all Reuters newswires in which the word has appeared since then shows that it really exploded on April 10th after the last FOMC Minutes release. Suddenly, "tapering" was the talk of the town and was strangely soothing to bond bulls fearing a more abrupt exit and strangely emboldening to Fed Hawks, seen as proponents of immediate tapering. Then a month of relative excellence for bond markets caused amnesia on tapering topics and the new FOMC Announcement on 5/1 even left the door open INCREASED asset purchases. In the midst of a raft of mostly negative...(read more)

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MBS Annihilated After Fed Confirms The Hype

Matthew Graham — Thu, 23 May 2013 00:11:03 GMT

Posted To: MBS Commentary

MBS Live : MBS Afternoon Market Summary Today was among the worst on record for MBS since the carnage that was late 2010. We still have yet to see anything rival Black Wednesday's, but almost exactly 4 years after that 2+ point evisceration (5/27/2009), today's loss of just over a point--in the midst of what was already an unpleasant downtrend--conjured up the same sort of gut-wrenching feelings. At least in the current case, there's some measure of logic involved, not to mention much more advanced notice. It might not prove to be the 4-month game changer that Black Wednesday was, but the problem is that it could be part of confirming that an already possible game-change is in progress--that being the ongoing long-term uptrend in rates that began after Treasuries hit all-time lows in mid 2012...(read more)

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Why Did Mortgage Rates Skyrocket Past 2013 Highs on Wednesday?

Matthew Graham — Wed, 22 May 2013 22:10:00 GMT

Posted To: Mortgage Rate Watch

Mortgage rates were utterly destroyed today. Not only did the average rate move above the highest seen in 2013, but rates haven't been this high since May 22nd of 2012! Of course, there's the "everything's relative" perspective, whereby we can attempt to appreciate the fact that best-execution is still around 3.75%, but the fact remains that the day over day movement was devastatingly swift, and on the the most aggressively negative end of the spectrum of possibilities heading into the day. We'll dig into some of the reasons for today's spike after the following housekeeping note. Mortgage News Daily's rate series is updated every day, once a day (usually near the end of the day to account for any intraday reprices from lenders). It's based on actual lender rate sheets and assuming you're viewing...(read more)

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House Rejects CFPB Testimony on Qualified Mortgage Rule

Jann Swanson — Wed, 22 May 2013 19:11:58 GMT

Posted To: MND NewsWire

Members of a House Financial Services subcommittee issued a press release Tuesday afternoon which essentially dismissed testimony heard earlier in the day from two officials of the Consumer Financial Protection Bureau (CFPB) regarding the impact efficacy of the new Qualified Mortgage Rule . Peter Carroll, CFPB's Assistant Director for Mortgage Markets, and Kelly Thompson Cochran, its Assistant Director for Regulations presented information to the Financial Institutions and Consumer Credit Subcommittee about the process the Bureau followed in developing the new Ability-to-Repay requirements of the Qualified Mortgage Rule required by the Dodd-Frank Wall Street Reform and Consumer Protection Act. The rule, the two said, was only finalized after a process in which CFPB considered nearly 2,000 comments...(read more)

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Distressed Sales Fall Under 25 Percent in California

Jann Swanson — Wed, 22 May 2013 19:04:00 GMT

Posted To: MND NewsWire

In April 2012 distressed properties accounted for 45.8 percent of home sales in California the states Association of Realtors® said Wednesday, but last month that share dropped to 24.4 percent and was down 3.5 points compared to March. There was of course a corresponding rise in the share of equity sales . The California Association of Realtors (C.A.R.) said that the share of short sales declined from 21.1 percent a year earlier to 14.8 percent as rising prices lifted more homeowners out of a negative equity position. Sales of bank owned real estate (REO) dropped into single digits (9.2 percent) for the first time in more than five years. The decline in distressed sales was evident throughout the state with at least seven of the state's 58 counties registering distressed sales in the single...(read more)

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Mel Watt Hearings; Current Origination Numbers; Foreclosure Process Slowdown Merely a Hiccup

Rob Chrisman — Wed, 22 May 2013 16:51:10 GMT

Posted To: Pipeline Press

Yesterday the commentary mentioned a rumored shut down of MGIC's Capital Markets Group . I received this e-mail: "MGIC has indeed reorganized certain, but not all, activities that were previously performed by our Capital Markets group. We did so to better align the services it provides with our needs of our customers and to operate more efficiently in the current business environment. So the services are not being eliminated, rather our customers' capital markets needs will continue to be supported by their local MGIC Account Managers, with assistance from MGIC's Marketing Department . Unfortunately, as a result of this realignment one individual will no longer be employed by MGIC." The industry is glad to hear that the services MGIC provides are still available, and that its customers' capital...(read more)

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MBS MID-DAY: THIS IS WHY YOU WANT MBS LIVE!

Matthew Graham — Wed, 22 May 2013 16:41:00 GMT

Posted To: MBS Commentary

MBS Live : MBS Morning Market Summary If you read this commentary with any sort of frequency, you may have noticed a trend of late, where the mid-day recap has been coming out later than normal. As we've said, this happens when MBS have sold off sufficiently, and early enough in the day to create negative reprice risk before the time the mid-day commentary is automatically collated in our system. Unfortunately for bond prices, that's happened quite a lot lately. During these times, I'm writing reprice alerts for MBS Live and interacting in real time with the other members of the MBS Live community on the dashboard. The first reprice alert today was out at 10:39am, well in advance of any lender reprice, and I've written two additional updates/alerts since then. Even before the alert, the MBS...(read more)

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Despite Tight Credit and Inventories, Existing Home Sales and Prices Continue Recovery

Jann Swanson — Wed, 22 May 2013 16:24:00 GMT

Posted To: MND NewsWire

Existing home sales remain constrained by limited inventory and tight credit but still managed to eke out a small increase in April the National Association of Realtors® (NAR) said today. Total existing home sales rose 0.6 percent to a seasonally adjusted annual rate of 4.97 million in April from 4.94 million in March. The March number reflects a substantial upward revision from the 4.92 million pace originally reported. Existing home sales in April were 9.7 percent higher than the 4.53 million sales rate one year earlier. Existing home sales in April were at the highest pace since the homebuyer tax credits caused the market to spike in November 2009 to a pace of 5.44 million units. Existing home sales and home prices have been above year-ago levels for 22 and 14 consecutive months respectively...(read more)

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Substantial Decline in Foreclosure Inventory Noted in LPS Report

Jann Swanson — Wed, 22 May 2013 15:29:58 GMT

Posted To: MND NewsWire

Lender Processing Services (LPS) has provided its regular advanced release of data from its Mortgage Monitor . This " first look " at April 2013 month-end mortgage performance data will be followed by the full report in early June. LPS reports that the total loan delinquency rate - loans 30 or more days past due but not in foreclosure - was 6.21 percent in April, down 5.81 percent from March and 9.61 percent from April 2012. Just over 3.11 million loans are currently delinquent but not in foreclosure and 1.394 million of these are over 90 days past due. Loans that are in foreclosure - the so called foreclosure inventory - now number about 1.59 million properties, 3.17 percent of U.S. mortgages. The inventory is down 5.83 percent month over month and has dropped by almost 25 percent since April...(read more)

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Mortgage Applications Fall Sharply as Rates Rise

Jann Swanson — Wed, 22 May 2013 12:33:37 GMT

Posted To: MND NewsWire

A big drop in applications for refinancing dragged the Mortgage Bankers Associations Market Composite Index, a measure of mortgage applications volume , lower during the week ended May 17. The index was down 9.8 percent on a seasonally adjusted basis compared to the week ended May 10 and was down 10 percent on an unadjusted basis. Refinancing, as measured by MBA's Refinance Index, was down 12 percent from the previous week and the refinance share of mortgage activity decreased to 74 percent of total applications from 76 percent. Applications for refinancing through HARP increased from 30 percent of all refinancing applications to 32 percent. Applications for purchase mortgages also declined and the seasonally adjusted Purchase Index was 3 percent lower than a week earlier. The unadjusted index...(read more)

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The Day Ahead: Has All the Hype Been Remotely Justified?

Matthew Graham — Wed, 22 May 2013 11:23:00 GMT

Posted To: MBS Commentary

Wednesday May 22nd, and we finally get to see what all the fuss is supposedly about . The "fuss" or hype, if you prefer, was theoretically kicked into high gear by a somewhat bungled pre-release ' leak ' of a Hilsenrath story about the Fed 'mapping an exit strategy.' Bond markets started selling off around the same time, but the extent to which this had much to do with the announcement of the impending Hilsenrath article is still a matter of debate. Reason being: it coincided with two or three other contenders that would have also been sufficient to engender such a spike. Well before any of the drama began, we'd discussed our own 'mapping' HERE , highlighting the risks that the May selling trend would continue and pointing out the technical ledge at 1.83-ish in 10yr yields as being a massively...(read more)

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MBS RECAP: Big Bounce Higher Ahead of Fed

Matthew Graham — Tue, 21 May 2013 20:28:39 GMT

Posted To: MBS Commentary

MBS Live : MBS Afternoon Market Summary In sort of an inverted reading of the recent script, bond markets weakened right out of the gate and began improving at 10am (several notable occasions in May have seen the opposite). From there, they kept on improving until hitting highs of the day at 2pm. For MBS it was a 20 tick swing all told, and Fannie 3.0s still hold 19 of those ticks (roughly a .625 move from lows to highs) but compared to yesterday's latest levels, only added about .375. Combine that with the fact that yesterday's latest levels were the worst of the day and it leaves today's highs right in line with yesterday's. Lenders passed on only token improvements in pricing ahead of more potential volatility tomorrow. Markets are eager to hear what Bernanke has to say in the morning when...(read more)

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Mortgage Rates Slightly Lower Ahead of Fed Minutes, Bernanke

Matthew Graham — Tue, 21 May 2013 19:32:00 GMT

Posted To: Mortgage Rate Watch

Mortgage rates finally caught a break, moving just slightly lower for only the second time this month. For some, the drop in rates may be too little too late as it still doesn't put much of a dent in the losses suffered in May. Best-execution for Conventional, 30yr Fixed Loans is still between 3.625% and 3.75%, and we noted a few lenders who were priced significantly worse than yesterday despite the majority being moderately improved. The leading candidate for the root cause of all the recent volatility is the general disposition of the Fed toward QE3, the "quantitative easing" programs responsible for the Fed's large-scale asset purchases. To a large, but unknown extent, QE3 is one factor keeping mortgage rates low because it makes for massive, guaranteed buying demand for mortgage-backed...(read more)

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Most Real Estate Investors in CA Plan on Selling Inside 6 Years

Jann Swanson — Tue, 21 May 2013 16:51:44 GMT

Posted To: MND NewsWire

Recognizing that real estate investors have played a key role in the state's housing market recovery, the California Association of Realtors® (C.A.R.) recently surveyed its members about their interactions with investor customers and have developed a profile of investors and their behavior. Two-third of investors are following a long term strategy in investing, buying and holding property although three-quarters of intend to hold the property for less than six years . About one-quarter (26 percent) of inventors buy property in order to flip it. Most investors, about 75 percent , are what C.A.R. termed small mom-and-pop type , owning between one and ten investment properties. Fifteen percent own one property, 46 percent own two to five, and 14 percent own six to 10. Owners manage more than...(read more)

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MBS MID-DAY: Bond Markets Rallying. Wait... What?

Matthew Graham — Tue, 21 May 2013 16:10:44 GMT

Posted To: MBS Commentary

MBS Live : MBS Morning Market Summary Like a jilted lover learning how to trust again, MBS were tentative at first, and Treasuries hesitated at 1.97 as they descended from morning weakness, but both have rallied directionally since then. The possibility and/or hope is that the highest yields and lowest prices this morning, constituted some sort of final push to the furthest reaches of the pre-FOMC range. Big volume came into Treasuries 7 minutes before Fed's Bullard's speech in Frankfurt. Either the clocks in Germany are running 7 minutes fast or dealers saw inventory getting lighter after the Fed's buying operation in 7-10yr maturities. Supply/Demand imbalances can often have an effect on Treasuries during and after the Fed's scheduled Treasury buying from 10:15-11:00am. Whatever the case...(read more)

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Freddie's Non-Usage Fees; LO Comp, Land Sales, and Reg. E Tidbits - It's a Compliance World

Rob Chrisman — Tue, 21 May 2013 15:13:08 GMT

Posted To: Pipeline Press

If you're like me and rest your weary eyes each night by reading the Fair Housing Act of 1968, then you don't need to be told that the act " prohibits discrimination in the sale, rental, or financing of dwellings and in other housing-related activities on the basis of race, color, religion, sex, disability, familial status, or national origin" . It would also come as no surprise to you that the good people over at HUD are chartered with the authority and responsibility for interpreting and enforcing the Fair Housing Act, with the power to make rules for implementation. The Act does not specify a standard for proving a discriminatory effect ( disparate impact ) violation. Notwithstanding this statutory omission, HUD and the eleven federal appellate courts that have ruled on this issue agree...(read more)

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The Day Ahead: Recent Volatility Might be Logical

Matthew Graham — Tue, 21 May 2013 10:12:00 GMT

Posted To: MBS Commentary

There continues to be little to do or say about the first two days of the week. For the most part, they merely serve as a sort of cruel waiting game (or torture rack) ahead of Wednesday's FOMC events. Those events include the Bernanke testimony to the Joint Economic Committee in the morning and of course the hotly anticipated FOMC Minutes at 2pm in the afternoon. In fact, ever since the Employment report on 5/3 set a negative trend adrift, there hasn't been one singular big-ticket event on the calendar that to inform or change the drift. The biggest swings have been tradeflow related, and we now find ourselves surprisingly in line with the original post-NFP trends from earlier in the month: Even the bigger picture trend has returned to it's mid-point. In fact, seeking out such a central zone...(read more)

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MBS RECAP: Another Hopeful Morning Dashed by Defensive Reality

Matthew Graham — Mon, 20 May 2013 20:44:10 GMT

Posted To: MBS Commentary

MBS Live : MBS Afternoon Market Summary Bond markets got in this morning and quickly began undoing some of the damage done by the overnight trading session. Treasuries and MBS both opened flat to slightly stronger and made further gains in the first few hours. This was soon revealed to be the same old set-up we've seen play out frequently since May 3rd. It usually ends with things starting to get slippery after 10am and drifting sideways-to-weaker in the afternoon. Today was no exception. 10yr yields ran into a floor that had been paved over on Friday after the Consumer Sentiment data. Before that, it had been a ceiling, providing a good bounce before the Friday afternoon drift took over. After bouncing there today, it was all over for 10's and MBS alike. The former moved quickly from 1.92...(read more)

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Mortgage Rates Near 2013 Highs to Start Week

Matthew Graham — Mon, 20 May 2013 19:56:00 GMT

Posted To: Mortgage Rate Watch

Mortgage rates continued May's nearly constant trend higher to begin the week, though the pace of increases is slower compared to that seen on Friday. Even so, it brings rates dangerously close to their highest levels of 2013 (which are also the highest levels in 1 year). Best-execution for Conventional, 30yr Fixed Loans is in transit between 3.625% and 3.75%. Best-ex is also more subjective from borrower's points of view at the moment due to the fact that the most efficient rate on most rate sheets is 3.625% yet it might leave some borrowers bringing more to the table in terms of closing costs than they'd otherwise like. In other words, we're now getting into rate territory where 3.625% won't necessarily be a "no point" quote for the best qualified borrowers (but as always, this can vary greatly...(read more)

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MBA Highlights Opportunity For Private Capital Risk-Sharing With GSEs

Jann Swanson — Mon, 20 May 2013 18:53:53 GMT

Posted To: MND NewsWire

Maintaining that the conservatorships of Fannie Mae and Freddie Mac (the GSEs) have caused government involvement in the mortgage market to balloon to unhealthy proportions , the Mortgage Bankers Association (MBA) Monday released the second in a planned series of five concept papers offering its solutions. Today's paper on risk sharing follows Key Steps on the Road to GSE Reform, which suggests that the Federal Housing Finance Agency (FHFA) direct the GSEs to modify the Freddie Mac PC to mirror the exact structure of the Fannie Mae MBS so that these securities would be considered fungible for TBA delivery. In Up-Front Risk Sharing: Ensuring Private Capital Delivers for Consumers MBA says a situation exists today where the government is crowding out private capital and blocking real competition...(read more)

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Fannie Forecast Serves up Feast for Housing Recovery Bulls

Jann Swanson — Mon, 20 May 2013 17:31:58 GMT

Posted To: MND NewsWire

Fannie Mae's economic and strategic research team today called the housing recovery "undeterred" after it contributed 0.3 percentages points to economic growth in the first quarter. Doug Duncan, Orawin T. Velz, and Brian Hughes-Cromwick said this was the eighth consecutive quarter that housing has added to growth and the company's Economic Summary for May said recent housing indicators point to continued recovery. The annualized rate of housing starts in March was over one million units for the first time since 2008 , driven solely by a surge in multi-family building which more than offset a decline in single-family construction. Multi-family housing starts are now back to the levels of the early 2000s, benefitting the report says from a continuing decline in homeownership which fell again...(read more)

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Delinquencies to Decrease Slightly, Price Appreciation Sustainable -FICO Survey

Jann Swanson — Mon, 20 May 2013 16:49:43 GMT

Posted To: MND NewsWire

Most risk professionals who participated in a recent survey believe the status quo is going to prevail when it comes to loan delinquencies over the next six months. In survey conducted in the first quarter by FICO and the Professional Risk Managers Association (PRMIA) the respondents, 58.5 of whom said their main area of responsibility was mortgages, were asked to predict the path of delinquencies for seven categories of loans. A plurality expect delinquency rates to stay the same for most loan types and few expect to see further increases. While 45.2 percent of respondents felt mortgage delinquency rates would remain fairly constant over the next six month, 38.5 percent do expect further declines compared to 31.3 percent in the previous survey conducted in the fourth quarter of 2012. Less...(read more)

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