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 RECAP: Bond Rally More Coincidence Than Causality

Posted To: MBS Commentary

We've discussed the tenor of Thanksgiving week in bond markets being more to do with serendipity than traditional "cause and effect" relationships. That means the events and data on the calendar that typically push and pull on bonds throughout the course of the day are less relevant than normal. Instead, it's the sometimes random, sometimes counter-intuitive tradeflows preceding a 4-day weekend that set the tone. And sometimes the seemingly random trades DO happen to line up in an intuitive way with the economic data and events. Today was one of those days. Both Durable Goods and Consumer Sentiment provided ways to justify bond buying. The only catch is that the bulk of bond buying didn't happen in direct response to either data release. Still, we can at least say the...(read more)

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Mortgage Rates Move Modestly Lower Ahead of Holiday

Posted To: Mortgage Rate Watch

Mortgage rates fell modestly today, with bond market strength both before and after the release of the Fed Minutes (a more detailed account of the Fed meeting that took place 3 weeks ago). Stronger bond markets correlate with lower rates. Bonds tend to benefit from weak economic data, low inflation expectations, and an accommodative monetary policy stance from the Fed. Today's economic data was generally weaker, but of particular importance at the moment were the inflation expectations in the consumer sentiment data, which came in near the lowest levels since the financial crisis. The Fed Minutes also mentioned some concern over intractably low inflation, though they continue to expect a rebound based on a strong labor market. Bond markets are already well aware the Fed is planning on hiking...(read more)

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Delinquencies Soar in Storm Impacted Areas

Posted To: MND NewsWire

As predicted, mortgage delinquencies resulting from Hurricanes Harvey and Irma continued to play out in October. Black Knight Financial Services, in its "First Look" at the month's loan performance data, said the delinquency rate spiked in both Texas and Florida, skewing the national data. The US delinquency rate rose 4 basis points (bps) during the month, but removing those two states from the equation results in a 14-bps decline. Delinquency rates in the two affected areas rose 24 percent (186 bps). In those parts of Florida affected by Irma, the increase from September was 36 percent. Black Knight says that the number of non-current loans, those that are 30 or more days past due, have risen 79 percent in Florida and 30 percent in Texas over the last six months. There are 66,000 delinquent...(read more)

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Upcoming Events and Training; Tax-Related Underwriting Changes

Posted To: Pipeline Press

The lending world has plenty of truly very busy people. (Or maybe that is what they tell their bosses.) How best to communicate with them? Here’s an article that might be of interest to some: "How to Send Emails to Very Busy People" . Events & training Join TMBA's Southern Secondary Market Conference on February 6 & 7, 2017 at The Westin Houston, Memorial City in Houston, Texas. Sponsorship, exhibits (DEADLINE DECEMBER 1st FOR EARLY RATE) and registration is available for those who want insight to "Liquidity in the Market: Bears Float and Bulls Swim." Take a deep dive into regulatory and supervision trends that will impact you in 2018. Topics include Richard Cordray's exit from the CFPB, co-marketing and affiliated arrangements, cybersecurity, TRID 2.0 and HMDA implementation...(read more)

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Purchases Reclaimed Market Share From Refis Last Week

Posted To: MND NewsWire

This month's half-hearted rally in refinancing didn't last long . During the week that ended November 10, applications for refinancing made up more than half of all mortgage applications received, the first time that had happened since late September, and refinancing volume jumped 6 percent. Last week refinancing ebbed, but purchase mortgage applications did manage to fill the resulting gap. The Mortgage Bankers Association (MBA) said its Market Composite Index, a measure of total mortgage application volume, was higher than the previous week. The seasonally adjusted index eked out an 0.1 percent gain, although the non-adjusted index was down 2.0 percent. The Refinance Index lost 5.0 percent while the seasonally adjusted Purchase Index increased 5 percent . The unadjusted Purchase Index rose...(read more)

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MBS Day Ahead: Only Major Econ Data of The Week, Plus Fed Minutes

Posted To: MBS Commentary

To be sure, market participants have one foot out the door today--either mentally, physically, or both. This has already been made quite clear in the increasingly consolidative range that we've been tracking throughout November, but especially over the past two weeks. Today's calendar contains the week's only significant economic data in the form of Durable Goods, which is expected to retract to 0.3 from 2.0 last month, with Cap-Ex (nondefense capital goods orders, excluding aircraft) contracting to 0.5 from 1.7. That may or may not be worth an exploration of one of the outer range boundaries this morning, depending on how far it falls from consensus, but even if that happens, it would be a temporary diversion. (Note: this just came out much weaker than expected. Bonds are rallying...(read more)

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MBS RECAP: Market Watchers Lulled to Sleep Ahead of Week's Biggest Day

Posted To: MBS Commentary

So far this week, both of the trading days have done everything in their powe r to be as meaningless as possible. There have been no major attempts to break floors or ceilings in rates, no major correlation between market movement and data/events, and not much by way of data and events in the first place! Of particular note: the intraday high 10yr yield in the past 4 trading sessions has occurred somewhere in the 2.37's. That gives us a great preliminary ceiling to watch as we stand guard against the risk of volatility tomorrow. It will be higher due to the holiday calendar (last day before Thanksgiving weekend) and the presence of the week's only big ticket economic and monetary events (Durable Goods in the morning and Fed Minutes in the afternoon). Bonds improved slightly on the day...(read more)

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Mortgage Rates Holding Steady in Recent Range

Posted To: Mortgage Rate Watch

Mortgage rates were unchanged today, on average, although a few lenders made small adjustments to rates sheets in response to bond market volatility. Bond markets began the day heading into stronger territory (which implies lower rates), but gave up much of the gains by early afternoon. That prompted a few lenders to raise the costs associated with prevailing rates. In other words, markets didn't move enough for published interest rates to change. Those tend to move in .125% increments and it takes an uncommonly big day in bond markets to push mortgage rates higher or lower by that much. The "upfront costs" associated with a mortgage (origination and discount, typically) give lenders a way to fine-tune the overall cost of financing. It's those costs that moved higher, but again, only for a...(read more)

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Existing Home Sales Erase Summertime Losses

Posted To: MND NewsWire

Existing home sales continued a gradual recovery in October after a summer of sliding sales. For the second straight month the National Association of Realtors® (NAR) is reporting that sales of previously owned homes increased, this time by 2.0 percent. Single-family houses, townhouses, condos, and townhouses sold at a seasonally adjusted annual rate of 5.48 million. The increase brought sales back to their strongest pace since June's rate of 5.51 million, but they are still running behind sales in October 2016 by 0.9 percent. September's sales had been reported as up 0.7 percent from August, to 5.390 million, ending a three-month streak of losses. That gain has now been revised down to 5.37 million. Analysts had been looking for October sales in an annual range of 5.320 to 5.560 million...(read more)

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Best Year in a Decade? Good, but not Great

Posted To: MND NewsWire

Freddie Mac's Economic and Strategic Research Team gave its forecast for housing in 2018 (which, as discussed below, it is now hedging a bit) in its October Outlook . This month they present a retrospection of how housing fared in the old one. Since we all lived through it, too much detail would be overkill, but for the sake of nostalgia (or maybe relief), a brief review. Not for the first time, Freddie Mac says 2017 appears on track to finish as the best year for housing in a decade. It was fostered by a GDP that averaged slightly over 3.0 percent in the first half of the year, and even though this expansion has been modest relative to other recoveries, it has been consistently positive. Robust job gains have helped support homebuyer demand, although wage growth has been disappointing. Low...(read more)

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CRA Changes; New Lender; Mortgage and Appraisal Books for Your Staff

Posted To: Pipeline Press

What is more relaxing than breakfast in bed? IHOP is there for you, and is testing IHOP home delivery in various states. Roshambo to see who answers the doorbell? In even more exciting news, we now have a new threshold for the smaller loan exemption from appraisal requirements for higher-priced mortgage loans. Heavyweights CFPB, OCC, and the Fed ratcheted it up slightly. Startup Under the category of bank-owned lenders, bemortgage is "the new kid on the block." Operating out of Chicago, the company is a division of Bridgeview Bank Group founded by industry veterans...that collaborated to develop an innovative and strategic company in an evolving industry. On the LO role, Rob Sampson, CEO and co-founder, stated, "They will have access to the best programs, pricing, and tools so they can grow...(read more)

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MBS Day Ahead: If Sideways Momentum Bores You, Consider The Implication

Posted To: MBS Commentary

It's no great mystery that momentum in bond markets (at least in 10yr Treasury yields and MBS) is sharply sideways at the moment--not only in terms of the trajectory of the range, but also in terms of that range's narrowness. For the time being, we can chalk this up to a Thanksgiving week that is traditionally lightly-traded combined with indecision ahead of the tax bill uncertainty that will play out in the coming weeks. Longer-term bonds are splitting the difference between a stock rally and a European bond rally. The tanking yield curve (falling green line) is also helping fuel demand relative to shorter-term debt. To whatever extent momentum is "too flat" to be interesting at the moment, it paradoxically becomes interesting because of its implication. The chart above doesn't...(read more)

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MBS RECAP: Moderate Weakness Keeps Bonds Rangebound

Posted To: MBS Commentary

Looked at under a microscope, there was a fair amount of intraday volatility this morning. Treasury yields fell overnight, reaching the best levels in 3 sessions, but then abruptly sold-off soon after domestic trading began. The bulk of the selling was close enough to the CME open that we could chalk the move up to a few big trades at the start of the day/week. We could also consider the roll-out of a corporate bond deal just before the selling. Finally , stocks were fairly well-correlated with bond yields today, and stocks had been rising steadily as bond yields moved higher at the beginning of European trading hours. Or we could just throw all of that out the window and focus on the fact that bond markets did what they needed to do in order to remain in the center of their broader, consolidative...(read more)

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Mortgage Rates Higher to Begin Holiday-Shortened Week

Posted To: Mortgage Rate Watch

Mortgage rates moved slightly higher today against the backdrop of the unique bond market conditions seen on Thanksgiving week. Bond markets underlie mortgage rates, and there's generally a certain level of participation that traders and mortgage lenders can count on. That participation wanes on major holiday weeks and the remaining players tend to behave a bit more conservatively. This is seen in the form of interest rates staying inside recent boundaries and mortgage lenders not getting too aggressive with pricing. Inside those boundaries, however, movement is far less predictable . After all, with fewer players in the game, each trader has a bigger say in the direction rates will move. If there are more bonds being sold than bought, regardless of the motivation, rates will move higher. This...(read more)

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MBS Day Ahead: Thanksgiving Week in The Bond Market

Posted To: MBS Commentary

Compared to stocks, bond markets tend to be more affected by changes in market participation surrounding holidays and other sources of illiquidity. Liquidity is closely related to volume, but is certainly not the same . The shortest definition of liquidity is "volume at price." In other words, if there is a decent volume of buyers and sellers interested in trading at any given price, that's a liquid market. Contrast that to volume which simply counts the size of the trades in question. Volume could be very high if there are a few very large buyers and sellers only interested in certain price levels, but that would not be a liquid market. The worst of both worlds in terms of frustration for market watchers is a low volume, illiquid trading environment. That means it takes fewer...(read more)

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Hurricanes, Timing Issues, Push Delinquencies Higher

Posted To: MND NewsWire

Mortgage delinquencies surged higher in the third quarter of 2017. Most of the increase came in the early stages of non-performance, and much of it appeared to be driven by the late summer hurricanes. The Mortgage Bankers Association (MBA) reported the changes as were gathered in its National Delinquency Survey (NDS). The delinquency rate for mortgages jumped 64 basis points (bps) compared to the second quarter, to 4.88 percent of all outstanding loans. This was an increase of 36 bps from the same quarter in 2016. The delinquency rate includes loans that are at least one payment past due, but not loans for which the foreclosure process has begun. Hurricanes Harvey, Irma and Maria caused a huge amount of damage in Texas, Louisiana, Florida, and Georgia and devastated Puerto Rico. Marina Walsh...(read more)

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Action at CFPB; Capital Markets Product

Posted To: Pipeline Press

Thanksgiving week already! Let’s temporarily shift from residential lending to economics. According to the SalaryforPilot website, Air Force pilots earn an average yearly salary of $107,950, while Naval and Marine aviators earn $70,550 per year. That’s decent, given the benefits. Yet the U.S. Air Force has a 2,000-pilot shortage . With unemployment already low, and commercial airlines offering signing bonuses when existing pilots are up for reenlistment, market forces are impacting employment - just like the mortgage biz. CFPB Here's something to think about. If the CFPB "dials things back," wouldn't the states step in and increase their consumer-focused regulatory levels? Multi-state lenders certainly wouldn't like that. Since the state regulators have been in regular communication...(read more)

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Q3 was "Rough Patch" for Housing; Q4 Indicators Not Positive

Posted To: MND NewsWire

Housing activity in the third quarter of 2017 is described as "continuing its rough patch" in Fannie Mae's latest edition of Economic Developments . The company's economists say that activity pulled back across the board during the quarter. It was also the third in a row in which housing starts fell, although Friday's report on October residential construction signals a possible resurgence. New home sales were also down, despite an impressive 18.9 percent gain in September, a month in which existing home sales also rose for the first time in four months. The increase was not enough to bring the quarter into positive territory. The economists note that, while "the hurricanes disrupted activity in the South, housing weakness was present before the hurricanes and largely stems from the supply...(read more)

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MBS RECAP: Holiday Mode Engaged as Bonds Seek Center of Range

Posted To: MBS Commentary

With today's modest gains, bond markets did exactly what they need to in order to keep the medium term momentum technicals perfectly flat (that flatness was discussed in the Day Ahead , if you'd like to read more about it). That commentary mentioned bonds being "done for the holidays" in the title because the following week tends to be anyone's guess when it comes go market movement. We've seen Thanksgiving weeks that have been awesome, ugly, and perfectly flat. In almost all cases, the motivation for each of those movements is nowhere to be found. It's a random walk based on which traders are trading and whether or not they are actually trying to accomplish something on a week known for it's light liquidity. As for today, it started out with yields and MBS...(read more)

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Mortgage Rates Unchanged Heading Into Holiday Week

Posted To: Mortgage Rate Watch

Mortgage rates barely budged today--not too surprising considering today's bond market levels (which underlie rates) were roughly in line with yesterday's. The average lender is quoting conventional 30yr fixed rates of 4.0% or slightly lower for top tier scenarios. Movement has been minimal since October with day-over-day change most frequently occurring at the "cost" level. In other words, bond markets don't move enough every day for lenders to change interest rates by their standard 0.125% increments. Instead, the cost (or rebate) associated with any given rate serves as a fine-tuning adjustment. The cost is typically calculated based on a percentage of the loan amount. It can move by more than half a perfect in some cases ($500 for every $100k borrowed) before it would make sense for some...(read more)

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More Than Half of October Refis Were FHA/VA

Posted To: MND NewsWire

The interest rate for loans originated (closed) in October inched down 1 percentage point to 4.20 percent, the lowest rate thus far in 2017, and the sixth month in a row rates have declined. Ellie Mae also reported that the share of originations that were for refinancing moved up one percentage point to the highest share since February. "We are continuing to see borrowers take advantage of the lower interest rates as the refinance percentage increased to 39 percent of total loans in the month," said Jonathan Corr, president and CEO of Ellie Mae. "We saw increases in October across all loan types with FHA refinances at 23 percent, conventional refinances at 46 percent and VA refinances at 32 percent of all closed loans." According to the company's Origination Insight Report, the distribution...(read more)

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Home Building Surges to Year's Best Levels, Erasing Summertime Sadness

Posted To: MND NewsWire

It has been a while since all three measures covered in the residential construction report were strongly positive. In fact, certain metrics bordered on disconcerting during the summertime months. October's numbers represent a major departure from that previously stagnant theme. The joint report from the U.S. Census Bureau and the Department of Housing and Urban Development contained especially strong numbers for housing starts , which rose 13.7 percent from September to a seasonally adjusted annual rate of 1,290,000. The number represented the fastest pace since October 2016 and fell just 2.9 percent below that year-ago estimate of 1,328,000 units. Starts in September were also higher than originally reported, revised upward from 1,127,000 to 1,135,000. The start rate was well above even the...(read more)

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MBS Day Ahead: Bond Markets May Be Done For The Holidays

Posted To: MBS Commentary

Take a few steps back from the shorter-term charts (we tend to watch at 2-day chart for most lock/float purposes on MBS Live ) and a theme begins to emerge about bond market momentum over the past 2 months. There has been additional reinforcement of that them so far this week as Tuesday's high yields and Wednesday's low yields hit the same trendlines that began to suggest a holiday consolidation. What's a holiday consolidation? Quite simply, warm bodies start disappearing from trade desks (and of course, from Capitol Hill) this time of year. There's one major wave around Thanksgiving, then after a few weeks of work, a much bigger exodus for the Christmas/New Year holidays. When traders start tuning out, it's not uncommon to see trendlines emerge on charts like bowling bumpers...(read more)

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HUD, FHA, VA, and Ginnie News; Wells Fargo Mgt. Upheaval

Posted To: Pipeline Press

Here’s a tidbit for Happy Hour tonight. Currently, about 21 percent of filers take the mortgage deduction, but under the new framework only about 4 percent would, according to recent estimates from the Tax Policy Center. Here's a good summary of how the current proposals, which we'll be hearing about for months and months, impact home owners. More below, but no one (Senate, House of Representatives, White House) have put a firm plan/proposal in front of the public - and heading into the Thanksgiving and Christmas breaks, no single plan has emerged. HUD, VA, and FHA News From the Government, Investors, and Lenders The U.S. Department of Housing and Urban Development (HUD) announced it is charging the owner and landlord of several rental properties in Wichita, Kansas, and his wife, who...(read more)

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MBS RECAP: Bonds Adrift, No Land in Sight

Posted To: MBS Commentary

Bond markets are officially looking for inspiration, motivation, or even just something to pass the time. Today's events didn't seem to do the trick as trading levels drifted aimlessly throughout domestic hours. That's not to say bonds didn't move, however. The overnight session saw 10yr yields rise to the 2.36% pivot point to start the day. From there, they never came close to breaking outside a narrow 2bp range until after the 3pm CME close. This means all of the morning's economic data and the passage of the House tax bill (just the House, not the Senate) were effectively meaningless as far as bond markets were concerned. When we see surges in volatility at (and after) 3pm ET, it's a sign that trading conditions are light and that day traders had been making bets...(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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