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400 North Mountain Ave., Suite 223, Upland, CA 91786
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Mortgage Related News

Vendor and Lender News/Updates; Academy Buys First Mortgage and Cunningham

Posted To: Pipeline Press

This morning we’ve had the usual Thursday initial jobless claims economic release. At the other end of the teeter totter, here’s an amazing stat to talk about at Happy Hour tonight. It is estimated that 50% of net business formation in the United States since the recession has happened in about half of 1% of U.S. counties. That’s 20 of the 3,100 U.S. counties . Vendor News No one has definitively proven that a lender's use of vendors has decreased the cost to produce a loan. Conversely no one has proven that they aren't affective in helping produce loans in compliant, efficient, cost-effective ways. It is good to see what they are up to and see what's new out there. Wells Fargo is already testing and preparing its own digital mortgage solution by 2018 . Small lenders are already...(read more)

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Ellie Mae Reports Few Changes in Loan Characteristics

Posted To: MND NewsWire

Refinancing held its ground in June, with that share of the mortgage market remaining at 32 percent. While that is a significant decline from the 47 percent share the first month of the year, it is little changed from the June 2016 share of 34 percent. Logically, purchase loans remained at prior levels as well, a 68 percent share. The June Origination Insight Report from Ellie Mae notes a shift between refinance and purchase shares within loan types. the percentage of both VA and Conventional purchase loans increased 2 percentage points from the previous month, to 75 percent and 63 percent respectively. FHA purchase loans decreased slightly to 81 percent. The distribution of all loans across lenders was largely unchanged as well. Ten percent of originations were VA loans , the same percentage...(read more)

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Low Rates Stoke Second Month of Prepayment Gains

Posted To: MND NewsWire

Black Knight Financial Services said on Thursday that continued low interest rates fostered another increase in prepayments . The national prepayment rate, considered a sign of refinance activity , rose 5.3 percent in June on top of a 23 percent jump in May. It now stands at 1.12 percent. Despite these gains, it still lags the rate last year by more than 22 percent. The company released the prepayment information as part of its "first look" at June loan performance data. More detailed analysis will be presented in its next issue of Mortgage Monitor which will be available on August 7. Black Knight said the national mortgage delinquency rate resisted typical seasonal pressures, held steady at 3.8 percent in June. Early delinquencies increased, pushing the non-current rate up by 3.0 percent,...(read more)

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MBS Day Ahead: Bonds Hoping Draghi Keeps Things Green

Posted To: MBS Commentary

Mario Draghi is the President of the European Central Bank (ECB). That's the EU's version of the Fed. Like the Fed in the past, the ECB is still adding new bond purchases to its balance sheet (the Fed tapered those new purchases beginning in Dec 2013 and markets went through the "taper tantrum" in the 6 months leading up to that). The ECB is understandably not interested in causing a European taper tantrum, but they also would like to extricate themselves from the role of world's biggest bond buyer. On June 27th, Draghi made comments that made investors think the ECB was gearing up for taper talk. The scheduled buying program runs through December of this year (an extension of a program originally scheduled to end in March). Investors figured the ECB was at least considering...(read more)

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MBS RECAP: Eerily Quiet Ahead of Central Bank Announcements

Posted To: MBS Commentary

Much has been made of tomorrow's European Central Bank (ECB) Announcement, mainly because of its proximity to ECB President Draghi's comments on June 27th. That's when Draghi said deflation was being replaced by reflation and that economic growth in the Eurozone has more upside risk than downside. Those are the words of a central banker who is sending up trial balloons for tapering. Bernanke sent up similar balloons in March 2013, but they were ignored due to an abrupt shift in economic data in April (and then suddenly recalled in alarming fashion when that data was heavily revised in May). Markets are much more alert about ECB tapering risks and they've reckoned it's not happening in any sort of sweeping fashion just yet. Draghi's late June comments threw traders for...(read more)

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Mortgage Rates at 3-Week Lows

Posted To: Mortgage Rate Watch

Mortgage rates moved lower today, despite slightly weaker underlying bond markets. This has been an ongoing phenomenon in recent days. Bonds improve, implying lower mortgage rates, but lenders wait to drop rates until bond market improvement is vetted. In the current case, yesterday's market gains remained relatively intact despite today's market losses, thus giving lenders the green light to pass the gains through to mortgage rate sheets. Although today's rates aren't appreciably lower than yesterday's, they're technically the best we've seen since June 28th. More lenders are quoting top tier conventional 30yr fixed rates of 4.0% instead of 4.125%, and some of the aggressive lenders are back down to 3.875%. If there's been an underlying reason for the hesitation on the part of lenders, the...(read more)

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Upcoming Events; Disaster Updates; Yield Curve Flattening

Posted To: Pipeline Press

In a broad generalization, when people have money to invest they usually think about stocks, bonds, or real estate. (Yes, I know there are other assets, like precious metals, restaurants, your sister-in-law’s nail salon…) Looking at real estate, if a home builder is going to spend large sums on land, labor, and permits, they want to be able to charge a lot. Sure enough, even though there's been a slight push back to entry level, builders are still focusing on higher priced homes . "In 2009, 19 companies of the 200 companies on the BUILDER 100 reported that 50% or more of their closings came in the affordable sector. By last year, that number had fallen to just two." Lenders Reacting to Disasters On 7/14/2017, FEMA announced NR-51 , amending DR-4317 and providing individual assistance...(read more)

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Housing Starts/Permits Convincingly End Recent Slump

Posted To: MND NewsWire

Housing permits and starts both reversed their respective two-month slides in June, and both did so convincingly , far outpacing analysts' expectations. Activity was especially strong in the Midwest. The U.S. Census Bureau and the Department of Housing and Urban Development said building permits were issued at a seasonally adjusted annual rate of 1,254,000 units. This is a 7.4 percent jump from the May rate of 1,168,000. June permits were issued at a 5.1 percent higher pace than a year earlier. The permitting number left analysts in the dust. Those polled by Econoday had expected the number to come in between 1.170 million and 1.225 million, with a consensus of 1.206 million. Single family permits were issued at a rate of 811,000, a 4.1 percent month-over-month gain from the May estimate of...(read more)

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MBS Day Ahead: Trust The Technicals?

Posted To: MBS Commentary

This commentary will begin it's life as the "day ahead" entry for July 19th, 2017, but it may as well be a "knowledge base" entry for the validity of technical analysis. There are already several knowledge base articles designed to help people understand technical analysis on MBS Live. These include: Basic Concepts of Technical Analysis (And Some Jargon Definitions) Technical Analysis 101, Trends and Trend-Lines Max Support/Resistance Pivot Points (inflection points, floors, ceilings, etc.) Today's addition has to do with how much faith we should put in any given technical study. Are some studies better than others? When multiple studies are saying the same thing, should we put more stock in the conclusion? If the technicals can be reconciled with fundamental developments...(read more)

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Mortgage Apps Bounce Back After Holiday Losses

Posted To: MND NewsWire

Mortgage application volume bounced back during the week ended July 14, following a sharp downturn a week earlier. That week had been shortened by the Independence Day holiday. The Mortgage Bankers Association said its Market Composite Index, a measure of that volume, rose 6.3 percent on a seasonally adjusted basis compared to the prior week, and was up 33 percent on an unadjusted basis. The previous week's numbers were adjusted to account for the holiday. The Refinance Index increased 13 percent from the previous week, the same percentage by which it declined the week before. The refinance share of activity rose to 44.7 percent from 42.1 percent. The seasonally adjusted Purchase Index gained 1 percent week-over-week and was up 27 percent on an unadjusted basis. The unadjusted version was 7...(read more)

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MBS RECAP: Best Day For Bonds Since Late June

Posted To: MBS Commentary

If there is one thematic event at the heart of the past 4 weeks, it was a series of comments from European Central Bank (ECB) President Mario Draghi back on June 27th, essentially foreshadowing a winding-down of asset purchases. In other words, markets quickly began entertaining the idea of a European taper tantrum. The taper tantrum brought important lessons though--especially for central bankers who might be a bit too eager or forceful when the time came to make a shift. There's no material reason for the ECB to begin tapering immediately or to maintain a fast pace of reductions once it commits. The ECB can learn from the Fed's mistakes and take a much more measured approach. Intentional or not, Draghi's June 27th comments were a trial balloon for the market's mood with respect...(read more)

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Mortgage Rates Moderately Lower

Posted To: Mortgage Rate Watch

Mortgage rates fell today, but continue lagging behind the movements seen in underlying bond markets. Part of that has to do with the timing of bond market swings over the past few days, but lenders also simply want to see markets pick a theme and stick with it. Simply put: trading levels in bonds ultimately dictate rates, and today's trading levels suggest the lowest rates of the month. Given that today's rates are still generally in line with last Friday's, it would be fair to conclude that we'll see more improvement on lender rate sheets, even if bond markets merely hold flat tomorrow. Although we can't ever know what bond markets will do tomorrow, the fact that mortgage rates are heading into the day with a small advantage is useful knowledge. It means there's comparatively less risk involved...(read more)

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Foreign Homebuyers Surge into U.S. Market

Posted To: MND NewsWire

Our neighbors to the north seem to think the grass is pretty green on this side of the fence. The National Association of Realtors® (NAR) says that foreign investment in the U.S. residential market skyrocketed to a new high during the 12 months that ended in March. Those sales were fueled by a substantial increase from Canadian buyers. NAR released results from its 2017 survey of international residential buyers on Tuesday. It shows buyers from each of the top five home countries increased their activity from 2016, and that nearly half of all foreign sales were in Florida, California and Texas. Between April 2016 and March 2017, foreign buyers and recent immigrants purchased $153.0 billion of residential property. This is 49 percent more than was indicated in the 2016 survey ($102.6 billion...(read more)

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Price Concerns Constrain Builder Confidence

Posted To: MND NewsWire

Home builder confidence continues backing down from its post-crisis peak earlier this year, although the National Association of Realtors (NAHB) calls results of its July survey "solid." The NAHB/Wells Fargo Housing Market Index (HMI) dropped 2 points to 64, its lowest reading since last November . The June composite index was also revised down, from an original reading of 67. NAHB attributes the slippage to concerns over the costs of construction. "Our members are telling us they are growing increasingly concerned over rising material prices, particularly lumber," said NAHB Chairman Granger MacDonald. "This is hurting housing affordability even as consumer interest in the new-home market remains strong." "The HMI measure of current sales conditions has been at 70 or higher for eight straight...(read more)

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Current Lending Environment; FHA, VA News; HELOC Resets Doing Well

Posted To: Pipeline Press

How much would you pay to keep your job, or find a new one? Political analysts forecast that two wealthy contenders for the 2018 Illinois governor spot (yes, that Illinois, with its financial difficulties) will spend more than $300 million trying to be elected. Fiscal intelligence? What's the environment like out there? Jeff Babcock , who heads up STRATMOR's M&A effort, writes, "In conversations with various lenders, I'm detecting a growing degree of pessimism about mortgage origination performance for the full year 2017. It seems that even the best-managed lenders are maintaining volumes at 2016 levels, but with lower margins. The average performers' volume is down 10% to maybe even 20%. While 2nd Quarter production accelerated after a slow 1st Quarter, several executives expressed concern...(read more)

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MBS Day Ahead: Bonds Thinking About a "Lead-Off" Ahead of Thursday

Posted To: MBS Commentary

It remains the case that Thursday is the focal point of the week, with European Central Bank (ECB) President Mario Draghi set to tell reporters how far away we are from a tapering announcement. Tapering is understandably a highly-charged topic, given how it played out in the US in 2013. Draghi is aware of the damage to financial markets and financial markets are aware that Draghi's aware. As such, they aren't expecting him to carelessly obliterate global bond markets. In fact, they're not expecting him to make much of a firm indication about what's going to happen in the future just yet--at least not in terms of actual dates or dollar (Euro amounts). In other words, he's increasingly seen as threading the needle that keeps tapering on the table, but that causes minimal panic...(read more)

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Mortgage Rates Higher Despite Friendly Market Movement

Posted To: Mortgage Rate Watch

Mortgage rates are largely dictated by movements in bond markets--specifically mortgage-backed securities (MBS). When bonds improve, prices rise and investors are willing to pay more to buy loans. This results in rates moving lower. In other words, bond market improvement = lower rates. With all of that in mind, today is a bit of a paradox as the average lender is quoting slightly higher rates today, despite general improvements in bond markets. Nothing too terribly mysterious is at work here though. The inconsistency has more to do with the timing of Friday's market movements and the generally narrow range over the past four days. Specifically, bonds weakened progressively into Friday afternoon and most lenders never fully adjusted rate sheets to account for that weakness. This left the average...(read more)

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MBS RECAP: Super Calm Summertime Monday

Posted To: MBS Commentary

Today was an exceptionally light day in terms of news, volume, participation, and everything else we normally care about when it comes to market movement. For all intents and purposes, it was another "unofficial 3rd day of the weekend." This happens from time to time during summer months--typically on Mondays and less frequently on Fridays. It wasn't necessarily destined to happen today, but we knew in advance that the week's biggest-ticket events wouldn't hit until Thursday. With that in mind, we might even wonder how big Thursday's European Central Bank announcement can really be, given that insiders peg the September meeting for a more formal comment on tapering. While that's a possibility, there's always a risk that investors are simply hungry for clues...(read more)

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June Pull-back of New Home Mortgages Apps Called Seasonal

Posted To: MND NewsWire

Applications for mortgages to purchase newly constructed homes posted what was termed a seasonal decline in June. The Mortgage Bankers Association said its Builder Application Survey (BAS), which is conducted among mortgage subsidiaries of home building companies, decreased in June, but remains 10 percent higher than a year earlier. MBA uses application and market coverage data to project sales of newly constructed homes. It estimates that, on a non-adjusted basis, there were 55,000 new home sales in June 2017, a decrease of 3.5 percent from 57,000 new home sales in May. Their seasonally adjusted annual estimate of 628,000 units for June is an increase of 3.8 percent from the May pace of 605,000 units and is up 18 percent year-over-year. "We are at the part of the season where housing market...(read more)

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Fannie Mae Sees Growth Slowing, Housing Restrained by Inventories

Posted To: MND NewsWire

Fannie Mae said it is sticking with its forecast for 2.0 percent economic growth in 2017, a projection it first made in February. The estimate of 2.1 percent growth in the first half of the year is expected by the company's economists to slow to 1.9 percent in the second half. Further, they say while housing won't drag on the economy this year, it won't make a huge contribution either, as inventories remain a problem. The global outlook has improved and this helped to move Treasury yields higher; the 10-year rose about 25 basis points during the first few weeks of July. Improving growth abroad along with the 4 percent decline in the dollar so far this year, should help improve U.S. manufacturing and exports. Fannie Mae's economic staff says the June Federal Reserve Open Market Committee (FOMC...(read more)

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Investor Updates/News; OCC's Risk List; Training and Events

Posted To: Pipeline Press

There’s plenty of talk about real estate agents, appraisers, and loan officers being replaced by artificial intelligence or robots. In legal news, JPMorgan unleashed artificial intelligence to automate its legal work and save over 360,000 hours of work each year by lawyers and loan officers. Given personnel costs, that's a lot of doubloons. More bank news below. Bank news Several banks reported 2nd quarter earnings on Friday with results that generally topped analyst's expectations. But residential mortgage banking was poor. At JPMorgan Chase mortgage revenues fell 26% compared to a year ago, fell 52% at Citigroup Inc., and was down 19% at Wells Fargo to $1.15 billion. The results reflect what most lenders already know: even though home purchase activity has increased throughout 2017...(read more)

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MBS Day Ahead: Slow Week Leaves Focus on Central Banks

Posted To: MBS Commentary

It's the middle of summertime, the middle of a month, and there's a light economic and event calendar in the US. These are prime conditions for traders to tune out and for markets to engage cruise control until there are more compelling reasons to tune in. Well, almost prime conditions... There are the small matters of major policy announcements from The European Central Bank (ECB) and the Bank of Japan (BOJ) both taking place this Thursday. In terms of underlying market movement motivation that the average citizen will never hear about, foreign central bank policy is about as big as it gets. The ECB, especially, has been a driving force behind rates being "that much lower" over the past 3 years (their final countdown to full QE began in the spring of 2014, even though bond...(read more)

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Almost Half of Americans Have Buyer's Remorse About Their House

Posted To: MND NewsWire

The excitement of buying a new home has worn off fast for almost half of Americans. Forty-four percent of homeowners have some regrets about their current residence or the process they went through when choosing it, according to a survey by Trulia, a residential real-estate website. That's a slight improvemen t from the 46 percent who reported regrets five years ago. The site polled 2,000 adults in late June. Buying a house is often the biggest purchase a person will ever make, so it's natural that many experience some buyer's remorse. The median U.S. home price was $252,800 in May, up 5.8 percent from a year earlier, according to the National Association of Realtors. Trulia found the top homeowner regret was not choosing the correct home size (42 percent), including a third of homeowners who...(read more)

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MBS RECAP: Post-Rally Correction Rains on Bond Market Parade

Posted To: MBS Commentary

Today was bittersweet for bond markets, with strong gains in the morning, and an almost complete reversal by the end of the day. As expected, the early focus was on the CPI/Retail sales data duo at 8:30am. Both were bond-friendly, and an unsurprising rally ensued. Actually, to be fair, the rally was perhaps a bit on the aggressive side given the tenor of the data. In other words, a quick drop to 2.28% in 10yr yields seemed like a strong reaction based on the numbers (+1.7 vs +1.7 core annual CPI and -0.2 vs +0.1 Retail Sales). This might have been our first clue that the rally was forcing the hands of those holding short positions (bets on rates moving higher), who would cover those bets by buying bonds. Shorts aren't the only bets out there. More than a few bond traders decided to recommit...(read more)

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Mortgage Rates End Week at Best Levels

Posted To: Mortgage Rate Watch

Mortgage rates are experiencing increased volatility at the end of this week, which was to-be-expected given the calendar of events and economic data. Fortunately, the volatility worked in favor of lower rates this morning after Retail Sales and a key consumer inflation report both came in lower than expected. In general, weaker economic data coincides with rates moving lower. Investors are particularly interested in inflation data at the moment as it seems to be the Fed's biggest hang-up when it comes to removing "accommodation" (a broad term that refers to the level of the Fed Funds Rate and the Fed's bond buying policies). A removal of accommodation could take the form of a Fed rate hike or a decrease in the amount of bonds the Fed is currently buying as a part of its reinvestment policy...(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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