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: Europe to The Rescue

Posted To: MBS Commentary

Global economic data is big business for the bond market these days. With no end in sight to the domestic economic expansion (note: 1.6% vs 0.9% f'cast in today's Retail Sales and another decades-long low in Jobless Claims), any recessionary risks have been pinned on the two biggest economies that have been sending the weakest cues: Europe and China. Earlier this week (and starting last Friday), Chinese economic data didn't do anything to help the cause of worrying about global growth. Overnight trading saw the China trade level off, however, thus opening the door for a raft of EU economic data to have its say. Among that data, it was the weaker German manufacturing PMI that set the tone overnight. German Bunds rallied sharply and pulled US Treasuries along for the ride. In the...(read more)

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Mortgage Rates Recover Modestly After Big Losing Streak

Posted To: Mortgage Rate Watch

Mortgage rates have generally been moving higher since March 28th after they bottomed out at the lowest levels in well over a year. At the time, investors were tuned-in to the Fed's concerns about the global economy. Granted, the US economy might not have been suggesting an imminent recession, but that was far more difficult to say about China and Europe. Both economies were clearly decelerating by the end of 2018 and into the first few months of 2019. That deceleration was the biggest risk factor for the global economy and the biggest boon for mortgage rates. Weak European economic data at the end of March helped drive the long-term low rates on March 27th. But that marked the apex of panic. We haven't seen any data quite as alarming since then and thus, the gradual increase in rates (economic...(read more)

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Lower Rates Have Slight Impact on New Loan Stats

Posted To: MND NewsWire

Continuing declines in interest rates had some impact along the margins of loan originations in March. Ellie Mae's Origination Insight Report for March reports that 30-year fixed-rate mortgages originated during the month had an average interest rate of 4.77 percent , down from 4.86 percent in February and 5.01 percent in January. The company reported that the share of originations that were for refinancing ticked up 1 percentage point to 35 percent during the month while the share among FHA loans jumped 3 percentage points to 23 percent. FHA's share of all originations also rose 1 point to 20 percent. The share of conventional and VA loans remained at 64 percent and 11 percent of the total respectively. Another possible impact of lower rates, the percentage of adjustable rate mortgages (ARMs...(read more)

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MBS Day Ahead: EU Weakness Helping US Bonds, But Don't Count Chickens

Posted To: MBS Commentary

Despite the presence of a big economic report like Retail Sales (which came out much higher than expected) or the unique event risk presented by the Barr report, the defining moment of the trading day will turn out to be the 3:30am release of just-slightly-weaker manufacturing data in Germany. Case in point: As seen in the chart, the 8:30am Retail Sales data pushed back on the 3:30am rally, but not enough to break into higher yields. Since then, European bonds have continued to slump and US bonds have continued following. Why do we care so much about a piddly little manufacturing headline in Germany? Keep in mind that, in terms of the domestic economy, it's hard to make a case for any imminent recession or significant contraction in economic growth. For such conclusions, we must turn to...(read more)

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Paper on FHA Changes; Tech Report; Compliance and Ops News

Posted To: Pipeline Press

Experienced originators know that lending is a numbers game. Every 100 cold calls result in 20 conversations, which result in 5 potential leads, which result in 1 closed loan. Or whatever personal ratios are. Not only that, but there is a 2-4-month lag time between those 100 calls and any funded loans that come from making them so good LOs have been laying the groundwork for summer for a quite some time. But speaking of two months, from St. Louis Mike Swaleh reminded me that the revised Uniform Closing Dataset (UCD) Seller data requirements will be effective on June 24, 2019 . Lenders are working on the borrower’s app process. For example, Envoy Mortgage has developed XLR8 . More on Ops issues below. Lender Products and Services MGIC’s SEB Cash Flow Worksheets are Now Live ! These...(read more)

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Lenders Manage Tiny Profits in 2018 Despite Rate Hikes, Inventories

Posted To: MND NewsWire

Despite their fourth quarter loss reported last month, independent mortgage banks and bank mortgage subsidiaries still managed, albeit barely, to stay in the black last year. The Mortgage Bankers Association (MBA) said that banks responding to its survey made an average profit of $367 on each loan they originated last year, down from $711 per loan in 2017. They lost an average of $200 per loan in the last quarter of the year, only the third quarterly loss since MBA began collecting the data in 2008. "Despite a healthy economy in 2018, the mortgage market suffered, as rate hikes hurt refinancing volume and low housing inventories priced some potential homebuyers out of the purchase market," said Marina Walsh, MBA's Vice President of Industry Analysis. "For mortgage companies, there was the perfect...(read more)

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MBS RECAP: Bonds Battle Back After Opening Weakness

Posted To: MBS Commentary

As feared, bonds were gearing up for the raft of big-ticket economic data in China overnight. On balance, that data was quite a bit better than expected. The resulting selling spree was thus fairly logical. 10yr yields nearly hit 2.62% before it was over. It definitely could have been worse. I think part of the resilience is explained by the extent to which bonds have moved to price-in economic stability (or even a rebound) in China. Such a thing would definitely be worth higher yields at home, and the last week of Chinese data keeps the risk on the table. There wasn't really a big enough reason to justify the size of Friday's bond sell-off. Combine that with today's sell-off seemingly being too light and we come to the conclusion that it's been one big move leading up to today...(read more)

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Mortgage Rates Quickly Find Themselves at 1 Month Highs

Posted To: Mortgage Rate Watch

Mortgage rates continued higher for the 5th day in a row today. This brings the average lender to the highest levels in exactly one month. At issue: a series of stronger economic reports at home and abroad have eased concerns about global growth. Not only is a strong economy associated with higher rates in general, but those "concerns" were a big part of the Federal Reserve's decision to be more bond-friendly back in March. With concerns arguably lessened by recent data, investors may be assuming the Fed won't be quite as bond friendly going forward. All that having been said, the Fed is NOT likely to make any big changes after one solid month of global economic data. The most immediate cause for pressure toward higher rates came overnight in the form of Chinese economic data. Along with Europe...(read more)

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New Tax Rules May Have Added to Housing Slowdown

Posted To: MND NewsWire

Two New York Federal Reserve Bank economists are asking whether the tax reform act that went into effect at the beginning of 2018 is playing a role in the decline of home sales. Richard Peach and Casey McQuillan, writing in Liberty Street Economics , say that the broad-based slowing in housing market activity coincided with a roughly 70 basis point rise , from 3.9 percent to 4.6 percent, in the thirty-year fixed-rate mortgage. During the period in which rates were increasing, from the fourth quarter of 2017 to the third quarter of 2018, new home sales declined 7.6 percent and sales of existing homes dropped 4.6 percent. The two point out, however, that those declines in sales were larger than in the two previous periods of significant rate increases. They theorize that provisions in the Tax...(read more)

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MBS Day Ahead: Bonds Successfully Predict Chinese Rebound

Posted To: MBS Commentary

Over the years, there have been more times than I can count where the financial media has mistakenly assigned some significance to news or events in China. The past week has had its moments in that regard, but this time around, the Chinese economy is undoubtedly in play as a market mover. Either that, or it's being used as cover for traders to strategically back-fill the post-Fed rally that begin on March 20th--something that was ultimately accomplished this morning. Overnight economic data in China was this week's focus in terms of potential market movers. Chinese GDP came out at 6.4 vs 6.3 forecast (6.4 previously). Industrial output rose by 8.5% versus a 5.9% forecast. And Retail Sales ticked up to 8.7% from 8.2%. All of the above data points were released at 10pm ET, and had obvious...(read more)

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Non-QM Products; Mortgage Mergers Roll On; QE Still Influencing Rates - a Primer

Posted To: Pipeline Press

Economic doldrums? Probably not – but there is always someone out there claiming dire straits are right around the corner. A CNBC survey of Wall Street experts finds over 96% do not anticipate a recession by summer 2020, 70% are optimistic about the economy, and 30% have a neutral outlook. Fitch Ratings said there are no signs of recession currently but noted that global growth was sharply deteriorating. Fitch sees relatively strong US GDP growth as a positive and expects China will start stabilizing soon. And a survey of economists by the Wall Street Journal found that 57% thought the next rate increase by the Fed wouldn't happen until September or later. This number is up from 35% in the February survey and 13% in the January survey. Overall, 18% of economists believe the Fed will not...(read more)

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Purchase Volume Continues Higher Despite Rising Rates

Posted To: MND NewsWire

It would appear that Refis' time in the sun is listing back towards purchases, as mortgage rates increased for the second straight week and application volume retreated further . The Mortgage Bankers Association's Market Composite Index, a measure of that volume, decreased 3.5 percent on a seasonally adjusted basis from the week ended April 5. On an unadjusted basis, the Index was down 3 percent. The Refinance Index decreased 8 percent from the previous week and the share of applications that were for refinancing dropped from 44.1 percent down to 41.5 percent. Falling interest rates had driven the refinancing share over 47 percent at the end of March. Meanwhile the volume of purchase applications continues to grow, up 1 percent from the previous week on a seasonally adjusted basis and 2 percent...(read more)

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MBS RECAP: Bonds Keep losing Ground. Defensive Positioning or Something Worse?

Posted To: MBS Commentary

Rates were flat to start the overnight session and didn't bat an eyelash at initial strength in equities markets during Asia-only trading hours. Things changes when European trading got underway with the sizable jump in the DAX (German stocks) coinciding with the first selling streak of the day in US Treasuries. Even then, yields never went any higher than yesterday's highs before correcting a bit. We actually touched unchanged levels at 5:53am, but it was all uphill from there . Without any clear correlation to an event, headline, or related market, bond selling picked up aggressively just after 8am (when a majority of domestic traders begin their trading day). The 10 minutes of volume following the 8:20am CME open dwarfed any other 10 minute block of the day, suggesting that traders...(read more)

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Mortgage Rates Highest in Nearly a Month

Posted To: Mortgage Rate Watch

Mortgage rates rose again today, albeit at a slightly slower clip compared to yesterday. Still, that's little consolidation considering this is the 4th straight day spent moving in that unfriendly direction. The average lender is now back to levels not seen since March 19th. On the bright side, March 19th's rates were the lowest in more than a year at the time. So what's going on? In general, the month of March saw the confluence of 2 great things for rates. Not only was there a generally high level of concern/uncertainty surrounding the global economic outlook, but the Fed was also surprisingly helpful. This was a bit of a double-edged sword because the Fed's helpfulness was predicated on that same sort of concern/uncertainty. In other words, if events unfold in such a way as to ease that...(read more)

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Buyer Traffic Improves, Builders Still Leery of New Home Market

Posted To: MND NewsWire

Builder confidence levels as reported by the National Association of Home Builders (NAHB) remained in the low 60s in April, a space it has now occupied for three months. The NAHB/Wells Fargo Housing Market Index (HMI) a measure of confidence in the market for new homes, rose 1 point to 63, continuing to slowly recover from the three year low of 56 it reached in December. "Builders report solid demand for new single-family homes but they are also grappling with affordability concerns stemming from a chronic shortage of construction workers and buildable lots," said NAHB Chairman Greg Ugalde. "Ongoing job growth, favorable demographics and a low-interest rate environment will help to modestly spark sales growth in the near term," said NAHB Chief Economist Robert Dietz. "However, supply-side headwinds...(read more)

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MBS Day Ahead: Be Careful What You Read and Whom You Trust

Posted To: MBS Commentary

Reading the news this morning, I came across multiple articles with such bogus claims that I feel compelled to rant about it here. All of the offenders (I stopped looking after 3 out of 3 all said the same thing) suggested that the overnight stock surge in Europe FOLLOWED the ZEW economic sentiment survey in Germany. Were stocks higher overnight? Yes! Was there an economic sentiment report in Germany from ZEW? Yes! Are the two things related? You tell me. If you answered "No! Not only does the rally obviously have nothing to do with the ZEW data, but in fact, German stocks FELL after the ZEW data was released. What the hell were they thinking?!" You'd be right! This is but one small, isolated example of financial market coverage that doesn't take a moment to vet claims on...(read more)

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Coaching, Underwriting, and Franchise Products; Tech Study; Fed Speeches This Week

Posted To: Pipeline Press

Things aren’t always what they seem. Does the mainstream press, or politicians, think about how about how much money it takes to attract top talent to senior roles at top mortgage companies? Elizabeth Warren has led a new proposal to Respect the Caps .” Stay tuned, as taking Fannie’s president, now at $4.2 million , and Freddie’s, now at $3.85 million, under $600k a year, would be “interesting.” And lots of Agency staff make much more than $600k, as do a scattering of individual originators around the country. We are reminded that no politician wants to see anyone make more than they do. (Speaking of comp, if you want to register for STRATMOR’s Compensation Connection Study you have until April 30.) Lender Products and Services When it comes to strengthening...(read more)

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MBS RECAP: Bonds Defy Friday's Logic to Hold Flat

Posted To: MBS Commentary

What would you expect to care more about Chinese economic data: the US bond market or the Chinese stock market? Option 2? Good, I agree. Now, if you said that US bond yields and Chinese stocks were moving higher together in response to strong Chinese economic data, I could also agree with that, but I hope we could both agree that any subsequent reversal in Chinese stocks would be worth at least something to US bonds. That's what happened overnight. In fact, by 4am, Chinese equities had given back almost all of their gains from Friday. But Treasuries didn't even seem to notice. Granted, we could certainly say that Friday's moves were driven by economic data and today's were due to "something else," except of course when the first sentence of today's Reuters Asia...(read more)

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Mortgage Rates Highest in More Than 3 Weeks

Posted To: Mortgage Rate Watch

Mortgage rates continued higher to start the week, following a relatively sharp increase on Friday. Interestingly enough, the underlying bond market was stable today. In other words, it didn't suggest higher rates. But the issue is that mortgage lenders adjust their rate sheets only a few times on the most volatile days. Many of them didn't get around to it on Friday afternoon. Those who did were greeted with another hour of bond market weakness before the week finally ended. In other words, the underlying market was indeed suggesting we'd see mortgage rates roughly where they are today and lenders simply didn't have an opportunity to adjust their rate sheets accordingly. This brings the average lender to the highest levels seen since before the Fed's rate-friendly announcement back on March...(read more)

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Non-Bank Lender CEO on Why Companies Like His Could Cause Next Crisis

Posted To: MND NewsWire

In an opinion piece published by MarketWatch , the president of the nation's third largest non-bank lender says institutions such as his could find themselves in a tough situation should liquidity dry up. So tough, in fact, it could endanger the entire financial system. Sanjiv Das, CEO of Caliber Home Loans, says rising home prices which have made owning a home less affordable has also made life difficult for mortgage lenders. Originations have fallen, and after lenders reduce costs then "they are faced with the decision of whether to lower margins or credit standards . A "race to the bottom" such as occurred before the housing crisis isn't the only danger Das sees. Another is liquidity risk, the inability of a firm to meet short-term financial obligations such as a payroll. This risk is particularly...(read more)

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Homeowners Expecting Higher Appraisals than They Get

Posted To: MND NewsWire

Homeowners are and should be proud of their homes, but that often leads them to think it has a higher value than does an appraiser and the difference between the two opinions increased significantly in March. Quicken Loans says the gap in its Home Price Perception Index grew by 25 percent compared to February. Part of the difference might be accounted for by a decline in home prices of 0.20 percent during the month although prices rose 3.37 percent over the previous 12 months. Nationwide, appraised values came in 0.78 percent lower than homeowners expected compared to 0.50 percent in February. Quicken Loans Executive Vice President for Capital Markets Bill Banfield said that there's more than one reason behind this sudden increase in the gap between estimates and values. "This month's fluctuation...(read more)

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MBS Week Ahead: Time to Find Out How Much China Matters

Posted To: MBS Commentary

Ah China... the US financial market's scapegoat of choice for many a swing that has nothing to do with China (with a few big, notable exceptions). Last Friday brought the biggest day of bond market weakness we've seen in a while and Chinese economic data got the credit. This week, then, provides ample opportunity to see just how much US markets really care about the Chinese economy as we'll get several big economic reports tomorrow including Industrial Output, Retail Sales, and GDP. Not only that, but GDP is the first reading for Q1 and it's expected to show a continued slide, albeit a small one, from 6.4% previously to 6.3%. If it happens to rise instead of fall, one would expect a big, negative reaction in US bond markets if last Friday is any indication. The other two reports...(read more)

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Marketing, HELOC Comp, Post-closing Products; New Broker Products

Posted To: Pipeline Press

M&A grab current headlines (Freedom buying JG Wentworth’s mortgage biz being the latest) but it’s hard to put the past behind us, as an industry, when the past continues to grab them as well. “GE to pay $1.5 billion U.S. fine over crisis-era subprime mortgages.” The U.S. Department of Justice stated that GE concealed the poor quality of the loans and WMC’s lax fraud controls when packaging the loans into residential mortgage-backed securities sold to investors. As is customary, GE did not admit any wrongdoing, and it is unknown if anyone at GE ever yelled, “We didn’t do anything wrong, but here’s a billion and a half to leave us alone.” WMC originated $65 billion in residential loans from 2004-2007. “They won’t catch us”...(read more)

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Mortgage Rates End Week at Highest Levels

Posted To: Mortgage Rate Watch

Mortgage rates rose fairly quickly on Friday, depending on the lender and the scenario. Bonds (which dictate mortgage rates and interest rates in general) weakened overnight on a variety of foreign and domestic data. While we can't necessarily be sure that one particular development was more responsible for the move than another, we can observe that most of the damage followed news of surprisingly strong credit growth in China. This could stand to reason given that China and Europe are central to the cautionary economic stance taken by the likes of the Fed. In general, uncertainty about the global economy would be associated with lower interest rates. Actually a downbeat economy is even better than an uncertain one! With Chinese GDP and several European metrics hitting long term lows in the...(read more)

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MBS Day Ahead: Bonds Quickly Find Themselves Defending 2.55% Ceiling

Posted To: MBS Commentary

The domestic bond market woke up this morning to find itself pushed up against the same ceiling that had offered a friendly bounce late last week. Between now and then, we've seen solid enough progress to reinforce that ceiling, but now it is called into question after a few short hours of bad luck. Is it luck, though? Or is there some logical cause and effect in play? The overnight news and resulting chatter from traders and analysts blames one thing for this particular move: the Total Social Financing (TSF) figure released by China at 4am ET (also referred to as Aggregate Financing, essentially "loans"). The contention is that strong loan growth turns the cogs of the Chinese economy, thereby decreasing the odds of a global growth slowdown led by China and Europe. Easy enough...(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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