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

Mortgage Related News

Bright Economic Outlook Muted by Housing Data

Posted To: MND NewsWire

Fannie Mae's Economic and Strategic Research (ESR) group is still expecting that economic growth will "likely" be solid in the third quarter, but they are otherwise hedging their bets. In their October Outlook, the economists said the lower job growth in September does not alter their view that the labor market is strong, but GDP growth has probably slowed from its second quarter pace, partly reflecting a deceleration of product investment and consumer spending. The surge of soybean exports that tried to get ahead of tariffs has subsided and with a strengthening dollar, the trade deficit has probably widened, and residential fixed investment is probably also down, extending that decline into a third straight quarter. Real estate sales commissions are part of that calculation and home sales...(read more)

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Purchase Share, FICOs, ARMs All Increasing -EllieMae

Posted To: MND NewsWire

The share of closed loans originated for home purchase continues to inch higher. Ellie Mae, in its September Origination Insight Report , says that share jumped from 68 percent in August to 71 percent . The upward trend in purchasing was most pronounced for FHA loans where the share rose 5 percentage points to 83 percent. For Conventional loans the share moved to 69 percent from 66 percent while there was only a 1-point increase in the VA share, to 73 percent. The distribution of loans did shift slightly for the first time in months. The VA and FHA shares of closed loans remained at 10 and 20 percent respectively but the Conventional shared dipped by 1 point to 65 percent. The share of adjustable rate mortgages (ARMS) increased to 7.2 percent from 6.6 percent in August. "We see refinances remain...(read more)

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MBS RECAP: Super Sideways and Slightly Weaker

Posted To: MBS Commentary

Bonds were stuck between a rock and a hard place today. Actually they were stuck between stocks and a European place. Stocks made a case for a bond rally (not that stocks are in total control of bonds, but all other things being equal, stocks' intraday momentum is frequently seen accompanying bond rallies). European markets pushed in the other direction with German Bund yields rising 3 times as fast as US 10yr yields. The net effect was moderate weakness, mostly early in the day. That stands to reason as Europe is closed during the 2nd half of our domestic trading day (therefore not around to keep adding is influence). In the bigger picture, the weakness wasn't a big deal. We're effectively sideways at 7-year highs in rates. That's been the case for most of the month. Stocks...(read more)

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Rates Edge Back Toward Long-Term Highs

Posted To: Mortgage Rate Watch

Mortgage rates failed to extend yesterday's modest improvement, moving modestly higher by the end of the day. This takes the average lender very close to the long-term highs seen on October 5th. Indeed, prospective borrowers shouldn't be surprised to see the highest rates since early 2011. In and of itself, today wasn't too dramatic. We were already fairly close to these highs yesterday and, in general, have been holding in a fairly sideways pattern nearby for most of the month. As has been the case for more than 2 years, we are in a rising rate environment, and there's no compelling reason for an immediate change. That said, the higher rates go, the harder it will be for them to continue moving higher. Additionally, when rates are historically high, we tend to see more "false starts" that...(read more)

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Existing Home Sales Extend Slump, But Inventory Holds Annual Gain

Posted To: MND NewsWire

Existing home sales slipped in September, following a month in which sales were almost totally flat. The National Association of Realtors® (NAR) said that closed transactions for existing single family homes, townhouses, condos, and cooperative apartments was at a seasonally adjusted rate of 5.15 million in September. This was a 3.4 percent decline from both the July and August rate, both of which came in at 5.34 million units. The last month in which existing home sales posted a month-over-month gain was in March. Sales are now down 4.1 percent year-over-year from the September 2017 rate of 5.37 million. Analysts polled by Econoday, after overshooting the mark for five straight existing home sales reports, lowered the bar for September. Despite this, the NAR report missed even the lowest...(read more)

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Appraisal White Paper; Data Filter Product; Capital Markets News

Posted To: Pipeline Press

Everyone, and their brother, knows that the costs for builders to build a home are increasing. Politics aside, it turns out that the tariff changes are indeed impacting the cost of remodeling and building, and NAHB released a list of products affected by tariffs, including nails. Did you know that, per a Freddie Mac poll, 78% of Americans now say that renting is more affordable than owning? Higher rates and home prices are the obvious factors although in some areas wage growth has overtaken house price appreciation. New rental supply, on the other hand, has hit a three-decade high. Appraisal and valuation news In 2017, more than six million homes were sold in the U.S. and there were more than two million licensed real estate agents. By contrast, there were only about 80,000 appraisers. The...(read more)

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MBS Day Ahead: Risks and Opportunities With Past Precedent

Posted To: MBS Commentary

We've talked a bit (in this commentary and in the live chat on MBS Live ) about the similarities between the October sell-off and one seen in April/May 2018. Both took yields to what were, at the time, the highest yields in years. Both examples have an initial spike followed by several weeks of narrower trading with a trend-line of "higher lows" being the most noticeable feature during those weeks. As you can see in the following chart, that's the phase that we're currently in (those "weeks of narrower trading with a trend-line of higher lows"). If October ends up like April/May, the there's another spike left to come. The lines along the bottom of the chart are fast and slow stochastics--momentum indicators. The move in May 2018--where both are heading lower...(read more)

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MBS RECAP: Bonds Find Buyers Thanks to Europe

Posted To: MBS Commentary

Bond markets began the day almost perfectly unchanged relative to yesterday's latest levels. That means the nasty little afternoon selling spree was still priced-in as of this morning. That continued to be the case until the 11am hour. At that point, European markets were beginning a decisive risk-off move heading into the end of their trading day. This was fueled primarily by Italy being put in the hot seat at an EU summit. While that wasn't the initial aim of the summit, Italy became the focus due to concerns among other EU nations regarding adherence to budget rules. In other words, the other countries were telling mom and dad (EU Commission) "hey! make Italy play fair." Italy has been throwing a bit of a tantrum saying "I don't wanna and I'm not gonna!"...(read more)

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Mortgage Rates Recover With Help From an Old Friend

Posted To: Mortgage Rate Watch

Mortgage rates recovered most of yesterday's losses today, following turmoil in European financial markets. What does Europe have to do with rates in the US? A lot, actually. In fact, Europe deserves credit for most of the glacial move toward lower rates seen from early 2014 through mid-2016, and was a key ingredient of the low rate environment in 2011-2012. More recently, Europe has been heading in a more American direction when it comes to monetary policy, and that's resulted in upward pressure on rates. Most recently, investors are having some doubts about Italy's willingness to play nice with EU rules. When that happens, investors seek safety in the core of the European bond market. In other words, they buy bonds from Germany and other safe-haven countries. While US bonds aren't high on...(read more)

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Annual Rent Growth Finally Turns Negative

Posted To: MND NewsWire

Evidence is growing that the housing market is cooling, and Zillow is adding to the pile of proof. However, its contribution points more to a slowdown in the rental market than breaking any news about housing prices. The company says that annual rent growth has now slowed nationally for eight straight months and turned negative on an annual basis last month for the first time since July 2012. The annual rate of growth in September was -0.2 percent, not only a negative but far from the peak rate of appreciation, 6.6 percent, in July 2015. Still, monthly rent is hardly pocket change. The national median after that 0.2 percent or $36.00 decline, was $1,440. Rents were lower in 19 of the country's 35 largest housing markets and were unchanged in three more. The largest decline , 2.7 percent, was...(read more)

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Rise of The Real Estate Teams

Posted To: MND NewsWire

Anyone who has ever worked as a real estate agent will understand the real reasons behind a new finding from the National Association of Realtors® (NAR). The organization recently conducted a survey among its Realtor members to find out how many considered themselves as members of a team . The survey, conducted in July, involved a sample of 50,436 active Realtors . A total of 3,483 useable responses were received for an overall response rate of 6.9 percent. The responses indicated that the team concept is becoming more common in the real estate world, although it certainly is not dominating it. Twenty-six percent of respondents said they were members of a team. NAR says the definition of a real estate team varies and in some cases is a legal definition. Some states describe it as two or...(read more)

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HELOC and Digital Products; Training And Events

Posted To: Pipeline Press

Whether it is reducing the number of cookies in a package and keeping the price the same or putting less ounces of cereal in a box and keeping the price the same, both are ways of slyly passing on costs to consumers. In housing, the same thing can be done. It turns out that 10% of the homes in Seattle consist of a single room ! Is this 1720? (Think your job is tough? What about appraisers appraising, and investors valuing, homes with only one room?) As we head toward winter, and higher rates, on the flip side Trulia analysis shows 17% of U.S. listings have dropped asking prices . Housing outpacing wage gains is not a long-term recipe for success for real estate. Training and Events Join me for lunch next week! On Thursday, October 25 th at Wente Vineyards in Livermore, CA join me, the California...(read more)

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MBS Day Ahead: Scary Technical Pattern Shaping Up For Bonds

Posted To: MBS Commentary

What is a pivot point ? In our primer on the topic, I talk mostly about levels that have repeatedly offered resistance or support to bond yields, but there's another relevant addition to the definition. Pivot points can also be suggested by a singular bounce at long-term high/low. It's not necessarily the first bounce that suggests a certain level as a pivot. Rather, it's when yields return to that level and fail to break on through to the other side. With all of the above in mind, 2018's previous ceiling at 3.128% (we'll call it 3.13% ) is shaping up as just such a pivot point. It acted as a floor as long ago as last Thursday, but yields were holding close--something they often do before attempting to break through. Yesterday's weakness pushed us far enough away from...(read more)

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Mortgage Rates Back up to Recent Highs

Posted To: Mortgage Rate Watch

Mortgage rates moved higher at a quicker pace today, following the release of the Minutes from the most recent Fed meeting. But correlation isn't necessarily causality in this case. The Minutes provide a more detailed account of the Fed meeting that resulted in September's rate hike. That rate hike was foregone conclusion and the Fed has been a relative open book in the intervening 3 weeks. In other words, there wasn't bound to be much by way of surprises. Even so, investors are always looking for clues in this more robust snapshot of the Fed's decision-making process. As such, it has the potential to cause some market volatility . There was market volatility today--especially for bonds (which directly affect mortgage rates). It's debatable whether it was purely a function of the Fed. More...(read more)

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MBS RECAP: Fed Proves to be Mere Speedbump For Bond Sellers

Posted To: MBS Commentary

Hindsight really is 20/20, and foresight wasn't too bad either. Either way, the picture is becoming clearer as bond yields move back toward recent highs in the wake of today's Fed Minutes. Let's start with the foresight . We'd been expecting (or at least entertaining the strong possibility) bonds to weaken earlier this week in the event the stock market found its footing. Stocks found that footing yesterday, but bonds didn't panic too much. My conclusion from yesterday's recap was that "bond traders could be waiting to make their move until tomorrow afternoon's Fed Minutes," or that we were getting a temporary boost from somewhere. Today's uneventful Fed announcement (stocks closed right at pre-Fed levels and bonds didn't really make a big move...(read more)

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Housing Construction Down But Not Out

Posted To: MND NewsWire

All three reports on residential construction activity in September were disappointing, but no more so than any of the other housing data that speaks to the ongoing process of leveling-off. While there had been some erosion expected from the August numbers, the actual data did not meet analysts' expectations. Upward revisions to August permitting took some of the sting out of that report, but the opposite happened with housing starts. Results were particularly poor in the South, likely resulting from the impact of Hurricane Florence . Permits for residential construction were issued at a seasonally adjusted annual rate of 1,241,000 units. This is 0.6 percent lower than the August estimate of 1,249,000 and 1.0 percent below the annual rate of 1,254,000 the previous September. The August number...(read more)

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MBS Day Ahead: Fed Minutes Approach; and a Musical Guest!

Posted To: MBS Commentary

There are only so many ways to say that bonds are range-bound and waiting for the motivation to break that range. Could it be the Fed Minutes today? Sure! But could the Fed Minutes also be a non-event that only prolongs the sideways indecision? Again, sure! One thing to keep in mind about this particular release of the Fed Minutes is that they pertain to a meeting where the Fed hiked rates, kept its rate hike outlook essentially unchanged, and published the least-edited version of their policy statement that we've seen in modern memory. The only noticeable change was the abandonment of the word "accommodative"--a qualitative reference to where the Fed views itself on a spectrum of tight/loose monetary policy. All of the above places a tremendous amount of emphasis on the Minutes...(read more)

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Self-Employed UW Products; Appraisal and Valuation Updates

Posted To: Pipeline Press

As thousands of MBA conference attendees head for the DC airports, what’s the chatter? Regulators who want to remind lenders that not being able to afford a compliance department doesn’t allow a company to make RESPA violations. That it is perfectly legal for builders to offer granite countertops, and to have a preferred lender. Companies who seem afraid, with the current industry-wide appetite for LOs, to tick off loan officers, so “drudgery” like teaching them compliance, how to use the LOS, etc., has fallen by the wayside. About how great a start Bob Broeksmit is off to as president of the MBA, and the value of the MBA’s charity, MBA Opens Doors Foundation , has in helping families. Lender Products and Services Gearing up for 2019, Lenders must reassess their...(read more)

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MBA Forecast: Purchase Originations to Remain Healthy as Fed Hikes Rates

Posted To: MND NewsWire

Purchase mortgage originations are expected to increase a bit in 2019, but not by enough to offset the continuing decline in refinancing. A forecast from the Mortgage Bankers Association (MBA), released Tuesday at its 2018 Annual Convention and Expo, predicts a 4.2 percent gain over the 2018 volume of purchase mortgages next year to a total of $1.24 trillion. However, the association expects refinancing activity to fall 12.3 percent to $395 billion. The result will be a net decrease of about $1 trillion in total originations to $1.63 trillion. Business should pick up in 2020; total volume is expected to be $1.68 trillion. Purchase originations are expected to increase to $1.27 trillion and even refinancing will gain ground, rising to $410 billion. Mike Fratantoni, MBA chief economist and senior...(read more)

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Mortgage Apps Take a Nosedive, Rates on the Rise

Posted To: MND NewsWire

Mortgage applications were down last week by the largest seasonally adjusted percentage since September 2017 . The Mortgage Bankers Association (MBA) said its Market Composite Index, a measure of application volume, dropped by 7.1 percent during the week ended October 12, and was down 7.0 percent unadjusted. There was a minor holiday, Columbus Day, that shortened the week for some financial institutions, but MBA said its numbers were adjusted to account for the holiday. Refinancing also suffered a major loss, declining 9 percent compared to the week ended October 5. It was the largest dip since the week ended November 24, 2017. The share of mortgage activity ticked down to 38.1 percent of total applications from 39.0 percent during the week ended October 5. The Purchase Index lost 6 percent...(read more)

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MBS RECAP: Uneventful Day For Bonds; Fed Minutes Tomorrow

Posted To: MBS Commentary

The S&P recovered roughly half of its losses from last week today, decisively breaking out of the consolidation pattern that had been in place through this morning. Bonds, on the other hand, are still in the consolidation pattern that accompanied the stock market volatility. In that sense, it was a good day (i.e. no one would have been surprised to see bond yields rise in concert with the big bounce in stocks). Bond traders could be waiting to make their move until tomorrow afternoon's Fed Minutes, or bonds could have simply benefits from a glut of retirement account funding associated with yesterday's tax deadline. Either way, they were clearly not willing to rally in any significant way. We still need to see 10yr yields break below 3.13% and hold those gains for a day or two before...(read more)

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Mortgage Rates Modestly Higher Ahead of Fed Minutes

Posted To: Mortgage Rate Watch

Mortgage rates didn't move much today. Some lenders were perfectly unchanged, but the average lender was just slightly higher. That's at odds with underlying bond market movement (which directly impacts rates)--at least at first glance. Specifically, the bonds underlying mortgages were slightly stronger today. That would imply slightly lower mortgage rates. So why did rates rise? As is often the case, today's seemingly paradoxical movement is due to timing . Bonds were weakening ever-so-slightly yesterday--something that's consistent with lenders raising rates. But the bond market didn't weaken enough for lenders to make those changes in the middle of the business day. Additionally, today's bond market improvement didn't really stick until the afternoon. Like yesterday, it wasn't quite enough...(read more)

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Home Price Reductions Are Increasing, Especially at High End

Posted To: MND NewsWire

Recent research from Trulia shows home price reductions are increasing . The share of homes for sale that have had at least one price cut since being listed is the highest since 2014. This, the company says, is more evidence that the market may finally be tilting in homebuyers favor, but the benefits are certainly not evident across the board, or maybe even where they are most needed. During the first part of this year the share of listings with a price changes stayed much as it was in 2017, but then shot up in July and August. When this is coupled with the slowdown in home price growth that has been noted in most indices, and inventories that are finally creeping up, the increase in price cuts, according to Trulia, could be a critical third confirmation that things may finally be shifting...(read more)

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Falling Lumber Costs Push Builder Confidence Higher

Posted To: MND NewsWire

Builder confidence ticked up 1 point in October, rising to 68. The National Association of Home Builders (NAHB), which produces the NAHB/Wells Fargo Housing Market Index (HMI) says this measure of confidence levels has held in the high 60s since June. "Builders are motivated by solid housing demand, fueled by a growing economy and a generational low for unemployment," said NAHB Chairman Randy Noel. "Builders are also relieved that lumber prices have declined for three straight months from elevated levels earlier this summer, but they need to manage supply-side costs to keep home prices affordable." The index is derived from a monthly survey that NAHB has been conducting among its new home building members for 30 years. Respondents are asked to give their perceptions of the current market for...(read more)

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FinTech Updates; Agency Deals; Off The Beaten Path at MBA Conference

Posted To: Pipeline Press

What’s not being covered by the mainstream press here at the MBA conference? How about, given the rough financial conditions, monthly (and not quarterly) financials being requested by warehouse & correspondents? How about some attendees bunking up two to a room to save money? Lenders trying to hire LOs, but the top LOs not wanting to move as we enter the 4th quarter and companies not wanting to hire the low-producing LOs? Both originators and management saying that regulator-impacted comp plans have continued to cause confusion, inequality, and hasn’t helped the borrower? And perhaps using net, or residual, income instead of gross income in the DTI calculation ahead of the “QM patch” expiring in January 2021? Capital markets In the secondary markets the Agencies...(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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