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Mortgage Related News

MBS RECAP: Bonds Pulled Back Toward Top of Fence

Posted To: MBS Commentary

Before the Italy drama picked up at the end of May, bonds were very much on the bad side of the fence. Italy quickly punted rates to the other side of the proverbial fence , but the good times didn't last long. As we moved toward last week's central bank announcements, rates/bonds did what they had to in order to keep in line with the 21-day moving average (the center of the popular Bollinger Band technical study--middle line below). Central bankers were generally bond-friendly (or at least not 'unfriendly'). Combined with Monday's trade war headlines, this helped bonds begin to creep back down toward the friendly side of the fence. But even as early as yesterday morning, it looked like the trade war motivation had given all it could give and that we might be headed back...(read more)

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Mortgage Rates Edge Slightly Higher

Posted To: Mortgage Rate Watch

Mortgage rates moved modestly higher today after holding in roughly the same territory for the past 3 days. This brings them back in line with last Thursday's levels. In general, trade tensions helped the bond market earlier this week (stronger bonds = lower rates), but the bonds that underlie mortgages didn't benefit nearly as much as US Treasuries. Additionally, mortgage lenders have had to play it safer than normal amid a rising rate environment and recently higher volatility. The net effect of these factors is that mortgage rates have often not been able to participate too much during the good days, but have still had to take their lumps on the bad days. The caveat to all of the above is that the day-to-day moves have been very small in the grand scheme of things. For instance, today's...(read more)

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Existing Home Sales Below Expectations for Second Month

Posted To: MND NewsWire

Analysts were expecting existing home sales to rebound in May after they fell behind year-ago levels in April. However, the National Association of Realtors® (NAR) reported a second straight monthly loss , with the Northeast the only region where sales improved. Sales of existing single-family homes, townhomes, condos, and cooperative apartments were at a seasonally adjusted annual rate of 5.43 million in May, a 0.4 percent decrease from April and down 3.0 percent from May 2017. It was the third straight year-over-year decline. April sales were also downgraded from 5.46 million to 5.45 million. The May results came in below the lowest of analysts' expectations as reported to Econoday. Those predictions ranged from 5.44 million to 5.65 million with a consensus of 5.50 million. Single-family...(read more)

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MBS Day Ahead: Checking in With "Longer-Term Trend"

Posted To: MBS Commentary

I talk quite a bit about the " long-term trend " or the "longer-term trend" these days. It most frequently comes up in some iteration of the following: "until the long-term trend has been clearly defeated," etc. But what exactly are we talking about? The following chart has several iterations. TOP: This is the most relevant of the 3 for the lock/float outlook. It leaves some room for corrections that take rates back to the lower boundary, but there's no guarantee we'll hit the lower end before we return to the upper end. MIDDLE: This is what I would consider to be the general counterattack leading back from the all-time lows in 2012. Yes, yields did move a bit lower (to new all-time lows) in 2016, but I tend to view that as a temporary divergence due to...(read more)

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Credit Scoring and HR Products; Freddie and Fannie - Never Standing Still

Posted To: Pipeline Press

onight/tomorrow morning is the summer solstice. I am in Minneapolis at an ACUMA workshop and where the sun will set tonight at 9:03. (I suppose ACUMA could have held its event in Anchorage, where the sun sets at 11:42 tonight, which would be cool.) I mention credit unions because a) their market share is growing, and b) the talk is how President Trump is trying to reshape the National Credit Union Administration board by nominating former NCUA vice-chair Rodney Hood to fill an expired seat on the three member board. Fannie and Freddie Changes Those rascally, friendly competitors just don’t stop to take a breath and seem to be busy trademarking every phrase and new product. (Watch out for a little “TM” or an “R” with a circle around it in promotional stuff.) On...(read more)

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Mortgage Application Volume Second Highest of Year

Posted To: MND NewsWire

Mortgage interest rates waffled, moving in different directions depending on the product last week, but the volume of mortgage applications increased rather decisively . The Mortgage Bankers Association (MBA) said its Market Composite Index, a measure of that volume, surged by 5.1 percent during the week ended June 15. It was the largest increase in total mortgage volume since the week ended January 5, 2018. On an unadjusted basis the volume was up 3 percent. Applications for both refinancing and home purchases increased compared to the week ended June 8. The Refinance Index gained 6 percent and the refinancing share of applications grew from 35.6 percent to 36.8 percent. The seasonally adjusted Purchase Index increased by 4.0 percent from one week earlier and the unadjusted Purchase Index...(read more)

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MBS RECAP: Lowest Yields of The Month

Posted To: MBS Commentary

June began with yields plateauing after rising from the Italy-inspired lows of late May. 10yr yields managed to avoid breaking above 3% until last week's much-anticipated Fed Day. Even then, the Fed and the ECB ultimately gave way to the slow, steady rally that's persisted into the current week. Until today, that rally was nice, but forgettable, as it merely got us back in line with the lowest levels of the narrow range seen so far this month. Today's rally is arguably forgettable as well. It hasn't marked a meaningful departure from the pace of the past few sessions. In fact, the domestic trading hours were just as boring as yesterday's. The only difference today is that we started with a bit of a lead thanks to overnight trade war headlines. As soon as Chinese equities...(read more)

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Mortgage Rates Barely Budge Despite Market Gains

Posted To: Mortgage Rate Watch

Mortgage rates didn't move much today, despite a somewhat decent improvement in bond markets. Overnight, trade war brinksmanship between the US and China had investors seeking the safe haven of bond markets. Excess demand for bonds pushes rates lower, all other things being equal. As is often the case with safe haven trades, US Treasuries saw more of the benefit than the bonds that underlie mortgage rates. The net effect is a move back in line with last Friday's levels for the average mortgage lender. Loan Originator Perspective Bond markets rallied as trade war fears grew today. Tariffs hurt economic growth, and boost bonds. I'm not sure rate sheets reflect the improvements yet, will float today's loans overnight and hope gains get passed along. - Ted Rood Talks of a Trade War continue to...(read more)

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A New CFPB Director? Perhaps That's Not the Intention

Posted To: MND NewsWire

The White House announced on Monday the nomination of Kathy Kraninger as head of the Consumer Financial Protection Bureau (CFPB) to replace acting director Mick Mulvaney. The appointment caught many in Washington by surprise as Kraninger is not widely known and has not previously been active in the consumer arena according to many reports. Kraninger has been an associate director at the Office of Management and Budget (OMB), which Mulvaney also serves as director, for about a year. At OMB she oversees $250 billion in funding for seven cabinet departments and 30 agencies, including the Department of Homeland Security. Her previous role was as a staff member of the Senate Appropriations Subcommittee on Homeland Security. She has also worked for the Department of Transportation. Looking beyond...(read more)

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Housing Starts Rebounded in May, Permits Still Lag

Posted To: MND NewsWire

Residential construction data was mixed for May as reported on Tuesday by the U.S. Census Bureau and the Department of Housing and Urban Development. Housing starts recovered strongly from their April loss while permits continued lower. Housing starts were at a seasonally adjusted annual rate of 1,350,000, a 5.0 percent improvement from April's revised, (from 1,287,000) 1,286,000 units. The May number was up 20.3 percent from the estimate reported for last May of 1,122,000 housing starts. Starts were right at the top of the estimates provided by analysts to Econoday . They were looking for results in the range of 1,270,000 to 1,350,000 with a consensus of 1,320,000. Construction was begun on a seasonally adjusted 936,000 single family houses, a 3.9 percent month-over-month gain and up 18.3...(read more)

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LO Training and Events; Trade Turmoil's Effect on Rates

Posted To: Pipeline Press

When I grow up I want to live in a ranch style… shipping container? If you have a builder complaining about lumber costs or labor to frame a house, there’s always metal. “From rooftop decks to custom wood floors, these repurposed shipping containers are anything but boring.” Air conditioning is a must, and the Hapag-Lloyd sign on the side might add character. In other housing news, we have this headline from Florida: “Freedom Mortgage CEO drops $20M on Ocean Ridge Estate.” Nice digs! Upcoming Training and Events Freddie Mac is offering up a, “Discover the Possibilities with Home Possible Mortgages” webinar on June 20th. (Home Possible and Home Possible Advantage are Freddie Mac’s low down payment offerings.) “Join us for this free...(read more)

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MBS Day Ahead: Bonds Begin With a Bang

Posted To: MBS Commentary

You're welcome! I knew if I lamented the slow and boring nature of the week ahead yesterday that I could trick the bond market into doing something exciting. Sure, it was a 50/50 chance that my little ploy could backfire, but at least there would be something exciting to talk about. And now here we are with 10yr yields staring the day down more than 4bps. Fake superstitions aside , bonds have quickly found some inspiration on what began as a dud of a week. As Asian markets returned from yesterday's holiday absence, the blossoming trade tensions between the US and China took a toll on equities markets and helped bond yields move lower. With the help of a bigger jump during the very first hours of overnight trading in Asia (during which, Treasuries are not trading on the cash market)...(read more)

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Fannie Mae June Outlook Turns a Little Cautious

Posted To: MND NewsWire

Despite a slowing rate of economic growth in the second estimate for the first quarter, Fannie Mae's economists are holding firm in their forecast for the remainder of the year. The second preliminary estimate for the quarter was for growth of 2.2 percent, down from the initial estimate of 2.3 percent and off by 0.7 point of the expansion in the fourth quarter of 2017. Fannie Mae's Economic and Strategic Research Group however continue to look for 2.7 percent growth this year, followed by 2.3 percent in 2019. They hedge their predictions with both upside and downside risks. Among the former are potential acceleration of business investment. There are indications of this in the newest report by way of upward revisions to investments in structures, equipment, and intellectual property products...(read more)

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MBS RECAP: Another One of Those Unofficial 3-Day Weekend Days

Posted To: MBS Commentary

These sorts of days (where nothing happens) happen. If you had to bet on a day of the week and a time of year to see them, Summertime Mondays would probably be the safest bet. Overnight volume was almost nonexistent, with much of Asia closed. Domestic volume and volatility was effectively nil with today's trading range falling easily inside Friday's. On a positive note, despite the low volume, any day where bonds begin a new week holding onto gains from the end of the previous week is better than nothing. In that sense, the fact that yields remained well under Friday's 2.937% ceiling in 10yr Treasuries was better than the alternative. That said, I'd look at it more like an unofficial 3rd day of the weekend than a new and meaningful trading session. MBS Pricing Snapshot Pricing...(read more)

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Mortgage Rates Little-Changed to Begin Quiet Week

Posted To: Mortgage Rate Watch

Mortgage rates were sideways to slightly higher today, depending on the lender. The underlying bond market (which dictates rates) was exceptionally quiet. On the heels of last week's important events and without much on the calendar this week, markets may take a couple days to relax. To put that in context, rates have been holding somewhat steady just below long-term highs. Their next major decision will be between pushing into new long-term highs or attempting to move lower for more than just a week or two. "Relaxation," in this context, means we're not likely to see evidence of either this week. Loan Originator Perspective Bonds coasted through a flat session Monday as rates hovered near unchanged. There's scant meaningful data this week to inform markets, I'll be surprised to see much movement...(read more)

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Builder Confidence: Tariffs on Lumber Hurting Affordability

Posted To: MND NewsWire

Builder confidence in the market for new single-family homes ended a three-month slide in May , as the Housing Market Index ticked up two points. This month that two-point gain evaporated as the index slid back down to 68. The National Association of Home Builders (NAHB) said the retreat of the measure, which it sponsors in conjunction with Wells Fargo, in June was, in large part, due to elevated lumber prices. "Builders are optimistic about housing market conditions as consumer demand continues to grow," said NAHB Chairman Randy Noel. "However, builders are increasingly concerned that tariffs placed on Canadian lumber and other imported products are hurting housing affordability . Record-high lumber prices have added nearly $9,000 to the price of a new single-family home since January 2017...(read more)

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MBS Week Ahead: Bonds Try to Confirm Last Week's Victory

Posted To: MBS Commentary

Post-Italian drama, bond yields rose for 2 straight weeks heading into last week's Fed and ECB announcements. They both proved friendly and the positive momentum continued on Friday. The timing of the Italian drama was important because it began helping bonds right as US 10yr yields were hitting 7-year highs. As yields rose back toward those highs early last week, it was fair to wonder if Italy had merely delayed a move to even weaker levels. The response to last week's central bank events suggested--if not proved --that bonds don't need to re-test high ceilings just yet. Moreover, there may even be a chance to rally. To reiterate a word of caution I've offered a few times, the fundamentals--at the very least--would not make a sustained rally easy. It's the sort of thing...(read more)

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Compliance and Construction Products; Legal Changes for Lenders on the East Coast

Posted To: Pipeline Press

Rumors continue to swirl. Will a top-10 bank really terminate hundreds, possibly a thousand, of its retail originators in late July/early August for not meeting minimum production standards? Is Houlihan Lokey out there marketing a well-known company (a provider of compliance outsourcing solutions to lenders and servicers) to Radian, Black Knight, or overseas firms? Are hundreds of lenders engaged in small-scale unpublicized layoffs to eliminate overstaffing? Maybe I am merely making this stuff up. Maybe not. Lender Products and Services The American Bankers Association announced its endorsement of Built Technologies, a Nashville-based fintech company focused on simplifying the administration of residential and commercial construction loans through secure, cloud-based software. Built’s...(read more)

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Americans Sitting on Trillions in Tappable Equity

Posted To: MND NewsWire

Americans are sitting on a nearly unprecedented level of untapped wealth - or maybe sitting IN it is more to the point. A report from Black Knight notes the first quarter of this year saw the "tappable" equity Americans have in their homes rose at what could be a record pace. The company says tappable equity growth is a different metric than simple equity growth as it is the amount that homeowners can actually use. That is, it is the amount of a home's value that can be borrowed against before reaching a combined loan-to-value (CLTV) ratio of 80 percent. Tappable equity grew by $380 billion in the first quarter of 2018. That 7 percent increase is the largest single quarter growth in Black Knight's records, which go back to 2005. Equity growth is usually greatest in the first and second quarters...(read more)

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MBS RECAP: Trade Fears Help Bond Rally Extend

Posted To: MBS Commentary

Fresh fears of trade wars pushed stocks and bond yields lower in the overnight session as the White House promised another wave of tariff announcements in the morning. China retaliated by promising its own tariffs and markets slumped accordingly. By "accordingly," I mean they slumped as much as they have for any other trade war headline after the initial shock wore off--i.e. not too terribly much. Case in point, stocks ended up bouncing back and nearly erasing all of the losses. Bonds, on the other hand, got a bit of an extra boost from the overall momentum following 2 decent days of central bank news, as well as weaker economic updates out of Europe overnight. 10yr yields rallied all the way to 2.889 before bouncing up to 2.922% by the close (still 2.4bps lower on the day). MBS underperformed...(read more)

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Mortgage Rates Inch to Week's Best Levels

Posted To: Mortgage Rate Watch

Mortgage rates fell again today, bringing the average rate just slightly lower on the week. Unlike the past 2 days, there were no big ticket calendar events today. Instead, motivation came from market jitters of new tariff announcements and the ensuing retaliation from China. Markets ultimately decided it wasn't the end of the world (yet) and bounced back in the other direction (higher stocks, higher rates) during the 2nd half of the day. Fortunately, the bounce in rates (via the bond market) wasn't big enough to force mortgage lenders to adjust their rate sheets for the worse. That knife cuts both ways though. If bonds were to merely hold flat by the start of Monday's trading, the implication would be for slightly higher rates to begin the day. Loan Originator Perspective Rally makes it time...(read more)

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MBS Day Ahead: Here We Go Bonds, Now, Here We Go!

Posted To: MBS Commentary

Bond markets have their rally caps on after making it through both central bank announcements this week without suffering any crazy damage. In fact, each day brought modest improvements and now today stands the chance of bringing enough of a rally to "confirm" those improvements from a technical standpoint. That's about the size of it at the moment. We're watching and waiting with fingers crossed. It's much the same as a sporting event where our team just made a good defensive stand and now has the ball on offense . They may or may not score, as always, but it's nice to have a chance! The only thing that troubles me about rooting for a bigger rally is that the justification for sustained improvement will be really hard to come by without something changing about the...(read more)

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Compliance, Fraud Prevention Products; Lenders' Digital Notes and Closings

Posted To: Pipeline Press

Taking a tour around the nation…No one has ever used the term “bespoke” in describing any place I’ve stayed. I barely know what it means. But if you’ve got the bucks, and want a nice place to bunk down in Hawai’i, here you go . Marlin jerky? 5,100 miles and six time zones away, a Martha’s Vineyard house that the Obamas have vacationed in sold for $15 million , $7.5 million under original asking. Falling demand on the high-end? In-between, here’s an article on the lay-offs to expect in the Dallas-Fort Worth lending industry. But Freddie Mac announced a new partnership with re-employment solutions company NextJob to provide job search assistance to current and aspiring homeowners living in high-needs and other persistent poverty areas . Digital...(read more)

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MBS RECAP: ECB Surprises Markets, But Bonds Liked It

Posted To: MBS Commentary

We knew the ECB (European Central Bank) was going to have to address its bond buying program soon, because it expires after September. Several speakers had alluded to the likelihood that it would be addressed in today's announcement. Markets took that to mean that Draghi would finally talk about the probable tapering announcement at the subsequent meeting. Instead, the ECB just went ahead and pulled the trigger --several months in advance. In other words, they will indeed continue buying bonds through September. They'll buy half as many over the next 3 months and then be done by 2019. This eventuality was somewhere in the realm of the market's expectation, even if we weren't planning on confirming it so soon. The early announcement caused a bit of bond market weakness at first...(read more)

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Mortgage Rates Are Actually Unchanged This Week!

Posted To: Mortgage Rate Watch

Mortgage rates moved LOWER today, following a policy announcement from the European Central Bank (ECB). That claim runs counter to almost any other mortgage rate headline in the mainstream news because big media is in the habit of quoting Freddie Mac's weekly rate survey. That's not necessarily a bad thing as long as you understand the underlying timelines. Unfortunately, most news outlets gloss over those important details or leave them out completely. Specifically, Freddie's survey is heavily weighted toward responses that come in on Monday and Tuesday, even though Wednesday is also technically included. Thursday and Friday are never counted. That means that any rate volatility that hits during the second half of the week typically isn't captured in Freddie's numbers. Long story short , because...(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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