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MBS RECAP: Floating, Locking, and Reasons For Sideways Rates (Including Politics)

September 21,2020
by admin

Bonds have been up a bit, down a bit, and sideways a lot. Comments from Fed speakers–while interesting in some cases, haven’t had an impact. In fact, there’s really no discernible trading theme for the day. MBS are at their highs, up 0.09 at 103.03 (+3 ticks at 103-01) and 10yr yields are unchanged at .6691. Stocks are technically up just a bit, but effectively flat since 6am.

Refresher on The New Refi Fee and Its Effect on Mortgage Rates

September 21,2020
by admin

Fannie Mae and Freddie Mac are the two government sponsored agencies that guarantee timely payment of principal and interest to the investors who front the money that finances the American mortgage market. This guarantee means that more investors are willing to participate and at more advantageous rates for homeowners. Naturally, not every mortgage is repaid perfectly. Sometimes, payments are missed. In more serious situations, loans can end in foreclosure, short sales, etc. In those cases, the housing agencies are there to act as a backstop ensuring investors are made whole.

In order to foot that bill, Fannie and Freddie collect fees on loans that they guarantee. Shockingly, these are called guarantee fees (or guaranty fees” with a “Y” in the case of Fannie Mae). The mortgage industry and the rest of this article will typically refer to them as G-fees.

There are g-fees you see and those you don’t. If you are quoted a higher rate because you have a lower credit score, higher loan to value, or are buying an investment property, your loan is mathematically riskier. The agencies will require more money from your lender to guarantee your loan so your lender either charges you more upfront or simply a higher rate. Either way, this is the most obvious way that the g-fee comes into play. But even if you’re a perfect borrower with an 800 credit score putting 40% down on an owner occupied home, the agencies are still going to collect a g-fee. You just won’t see it because it will come off the top of every interest payment each month.

G-fees have risen and fallen over the years (mostly risen), and that’s been especially true after the financial crisis. The average g-fee on Fannie/Freddie’s entire portfolio comes out to just under 50 basis points (or 0.5% of the loan amount). It was a rather jarring revelation, then, when the agencies announced ANOTHER 50 basis point g-fee to be imposed on all refinances back on August 12th. The fee was to apply to any loan delivered to the agencies on or after September 1st. “Delivery” is a fancy term for the agencies giving a loan their stamp of approval–aka “guaranteeing it.”

It can take several weeks for that to happen AFTER the loan is closed. As such, that 50 basis points was going to come out of lenders’ pockets effective immediately. That’s why rates spiked so quickly in early August and why they recovered several weeks later when the fee date was delayed until December 1st. A lot of people felt like that was a date that was far enough in the future to forget about the fee indefinitely. But again, it takes time for loans to be delivered to agencies after closing.

In fact, quite a few lenders have already re-implemented the fee. They figure, depending on the lender, it will take 30-60 days for a loan to close and another 15-45 to get the loan guaranteed by the agencies. That gives us a total time range of 45-105 days, and December 1st is now 70 days away.

For some lenders, rates recently spiked significantly in a single day as they reimplemented the fee. For other lenders, it’s only a matter of time. In terms of nuts and bolts, the fee raises rates by 0.125-0.25%. Alternatively, it can be paid upfront as 0.5% of the loan amount. On a qualitative note, many loan originators have noted less generous pricing from lenders recently. There’s some suspicion that lenders have been keeping rates slightly higher than they otherwise would have been in order to create a more gradual ramp up in costs. Either way, the important point is that the fee will soon be back for every lender (if it isn’t already), and in a bond market that has been exceptionally flat, it’s the single biggest consideration for mortgage rate movement right now.

Remember to VOTE!

September 21,2020
by admin

Did you catch The August Blend? This is a must watch! On this webseries, we had Dr. Robert Stein, Political Science Professor at Rice University, and Brandon Alderete, Director of Political Affairs for Texas REALTORS®…

Source: Houston Association of REALTORS®

Ops, LO Jobs; ROI, Workflow, Underwriting Tools; Training; Improving Forbearance Stats

September 21,2020
by admin

Today (Tuesday), while Washington DC “sucks the air out of the room,” welcome to the Autumn Solstice (Equinox) in the U.S., the day when the Sun appears to cross the celestial equator, heading southward. Others know it as halfway between the day with the most sunlight in June and the day with the least (December 22), or when night and day are the same length. What isn’t the “same” are lock volumes. According to Informa Financial Intelligence, August 2020 mortgage rate-lock volume was up 39% YoY but down -6% MoM across all channels, while funded volume increased 39% YoY and 2% MoM. It reports retail lock volume increased 36% YoY and funded volume was up 57% YoY. If yours didn’t, well, catch up! The industry talk continues to revolve around lock volumes (“ops staff can’t take vacations, so we’re breaking policy and rolling vacay into next year”) and about Bloomberg’s story on a potential initial public offering by loanDepot. Not that it necessarily needs the billions… But some argue to strike while the proverbial “iron is hot.”

Broker and Lender Products and Services

Maxwell continues to expand on one of the most impactful features of its digital mortgage platform, its technology-powered outsourced fulfillment services. Maxwell now offers both underwriting and closing services to its already successful processing offering. Designed to provide economic scale for small to midsize lenders, the Maxwell Fulfillment Platform plugs in like the operational unit of any mortgage originator, enabling you to adjust fulfillment capacity to meet market needs. By being a Maxwell customer, we can simplify the handoff, communication, accuracy, and transparency of loans. What’s more, all of this efficiency saves costs that we pass on to you, the lender, saving thousands in fulfillment costs monthly. To learn more about Maxwell’s digital platform and tech-powered outsourced capabilities click here or schedule a demo.

Lenders, speed up turn-times by assessing true borrower credit risk & resiliency up-front with the predictive & prescriptive Mortgage Risk & Fairness Score. MRS identifies which loans should be “fast-laned”, and which need a closer look than even DU suggests. It also enables lenders to open the credit box safely, helping the underserved while expanding margins. For FHA this is a must! Lenders, investors, traders, servicers, and insurers can sleep well at night knowing that MRS is helping avoid costly forbearance, delinquency, and default events, while promoting financial inclusion. Bottom line: The Mortgage Risk Score is an easy and inexpensive tool that leverages state-of-the-art AI and ML algorithms, and years of experience, to supercharge risk management, sales, operations, secondary, and servicing. It’s plug-n-play, validated (top 10 bank) and vetted (CFPB, OCC, Fed). Click for more information.

Is your servicing operation held captive by aging systems and point solutions that create fragmented processes? In today’s world of evolving technology, the power of workflow automation is real. Data is advancing business process automation quickly and effectively by leveraging expanded access to resources, machine learning capabilities and bulk processing optimization. Understanding the value of data since its inception, Clarifire uses notable industry resources to enhance its proven CLARIFIREautomated workflow application. CLARIFIREhelps mortgage servicers remove the chaos of process fragmentation, circumvent antiquated system issues, and gain access to a fluid, seamless application that offers fast and easy displays of critical data. Click here to read about the benefits that can be realized when you leverage data in your automated business processes, rules administration and decisioning. If your organization is interested in achieving a new level of innovation with a proven industry provider, turn to CLARIFIRE, Truly BRIGHTER AUTOMATION.

Can your current POS provider quantify the ROI it delivers? Do you suspect that if it did, the results would be rather disappointing? SimpleNexus is so confident in its ability to deliver above the rest it has launched a self-service ROI calculator that compares its performance to other major POS providers. Just plug in a few numbers, like annual units and volume, and it’ll tell you how SimpleNexus lines up. Try the calculator out now and request an in-depth ROI analysis. It only takes 30 seconds!

Events and Training From Your La-Z-Boy

Today’s the day. Blend’s virtual summit kicks off at 9 a.m. PDT and if you’ve been wondering how your organization can become digitally agile, you won’t want to miss this. Find out what it takes to be able to respond to market conditions, regulatory changes, and rising consumer expectations swiftly and efficiently. Join the summit for keynote addresses, industry and customer panels, and product roadmaps to hear how Blend executives and leaders across mortgage and consumer banking are tackling today’s challenges. Join the summit.

Just in time for 2021 business planning: XINNIX is presenting a free live executive roundtable event on Wednesday, October 7 at 1 PM ET for all mortgage industry leaders. “Building the Next Generation of Mortgage Professionals” is part of XINNIX’s quarterly Leadership Lessons series and will feature leaders from three of the nation’s top mortgage companies: Regions Bank EVP of Lending, Bob Cabrera; HomeBridge Financial Services EVP & Partner, Rick Floyd; and Caliber Home Loans AVP Program Director and Head of Caliber University, Lauren Havins. Moderated by XINNIX Founder & CEO Casey Cunningham, these leaders will discuss how their organizations are developing new talent to meet the industry’s short-term capacity challenges and ensure long-term organizational success. Registrants will have an opportunity to submit questions in advance or can ask the panelists during the live session. Reserve your seat today!

The California MBA’s Western Secondary Market Conference is this week, virtually, September 23 and 24. To thank you for being a loyal subscriber, I am offering you a complimentary conference registration! Use this link and enter the promo code Chrisman to get your free registration. Hear from the star of Undercover Billionaire and CEO of Kind Lending, Glenn Stearns, as well as the CEO Panel, mPower Leadership Panel, Capital Markets Update, and a discussion about the latest trends in Mergers and Acquisitions.

As a reminder, the Mortgage Banker Association offers scores of training events and webinars. And the grand national convention is October 19-21.

MGIC’s upcoming webinar calendar includes, “Up Your Game to Score Approvals Sooner!”, offered Oct. 6. “During this 30-minute session, we’ll review several scenarios to avoid documentation delays at the closing table. MGIC offers complimentary webinars every month to help customers succeed in today’s mortgage insurance industry.” View the full MGIC training calendar at

The Mortgage Girlfriends is hosting a Women’s Retreat Mastermind on October 22 and 23rd virtually. Women can register at and we have amazing content planned, as well as, special gifts. The theme is Maximizing Your Business and planning for next year, as well as Maximize You and not to forget to take care of yourself with some tricks on how to fit it all in. A TexX Speaking Coach is going to share how to improve your public speaking skills for video, a top producer is sharing how she manages her calendar and works less than 40 hours a week, along with a master of delegation and how to delegate effectively. We have teamed up with The Marketing Firm who is going to teach them how to utilize social media in all ways to leverage for next year.

Capital Markets

Ginnie Mae announced restrictions on the pooling of adjustable-rate mortgages with rates indexed to the London Interbank Offered Rate (LIBOR), which are effective with security issuances dated on or after January 21, 2021. This guidance follows Ginnie Mae’s adoption of the recommendations of the Alternative Rates Reference Committee (ARRC) relating to fallback language for new issuances of LIBOR floating rate securities.

Economic data over the last week mostly failed to meet analysts’ expectations but one could argue that it’s exponentially more difficult to forecast during this time. Despite the “misses” at the headline levels, the details of the data were generally positive. Industrial production increased just 0.4 percent in August, however July was revised nearly a half point higher meaning the overall level of production was more or less in line with market expectations. Retail sales also fell short of expectations but the total level of retail sales hit a record high. Despite the record high, spending has shifted so not every component of retail sales has recovered to their pre-pandemic levels. Receipts at bars and restaurants remain 16 percent below their pre-crisis peak and in many places, bars remain completely closed. Grocery stores continue to see a surge in sales as consumers shifted spending away from restaurants. Gas station sales remain 14.8 percent below their pre-crisis peak as many people continue to work from home and gas prices remain low. Builder confidence remains high as single family housing starts have risen for the past four months and the trend is expected to continue in September with low mortgage rates driving sales and prices higher.

Bond markets yesterday traded sharply “risk-off.” There was pressure from falling equities, heightened coronavirus shutdown concerns from Europe, and talk out of Washington that investors should prepare for the likelihood Congress won’t pass a second bailout. The Mortgage Bankers Association’s (MBA) latest Forbearance and Call Volume Survey revealed that the total number of loans now in forbearance decreased by 8 basis points to 6.93 percent of servicers’ portfolio volume as of September 13, 2020. According to MBA’s estimate, 3.5 million homeowners are in forbearance plans.

Today’s economic calendar is already underway with the Philadelphia Fed’s nonmanufacturing indices. Later are existing home sales in August and the Richmond Fed Manufacturing and Services, Revenues Indices for September. Markets will also receive a heavy slate of Fed speakers: Chicago’s Evans, Chair Powell (along with Treasury Secretary Mnuchin) before the House Financial Services Committee, Richmond’s Barkin, and Atlanta’s Bostic. The Desk will provide its largest support for the week, $6.7 billion across three operations with targets including up to $2.9 billion UMBS30 2 percent and 2.5 percent as well as another for $1 billion GNII 2.5 percent. We begin the day with Agency MBS prices a tad better and the 10-year’s yield unchanged at 0.67 percent.


Home Point Financial had 96% of its Associates working from home since mid-March and still increased its loan volume by nearly 60% from Q1 to Q2. While growing volume and building capacity are focal points, the company’s top priority is the care and well-being of its Associates and their families. With many people pulling double-duty, working remotely while supporting young virtual learners, Home Point committed to providing laptops, tablets, or Chromebooks to all Associates with kids (kindergarten through age 22) that are attending school virtually from home. If you want to be part of a team that makes your career, and your family, a priority, apply for one of Home Point’s hundreds of open positions or email your resume directly to John Eite.

On Q Financial is seeking an experienced VP of Consumer Direct, a qualified candidate that has a proven track record in consumer direct lending. The ideal candidate is an energetic, transformational leader with an exceptional sales mind capable of cultivating effective relationships in order to collaborate cross-functionally to innovatively scale the call center, convert organic leads, and support portfolio retention. This is an exciting opportunity to join a highly entrepreneurial company with a $2 billion and growing servicing portfolio committed to $100 million and more in funded monthly volume. The VP of Consumer Direct will help lead and bring this vision to life! Relocation not required. Interested candidates please email your resume to Shane Miller.

PrimeLending’s empowering culture wins again! For the sixth straight year, Great Place to Work and FORTUNE have honored the powerhouse national lender as one of the 2020 Best Workplaces for Women, this year ranking 16. Awarded based on survey results from 4.9 million employees nationwide, PrimeLending ranked highly in trustworthy leaders, treating people with respect, fair workplace decision making and team camaraderie. We’re proud to be home to so many talented women, who represent 56% of all our company officers and 65% of our total workforce. This recognition comes on the heels of earning a spot on this year’s Best Workplaces for Millennials in August. Earning rave reviews for our culture comes as no surprise, 94% of our employees say PrimeLending is a great place to work compared to 59% of employees at a typical U.S.-based company. If you’re ready to join an award-winning team, contact Nic Hartke.

Operations and Sales… are you managing your career, or just managing your day? “Joining Thrive is absolutely the best career move I have ever made.” This is the most common sentiment expressed by new hires after their first months with the company. After laying an incredible foundation of best-of-breed technology solutions, perfecting their Quality & Efficiency workflow, and building one of the best leadership teams in the industry; Thrive Mortgage is crushing production numbers and is positioned to maintain this growth for years to come. “Our Operations Staff is unmatched. It’s not just that we have great tools, but we have the best people,” stated Kindra Miller, Business Development Manager for Thrive. “When you have great leadership like Selene Kellam and her team, it simply breeds a culture of excellence from the top down.” To inquire about open positions within Thrive, contact Kindra to begin a confidential conversation.

MBS Day Ahead: A Brief History of Bonds’ Break-Up With Econ Data

September 21,2020
by admin

Remember simpler times when following interest rate movements meant waiting for economic data to come out and counting on logical, repeatable, predictable impacts? For instance, today’s Existing Home Sales report has always fallen somewhere in the lower rungs of the market movement echelon, but even then, a big deviation from the consensus was still worth a bit of movement in the implied direction (i.e. weaker data would help bonds a bit and stronger data would hurt). That almost certainly won’t be the case today–nor has it been the case for a vast majority of economic reports recently.

Defining “recently” is a matter of debate as well. The econ data correlation breakdown has been in its most glorious heyday since coronavirus became a thing, but it was nearly as prevalent for several years before that. Credit the absence of inflation and a generally strong economy. More than anything, we were just waiting to see what was going to derail the record-setting labor market expansion and broader growth cycle. Left to these devices, the bond market playbook consisted of the following:

  • A big bounce at all-time lows in mid-2016 (brexit) implied a technical correctio
  • Keep an eye on Treasury and corporate debt supply. More supply = higher yields
  • Lower tax revenue implied more supply, and the tax bill passage solidified that in early 2018
  • Record setting stock prices implied money moving out of bonds and into stocks

During that time (2016 through 2018), one could argue bonds were weakening due to a decent surge in econ data, but notably, the best surge occurred in 2017–a year where bonds rallied. It wasn’t until the tax bill passed that yields were on the move higher again. Finally, the global economic slowdown of 2018 took its toll, rates moved logically lower, and the gains only continued as the trade war flared up. The stock market–which had been growing concerned, perhaps, about overly high rates, ignored the trade war implications and instead took solace in rapidly declining interest rates.

As persistently sluggish econ data and trade war fears finally argued for a logical re-connection with bond market momentum, 2019 drew to a close with bonds bouncing just before hitting all-time low yields again. Progress was being made on the trade war, and it was time to forget the econ data and focus on that instead. And they would have gotten away with it too if it weren’t for that pesky Covid!

Bottom line: we had a nice opportunity to witness some good old fashioned correlation between econ data and the bond market in 2018 and early 2019, but we’ve been more focused on external events ever since. The trade war has been replaced by Covid, and neither plays by exactly the same rules.

20200922 open3.png

Stocks seem thrilled with stimulus, low rates, tech sector leadership, and I don’t know what else. But now that stocks might be having second thoughts about surging back up into all-time highs, what’s next?

20200922 open.png

Money fleeing the stock market (if it continues to flee), needs somewhere to go. Not all of it will go into the bond market, but perhaps enough to reinforce a sideways range in bonds. One thing’s for sure: bonds have given absolutely no indication of a bias in one direction or the other since stocks topped out. Before that, they (bonds) were clearly trending higher in yield (in August). Now they’re in wait and see mode.

20200922 open12.png

To reiterate, the waiting is less about econ data/events and more about things like stock market momentum, covid developments, Fed policy, factors affecting Treasury supply, and of course the upcoming presidential election.

Homeowner Equity Surged in Q2

September 21,2020
by admin

There was another big surge in the amount of equity on the balance sheets of American homeowners in the second quarter of this year. CoreLogic reports that the 4.3 percent gain in home prices over the past year sent home equity shooting up by 6.6 percent.

The report shows U.S. homeowners with mortgages (which account for roughly 63 percent of all properties) saw an average gain in equity from the second quarter of 2019 of $9,800. The collective nationwide increase was $620 billion.

This is especially important at this point, as equity may provide some insulation for homeowners during the pandemic. During the housing boom millions of buyers used low down payment mortgages and there was an epidemic of cash-out refinances, leaving many homeowners with little equity. When prices began to fall, millions fell quickly into negative equity, owing more on their mortgages than their homes are worth. This left them with little flexibility to refinance or sell their homes to get out of financial difficulty.

The number of mortgaged properties with negative equity decreased by 15 percent year-over-year in the second quarter of 2020 to 1.7 million homes with loan to value (LTV) ratios of 100 percent or more, 3.2 percent of all mortgages. There was a decline of 5.4 percent in underwater homes from the first to the second quarter of 2020.

The national aggregate value of negative equity was approximately $284 billion at the end of the second quarter of 2020. This is down quarter over quarter by approximately $0.7 billion, or 0.2 percent, from $285 billion in the first quarter of 2020, and down year over year by approximately $20 billion, or 6.6 percent, from $304 billion in the second quarter of 2019.

Despite a slowdown in April when the coronavirus began to spread, home-purchase activity remained strong in the second quarter of 2020 as prospective buyers took advantage of record-low mortgage rates. This, along with the seemingly perpetual inventory constraints helped drive home prices up and add to borrower equity through June. However, with unemployment expected to remain elevated throughout the remainder of the year, CoreLogic predicts price growth will slow over the next 12 months and mortgage delinquencies will continue to rise. These factors combined could lead to an increase of distressed-sale inventory, which could put downward pressure on home prices and negatively impact home equity.

“The CoreLogic Home Price Index registered a 4.3 percent annual rise in prices through June, which supported an increase in home equity,” said Dr. Frank Nothaft, chief economist for CoreLogic. “In our latest forecast, national home price growth will slow to 0.6 percent in July 2021 with prices declining in 11 states. Thus, home equity gains will be negligible next year, with equity loss expected in several markets.”

Borrowers with equity positions near the negative equity cutoff are most likely to move out of or into negative equity as prices change. Looking at the second quarter of 2020 book of mortgages, if home prices increase by 5 percent, 270,000 homes would regain equity; if home prices decline by 5 percent, 380,000 would fall underwater.

While national figures reflect a resilient housing market thus far into the recession, equity gains varied broadly on the local level. States with strong home price growth have continued to experience the largest gains in equity. This includes Montana, where homeowners gained an average of $28,900; Idaho, an average of $21,200 and Washington, $20,400. Meanwhile, New York, which was hit hard by the pandemic, experienced some of the lowest equity gains (averaging just $4,400) and highest negative equity shares in the second quarter of 2020.

“Homeowners’ balance sheets continue to be bolstered by home price appreciation, which in turn mitigated foreclosure pressures,” said Frank Martell, president, and CEO of CoreLogic. “Although the exact contours of the economic recovery remain uncertain, we expect current equity gains, fueled by strong demand for available homes, will continue to support homeowners in the near term.”

Home Sales Surge to Best Levels in 14 Years

September 21,2020
by admin

Existing home sales continued on a roll for the third consecutive month, hitting the highest level in August since December 2006. The National Association of Realtors® (NAR) said sales of pre-owned single-family houses, townhomes, condos, and cooperative apartment were at a seasonally adjusted annual rate of

The August numbers came on top of a 24.7 percent rise the prior month and 20.7 percent growth in June. Since May, when the market began to recover from its 3-month long pandemic related tailspin, the pace of sales has risen by 2.2 million units.

Analysts had been bullish in their forecasts for the August numbers and didn’t miss by much. Those polled by Econoday had expected sales in the range of 5.56 million to 6.44 million with a consensus of 5.97 million units.

“Home sales continue to amaze, and there are plenty of buyers in the pipeline ready to enter the market,” said Lawrence Yun, NAR’s chief economist. “Further gains in sales are likely for the remainder of the year, with mortgage rates hovering around 3 percent and with continued job recovery.”

Sales of single-family homes was at a seasonally adjusted annual rate of 5.37 million in August, up 1.7 percent from 5.28 million in July, and 11.0 percent from one year ago. Existing condominium and co-op sales were recorded at a seasonally adjusted annual rate of 630,000 units representing growth of 8.6 percent and 6.8 percent from the two earlier periods.

The median existing-home price for all housing types in August was $310,600, up 11.4 percent from the August 2019 median of $278,800 and marked 102 straight months of year-over-year gains. The median existing single-family home price was $315,000, 11.7 percent higher on an annual basis while the median existing condo price rose 7.8 percent to $273,300.

There were 1.49 million units available for sale at the end of August, down 0.7 percent from July and 18.6 percent from one year ago (1.83 million). Unsold inventory sits at a 3.0-month supply at the current sales pace compared to 3.1 months in July and 4.0-months a year earlier.

Scarce inventory has been problematic for the past few years, according to Yun, an issue he says has worsened in the past month due to the dramatic surge in lumber prices and the dearth of lumber resulting from California wildfires.

“Over recent months, we have seen lumber prices surge dramatically,” Yun said. “This has already led to an increase in the cost of multifamily housing and an even higher increase for single-family homes.”

Yun says the need for housing will grow even further, especially in areas that are attractive to those who can work from home. An August report from NAR noted that remote work opportunities are likely to become a growing part of the nation’s workforce culture. Yun believes this reality will endure, even after a coronavirus vaccine is available.

“Housing demand is robust but supply is not, and this imbalance will inevitably harm affordability and hinder ownership opportunities,” he said. “To assure broad gains in homeownership, more new homes need to be constructed.”

Properties typically remained on the market for 22 days in August, seasonally equal to the number of days in July and down from 31 days in August 2019. Sixty-nine percent of homes sold in August 2020 were on the market for less than a month.

First-time buyers accounted for 33 percent of sales during the month. All-cash sales accounted for 18 percent of transactions in August, up from 16 percent in July but 1 percentage point less than in the previous August. Individual investors or second-home buyers, who account for many of those sales, purchased 14 percent of homes in August, little changed from the earlier periods. Distressed sales - foreclosures and short sales – represented less than

“The past few months have shown how valuable real estate is in the country, both to our nation’s economy and to individuals who have been given an opportunity to rethink their location and redesign their lifestyle,” said NAR President Vince Malta. “NAR maintains robust advocacy efforts on behalf of our 1.4 million Realtors – including hundreds of thousands of housing providers – to ensure this industry can continue to lead in America’s economic recovery.”

NAR said home sales have climbed month-over-month for three straight months in all four major U.S. regions and median home prices grew by double-digits annually in each as well. Sales in the Northeast jumped 13.8 percent to an annual rate of 740,000, a 5.7 percent increase from a year ago. The median price in the Northeast was $349,500, up 10.4 percent from August 2019.

The Midwest saw sales increase 1.4 percent from July and 9.3 percent from a year earlier to an annual rate of 1,410,000 units. The median price rose 10.7 percent to $246,300.

Existing-home sales in the South were at an annual rate of 2.60 million units, a gain of 0.8 percent from July and 13.0 percent from a year earlier. There was 12.3 percent annual growth in the median home price to $269,200.

Sales in the West inched 0.8 percent higher to 1,250,000 annual units, a 9.6 percent increase from July. The median price in the West was $456,100, up 11.8 percent year-over-year.

MBS Week Ahead: Who Knows Where We’d Be Without Stock Market Weakness

September 21,2020
by admin

One of my favorite pastimes is debunking the notion that stock prices and bonds yields ‘always’ correlate. Years of indoctrination from the conventional wisdom of money managers have done us no favors as market watchers. Even if you don’t invest or actively make decisions about your 401k allocation, you’re still likely familiar with the notion of moving out of stocks/bonds and into the other.

The net effect of such asset allocation strategy is simple. If you’re selling stocks to buy bonds, then charted lines of stock prices and bond yields would move lower together (because buying bonds = higher prices and lower yields). This line of thinking makes the following stock/bond movement in early September very logical.

20200921 open3.png

Indeed, looking at the chart above, it’s easy to conclude that the conventional wisdom is right and that what I’m about to tell you is wrong. But let’s zoom that chart out a bit.

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Striking, no? As usual, the truth is somewhere in the middle. We do indeed see strong correlation at times–usually over short time horizons (but even over longer time horizons in 1999-2009). But the more we zoom out, the more that correlation breaks down. The modified approach is to lean on the short term correlation when it’s clearly setting the tone. Additionally, we also have to consider that the correlation won’t necessarily look perfect, even if one side of the market is definitely influencing the other.

While it’s harder to see with the naked eye, one of the best examples we have of this modified analytical approach is that of a burgeoning stock sell off making a case for bonds to abandon a gradually weaker trend. The second half of last week is the most recent example.

20200921 open2.png

If we zoom out to a wider frame of reference, the correlation is harder to see, but the scope of weakness in stocks becomes more clear. This is now the biggest sell-off for stocks since the post-covid recovery began. Bonds certainly aren’t eager to follow suit, but they are nonetheless forced to absorb at least some of the dollars fleeing the stock market.


If this is enough to prevent yields from breaking their current ceilings (0.73 and .79, most immediately), so be it. That said, it would probably take a fairly massive stock sell-off to help bond yields get through their bigger picture floors at .63, .57, and 0.50. On the other side of the coin, we also have to wonder how much of a recovery in stocks would be needed in order for bonds to get back to their previous business of pushing toward higher yields. With a fairly light economic calendar, that’s actually one of our first orders of business this week: watching for a bond weakness in the event of stock market stability.

MLO, Ops Jobs; Retention, Co-op Products; USDA Rural Conditional Commitments

September 21,2020
by admin

If you watch the news long enough, you see all kinds of interesting things. Cracker Barrel is adding alcohol to its menu? Yup! And you must watch this clip with Stephen Colbert working out with, and interviewing, the Notorious RBG (“Is a hot dog a sandwich?”) a few years back. We watched Lee Farkas be released from prisonafter only 9 years. What are small independent mortgage bankers, and every other lender for that matter, watching? How about concerns and questions about loans with Agencies’ indemnification/recourse, that are now in forbearance, hitting the 120-day delinquency repurchase trigger? My guess is that details are under review and you should ask your Agency rep for details, but if your net worth is $4 million, and in the next month you receive buyback requests for five loans at $400,000 each, it doesn’t take an HP-12C to calculate what does that does to your net worth. Oh, there’s help: Miller High Life is giving away a backyard dive bar. Let the good times roll!

Broker and Lender Services and Products

For all of you sports fanatics out there, give me a virtual high five that football is back! We all know that a fundamental principal in any successful sport’s team is roster depth. Computershare Loan Services (CLS) is embracing this fundamental by adding two more seasoned industry professionals to its team. Tracey Dace brings 30 years of experience to CLS’ Fulfillment team and joins as the VP of National Sales. Contact Tracey to learn how CLS can help originators increase capacity and drive down costs. Lining up as the VP of Capital Markets Cooperative’s Vendor Management is Mark Litzel. Launched in 2003, CMC is a highly diversified cooperative with solutions for lenders of all sizes. Mark is focused on adding vendors and investors that round out CMC’s robust Preferred Partner network. Reach out to Mark and learn about the benefits of becoming a CMC partner.

Corey Shelton at Atlantic Coast Mortgage shared how one of his team’s highest-performing LOs nailed down a WHOPPING $2 Million in revenue in 110 seconds. All coming from just 4 alerts he received from Sales Boomerang. Check it out.Sales Boomerang notifies mortgage lenders when someone in their database is ready for a loan. “Look at the opportunity cost you have by not having Sales Boomerang. Last year we closed over $72M in loans that we would have lost from not having Sale Boomerang.” (Stephen Barton, EVP, Eustis Mortgage) The numbers speak for themselves: 20x Avg. ROI, $240 Avg Cost Per Acquired Loan, 10-20% Avg Lift to Loan Volume. Want to see exactly how much you lost this year? Request your report today. We will show you which competitor took your deal, what was the loan amount, what type of loan it was, and much more.

HomeBinder, one of the fastest growing tools in the lending market for post-closing retention, will be starting a capital raise on October 1st to support its expansion. In June, HomeBinder finalized its partnership with Ellie Mae and their integration with Encompass resulting in accelerated adoption of HomeBinder across mortgage companies nationwide as a value-added platform to help increase client retention. Interested parties can contact Pete Paglia(978.618.0835). To learn more about HomeBinder visit or to receive a demo click here.

USDA, All the Way!

We go through this every darned year, and are reminded of it as Fiscal Year 2021 begins October 1. Pretty much the same note goes out every year. Lenders should review the Single-Family Housing Guaranteed Loan Program (SFHGLP) Conditional Commitment process. “Fee Structures: An upfront guarantee fee of 1.00 percent and an annual fee of .35 percent will apply to both purchase and refinance transactions for FY 2021. Issuance of Conditional Commitments: At the beginning of each fiscal year, funding for the guaranteed loan program is not available for a short period of time –approximately two weeks. USDA anticipates this brief lapse in funding to continue for FY 2021. During the temporary lapse in funding, Rural Development-Rural Housing Service (RHS) will issue Conditional Commitments (Form RD 3555-18/18E) ‘subject to the availability of commitment authority’ for purchase and refinance transactions.”

The U.S. Department of Agriculture (USDA) extended the foreclosure and eviction moratorium for Single Family Housing Direct Loan Borrowers through December 31, 2020.

The moratorium applies to: Initiation of foreclosures or completion of foreclosures in process, excluding vacant and abandoned properties and Evictions of borrowers from properties bought with a USDA direct home loan.

Additional FAQs related to the origination of USDA Single Family Housing Guaranteed loans have been added to the previously posted FAQs. The revised document has been posted to the USDA LINC Training and Resource Library. (Questions regarding program policy and this announcement may be emailed to the National Office Division or (202) 720-1452.)

Yes, the USDA Rural Development SFHG Program is providing additional guidance to support borrowers impacted by the Presidentially declared COVID-19 National Emergency. Guidance includes Moratorium Extension, Forbearance Requirements and Post Forbearance Options. Also announced, temporary exceptions in relation to COVID-19 Pandemic have been extended for the Single-Family Housing Guaranteed Loan Program. The temporary exceptions originally issued on March 27, 2020, pertaining to appraisals, repair inspections and income verifications for the Single-Family Housing Guaranteed Loan Program (SFHGLP) due to the COVID-19 pandemic have been extended until November 30, 2020.

There will be no change to the Submission or Underwriting process for Mountain West Financial, Inc. during the 2-week USDA unavailability of Funding for Fiscal Year 2021.

During the interim period, which starts 10/1/2020, while USDA awaits Fiscal Year 2021 funding, AmeriHome will require that the unexpired Conditional Commitment be in the Loan file prior to Loan Purchase by AmeriHome. The Conditional Commitment may be “subject to the availability of commitment authority.” By the way, During recent months, AmeriHome and each of the Agencies, Fannie Mae, Freddie Mac, FHA, VA, and USDA, have published announcements providing temporary measures to address the impacts of COVID-19 (coronavirus). The Agency guides and handbooks, AUS messaging (except as otherwise noted by the respective Agency), and AmeriHome Seller Guide and program guides will not be updated to reflect these temporary policies.

Flagstar Bank will continue to process, underwrite, and fund loans during the USDA lapse in funding submitted under the Guaranteed Rural Housing program, Doc. #5830 and GRH StreamlinedAssist program, Doc. #5831. Read Memo 20093 for details.

As per FHA Mortgagee Letter 2020-28 and the USDA-RD Single-Family Guaranteed Originations Notice, FAMC is announced updated temporary guidance for FHA Products:

Appraisal, VVOE – Wage Earner and USDA-RD Product Appraisal and VVOE.

The PennyMac Correspondent Group posted new announcements: Fannie Mae SEL 2020-05, Freddie Mac Bulletin 2020-36 and FHA Mortgagee Letter 2020-28 and 20-57: Funding for USDA Rural Housing 2021 Fiscal Year (FY).

Trainings and Events

Blend Forward kicks off tomorrow. Learn what it takes to be able to respond to market conditions, regulatory changes, and rising consumer expectations with swift action. Forward, Blend’s virtual summit, brings together industry leaders and Blend executives and partners to unpack tactics lenders can use to master digital agility. Reserve your spot at the September 22-23 summit.

The Zelman and Associates2020 Virtual Housing Summit begins today at 8:15AM.

Join Insellerate on Tuesday, September 22ndfor a free dynamic webinar “Managing The Borrower Journey”. Key Take-A-Ways include The Evolution of CRM & Marketing Automation in the mortgage industry, Data and key borrower touchpoints, Importance of telephony integration to intelligently engage borrowers, Mobile Innovation, and its impact on borrower engagement.

FHA has posted a new pre-recorded webinar on the Single Family Housing Archived Webinars page, providing a detailed overview of the loss mitigation policies for disaster-affected borrowers with FHA-insured mortgages whose property and/or place of employment is in a PDMDA.

Redwood Trust will be participation in Morgan Stanley’s State Of The Housing Market Webcast on September 24th.

Join snapdocs on September 30th for its Leading Lender Forum Webinar. Mike Lyons, EVP of Nexsys, Jaime Kosofsky, Partner at B&K Law, and Thomas Knapp, CIO of Waterstone Mortgage will discuss What RON and investor acceptance has looked like this year, How changes this year will affect lenders in 2021 and What to expect in the mortgage industry in 2021 and beyond.

Capital Markets

Last week rate sheets didn’t change much, and Friday ended with UMBS30 basis roughly unchanged and the Treasury yield curve steepening slightly during a pullback amid the stalemate on more fiscal stimulus (the two sides are currently about $700 billion apart). Stocks hit a six-week low due to tech shares as that move heaped more pressure on risk tolerance across all asset classes.

In terms of news, the Federal Reserve announced it will release the results of its latest stress test by the end of 2020. The Conference Board’s Leading Economic Index (LEI) increased 1.2 percent in August, falling slightly short of expectations though the increase for August represents the fourth straight month the index has been positive after declining 7.4 percent in March and 6.3 percent in April. The index is still 4.7 percent below the level seen in February. The preliminary University of Michigan Index of Consumer Sentiment for September beat expectations and bettered the August reading, though the index is still 15.3 percent below the level registered in the same period a year ago.

This week opens with a very light economic calendar. We’ve had the Chicago Fed National Activity Index for August (down to .79 from last month’s 2.54), and later today, markets will have a chance to digest a couple shorter-duration Fed auctions and remarks from Governor Brainard, New York Fed President Williams and Dallas Fed President Kaplan. The Desk will conduct three MBS purchase operations totaling up to $5.5 billion. That starts with nearly $1 billion UMBS15 1.5 percent and 2 percent, which will be followed by $2.9 billion UMBS30 2 percent and 2.5 percent and $1.7 billion GNII 2 percent and 2.5 percent. With no other economic releases of note today, things pick back up tomorrow with August Existing Home Sales. Wednesday brings the September FHFA Housing Price Index and Thursday sees August New Home Sales before the week closes with August Durable Orders. Monday starts with Agency MBS prices better/up nearly .125 and the 10-year yielding .65 after closing Friday at 0.69 percent.


“In the midst of a turbulent year, NRL Mortgage has not skipped a beat. While shattering previous companywide production volume records for six consecutive months and soon September, NRL has maintained operational excellence in underwriting turn times, upheld service level agreements, and placed a heavy emphasis on agility allowing NRL to avoid an operational slow down. Our turn times from application to clear to close are hovering just over 21 calendar days! Our proven record of high-quality and efficient service has driven rapid company expansion: 10 new branches across nine differed states in two months! Director of Acquisitions, Jeff Mason, attributes the growth to NRL’s committed operations team. “They are incredible,” he said. “When people see that they can get their files underwritten in 48 hours and closed in 21 calendar days during these incredibly busy times, it gets their attention. Pair that with our industry-leading compensation plan and NRL Mortgage is the perfect combination.” We are always looking to grow our team with professionals that share our entrepreneurial spirit and value for customer service. If you are interested in being a part of NRL Mortgage, please contact Jeff Mason.”

Caliber Home Loans is thrilled to announce the launch of our new H2O ClearChoice Automated Underwriting System (AUS). Caliber ClearChoice empowers loan officers and wholesale business partners to make quicker decisions by providing side-by-side comparisons of multiple AUS types. Our AUS is a powerful and intuitive tool that provides the best option every time, drives a better experience and builds confidence with your customer. ClearChoice also offers an intelligent recommendation, and its recommendations have been accepted by 99% of users. Smart, efficient, and clear, just what you need to prepare your sales presentation to customers! If you’re ready to work for an innovative company, Caliber Home Loans is hiring. Connect with Jonathan Stanley or Brian Miller for positions in Operations or Sales respectively. To join as an approved Caliber business partner, email us.”

Recently named among Top 5 Best Mortgage Companies to work for by National Mortgage News, Geneva Financial, Home Loans Powered By Humans has experienced explosive growth and is seeking Operations Professionals nationwide. Competitive pay and benefits. Underwriters, Processors, Closers, and multiple other positions available. Most positions can be remote/home-based. across the United States. Geneva strives to humanize every aspect of its business from the inside-out. With a culture-forward mindset, management focuses on employees to ensure an unbeatable experience for customers. Its Geneva Gives, BE A GOOD HUMAN and Hero of The Year initiatives deemed them a recipient of this year’s AZ Business Magazine’s Excellence in Banking Award for Community Impact. In 2019 Geneva was ranked a nationally fastest growing company in the financial sector, mortgage industry and all industries categories. Apply today!

Churchill Mortgage, who was recently named a “Fast 50” company by Nashville Business Journal, announced two new hires: Randy Starkweather & Martin Ford. “Starkweather joins as Churchill’s CFO. With more than 35 years of executive management experience, his career includes a broad spectrum of industries and company sizes. Bringing more than 30 years of experience in operations, underwriting and credit policies in the financial services industry, Martin Ford, joins as our Vice President of Credit Risk. We’re continuing to quickly grow! We are not only focused on profits, but also on our people, which is one reason why we’ve been voted a Top Workplace for 8 consecutive years! If you would like to join us in our success, we would love to speak with you about opportunities in your area. Learn more about us here.”

Fannie’s Forecast Sees a Brightening Recovery

September 21,2020
by admin

Fannie Mae has upgraded its forecast for the third quarter gross domestic product (GDP). It now expects growth at an annualized pace of 30.4 percent, up from the 27.2 percent the company’s economists predicted in August. They say that growth has clearly slowed from the days soon after the business shutdowns and orders to shelter in place were gradually lifted by states and cities in May and June, but more recent data points to a continued recovery.

It was originally thought that personal consumption expenditures would fall off significantly as expanded unemployment benefits expired, but they rose 1.6 percent in July, and early data for August suggest that growth continued. Auto sales, one component of the PCE, rose 4.5 percent and credit and debit card transactions appear to have increased as well. There are also indications that business and housing investment will grow at a faster pace in the third quarter than previously thought.

However, while prospects appear slightly rosier for this quarter, the economists have downgraded their GDP growth estimate for the fourth quarter to an annualized 6.2 percent from 8.7 percent in their last forecast. This is based on both a smaller remaining recovery gap and the fading prospect for an additional round of stimulus before the election.

Next year’s prospects will probably be limited again by pandemic concerns. Hospitality and travel could take several years to return to normal and “the pace of growth [will] decelerate meaningfully in 2021, as recovery in sectors less harmed by social distancing measures nears completion.”

The housing data that has come in since the last Fannie Mae forecast continues to demonstrate a V-rebound which is helping to drive the broader economy. Existing home sales in July were up month-over-month by 24.7 percent to an annualized pace of 5.86 million units, the highest since 2006. The July blowout will probably not be followed by the predicted pullback in August as pending home sales rose 5.9 percent in July, setting the stage for strong closings in 30 to 45 days and purchase mortgage applications were also as high in August as July. Construction measures were also strong; July housing starts were the highest since February.

Pent-up demand from the spring, historically low mortgage rates, and what appears to be an increased interest in moving to suburban areas in at least some metro areas is fueling strong home purchase demand.

While the July pace of sales was in line with Fannie Mae’s expectations, the continued strength in August has exceeded them. The company, however, says the pace of sales isn’t sustainable given the lack of inventory. New single-family listings have grown modestly on a year-over-year basis, but the growth is much slower than purchase demand. The months’ supply of homes for sale as a ratio of sales fell to 3.1 at the end of July, down 26 percent from a year prior and to the lowest level for the month of July in the history of the series. The forecast for existing home sales has been increased for the remainder of the year, but the fourth quarter will probably be down somewhat from the current quarter.

Extremely limited inventory of existing for-sale homes will likely continue to bolster demand for new homes. Single-family housing starts rose 8.2 percent in July but that was outpaced by new home sales which jumped by 13.9 percent to 901,000 annualized units, the highest level since 2006. Even with a strong recovery in construction, supply is not keeping up with demand. The months’ supply of new homes for sale where construction has been started as a ratio of sales fell to 3.0 in July, tying the lowest level since 2004. Given these conditions the forecast starts has been increased to over one million annualized and for the full-year total to rise 5.1 percent above 2019 levels.

Fannie Mae now forecasts residential fixed investment (RFI) in the third quarter to grow 48.7 percent annualized and has upgraded its forecasts for both new and existing home sales. For 2020, total home sales are now expected to be 1.3 percent higher than in 2019.

The lack of inventory of for-sale homes is putting upward pressure on home prices and threatens to negate the affordability benefits from low mortgage rates. The CoreLogic National House Price Index showed an acceleration in annual house price growth to 5.5 percent in July, up 1.2 percentage points from June and says the median listing price the first week of September was 10.8 percent higher than a year earlier.

Estimates for purchase mortgage originations were increased consistent with recent, robust housing data as well as continued strength in acquisitions and securitizations data. They should grow 8.9 percent in 2020 to $1.4 trillion, $112 billion higher than last month’s forecast. Purchase volumes should grow 3.3 percent in 2021 as decelerating home price growth limits additional volume.

Refinance originations were also revised upward, now totaling $2.4 trillion in 2020, a full $350 billion higher than last month’s forecast. This revision was driven by stronger-than-expected securitization and application activity, though some of this volume are refinance originations being pulled forward so estimates for next year have been lowered modestly. The company still expects that the low-rate environment will support refinance demand over the forecast horizon. At the current interest rate of 2.86 percent, nearly 69 percent of outstanding first-lien loan balances may have at least a half-percentage point incentive to refinance. Total mortgage originations should reach $3.87 trillion, which would be the highest nominal dollar annual total since Fannie Mae began tracking it in 1988.

Most short-term interest rates should remain low for the foreseeable future given the Federal Reserve’s latest Policy Framework update. The largest change included making the two percent inflation target an average objective, meaning that the Fed will now be comfortable allowing inflation to run above the threshold for a longer period of time and will thus be unlikely to raise interest rates to head off inflation. The impact on longer-run rates, like the mortgage rate, will depend in part on the Fed’s future management of inflation expectations.

Fannie Mae says risks to its forecast remain elevated. COVID-19 cases in the U.S. continue to trend downward, although the pattern in Europe suggest they could spike here again as well, and development and distribution of a vaccine will probably determine the path of consumer behavior. Uncertainty surrounding fiscal and other policies remains high as the election approaches.

Further downside risks in the coming quarters include a slowdown in global growth and consumer retrenchment in the face of diminished unemployment benefits and the expiration of the Paycheck Protection Program (PPP) loan program. On the other hand, the pace of consumer spending in July remained historically modest compared to income levels. The personal savings rate stood at 17.8 percent. Even with declining unemployment benefits in August, it is likely that the savings rate will continue to be well above the recent pre-coronavirus range of 6 to 9 percent. Combined with extremely supportive monetary policy and continued pent-up demand, significant upside risk is also present. Many households have the means to further drive a consumption demand recovery if they are willing to do so.