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MBS RECAP: Bonds Fizzle as Week Ends Without Healthcare Vote

Fri, 24 Mar 2017 20:37:32 GMT

Posted To: MBS Commentary

More than a few bond bulls out there (those are folks who want rates to go lower!) were eager for the vote to take place on the healthcare bill that drew most of the market's attention this week. They figured one of two things would happen. Most likely, there weren't enough votes for the bill to pass. It would fail, and that would be great for bonds. Alternatively, they hoped that if the bill did pass, that it would have been changed so much that it still cast doubt on the new administration's ability to push its policy agenda. You'd be hard-pressed to find a trader who wouldn't have agreed that one of those 2 outcomes was more likely than a clean passage of the bill. Instead of any of those options, markets were dealt a wild card in the form of a postponement of the vote...(read more)

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Mortgage Rates in Holding Pattern Until Healthcare Vote

Fri, 24 Mar 2017 19:22:00 GMT

Posted To: Mortgage Rate Watch

While some lenders were slightly better or worse versus yesterday, mortgage rates were unchanged on average today. This isn't much of surprise considering yesterday's much-anticipated healthcare vote never happened. It's rumored to occur this afternoon, but markets won't have much time to react before closing for the weekend. If you need to get caught up with the healtchare news and the mortgage rate implications, check out yesterday's article . The bottom line of all this political drama is that it's not about healthcare! It's about investor confidence in the Trump administration's other policy promises. If the healthcare deal fails (or is significantly changed), investors will lose hope for the tax cuts promised during the campaign. That would likely be bad for stocks and good for rates....(read more)

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2016 Cash and Distressed Sales Totals Hit Nine-Year Lows

Fri, 24 Mar 2017 14:51:31 GMT

Posted To: MND NewsWire

The share of homes sold for cash fell to the lowest level in nearly a decade in full-year 2016. CoreLogic said that 32.1 percent of all home sales in the 12-month period ending in December closed without benefit of a mortgage. This was a decrease of 2.2 percentage points from the 2015 share. The previous low point for such sales was in 2007 when cash sales accounted for a 27 percent of sales. CoreLogic also noted that distressed home sale s, a total of both short sales and sales of lender-owned real estate (REO) accounted for 8.9 percent of all sales for the year, also the lowest share since 2007. For the month of December, the all-cash share of sales was 33.1 percent, down 1.3 percent from that month in 2015. Cash sales peaked in January 2011 when they accounted for 46.6 percent of the national...(read more)

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Experian Fined for Misrepresenting Credit Scores

Fri, 24 Mar 2017 14:47:16 GMT

Posted To: MND NewsWire

It wasn't exactly bait and switch, maybe unlawful substitution is closer to the mark. Whatever, Experian, the credit reporting company, has been handing consumers a line about their credit scoring system and CFPB caught them. The Consumer Financial Protection Bureau (CFPB) announced on Thursday Experian and its subsidiaries have agreed to a $3 million civil penalty for deceiving consumers about its own proprietary brand of credit scores. The company claimed the credit scores it marketed and provided to consumers were used by lenders to make credit decision. CFPB says, in fact, lenders do not use these scores. Credit scores are numerical summaries designed to predict consumer payment behavior in using credit. CFPB states that no single credit score or credit scoring model is used by every lender...(read more)

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Experian Fined by CFPB; Jumbo Program News; Technology Updates

Fri, 24 Mar 2017 14:22:39 GMT

Posted To: Pipeline Press

In legal news, Experian , one of the nation's three major credit reporting bureaus, misled consumers by telling them that the credit scores they purchased from the company were the same ones that lenders used to make credit decisions, the Consumer Financial Protection Bureau said yesterday . And for that deception, the CFPB is fining Experian $3 million. Peers Equifax and Transunion reached a settlement on similar allegations in January. Jay Clayton, President Donald Trump's nominee to be chairman of the Securities and Exchange Commission, said the Dodd-Frank Act should be looked at to see if its objectives are being achieved, but he doesn't have "specific plans for attack" against the law. The SEC should continue its work on rules mandated by Dodd-Frank that haven't yet been completed, he...(read more)

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MBS Day Ahead: Healthcare Bill Dominates Markets

Fri, 24 Mar 2017 13:47:50 GMT

Posted To: MBS Commentary

The healthcare bill is all anyone can talk about ( here's one recent article from Reuters). We rarely see such an abrupt coalescence of market focus on something that was heretofore "off the radar." There are a few potential reasons for this. First, the realization that the healthcare bill was such a priority for the administration is fairly recent. We knew Trump wanted to repeal/replace the Affordable Care Act, but we didn't know those efforts would take precedence over tax reform until late last week. This week saw rapid and constant evolution of the status of the bill, its likelihood of passage, and its implications. At first, it was a non-starter that couldn't get enough support from conservative republicans led by Mark Meadows and the "Freedom Caucus." From...(read more)

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MBS RECAP: Bonds Pull Back For 2nd Day Amid Healthcare Limbo

Thu, 23 Mar 2017 22:17:13 GMT

Posted To: MBS Commentary

Rarely has something so "off the radar" become such a focal point for financial markets as this week's vote on a healthcare revamp to replace the Affordable Care Act. Rather than stand on its own merits as a market mover (because those would be underwhelming), the healthcare vote has come to represent more of a vote of confidence in the Trump administration's ability to get its other policies through the political system. When we consider that those policies are responsible for the big move in bonds and stocks seen at the end of 2016, it's not hard to imagine that a lot is at stake here . The past 2 days of trading tell us that bond markets are in a neutral position and waiting to see what's what after the healthcare vote. In any event, the rally that began after the...(read more)

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Mortgage Rates Stumble as Political Uncertainty Weighs

Thu, 23 Mar 2017 20:06:00 GMT

Posted To: Mortgage Rate Watch

Mortgage rates were slightly higher for the first time in 8 days as markets braced for the impact of political developments. The big issue of the day was (and still is) the healthcare bill set to be debated in the House of Representatives tonight. In general, if the bill is passed, investors will be more keen to believe in the viability of other legislation more germane to financial markets (like tax cuts, other stimulus, and regulatory reform). Those "other" policy points were key reasons for the sharp move higher in rates at the end of 2016. If confidence increases , it could put the same pressure back on rates. But if investors lose confidence in the policy potential, stocks and bonds would have more motivation to move lower (as they've both been doing for the past 2 weeks). As of yesterday...(read more)

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New Home Sales Build on January Strength

Thu, 23 Mar 2017 15:14:15 GMT

Posted To: MND NewsWire

New home sales posted a much better February than did existing home sales and, in fact, better than most analysts had expected. The U.S. Census Bureau and the Department of Housing and Urban Development report that sales of newly constructed single family homes rose 6.1 percent from January to February to a seasonally adjusted rate of 592,000 units . It was the second consecutive month of strength for the indicator which had see-sawed between positive and negative results in the waning months of 2016. The February rate of sales was 12.8 percent higher than the rate of 525,000 units in February 2016. January sales were revised from an original estimate of 555,000 to 558,000. Analysts had expected sales to rise, looking for a range of 550,000 to 600,000 units. The consensus among those polled...(read more)

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Financial Services Committee Hears Arguments to "Restructure CFPB"

Thu, 23 Mar 2017 14:15:49 GMT

Posted To: MND NewsWire

The House Financial Services Committee (FSC) held a hearing on Tuesday into the constitutionality of the structure of the Consumer Financial Protection Bureau (CFPB). The hearing arose in part from a pending case, PHH Corp. v. CFPB , in which that constitutionality is one of the principal issues. The DC District court recently ruled in favor of PHH but CFPB has been granted a rehearing. The Justice Department has opposed that action and has sided with PHH against the Bureau. The committee's first witness was Theodore B. Olson Partner, Gibson, Dunn & Crutcher LLP and Former Solicitor General of the United States. Olson is also lead counsel for PHH in the pending suit. He said the creation, by the Dodd-Frank Act in 2010, of the CFPB "is the product of cherry-picking some the most democratically...(read more)

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Loan Pay-Offs Hit Three-Year Low

Thu, 23 Mar 2017 13:57:49 GMT

Posted To: MND NewsWire

As further evidence that the era of refinancing is ending, Black Knight Financial Services says that prepayment speeds (the SSM rate), historically a good indicator of refinancing , declined 15 percent in February. In its regular "first look" at mortgage performance activity for the month, the company says that this is the lowest monthly rate for prepayments in three years, and brings the total decline thus far in 2017 to 40 percent. Delinquency rates continued their seasonal decline, ticking down .98 percent from January. The rate at the end of February was 4.21 percent, down 5.51 percent year-over-year with 2.135 million loans 30 or more days past due but not yet in foreclosure. Of those delinquent loans, 641,000 were seriously delinquent, that is 90 or more days past due but not in foreclosure...(read more)

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From Apps to Secondary, a Multitude of Vendor Changes and Announcements

Thu, 23 Mar 2017 13:10:30 GMT

Posted To: Pipeline Press

Have you been asked to join the Trump Administration’ new group focusing on mortgage finance policy? No? My cat Myrtle hasn't gotten the nod (yet) either, but if you want on, you'd better give them a call. Mark Calabria, chief economist to Vice President Mike Pence, said the Trump administration is developing a group to focus on mortgage finance policy . "You will see in a few months a set of principles, and then we'll go from there," Calabria said. Let's play catch up on some recent vendor news , especially ahead of the MBA's Tech conference next week. PCLender's next generation of service has integrated consumer direct, automated workflow, and the agency's new technology suites. PCLender is not only prepared for the new HMDA regulatory changes but also has made dramatic updates to the...(read more)

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MBS Day Ahead: Bonds Fight For The Old Ways

Thu, 23 Mar 2017 11:46:23 GMT

Posted To: MBS Commentary

In the post-apocalyptic hell (relative) that is the post-election bond market trading environment, there was a noble group of traders who attempted to stand strong against the tyranny of those who would deign to SELL Treasuries and MBS. Well, actually, selling bonds is a pretty natural part of the market, and they'd been so universally positive for so long that we can't be too upset about markets taking this great opportunity to reset the pieces, clear the runway, shuffle the deck, or what have you. Still, big sell-offs are no fun for those of us on the origination side of the mortgage market, so logic be damned. One of the only saving graces of the post-election bond rout was that a very nice, very linear trend of "lower highs" took shape in 10yr yields. This trendline was...(read more)

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Legal News; CFPB Reform Update; Fannie, Freddie, Conforming Lender Changes

Wed, 22 Mar 2017 21:36:11 GMT

Posted To: Pipeline Press

“Dance like no one is watching. E-mail like one day it may be read aloud in a deposition.” Here's some pithier legal news. The Department of Justice is taking PHH's side in the lawsuit over the structure of the CFPB. This is an amicus brief, and the judges may pay close attention, however the DC District Court of appeals is a liberal stronghold and will probably side with the CFBP. Many believe that the CFPB, however, would need DOJ on its side if it goes to SCOTUS. Former U.S. solicitor general and current Gibson Dunn partner Ted Olson is not a fan of the CFPB . Olson was on Capitol Hill yesterday, where he testified at the House Financial Services Committee about the CFPB. "The CFPB's structure is the product of aggregating some of the most democratically unaccountable and power...(read more)

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MBS RECAP: Bonds Simmer Down Ahead of Pivotal Events

Wed, 22 Mar 2017 21:30:30 GMT

Posted To: MBS Commentary

Bond markets began the day in slightly stronger territory and quickly embarked on the same sort of rally that characterized yesterday morning. Today's rally was driven, in part, by traders covering short bets on bonds (i.e. buying bonds in order to close out short positions--as opposed to "buying bonds simply to buy bonds"). Terror attacks in London caused additional flight-to-safety demand for bond markets, but when the details came out, the rally ran out of momentum. Bonds ended the day in positive territory, but unlike yesterday, yields spent most of the day moving gradually higher . In fact, with the exception of the earliest part of the domestic session, MBS and Treasuries closed at their weakest levels of the day. This speaks more to a market that has run the course it wanted...(read more)

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Mortgage Rates Slightly Lower, but Volatility Looms

Wed, 22 Mar 2017 19:44:00 GMT

Posted To: Mortgage Rate Watch

Mortgage rates were lower for the 7th day in a row today, further extending their push into the lowest levels of the month. At first, that positive movement was driven by relief that the Fed's rate hike outlook didn't accelerate as much as investors expected. That motivation ran its course by the end of last week. Since then, political uncertainty has been a hot button, with widespread doubt surrounding the new administration's ability to pass the new health care bill. There have been several other contributing factors driving political uncertainty, but Thursday night's health care vote is a focal point. Most media reports suggest passage is unlikely, but that a modified version of the bill might be able to clear the House. Even though the Senate would still need to vote, if any sort of healthcare...(read more)

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Existing Sales Stifled By Inventory Constraints

Wed, 22 Mar 2017 15:20:44 GMT

Posted To: MND NewsWire

Existing home sales burst out of the box in January to start the year out with a 3.2 percent increase over the previous month. Those gains, however, were wiped out in February . The National Association of Realtors® (NAR) said on Wednesday that sales of previously owned homes, including single-family structures, townhomes, condos, and co-ops, retreated by 3.7 percent, to a seasonally adjusted annual rate of 5.48 million units. NAR did not revise their original estimate of a 5.69-million-unit pace in January. Even with the decline, sales still maintained their edge over February 2016 by 5.4 percent. Analysts polled by Econoday had expected sales to pull-back, but the February number was on the low end of estimate, from 5.430 million units to 5.670 million. The consensus was 5.555 million...(read more)

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Home Prices Slam on The Brakes After 5-Year Run

Wed, 22 Mar 2017 14:56:27 GMT

Posted To: MND NewsWire

What a difference a month makes. After posting monthly price increase in all but one month since early 2012, the Federal Housing Finance Agency reported on Wednesday that its House Price Index (HPI) has slammed on the brakes . The index, which had risen 0.4 percent from November to December remained unchanged in January. On a year-over-year basis the HPI was up by 5.7 percent . This followed a 6.1 percent annual increase in December. January marked the first time the year-to-year gain had slipped under 6 percent since July and the smallest such gain since June. The absolute number of the national index was 242.6 compared to 229.6 in January 2016. The index base was January 1991=100. Three of the nine census divisions saw prices decline from December to January, with the largest downturn, 2...(read more)

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MBS Day Ahead: Lull in Data and Fed Speakers: Calm Before Storm?

Wed, 22 Mar 2017 13:23:14 GMT

Posted To: MBS Commentary

Things are getting exciting for markets, and not simply because bond yields have returned to the core of their prevailing range for 2017 just after all hope looked lost. Some serious questions are about to be answered, and both sides of the market stand ready to react. What exactly would markets be reacting to? While there are number of potential market movers to consider, the 800lb gorilla at the moment is the general notion of "policy gridlock." This refers to the Trump administration's campaign goals/promises not being able to come to fruition due to a lack of consensus with one or both chambers of congress. So much of the late 2016 market movement is based on policy expectation that, to whatever extent policy fails to launch, markets must take a serious look at whether current...(read more)

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Minor Correction For Mortgage Applications

Wed, 22 Mar 2017 12:36:40 GMT

Posted To: MND NewsWire

The Mortgage Bankers Association (MBA) said today that the volume of applications for both purchase mortgages and refinancing retreated last week from their levels during the week ended March 10. MBA's Market Composite Index, a measure of that volume, was down 2.7 percent during the week ended March 17 on a seasonally adjusted basis, and was 2.0 percent lower before adjustment. The Refinance Index decreased 3 percent from the previous week and the share of applications that were for refinancing shrank to 45.1 percent from 45.6 percent. The Government Refinance Index dropped 12 percent , hitting its lowest level since December 2014. MBA's Purchase Index lost 2 percent on both an adjusted and unadjusted basis compared to a week earlier. The unadjusted index was 5 percent higher than during the...(read more)

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MBS RECAP: Things Could Get Very Interesting Very Quickly For Stocks/Bonds

Tue, 21 Mar 2017 21:21:15 GMT

Posted To: MBS Commentary

If there was one catalyst for the overall surge toward higher stocks and rates at the end of 2016, it was the expectation that the new administration's policies would do " something ." "Something" took on several forms depending on whom you asked, but the most popular definition was some combination of increased growth prospects, increased inflation , and a faster Fed rate hike timeline. Slightly off the beaten path was the notion that the promise of tax cuts juiced the stock market, but that's definitely a consideration. In fact, tax cuts are arguably an integral component of the other components (i.e. they're expected to contribute to growth, which begets inflation, which begets a hawkish Fed). If the new administration and congress aren't going to tackle...(read more)

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Mortgage Rates Down to March Lows

Tue, 21 Mar 2017 20:14:00 GMT

Posted To: Mortgage Rate Watch

Mortgage rates continued lower today as political uncertainty sparked the biggest day of stock market losses since the election. In general, short term pain for stocks benefits bonds. When demand for bonds increases, rates move lower. Today was no exception. Bond yields (which correlate with mortgage rates) fell in lock-step with stocks in the late morning hours. Today's improvement makes for a nice addition to several days of lower rates. In less than a week, rates have fallen quickly from 3 year highs to the lowest levels of the month . The average lender is still quoting conventional 30yr fixed rates of 4.25% on top tier scenarios, but with lower upfront costs today. Several of the more aggressive lenders are already back down to 4.125%, and fewer laggards remain at 4.375%. Loan Originator...(read more)

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Profits Plummet as Rising Rates Constrict Loan Volume

Tue, 21 Mar 2017 16:39:22 GMT

Posted To: MND NewsWire

The reported net profit per loan reported to the Mortgage Bankers Association (MBA) by independent mortgage banks and mortgage subsidiaries of chartered banks cratered during the fourth quarter of 2016. The MBA said today the average gain on each loan originated during the fourth quarter period fell by two-thirds compared to the third quarter, down from 1,773 to $575. Production volume also fell both on a dollar and a loan count basis. The MBA's Quarterly Mortgage Bankers Performance Report says the average pre-tax production profit was 24 basis points (bps) in the fourth quarter compared to 74 bps in the third. Since the inception of the Performance Report in the fourth quarter of 2008, net production income has averaged 53 bps. Average production volume was $690 million per company in the...(read more)

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CoreLogic Notes Quality of Recent Loan Originations, Warns of Risks Ahead

Tue, 21 Mar 2017 16:36:38 GMT

Posted To: MND NewsWire

In terms of credit risk, the loans originated in the fourth quarter of last year are among the highest quality mortgages originated since 2001 according to CoreLogic. The company's Housing Credit Index (HCI) compares those loans with those originated in previous quarters based on borrower credit scores, and debt-to-income (DTI) and loan-to-value (LTV) ratios. A rising score on the HCI indicates that new single-family loans have more credit risk than during the prior period, while a declining HCI means that new originations have less credit risk. CoreLogic found the average credit score for money purchase loans rose 4 points from 733 in the fourth quarter of 2015 to 737 in the fourth quarter of 2016. In Q4 2016, the share of homebuyers with credit scores under 640 was about one-tenth of those...(read more)

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More on Zillow; Primer on a Flat Yield Curve: Any Change to Rating Agency Model?

Tue, 21 Mar 2017 14:16:05 GMT

Posted To: Pipeline Press

Who can you trust? Digital Journal reports new malware targets Google Chrome users with a pop up that indicates a new font needs to be installed for websites to load properly. Those who click on it download the malware. We can’t even trust the game Monopoly to be…immune from change. Monopoly, apparently thinking that “this will really liven things up & bolster sales,” has swapped out three of its game pieces (thimble, boot, wheelbarrow) for three new ones: a rubber duck, a T. rex and a penguin. But really, how often do you need to buy a new Monopoly game? Zillow chatter Yesterday the commentary mentioned receiving a note from one industry vet regarding Zillow, the CFPB, CIDs (Civil Investigative Demand), and a UDAAP charge for providing "substantial assistance"...(read more)

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