Posted To: MND NewsWire

A decline in the number of forborne loans in those portfolios serviced for banks and private label securities (PLS) accounted for most of the modest downturn in overall numbers last week. Black Knight said the number of active plans dropped by 9,000 loans or 0.3 percent compared to the previous week. The the total of active plans is only 1.5 percent below where it was in December, continuing a recent trend of slowing improvement . "This further sets the stage for a great many plans to still be active when the first wave of forbearance plans begin to expire at the end of March, the Black Knight report says." Loans serviced for bank portfolios and private label securities (PLS) declined by 13,000 loans. This was partially offset by a 4,000-loan rise in FHA and VA loans. The number of forbearances...(read more)

1/15/2021 9:34:12 AM

Posted To: MND NewsWire

Freddie Mac's first quarter 2021 economic forecast is unusually short, and, unlike recent forecasts from either of the GSEs, has relatively few revisions. The company's economists say that nearly a year after the first cases of COVID-19 were diagnosed in the U.S., economic growth remains uncertain, with answers largely hinging on the roll-out of the new vaccines. The labor market remains weak with close to 20 million collecting unemployment insurance. December's job losses, the first since last April, didn't change the unemployment rate from 6.7 percent because labor participation also declined. Record low mortgage rates continued to carry the housing market during the turmoil of the pandemic. At the end of the first week of 2021, the 30-year rate hit 2.65 percent, a new low. Freddie Mac expects...(read more)

1/15/2021 9:19:00 AM

Posted To: MND NewsWire

Fannie Mae said that the standardization of servicing standards that followed the 2008 housing crisis appears to have helped the industry manage the recent flood of COVID-19 forbearance plans. The company included a series of questions about forbearance management in its September Lender Sentiment Survey and has now released a special report on the responses. Servicers had to move quickly to implement the forbearance programs, which were first announced by the GSEs Fannie Mae and Freddie Mac and by FHA but were then expanded and mandated by Congress under the CARES Act. They also had to manage the loans in forbearance, continue remittances to investors, and make insurance and tax payments out of escrow accounts. As the plans had three-month terms, borrowers had to be contacted to do renewals...(read more)

1/15/2021 9:17:51 AM

Posted To: Pipeline Press

As Flagstar’s Marcus L. points out, “1999 doesn't sound like that long ago until you realize that people with a birth year starting with ‘2’ are starting to be old enough to legally drink.” And plenty of them have student debt, the forgiveness of which is now in the press and could very well impact lending & home ownership in a positive way. All of these households and corporations, and the U.S. Government, refinancing debt at lower rates and saving money has to have a beneficial impact on finances and growth going forward, right? Rates are certainly impacting bank earnings, and their mortgage earnings. More about that tomorrow. Lender and Broker Jumbo, DPA, and Non-QM Products “If your New Year’s resolution was to roll out a NonQM product, eResi’s...(read more)

1/15/2021 9:02:18 AM

Posted To: MBS Commentary

After the GA senate elections, the bond market immediately knew it needed to prepare for additional stimulus, even if moderate democratic voices might serve to limit the size and scope. We hazarded a guess that this was worth 10yr yields rising 25bps, roughly and finding support around 1.17%. Bond traders have now effectively made the same guess with yields switching into rally mode almost immediately after breaking above 1.17%. If that sell-off was based on the expectation for additional near-term stimulus, then last night's Biden speech was exactly what traders had priced in. The name of the game is "consolidation" now... the bridge... the intermission between the initial push up from super low covid-inspired yields and the significantly higher levels that traders can imagine...(read more)

1/15/2021 8:27:22 AM

Posted To: MBS Commentary

Bonds Playing it Extra Safe Ahead of Biden's Stimulus Details As we discussed yesterday, the strong mid-week rally suggested a good amount of short covering was behind the move. This merely means traders who bet on rising rates were finally cashing in. It doesn't mean there are lots of new buyers interested in owning Treasuries. Today's weakness supports this narrative. Traders are indeed hesitant to buy bonds until they have more clarity about the stimulus plan that the new administration will attempt to pass. Biden is expected to offer additional details tonight after markets are closed, but the real question is whether or not the plan can get moderate democratic votes in the senate. That may be the talk of the town tomorrow. Econ Data / Events 20min of Fed 30yr UMBS Buying 10am...(read more)

1/14/2021 3:03:30 PM

Posted To: MBS Commentary

A few hours after markets closed yesterday, news began coming out regarding a Biden aide mentioning tonight's stimulus proposal would be in the $2 trillion neighborhood. That's quite a bit more than the $1.3 trillion that had been making the rounds a few hours prior (the same number was thrown around more than a month ago as well). Treasuries reacted to this overnight with a whopping sell-off of 3bps. This reflects the fact that markets have largely priced in some sort of $1.3+ trillion in additional spending/relief. We won't get a chance to any additional reaction until tomorrow's trading session, as Biden won't be speaking until after 7pm ET. It's another light day in terms of economic data, with Jobless Claims already out at 965k vs 795k forecast and 784k previously...(read more)

1/14/2021 8:48:10 AM

Posted To: Pipeline Press

With the money I’m saving on “Dry January,” I was able to buy some great edibles at the dispensary yesterday. “Come on, come on, listen to the money talk” sang AC DC. Wells Fargo’s stock price is up 60 percent since late Halloween… that’s money! Some are curious about bitcoin, with proponents saying it is the worldwide currency of the future while critics say… well, the list of what critics say is too long for this lead paragraph. But I found this article titled, “Lost Passwords Lock Millionaires Out of Their Bitcoin Fortunes” fascinating. “Bitcoin owners are getting rich because the cryptocurrency has soared. But what happens when you can’t access that wealth because you forgot the password to your digital wallet...(read more)

1/14/2021 8:20:02 AM

Posted To: Mortgage Rate Watch

Mortgage rates had another solid day today--this time without any of the early drama seen yesterday. If you're just getting caught up, the bond market (which drives day-to-day interest rate movement) has been selling off aggressively since the Jan 5th Georgia senate election. When bonds sell-off, it means bond PRICES are getting lower and bond YIELDS (aka RATES) are getting higher. The GA election sparked the move because it gave democrats total control of the government, thus making it easier to pass legislation--especially as it concerns some sort of upgrade to the most recent round of covid-relief stimulus. Covid-relief stimulus may do great things for people in the short term and for the economy in the longer term, but it does bad things for interest rates (assuming you like low rates,...(read more)

1/13/2021 3:32:00 PM

Posted To: MBS Commentary

Important Victory For Bonds, and Another Battle Ahead Rates rallied today. Despite a positive reaction to a strong 30yr bond auction, it looks like traders made their minds up to be buyers well before that. The rally greatly improves the odds that 10yr yields are finding a supportive ceiling in the 1.1-1.2% zone. The show of support is still a bit tentative to rest easy, but things certainly could have been worse over the past two days. Some traders are still waiting to see what Biden has to say about stimulus tomorrow (and more importantly, whether they think moderate democrats will be in support). Econ Data / Events 20min of Fed 30yr UMBS Buying 10am, 1130am (M-F) and 1pm (T-Th) Core Annual CPI 1.6 vs 1.6 f'cast, 1.6 prev Market Movement Recap 08:10 AM Fairly calm overnight session--especially...(read more)

1/13/2021 3:25:52 PM

Posted To: Pipeline Press

There are plenty of MLOs (mortgage loan originators) out there very pleased with their earnings for 2020. In a non-random sample, several CEOs with whom I spoke had retail LOs earn more than a million clams, all in a compliant manner. It is good to remember that some of the changes made as a result of the “Financial Crisis” were in the area of LO comp(ensation), especially to prevent steering and taking advantage of borrowers. Importantly, LO Comp doesn’t restrict how creditors price their loans, only how they compensate LOs (including brokers). This has many ramifications, For example, many in the industry question worse pricing for self-employed borrowers, or better pricing for W-2 borrowers. The pricing has always varied for high credit score borrowers, or loan to value...(read more)

1/13/2021 10:17:39 AM

Posted To: MBS Commentary

With yesterday offering the first legitimate push back against the recent sell-off, today becomes one of three critically important days in establishing a ceiling for bond yields (or a floor for MBS prices). With Biden announcing stimulus details tomorrow, and Retail Sales on Friday, we wouldn't expect a bond rally to get too far ahead of itself today (if it does, that would be very telling, in a good way). The goal for bond bulls is simply to avoid slipping back into sell-off mode. Conventional wisdom suggests weakness is a bigger risk in the hours leading up to the 1pm 30yr bond auction. Trading doesn't always stick to that script, of course, but the point is this: if yields are rising between 10am and 1pm, we'd want to wait to see what happens after 1pm before concluding all...(read more)

1/13/2021 8:28:25 AM

Posted To: MND NewsWire

It was a typical first-work-week-after-the holiday bounce for the mortgage indexes, although the surge was significantly more restrained than last year. Perhaps the nation was otherwise distracted. The Mortgage Bankers Association (MBA) said its Market Composite Index, a measure of mortgage loan application volume, increased 16.7 percent on a seasonally adjusted basis during the week ended January 8. During the first week of 2020 the increase was over 30 percent. On an unadjusted basis, the index was up 69 percent. The Refinance Index increased 20 percent from the previous week , less than half the 2020 post-holiday recovery. The Refinance Index is 93 percent higher than a year ago and the refinance share of total applications rose to 74.8 percent of total applications from 73.5 percent the...(read more)

1/13/2021 7:29:39 AM

Posted To: MND NewsWire

While it did dip a bit last month, the availability of mortgage credit appears to be stabilizing , having moved only slightly over the last three months. The Mortgage Bankers Association's (MBA's) Mortgage Credit Availability Index (MCAI) was down 0.1 percent in December, to a reading of 122.1. A decline in the MCAI indicates that lending standards are tightening, while increases in the index are indicative of loosening credit. The MCAI was at 181.3 in February 2020 as news of the pandemic broke. It declined by 16.1 percent in March and another 12.2 percent in April. Subsequent smaller decreases ultimately took the index to 118.6 in September before it began what is so far a hesitant recovery . The index has four components based on loan types. The Conventional MCAI decreased 2.8 percent in...(read more)

1/12/2021 3:41:12 PM

Posted To: Mortgage Rate Watch

Mortgage rates were off to a very bad start this morning, but recovered a portion of what they lost by the end of the day. The specifics depend greatly on the lender in question. Sadly, few if any lenders are still able to offer the rates seen yesterday. To make matters worse, yesterday's rates were already significantly higher than those seen just one week prior. But how about a big silver lining? One week prior to yesterday, the average lender was offering all-time low mortgage rates. So being "significantly higher" than that still hasn't been enough to move the average top tier conventional 30yr fixed quote up to 3%. Before covid, 3.125% was the lowest ever 30yr fixed rate! If you're in the purchase market, 2.75% is still common (2.875% for refis). Lenders continue to be widely stratified...(read more)

1/12/2021 3:22:00 PM

Posted To: MBS Commentary

Much-Anticipated Correction Finally Arrives. Now What? This morning's alert noted a scary scenario playing out in bonds due to a confluence of big picture negative motivations (power shift in D.C., ruminations about Fed tapering, brighter covid/econ outlook as vaccines roll out, and the general need to correct the extended stay in a record low range). Just as it makes sense for bonds to push back against months of sub-1% yields in the bigger picture, it also made sense that bonds should be pushing back on the shorter term selling spree that accounted for a quick spike of more than 30 basis points in 10yr yields by this morning. As of this afternoon, we finally have the first evidence of such a push-back. It remains to be seen whether it's the start of any additional friendly momentum...(read more)

1/12/2021 3:16:39 PM

Posted To: MND NewsWire

The rate of mortgage delinquencies remains significantly elevated from last year, but there is gradual improvement . The national rate moved higher in October on an annual basis per CoreLogic's Loan Performance Insights Report . Loans that were 30 or more days past due, including those in foreclosure, represented 6.1 percent of all active mortgages compared to 3.7 percent in October 2019. In September, however, the annual rate of increase was 6.3 percent. Early-stage delinquencies are exhibiting the most positive trend. Loans that were 30 to 59 days past due declined from a 1.8 percent rate in October 2019 to 1.4 percent. The rate for that delinquency bucket spiked at 4.2 percent in April when the first financial effects of the COVID-19 pandemic hit. The rate for loans in "adverse" delinquency...(read more)

1/12/2021 9:42:43 AM

Posted To: MBS Commentary

This morning's alert notes that the bond market is in the midst of one of its scarier scenarios. The ingredients are as follows: a long run in a record low rate range with uncommonly strong help (both from the Fed and from the market movers in play), the gradual realization that the record run is justifying a shift toward higher rates, a key political change in the form of one party controlling congress and the White House, and increased ruminations among Fed members about how much longer their uncommonly strong help will last. Throw in the fact that the biggest jolt of momentum coincides with the start of a new year and this has all the makings of a moment you may wish you took more seriously in hindsight. Actually, that moment happened a week ago yesterday (the day before the GA senate...(read more)

1/12/2021 9:04:10 AM

Posted To: Pipeline Press

Nearly two weeks into 2021 already? I was just getting used to saying “2020.” Now I have to add a syllable every time. “One.” There’s continued talk of companies like Finance of America , loanDepot , SoFi , and Homepoint going public, and if Caliber and AmeriHome will after delaying things in October. Many experts are predicting another strong housing market in 2021. “Strong” can mean either lots of volume, or price appreciation. Or both. “They” are forecasting increased demand from buyers who delayed purchasing homes due to the pandemic, from existing homeowners who need larger spaces to accommodate parents working from home, children attending school virtually, and from condo owners who are seeking to escape multifamily buildings for single...(read more)

1/12/2021 8:53:32 AM

Posted To: Mortgage Rate Watch

Mortgage rates are coming off a rough week-- the roughest , in fact, since June 2020 by some measures. That's the last time rates rose this quickly for market-driven reasons. There were a few instances of bigger moves in Aug/Sept as the new refinance fee was announced, delayed, and ultimately implemented. Either way, things aren't great right now, relatively speaking. The "relative" qualification is important considering this abrupt move higher has yet to threaten to take the average top tier 30yr fixed quote above 3%--far from it, in fact. Most lenders can still offer 2.875% or better on refis and 2.625% or better on purchases. This assumes an ideal scenario with 20%+ equity, strong credit, etc. If this drama were to conclude right now, it wouldn't be that big of a deal in the bigger picture...(read more)

1/11/2021 4:41:00 PM