MBS RECAP: Markets Do Nothing With Data. Bring On The Greekend
The most recent alert at 1:32pm effectively serves as the recap. So this is more of a recap of the recap for those with short attention spans. Treasuries started strong and moved lower in yield throughout the morning finally hitting a floor just before noon. MBS on the other hand, hit their highs less than an hour into the session and never went higher, trading a sideways and fairly narrow range all day long. It turned out to be a completely uneventful trading day, thus adding to the mystique of "The Greekend.
" (For what it's worth, the Greekend unofficially lasts through Wednesday's FOMC festivities, which matter just as much, if not more than Greek elections. It's just more fun to make up Grexit-related words).
MBS Pricing Snapshot
Pricing shown below is delayed, please note the timestamp at the bottom. Real time pricing
is available via MBS Live.
Pricing as of 4:05 PM EST
Afternoon Reprice Alerts and Updates
Below is a recap of instant Reprice Alerts
and updates issued via email and text alert to MBS Live subscribers
Afternoon Weakness Coming And Going; Beware Pipeline Control Reprice
First of all, this isn't a "time to panic" alert, but more of a heads up on the evolving situation into the afternoon hours.
Volume is down and benchmarks look like they're set up to coast out into the weekend uneventfully, but there are a few considerations that suggest maintaining some level of vigilance on any loans you might lock today.
First of all, there are the normal considerations based on market movements. In this case we have 10yr yields trying to hold a narrower range just under 1.60 on the upside. We think that if they can do that, it hearkens a relatively calm ride out for MBS. As for MBS themselves, take a look at the 3.5 chart on the dashboard to see the uptrend heading into the afternoon, and broken on the downside shortly thereafter. The logical horizontal pivot just under 105-00 was tested and held up well, leaving us in "so far so good" mode at the moment. But should 10's break upwards of 1.596 or should Fannie 3.5's fall below 104-30, risks would we marginally increasing (though the overall range is fairly narrow, so more conservative lenders might not even really care until 104-28).
The second consideration is the "pipeline control" reprice risk. Depending on the lender, rate sheets are either at their BEST EVER levels or close to it. Certain lenders are more predisposed to it than others, but be cognizant of the risk of negative reprices EVEN IF MBS are holding their ground or improving.
all in all, we're doing well at the moment, and if nothing much changes, it looks like a surprisingly normal, calm Friday afternoon on cruise control. That said, there's probably not much reason to hold out for positive reprices unless you're planning on floating through the weekend, and let's be realistic.... If you're planning on floating through the weekend, you've already accepted the possibility of an infinitely bigger market movement than we're likely to see today.
Live Chat Featured Comments
Adam Quinones : "hence the overlays "
Adam Quinones : "lenders/servicers still have to deal with delinquencies though. This isnt intended to be a charity event"
Adam Quinones : "they eased up on cross servicer restrictions via Compare Ratio rule..."
David Zilkha : "Ok that makes sense. But then why not ease up on same servicer restrictions?"
Adam Quinones : "make more money = selling checking accounts, savings accounts..etc etc etc"
Adam Quinones : "yes FHA decided not to include these streamlines in Compare Ratios, but still, servicing delinquent loans is expensive "
Matthew Graham : "DZ, it's like Honda offering warranties on Toyotas as long as the Toyota owner bought a new Honda. Now they're saying, "we're just going to stick to Hondas because we built them in the first place, and can get parts for them cheaper. Plus, we don't want to be on the hook for something Toyota may have done wrong.""
David Zilkha : "Can you explain more on that AQ?"
Adam Quinones : "rep and warrant relief and they can charge more!"
John Paul Mulchay : "likelier to default?"
John Paul Mulchay : "prepay speeds?"
John Paul Mulchay : "U.S. Bank Home Mortgage Wholesale Division will no longer accept any new registration or locks for FHA Streamline Refinance loans that ARE NOT refinances of existing USBHM FHA loans currently being serviced by U.S. Bank Effective Friday, June 22, 2012. This applies to all CUSB, Table Fund and Purchase Fund Lenders."
Adam Quinones : "two reasons..."
Matt Hodges : "yep"
Adam Quinones : "most are saying same servicer right?"
Matt Hodges : "1-2 dominoes each day"
John Paul Mulchay : "same servicer only"
Gaius Rossini : "what did it say jpm?"
John Paul Mulchay : "USBank issued their streamline memo"
Matt Hodges : "will that change? I don't know"
Matt Hodges : "our AE was emphatic that they want FHA streams"
Matt Hodges : "yes"
Andy Pada : "have they come out and committed to the product?"
Matt Hodges : "ST"
Andy Pada : "So who has committed to this space?"
Andy Pada : "US Bank just cut off fha streamline effective June 22"
Mike Ford : "also can be higher # financed properties allowed..goes off of how many were allowed at time of original note, so many investors can do freddie relief, no income/asset, no appraisal and up to 10 financed properties allowed vs open access is 4"
Mike Ford : "as well as it's a no income/asset loan!"
Mike Ford : "yep"
Jason York : "on a Freddie Owned loan, if a customer goes to their current servicer on the retail side, can't they do it with no appraisal?"
Matt Hodges : "correct; so that it's applied early - PV"
rford : "its better to add 1/12th to the monthly payment and you come out even better than biweekly"
Matt Hodges : "once/year it will help, since it's 13 payments (26 1/2 payments)"
Curt Sandfort : "if I do biweekly on a FHA loan, will it help reduce the interest or does it not matter since FHA interest is monthly anyways?"
Matt Hodges : "ok, will look at ST. thanks"
Jason Zimmer : "and prrof of residency...pay stubs, bank statements, etc in different houses"
Matt Hodges : ""yeah, we are not living together and i own another house, but it's cool"?"
Jason Zimmer : "uhhhh yeah!"
Matt Hodges : "LoX?"
Jason Zimmer : "wife owned one home and husband owned another. both were considered OOC"
Matt Hodges : "WF helpline doesn't like it"
Jason Zimmer : "MH...i did one of these at suntrust no problem."
Matt Hodges : "U/W question: wife living in marital house, husband renting down the street. no separation, no divorce. Concerned that this doesn't meet the occupancy requirements. Husband earns money; wife does not"
Christopher Stevens : "rec'd this email from Wells...Best effort Conventional pricing was improved this morning by the following:
• 25 bps for standard conforming fixed and ARM production
• 50 bps for high balance fixed and ARM production
This improvement was on top of an improving market this morning. The market improved 6-8 tics in the liquid coupons.
rford : "yeah MG, i was comparing yesterday also Wells 6/1 was insanely good! I gave the smae perspective to a borrower yesterday that it was the 3rd best day in pricing, ever..."