Mortgage News Daily

MBS RECAP: Big Bounce Higher Ahead of Fed

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

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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MBS MID-DAY: Morning Gains Give Way to Mid-Day Rout (again)

Matthew Graham — Mon, 20 May 2013 16:36:02 GMT

Posted To: MBS Commentary

MBS Live : MBS Morning Market Summary Please note the timestamp on the pricing snapshot below, and that it's about an hour and 15 minutes old. The snapshot will continue to be generated between 11:00-11:10am while the MID-DAY Commentary time may vary depending on market volatility. Lately, MBS have had an unfortunate tendency to reverse course after making gains (or at least holding ground) in the first two hours of the day. When this occurs, our resources are fully allocated to reprice alerts for the MBS Live community . One of those is already reflected in this recap, but there were two additional instances at 11:33am and 12:12pm. Those operational details tell about as much of the story as there is to tell for bond markets this morning. There hasn't been any data, headlines, or events to...(read more)

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Texas and Reverse Mortgages; More on Possible Ginnie Changes; Upcoming Training

Rob Chrisman — Mon, 20 May 2013 13:32:46 GMT

Posted To: Pipeline Press

Here in Austin, at the Texas Mortgage Banker Association's yearly conference, the talk is not so much about the Millennial generation but about how the Texas House of Representatives approved legislation, already approve by Texas' Senate, which would allow reverse mortgage lending in Texas . But before it can become a law, the legislation will go to voters in Texas on November 5th for approval. This potential law would amend the Texas Constitution to authorize the "Reverse Mortgage for Purchase" program in Texas and would enhance consumer disclosure requirements for all reverse mortgage loans in Texas. Oh, and by the way, Texas is the only state that doesn't allow the reverse mortgage for purchase program for homeowners. Redwood Trust doesn't securitize reverse mortgages, but did issue another...(read more)

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The Week Ahead: No Scheduled Data Before Wednesday's Important FOMC Minutes

Matthew Graham — Mon, 20 May 2013 11:53:00 GMT

Posted To: MBS Commentary

Whether or not it turns out to be justified, hype and anticipation have been building over this week's FOMC Minutes for over a week now. The hype concerns the notion that the Fed Minutes will show a Fed board that is somewhat closer to tapering QE3 than the current market consensus might suggest. Recent Fed speakers, though not all of them, have added to the hype by suggesting tapering could begin this summer. Some of them have rested their hats on the verisimilitude of a housing recovery, saying it makes more sense to pull back on MBS first if housing is heating up . The other side of last week's coin and of the hyper in general, is the possibility that the Minutes show broader consensus that things are as they should be--that is to say the FOMC is " staying the course" on QE and needs to...(read more)

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Consumer Mortgage Choice Act Under Fire From CRL

Jann Swanson — Fri, 17 May 2013 20:56:00 GMT

Posted To: MND NewsWire

The Center for Responsible Lending (CRL) has released a brief issues paper voicing objections to HR 1077 , The Consumer Mortgage Choice Act. The bill currently sits in the House Financial Services Committee of which its sponsor Representative Bill Huizenga (R-MI) is a member. The bill amends the Truth in Lending Act (TILA) with respect to disclosures of points and fees for so called "high cost" mortgage loans and has the following key points Excludes from the computation of such points and fees: (1) the amount of any loan level price adjustment payment set by Fannie Mae, Freddie Mac, FHA, or similar government entity, (2) any compensation paid by a mortgage originator to an employee or creditor; and (3) any escrow for future payment of insurance. Modifies the inclusion in the computation of...(read more)

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MBS RECAP: Reminded of Volatility via Friday Cliff-Diving

Matthew Graham — Fri, 17 May 2013 20:46:57 GMT

Posted To: MBS Commentary

MBS Live : MBS Afternoon Market Summary MBS took a running start downhill this morning before reaching the edge of the cliff marked by yesterday morning's "ledge" of prices. This was the 102-28 area hit after yesterday's 8:30am economic data, including the weaker-than-expected Jobless Claims figures. MBS would go on to rally further after Philly Fed data at 10am, resulting in their best day of the month by a wide margin. Staring over the precipice of that same cliff (OK, it's not a very epic sort of cliff by the time we get back down to 102-28 from yesterday's highs at 103-10, but we're going for some continuity with the title here!), MBS turned, mouthed the words "it was never about the data..." and took the leap, ultimately making a splash (lots of them) around the important 102-16 waterline...(read more)

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Mortgage Rates Jump Back To Recent Highs, More Volatility Ahead

Matthew Graham — Fri, 17 May 2013 19:51:00 GMT

Posted To: Mortgage Rate Watch

Mortgage rates moved higher at their fastest pace in two weeks , after having their best day in more than 6 weeks just yesterday. The net effect for rates is not good, leaving them at their highest levels of the week and very close to 2013 highs seen in early March. While 3.625% remains as the best-execution rate for conventional, 30yr fixed loans, the costs associated with that rate (or whatever rate you're considering) are as high as they've been all week. Further increases from here start to shift the balance toward 3.75%. There's no question that the month of May has been exceptionally volatile for mortgage rates, in the context of the past 2 years anyway. Consider the "cost" side of the mortgage rate equation. Every rate has an associated cost implied. The lower the rate, the higher the...(read more)

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Home Sales Would Rise 15-20 Percent With 720 FICO - NAR

Jann Swanson — Fri, 17 May 2013 19:18:19 GMT

Posted To: MND NewsWire

Lawrence Yun, chief economist for the National Association of Realtors® (NAR) said Thursday it might be time to " dial down the credit stringency ." If the credit scores required for a mortgage returned to the more normal levels of about 720 for conventional loans and 660 for FHA loans, he said, home sales could be 15 to 20 percent higher than they are. During the past four years the average scores for approved conventional loans have been in the 760 to 770 range. About 51 percent of renters could qualify financially to purchase a home compared to 24 percent in 2005 and 33 percent in 2000. While their credit scores are unknown, "there are about 8 million more renters with the income necessary to buy a home now than in 2000, but they are choosing not to or are unable to become a homeowner...(read more)

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Kickback Accusations Resolved by CFPB Consent Filing

Jann Swanson — Fri, 17 May 2013 18:26:00 GMT

Posted To: MND NewsWire

A Texas homebuilder will surrender more than $100,000 to the Consumer Finance Protection Agency under a consent order filed on Friday. Paul Taylor, a principal of Paul Taylor Homes Unlimited and Paul Taylor Corporation was accused of receiving kickbacks for referring homebuyers to Benchmark Bank and to Willow Bend Mortgage Company for their mortgages. Under the agreement Taylor is also prohibited from engaging in future real estate settlement services including mortgage origination. Under the consent order, under which the respondents neither accepted nor denied the CFPB findings, the Bureau contends that Taylor and Benchmark jointly created and owned Stratford Mortgage Services and Willow Bend and Taylor created PTH Mortgage Company. Both companies, which the CFPB contends were shams, operated...(read more)

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Senator on a Mission to Change the Way Short Sales Affect Credit Reporting

Jann Swanson — Fri, 17 May 2013 18:04:21 GMT

Posted To: MND NewsWire

Senator Bill Nelson (D-FL has asked for an investigation and possible "crackdown" on the manner in which short sales are impacting consumer credit files . Nelson said that short sales are now often reported to the credit agencies using the same code that designates a completed foreclosure. In letters sent earlier this month to Edith Ramirez, Chairwoman of the Federal Trade Commission (FTC) and Richard Cordray, Director of the Consumer Financial Protection Bureau (CFPB) Nelson called the credit coding practice "disturbing" and said that there are key differences between a short sale and a foreclosure and both have major but different implications for consumers' credit ratings. "If a short sale is reported as a foreclosure, it could unfairly ruin short sellers' credit scores and make it more...(read more)

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CFPB Reminds Lenders of Changes to Mandatory Arbitration Provisions

Jann Swanson — Fri, 17 May 2013 17:54:24 GMT

Posted To: MND NewsWire

The Consumer Finance Protection Agency (CFPB) reminded lenders today that new Truth in Lending Act (TILA) rules banning mandatory arbitration provisions go into effect on June 1, 2013 so all documentation for new loans should be ready to go on that date. Changes to Regulation Z amendments relating to those provisions were contained in CFPB's final rule on loan originator compensation issued last January. The changes ban "terms that require arbitration or any other non-judicial procedures to resolve any controversy or settle any claims arising out of the transaction" for any closed in loan secured by a dwelling. Loans closed before June 1 or for which applications were received after that date are not covered by the new rule , but all lenders must make sure that all loan documents for loans...(read more)

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Ginnie I, II, or...III: Combining the Programs and the Advantages to Originators; Credit Unions Weigh in on QM

Rob Chrisman — Fri, 17 May 2013 17:18:31 GMT

Posted To: Pipeline Press

Among the nation's 30 largest metro areas included in a recent Zillow study, Pittsburgh (39%), Tampa (33%), New York (30%), Cleveland (29%) and Miami (29%) had the highest percentage of free-and-clear homeowners. It appears that areas with lower home values generally have higher outright homeownership rates, as smaller loan amounts are easier to pay back more quickly, but the age and credit rating of primary borrowers also influence free-and-clear homeownership rates. Zillow found that 65- to 74-year-olds are most likely to be free-and-clear (21%), followed by 74- to 84-year-olds (18%). Interestingly, when examining free-and-clear ownership rates as a percentage of homeowners in various age groups, Zillow found 35% of 20- to 24-year-old homeowners are free of debt. And one last unsurprising...(read more)

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MBS MID-DAY: Third Time is NOT the Charm for Bond Markets

Matthew Graham — Fri, 17 May 2013 16:51:57 GMT

Posted To: MBS Commentary

MBS Live : MBS Morning Market Summary Here we are again... All but a few days this week have seen morning sell-offs that have required negative reprice alerts for MBS Live subscribers . As previously intimated, such alerts delay the publication of these free recaps and will be reflected in the afternoon recap. It also means that the price table below is quite a bit out-dated at the moment, as it is automatically generated for this morning recap between 11:00am and 11:10am. Prices are quite a bit lower now and I've posted two more alerts since then. Consumer Sentiment wasn't the only culprit here. Rather, the pre-FOMC " range-finding " is probably what accelerated the losses with the Sentiment data merely serving to reinforce yesterday's highs. We've been trending back in the other direction...(read more)

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The Day Ahead: Winding Down and Range Finding; 2 Cool Charts

Matthew Graham — Fri, 17 May 2013 11:53:00 GMT

Posted To: MBS Commentary

The bulk of the week's activity has passed, from a calendar standpoint, and this morning's Consumer Sentiment data is all that's left on the domestic agenda. Even in the overnight session, there are no interesting data sets, and really, no data period, unless you consider Canadian CPI interesting (and we'd recommend against such perversion). These days tend to go one of two ways . More often than not, after big sell-offs and moderate bounces like we've seen this week, these Friday's fizzle mostly sideways as long as the data doesn't get any snowballs rolling. Occasionally, however, Sentiment data, and even other headlines can do just that. So I guess that's Fizzle with a chance of snowballs? Here are a few charts to help frame the trading day ahead. First up, take a look at MBS. Fannie 3.0...(read more)

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MBS RECAP: Purposeful Rally Helps Define Pre-FOMC Range

Matthew Graham — Thu, 16 May 2013 20:47:37 GMT

Posted To: MBS Commentary

MBS Live : MBS Afternoon Market Summary Yesterday and again early this morning (before the data), we discussed the potential significance of yesterday's prices failing to make a new low for the first time in 9 days. It's not a common thing for MBS or Treasuries to go that many sessions in a row making new lows, and earlier in the week we noted that sell-off's in Treasuries seldom go more than 8-12 sessions without pausing for at least 2 days. The current sell-off hit it's 9th day yesterday, and the strong bounce at the same highs (yield) seen on Tuesday set the stage for 1.98 to be the high end of the near-term range heading into next Wednesday. The analogous level for MBS would be 102-16. After dipping for a moment to 102-17 this morning, MBS never looked back, though they did lose a little...(read more)

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