Rising Rates Damp Mortgage Applications Ahead of Spring Selling Season

Mortgage rates reached their highest level since November last week, cooling off home purchase and refinance applications ahead of the all-important spring selling season.

The average rate on the 30-year fixed-rate mortgage rose to 2.81% in the week ended Feb. 18, the highest since the second week of November, according to mortgage-finance giant Freddie Mac. A measure of mortgage applications fell 11.4% over the same week, according to the Mortgage Bankers Association.

Improving Covid-19 vaccination rates in the U.S. and expectations of a large federal stimulus package in the coming weeks drove benchmark 10-year Treasury note yields, which are closely tied to mortgage rates, to their largest weekly gains in more than a month last week. Demand in safe-haven assets such as government bonds weakens when investors feel optimistic about the economy.

“Higher rates are a signal of expectations of faster growth and a stronger job market ahead,” said Mike Fratantoni, the MBA’s chief economist. “This last week, rates have turned faster than many people had anticipated.”

Rising rates sometimes prompt borrowers to put their mortgage plans on hold for a few weeks, Mr. Fratantoni said. Measures of purchase and refinance activity fell 11.6% and 11.3%, respectively, in the week ended Feb. 19, according to MBA data.

If mortgage rates begin to increase at a faster pace, some borrowers could be discouraged from attempting to buy a home during the crucial home-selling months of March through June. In a typical year, more than 40% of annual home sales are made during this period, according to the National Association of Realtors.

Still, rates remain historically low, and more people are applying for purchase mortgages and refinances than at the same time in 2020. Last year was a banner one for the housing market, thanks in large part to mortgage rates, which fell below 3% for the first time last summer.

Mortgage lenders originated a record $3.6 trillion worth of mortgages last year, according to the Mortgage Bankers Association, an increase of more than 50% from 2019. Refinances accounted for about 59% of that volume. With the 30-year rate near 2.81%, between 16.7 million and 18.1 million Americans could lower their monthly mortgage payments through a refinance, according to mortgage-data firm Black Knight Inc.

Lissette Gomez will close this week on a new loan that lowers the mortgage rate on her Cleveland-area condo to 2.75% from 4.125%. Ms. Gomez, a special-education teacher, said she decided to refinance after she watched her boyfriend get a much lower rate on his mortgage.

“Everybody was getting the word, especially in the second half of 2020, that the rates were super low,” Ms. Gomez said. “I wanted to refinance when people were jumping on it, and the numbers were as low as they’ve ever been.”

Source: realtor.com

Mortgage Application Volume Continues Decline

The volume of
mortgage applications for both home purchase and refinancing fell for the third
straight time during the week ended February 19.
The Mortgage Bankers
Association (MBA) says its Market Composite Index, a measure of that volume,
dropped 11.4 percent on a seasonally adjusted basis. It was the largest single
week decline since the week ended April 3, 2020. On an unadjusted basis the index
was down 10.0 percent.

The Refinancing
Index decreased 11 percent from the previous week but was still 50 percent
higher than the same week one year ago. The refinance share of mortgage
activity decreased to 68.5 percent of total applications from 69.3 percent the
previous week.

The seasonally
adjusted Purchase Index dropped 12 percent and was 8 percent lower before adjustment.
Activity was 7 percent higher than the same week one year ago.

 

Refi Index vs 30yr Fixed

 

Purchase Index vs 30yr Fixed

 

“Mortgage
rates have increased in six of the last eight weeks, with the benchmark 30-year
fixed rate last week climbing above 3 percent to its highest level since
September 2020. As a result of these higher rates, overall refinance activity
fell 11 percent to its lowest level since December 2020
, but remained 50
percent higher than a year ago,” said Joel Kan, MBA’s Associate Vice President
of Economic and Industry Forecasting. “Additionally, the severe winter weather
in Texas affected many households and lenders, causing more than a 40 percent
drop in both purchase and refinance applications in the state last week.” 

Added
Kan, “The housing market in most of the country remains strong, with activity
last week 7 percent higher than a year ago. The average loan size of purchase
applications increased to a record $418,000, in line with the accelerating
home-price growth caused by very low inventory levels.” 

The
FHA share of total applications jumped to 11.2 percent from 9.0 percent the previous
week while the VA share fell to 11.9 percent from 13.2 percent and the USDA
share dipped 0.1 point to 0.3. The balance of all loans was $344,800, up from
$338,200 and for purchase loans the balance grew from $412,200 to $418,000.

The average
contract interest rate for 30-year fixed-rate mortgages (FRM) with balances at
or below the current conforming limit of $548,250 increased to 3.08 percent
from 2.98 percent, with points increasing to 0.46 from  0.43. The effective rate was 3.22 percent. 

The
rate for jumbo 30-year fixed-rate mortgages, loans with balances greater than the
conforming limit, increased to 3.23 percent from 3.11 percent, with points increasing to 0.43 from
0.35. The effective rate was 3.35 percent.

Thirty-year
FRM backed by the FHA had an average rate of 3.00 percent with 0.33 point. The
prior week the rate was 2.93 percent with 0.27 point. The effective rate
increased to 3.10 percent.  The rate for
15-year fixed-rate mortgages increased 9 basis points to 2.56 percent and
points grew to 0.40 from 0.36. The effective rate was 2.66 percent.

The
average contract interest rate for 5/1 adjustable-rate mortgages (ARMs) was unchanged
at 2.83 percent, with points
decreasing to 0.36 from 0.70. The effective rate declined to 3.10 percent.  The ARM share of applications increased from
2.4 to 2.7 percent.  

MBA’s Weekly Mortgage Applications
Survey has been conducted since 1990 and covers over 75 percent of all U.S.
retail residential applications Respondents include mortgage bankers,
commercial banks, and thrifts. Base period and value for all indexes is March
16, 1990=100 and interest rate information is based on loans with an 80 percent
loan-to-value ratio and points that include the origination fee.

MBA’s latest Forbearance and Call Volume Survey found a 7-basis point
decline in the total number of loans in forbearance t
o 5.22 percent of all
first liens as of February 14, 2021. According to MBA’s estimate, 2.6 million homeowners
are in forbearance plans.  Of those
loans, 15.9 percent are in the initial forbearance plan stage, while 81.6
percent are in a forbearance extension. The remaining 2.5 percent are re-entries
in the program. 

The
share of Fannie Mae and Freddie Mac (GSE) loans in forbearance decreased to
2.97 percent –
a 4-basis-point improvement. Ginnie Mae (FHA and VA) loans in forbearance ticked
down 2 basis points to 7.32 percent, while the forbearance share for portfolio
loans and private-label securities (PLS) decreased by 20 basis points to 8.94
percent. The percentage of loans in forbearance serviced by independent
mortgage banks (IMB) fell 15 basis points to 5.54 percent, and the percentage
of forborne loans in depository servicers’ portfolios rose 2 basis points to
5.28 percent.

“The share of loans in forbearance has declined for
three weeks in a row, with portfolio and PLS loans decreasing the most this
week. This decline was due to a sharp increase in borrower exits, particularly
for IMB servicers,” said
Mike Fratantoni, MBA’s Senior Vice President and Chief Economist. “Requests for new
forbearances dropped to 6 basis points, matching a survey low.” 

Fratantoni added, “The housing market is
quite strong, with home sales, home construction, and home price data all
testifying to this strength. Policymakers and the mortgage industry have helped
enable this during the pandemic by providing millions of homeowners support in
the form of forbearance. The decision to extend the allowable duration of
forbearance plans should provide for a smoother transition this year as the job
market continues to recover.”

MBA’s latest Forbearance and Call
Volume Survey covers the period from February 8 through February 14, 2021 and
represents 74 percent of the first-mortgage servicing market (37.1 million
loans).

Source: mortgagenewsdaily.com

Forbearances fall for third week in a row, to 5.22%

The total number of mortgages in forbearance declined seven basis points to 5.22% in the week ending Feb. 14, according to the latest estimate from the Mortgage Bankers Association.

The trade group said 2.6 million homeowners are currently in forbearance plans.

“The share of loans in forbearance has declined for three weeks in a row, with portfolio and PLS loans decreasing the most this week. This decline was due to a sharp increase in borrower exits, particularly for IMB servicers,” said Mike Fratantoni, MBA’s senior vice president and chief economist.

Fannie Mae and Freddie Mac‘s forbearance portfolio continued to express the lowest share of loans, decreasing four basis points to 2.97%. Ginnie Mae‘s share, which include loans backed by the Federal Housing Administration, fell 2 basis points to 7.32%, while the share for portfolio loans and private-label securities (PLS) dropped a full 20 basis points from the prior week, at 8.94%.

The percentage of loans in forbearance for nonbank servicers also dropped 15 basis points to 5.54%, while the percentage of loans for depository servicers decreased 2 basis points to 5.28%.


From forbearance to post-forbearance: How to make the process effective

To accommodate the large volume of loans still in forbearance, mortgage servicers must have functional, flexible and effective processes in place. Here are some actionable steps to create that process.

Presented by: FICS

The MBA’s survey found that of the cumulative exits between June 1, 2020, and Feb. 14, 27.9% of borrowers continued to make their monthly payments during the forbearance period while over 15% of exits represented borrowers who did not make all of their monthly payments and exited forbearance without a loss mitigation plan in place.

Overall, the MBA noted that new forbearance requests are also falling – down six basis points to match a survey low.

“The housing market is quite strong, with home sales, home construction, and home price data all testifying to this strength,” Fratantoni said. “Policymakers and the mortgage industry have helped enable this during the pandemic by providing millions of homeowners support in the form of forbearance.”

In the week prior, forbearance was once again extended by the Biden administration, pushing out forbearance and eviction moratoriums an additional three months, through June 30, 2021. This measure only applies to those with a loan backed by the FHA, though Fannie and Freddie recently extended forbearance requests up to 15 months.

Now, data is showing the affects of long-standing moratoriums. Black Knight’s December mortgage monitor report revealed foreclosure starts hit a record low in 2020, falling by 67% from the year prior as moratoriums and forbearance plans protected homeowners.

Based on the rate of improvement to date, Black Knight estimates there could be more than 2.5 million active forbearance plans remaining at the end of March 2021 when the first wave of plans reaches their 12-month expirations.

For four months now, the forbearance portfolio volume has hovered between 5% and 6% — the longest a percentage range has held since the survey’s origins in May.

Source: housingwire.com

Forbearance rate drops again, to 5.29%

The total number of mortgages in forbearance declined six basis points to 5.29% in the week ending Feb. 7, according to the latest estimate from the Mortgage Bankers Association.

The trade group said 2.6 million homeowners are currently in forbearance plans.

“The share of loans in forbearance declined to the lowest level since April 5th of last year, due to decreases in both the GSE and Ginnie Mae portfolios,” said MBA Vice President and Chief Economist Mike Fratantoni.

According to the MBA, Fannie Mae and Freddie Mac loans in forbearance decreased six basis points to 3.01%. Ginnie Mae loans decreased 12 basis points to 7.34%, while the share for portfolio loans and private-label securities (PLS) remained unchanged relative from the prior week, at 9.14%.

The percentage of loans in forbearance for nonbank servicers decreased 4 basis points to 5.69%, while the percentage of loans in forbearance for depository servicers decreased 10 basis points to 5.26%.


From forbearance to post-forbearance: How to make the process effective

To accommodate the large volume of loans still in forbearance, mortgage servicers must have functional, flexible and effective forbearance processes in place. Here are some actionable steps to create that process.

Presented by: FICS

“Similar to the trend in recent months, the first week of February
showed a faster pace of exits from forbearance compared to recent weeks, while new forbearance requests were unchanged,” Fratantoni said.

“MBA expects the rollout of the vaccines to boost economic growth through the course of the year, leading to a stronger job market and a greater ability for more struggling homeowners to get back on their feet. We do believe that additional support is needed until they have regained their jobs and incomes.”

According to the MBA, 16.07% of total loans in forbearance are in the initial stage while 81.42% are in a forbearance extension. Just over 2.5% are forbearance re-entries.

The MBA’s survey found that of the cumulative exits between June 1, 2020, and Feb. 7, 28.2% of borrowers continued to make their monthly payments during the forbearance period. Of those exiting forbearance, 25.5% resulted in a loan deferral/partial claim, and 15.4% resulted in reinstatements, in which past-due amounts are paid back upon exit.

About 14% of exits represented borrowers who did not make all of their monthly payments and exited forbearance without a loss mitigation plan in place. The survey found that 7.7% of exits resulted in loan modifications, and 7.5% of exits resulted in loans paid off through either a refinance or by selling the home.

On the day that the MBA released its latest survey, the Biden administration extended forbearance and eviction moratoriums an additional three months, through June 30, 2021. Homeowners with FHA loans will now be able to receive up to six months of additional mortgage payment deferrals if they entered before June 30, 2020. The Biden administration’s FHA also gave homeowners more time to request a pause or reduction in mortgage payments through the CARES Act.

However, the measures made Tuesday don’t apply to borrowers with loans backed by Fannie Mae and Freddie Mac. Those borrowers can request forbearance for up to 15 months if they apply by the end of February.

Source: housingwire.com

IT Jobs; VOE, CRM, Non-QM Products; Conventional Conforming News; CPI: No Inflation Worries

IT Jobs; VOE, CRM, Non-QM Products; Conventional Conforming News; CPI: No Inflation Worries

Here we are in the seemingly 58th week of 2020. What’s new? The podcast of today’s commentary features thoughts from the Millennial host on how lenders can address that market, and it can be heard via Apple, Spotify, or Google: subscribe and download. In terms of news, the FHFA extended forbearance protection past March. (More below on that.) And rating agency Moody’s view is that the CFPB’s recent changes to the QM rules would “allow lenders to qualify more types of loans as QM, resulting in a non-QM market with loans of lower credit quality, since most of today’s higher-quality non-QM loans would qualify as QM under the new rules, making future non-QM more synonymous with non-prime… the rule, if implemented could incentivize some lenders to price riskier loans lower than their true risk in an effort to fall within the new QM rule’s APR threshold. QM status conveys potential benefits to lenders and securitization issuers, such as protection against legal challenges and exemption from securitization risk retention.” More on this below as well, remember, the mandatory compliance date for the revised general QM and seasoned QM definitions is July 1.

Lender and Broker Services and Products

As the rush of mortgages and refis continues to flood the industry, it’s no secret that everyone’s feeling the deluge and leaving valuable loans on the table. At Truework, we know you’re feeling overwhelmed. Here are three things you can do to stop leaving valuable loans on the table, and take advantage of the market so you can come out on top. Truework is a US-based company with an expansive and ever-growing network and a dedicated team of mortgage professionals that are committed to tackling and completing any and all VOE/VOI requests. Additionally, we are the market leader for coverage for small and mid-sized companies. Start a verification on Truework now. Furthermore, with Truework, you can reverify employment for any request within 90 days of the original, receive up-to-date statuses on all verification reports, and get fast turnaround times. And for a limited time, Rob Chrisman readers get 6 free Verifications ($240 value). Let us do the heavy lifting so you can focus on what matters. Reach out to Zackary Green now for questions and to claim this offer.

Attention ClosingCorp and Reggora customers! If you use either of these platforms, you can now order appraisals and check the status of reports directly from within these systems – no need for yet another login. Triserv is fully integrated with both ClosingCorp and Reggora, as well as many other LOS and other technology providers. Triserv is a 50-state AMC that has client-specific, dedicated teams on both coasts offering high-touch, personalized service. To find out more, contact Triserv Appraisal Management Solutions.

Mortgage demand among self-employed and credit-challenged borrowers is still growing, according to Verus Mortgage Capital, the industry’s largest purchaser of Non-QM loan products. Largely ignored by lenders since COVID struck, the consumers demand has not changed. Fortunately, Non-QM guidelines are back to pre-COVID levels and some pricing is actually better, attracting more originators to this business. It’s time to help borrowers who don’t fit into the GSE credit box and who need the flexibility offered by the leading Non-QM investor. For more information about adding Non-QM products to your menu contact Jeff Schaefer, EVP of Correspondent Sales (202-534-1821).

One month into 2021 and Stearns Wholesale is already kicking the new year into high gear with exciting new tech developments! This week, Stearns has reduced its minimum lock duration from 60 to 45 days, reduced the minimum credit score to 620 now allowing up to 90% LTV on its Accelerator program, and removed the COVID cash out adjustment of .375. Stearns has also enhanced its Jumbo Loan Guidelines, which now allows 2nd homes, a max loan amount of $2 million and a minimum credit score down to 700. If you want to learn more about these exciting new product updates or partner with Stearns, click here to be contacted.

It’s a well-known fact that 2020 was a banner year for the mortgage industry. As you look over your 2020 numbers, ask yourself, “is this the best we could have done?” If you’re not working with Sales Boomerang to maximize borrower retention, the answer to that question is, “Nope. You definitely could have done better.” Sales Boomerang notifies lenders when someone in their database is ready for a loan. And the numbers speak for themselves: up to 65% borrower retention and 20-40% average lift to loan volume, all for around $299 per acquired loan — an average 20x ROI. Want more proof? With a loan loss report, Sales Boomerang can show you which competitor took your deal, the loan amount, type of loan, the term and much more. Request yours from Sales Boomerang today to learn how you can keep more of your borrowers.

As industry experts, TMS anticipates 2021 should see a steady rise in mortgage rates, and consequently, the refi faucet slowly turning off (eventually). The purchase market will once again be lenders’ bread and butter, although with slightly modified, post-COVID conditions. TMS CAREspondent has compiled some great tips in its new blog to help lenders prepare for this impending shift. Partner with TMS today.

While there’s no crystal ball capable of showing the industry’s future, MBA Chief Economist Dr. Mike Fratantoni is the next best thing. Join LBA Ware for the first of its quarterly webinar series More Insights, Better Decisions: Michael Fratantoni’s 2021 Mortgage Industry Outlook for a data-packed discussion on the state of the mortgage industry. Drawing on the latest stats, Mike will help you take a data-driven approach to your business decisions this year. Register for the free webinar, which takes place tomorrow, Thursday, February 11, from 1-2 pm ET.

“When people and robotic processes work together, loans get completed faster, error free.” If Elon Musk chose the mortgage industry, that’s how he’d do it. It’s how modern assembly lines achieve maximum efficiency. Yet many loan teams still handle loan files the old-fashioned way with tedious data entry, error-prone, time-consuming communications, and no way to get visibility into what may be at risk of missing critical deadlines. Now imagine an online, ultra-productive, “loan assembly line” that coordinates every step for every loan, actively prioritizes everyone’s tasks and eliminates tedious, routine work in your CRM+POS+LOS. That’s what TeamworkIQ does for $24/user/mo. It makes sure things get done right and get done on time while tracking each loan’s details, documents, deadlines and turn times. Loans get done faster and error free. What if you could 4x your efficiency in under 30 days? See how American Pacific Mortgage did and test-drive TeamworkIQ for free.

Leverage your existing technology ecosystem… it’s paid for!  Service 1st is integrated with multiple LOS and point of sale systems for TRV, SSV, VOE and credit reporting, with more added each year. Keep your team safely engaged and instantly cascade through S1 solutions within your IT environment. Additionally, many originators and lenders experienced significant VOE and credit reporting cost increases as we entered 2021. Have you contacted S1? S1 creates significant value via loan manufacturing efficiencies: Results (verifications and tradeline updates delivered 50% faster than industry benchmarks) without the hefty price tag. No signup fees or minimums.  Get started today with a no obligation price proposal at srv1st.com.

There’s still time to register for XINNIX’s upcoming quarterly Leadership Lessons Webinar: “Beyond the Daily Commentary 2021: A Live Q&A with Rob Chrisman” happening today at 1 PM ET. XINNIX Founder & CEO, Casey Cunningham, will be hosting this live Q&A session likely on topics focusing on exactly what is important to you. Reserve your seat today!

FHFA, Freddie, Fannie News Impacting Borrowers Everywhere

Huh? Freddie and Fannie operated like utilities? Let’s see how that is working out for PG&E and California. Seriously, what if the Administration left the two of them under conservatorship? It would certainly leave industry pundits less to talk about, right?

The Federal Housing Finance Agency (FHFA) extended the forbearance period to 15 months for GSE borrowers. This is an additional three months beyond the previous 12-month limit. Black Knight had reported that nearly 25% of all (not just GSE) active forbearance plans were scheduled to reach their 12-month expiration in March, and another nearly 15% in April. This extension should provide support for troubled borrowers through the difficult winter and early spring months. We view this announcement positively for mortgage credit broadly. In our coverage universe this primarily benefits mortgage insurers and mortgage REITs.

Fannie Mae issued Selling Guide Announcement SEL-2021-01 which includes update information on the verification requirements related to seasonal and secondary income, the seller/servicer post-purchase adjustment (PPA) process to require the use of the PPA form, and the removal of references to lenders authorizing release of MI data.

A recent Compliance Update from First American Docutech discussed Freddie Mac’s announcements in Bulletin 2021-4  regarding CMT-indexed ARM, IRS Form 4506-C, and

authorized change for the uniform Oklahoma Mortgage (Form 3037). And Fannie Mae is retiring CMT Arm Products per FNMA LL-2021-05; more information in Compliance News.

loanDepot’s Weekly Announcement includes the Fannie Mae Appraisal Risk Management Policy Reminders and Resources and updates on FHA Loan Limits 2021. loanDepot has new programs available, smart Term Conforming and High Balance. Information on these programs and updates to its Conventional Lending Guide are discussed in this Announcement.

PRMG announced the expiration of QM Points and Fees Cure Provision on covered transactions with consummation dates after January 10. Impacted loan programs include Conventional (Fannie Mae and Freddie Mac), FHA and USDA. Lenders or assignees will no longer be allowed the option to cure the transaction and bring it into QM compliance when the total points and fees exceed the applicable limits.

Plaza Home Mortgage offers Fannie Mae HomeStyle® and Freddie Mac CHOICERenovation® loan programs. Download Plaza’s flyer for more information. In alignment with Freddie Mac Bulletin 2020-45, Plaza has updated the Home Possible® program guidelines, effective for all loans purchased on or after March 1, 2021. Specifically, this update reduces the maximum LTV from 95% to 85% for certain Home Possible Mortgages secured by 2-4-unit properties.

COVID tolerances have been extended on Flagstar Bank Conventional Products. Read Memo 21011 for details.

MQMR addressed how internal audit policies and procedures can meet federal and agency requirements. It discussed Fannie Mae’s release of several checklists as part of their Seller/Servicer Risk Self-Assessments, including the Internal Audit checklist. Internal audits are an important risk mitigation tool that uncover operational inefficiencies and potential areas of risk within a lender’s organization. For that reason, it is important for sellers/servicers to know that their Internal Audit policies and procedures satisfy federal and agency requirements and are effective for identifying risk. The article provides a list of requirements for an internal audit self-assessment checklist.

MQMR also spoke to the best practice of requiring outsourced service providers, such as contract underwriters and processors, to be checked against exclusionary lists. While the practice may not always be feasible to do, particularly if the lender is not made aware of the individual contract underwriter’s/processor’s name by the third party service provider that employs them, the article provided a summary of Agency guidelines on this issue from Fannie Mae Selling Guide Chapter A3-3, HUD Handbook 4000.1, Chapter II, A, 1, iii, and Freddie Mac Seller/Servicer Guide Chapter 3101.

Capital Markets

Our economy is driven by jobs and housing, and it is worthwhile to take another look at the employment numbers last week to keep things in perspective. After falling 227,000 in December, nonfarm payrolls increased a mere 49,000 in January disappointing many analysts who were expecting a more robust number. But thanks in part to a drop in the labor force, the unemployment rate fell from 6.7 to 6.3 percent. The U-6 unemployment rate, which includes those marginally attached to the labor force as well as those who are working part-time but prefer to be working full-time, declined. And initial claims for unemployment have been slowly declining and February’s outlook remains positive. Claims are still well above pre-recession levels and still largely affecting those in their prime working years. On top of that, U.S. manufacturing continues to improve according to the latest ISM Manufacturing Index. Inflation? Commodity prices rose nearly across the board for the month. Services also continued to expand but arts/entertainment/recreation, education services, and retail trade continue to struggle in the face of the ongoing pandemic.

Looking at rates Tuesday, Treasuries yields rose marginally across longer durations and the MBS basis ended Tuesday tighter, particularly on higher coupons as investors weighed the latest on stimulus, earnings, and vaccination efforts, trying to determine whether letting the economy run hot will spark destabilizing inflation. The day’s $58 billion 3-year note auction was met with solid demand ahead of today’s $41 billion 10-year Treasury note auction results.

Today’s economic calendar is already underway. Mortgage applications decreased 4.1 percent from one week earlier, according to data from the Mortgage Bankers Association’s Weekly Mortgage Applications Survey for the week ending February 5. 30-year mortgage rates remained near their cycles lows during the reporting period (2 7/8). We’ve also had January Consumer Price Index (+.3 percent, as forecast, much of the gain due to gasoline, the core rate was unchanged). Coming up are December wholesale inventories and sales, remarks from Fed Chairman Powell on the “State of the US Labor Market” before the Economics Club of New York, and the January budget deficit from the Congressional Budget Office. Today’s Desk purchase schedule is the largest of the week at $8.8 billion over three operations, including over $7.3 billion in UMBS30s. We begin the day with Agency MBS prices unchanged and the 10-year yielding 1.15 after closing yesterday at 1.16 percent after the CPI data reminded us that inflation is currently not an issue.

 

Employment

“OpenClose continues to experience record setting growth while bank, credit union, and mortgage lender demand for our award-winning digital lending ecosystem is booming. This success makes available exciting opportunities for experienced mortgage banking and innovative software professionals to join the OpenClose family. We are seeking qualified and energetic professionals to join our implementation team as a Mortgage Software Implementation Specialist. The specialist will be responsible for the implementation of new customers and work with existing customers providing business + channel + user analysis, workflow evaluation, application setup and optimization of installations of our Web-based, enterprise-level mortgage software platform. Notable is that OpenClose is a 100% browser-based platform and can largely be implemented remotely. Minimal travel, if any, is involved in this position. Come see why OpenClose has received the Top Mortgage Employer award four years running. This and other opportunities can be accessed at Join the OpenClose Family!”

STRATMOR Group is anticipating a significant uptick in Merger and Acquisition activity in 2021. As a follow up to its recent open-position post, STRATMOR is seeking a professional with at least two years of hands-on M&A or Private Equity experience. This is a junior level position that will benefit from STRATMOR’s extensive experience in this industry. Employees of STRATMOR enjoy working at a company that has successfully managed remote work for decades and continues to grow in importance in the market. Specifically, this new hire will assist the STRATMOR team with tracking the M&A deal pipeline, generating interest with new M&A candidates, and creating Confidential Information Memorandums (CIMs), and financial models. If you are looking for an exciting new position with a highly respected mortgage consulting firm, then drop STRATMOR a note.

 

Source: mortgagenewsdaily.com

Slight Rate Increases Dampen Mortgage Application Volume

Mortgage
application activity gave back much of the previous week’s gains as interest
rates increased. The Mortgage Bankers Association (MBA) said its Market
Composite Index, a measure of mortgage loan application volume, decreased 4.1
percent
on a seasonally adjusted basis during the week ended February 5 and was
down 3 percent before adjustment.

The
Refinance Index, which had surged by 11 percent during the last week in
January, was down 4 percent last week but was still 46 percent higher than the
same week one year ago. The refinancing share of overall activity decreased to
70.2 percent from 71.4 percent the previous week.

The
seasonally adjusted Purchase Index dropped 5 percent from one week earlier but
was up 2 percent from the prior week and 17 percent year-over-year on an
unadjusted basis.  

 

Refi Index vs 30yr Fixed

 

Purchase Index vs 30yr Fixed

 

“Mortgage rates
have increased in four of the first six weeks of 2021, with jumbo rates being
the only loan type that saw a decline last week. Despite some weekly
volatility, Treasury rates have been driven higher by expectations of faster
economic growth as the COVID-19 vaccine rollout continues,” said Joel Kan,
MBA’s Associate Vice President of Economic and Industry Forecasting. “With the
30-year fixed rate increasing to 2.96 percent – a high not seen since last
November – refinances declined, and their share of total applications dipped to
the lowest level in three months. Government refinance applications did buck
the trend and increase, and overall activity was still 46 percent higher than a
year ago.
Demand for refinances is still very strong this winter.” 

Added Kan, “Purchase applications cooled the first week of February, but homebuyers are
still very active. Purchase activity was 17 percent higher than last year, and
the average purchase loan size continued to increase, reaching another survey
high of $402,200, as the higher-priced segment of the market continues to
perform well.”

The
FHA share of total applications increased to 9.5 percent from 9.1 percent the
previous week and the VA share grew to 13.3 percent from 12.1 percent. The USDA
share was unchanged at 0.4 percent. The average purchase price dipped to
$332,400 from $332,100 and the balance of a purchase mortgage grew from
$398,600 to $402,200.

The
average contract interest rate for 30-year fixed-rate mortgages (FRM) with balances
at or below the conforming limit of $548,250 increased to 2.96 percent from
2.92 percent; Points increased to 0.36 from 
0.32 and the effective rate increased. 

The rate for jumbo 30-year
FRM, loans with balances exceeding the conforming limit, declined 1 basis point
to 3.11 percent. Points decreased to 0.29 from 0.32 and the effective rate also
moved lower.

Thirty-year FRM backed by
the FHA had a rate of 2.97 percent with 0.36 point. The prior week the rate was
2.94 percent with 0.29 point. The effective rate increased.  

The rate for 15-year FRM was
2.50 percent, up from 2.44 percent, with points decreasing to 0.29 from 0.32.
The effective rate increased from last week.

The average contract
interest rate for 5/1 adjustable-rate mortgages (ARMs) increased 4 basis points
to 2.92 percent and points declined to 0.36 from 0.46, leaving the effective
rate unchanged. The ARM share of activity increased to 2.3 percent of total
applications.

MBA’s Weekly
Mortgage Applications Survey has been conducted since 1990 and covers over 75
percent of all U.S. retail residential applications Respondents include
mortgage bankers, commercial banks, and thrifts. Base period and value for all
indexes is March 16, 1990=100 and interest rate information is based on loans
with an 80 percent loan-to-value ratio and points that include the origination
fee.

MBA’s latest Forbearance and Call Volume Survey showed
that the total number of loans now in forbearance decreased by 3 basis points
over the prior week. As of January 31, 5.35 percent of servicers’ portfolios
were in active plans, down from  5.38
percent a week earlier and equating to an estimated total of 2.7 million homeowners.
By stage, 16.52 percent of forborne loans are in their initial plan stage,
while 80.98 are in a forbearance extension. The remaining 2.50 percent are
forbearance re-entries. 

The
share of Fannie Mae and Freddie Mac loans in forbearance decreased to 3.07
percent – a 3-basis-point
improvement. The Ginnie Mae (FHA and VA) share of loans in forbearance
decreased 5 basis points to 7.46 percent. The forbearance share for portfolio
loans and private-label securities (PLS) decreased by 2 basis points to 9.14
percent. The percentage of loans in forbearance for independent mortgage bank
(IMB) servicers decreased 4 basis points to 5.73 percent, and those for depository
servicers decreased 1 basis point to 5.36 percent.

“The share of loans in forbearance decreased at the end
of January across all investor categories. Almost 14 percent of homeowners in
forbearance were reported as current on their payments at the end of last
month, but the share has declined nearly every month from 28 percent in May,” said Mike Fratantoni,
MBA’s Senior Vice President and Chief
Economist. “While
new forbearance requests increased slightly at the end of January, the rate of
exits picked up somewhat but remained much lower than in recent months. We are
anticipating a sharp increase in exits in March and April as borrowers hit the
12-month expiration of their forbearance plans.” 

Fratantoni added, “The job market rebounded
slightly in January following a decline in December, but there are still 6.5
percent fewer jobs in the U.S. economy compared to February 2020. The
proportion of long-term unemployed also remains troubling, with 4 million
people who have been actively looking for work for 27 weeks or more. These are
the homeowners who are likely to still be in forbearance and need additional
support until the job market recovers to a greater extent.”

MBA’s latest Forbearance and Call Volume
Survey covers the period from January 25 through January 31, 2021 and
represents 74 percent of the 37.0 million loans in the servicing market.

Source: mortgagenewsdaily.com

Borrowers With Fannie Mae, Freddie Mac Mortgages Can Get Additional Forbearance, Regulator Says

The Federal Housing Finance Agency is extending the length of time that borrowers can be in a COVID-related forbearance on mortgages back by Fannie Mae and Freddie Mac.

Originally, Fannie Mae and Freddie Mac instructed loan servicers that mortgage borrowers could request up to 12 months of forbearance on their mortgages as a result of the coronavirus pandemic.

Now, the FHFA is allowing these borrowers to request a forbearance extension of up to three months, the agency announced Tuesday.

While in forbearance, mortgage borrowers are not required to make their monthly mortgage payments. When forbearance ends, these borrowers have a range of options to choose from to pay back the owed amount, including tacking the missed payments onto the end of the mortgage’s duration.

Homeowners must already be in forbearance on their mortgage by Feb. 28 to qualify for the three-month extension.

Separately, the FHFA is extending the moratorium on single-family foreclosures and evictions for properties with mortgages backed by Fannie and Freddie by one month until March 31. FHFA Director Mark Calabria said the steps were being taken “to keep families in their home during the pandemic.”

The FHFA expects that Fannie and Freddie will bear between $1.5 billion and $2 billion in expenses as a result of the COVID-19 foreclosure moratorium.

As of Jan. 31, 3.07% of Fannie Mae and Freddie Mac loans are in forbearance, according to recently-released data from the Mortgage Bankers Association. That’s better than the overall forbearance rate for all mortgages nationwide, which stands at 5.35%.

The number of loans in forbearance decreased at the end of January, the Mortgage Bankers Association reported. “While new forbearance requests increased slightly at the end of January, the rate of exits picked up somewhat but remained much lower than in recent months,” said Mike Fratantoni, chief economist at the Mortgage Bankers Association.

Fratantoni had expected the rate of exits from forbearance to pick up in March and April as people came up against the original 12-month deadline to resume making payments. He warned that, given the employment situation nationwide, homeowners who are unemployed and still in forbearance would “need additional support until the job market recovers to a greater extent.”

Source: realtor.com

Refinancing Volume Surges on Slight Rate Drop

Borrowers looking
to refinance were quick to take advantage of a slight drop in interest rates
last week.  The Mortgage Bankers Association
(MBA) said its Market Composite Index, a measure of mortgage loan application
volume, jumped 8.1 percent on a seasonally adjusted basis during the week ended
January 29, and was up 10 percent on an unadjusted basis.  The index had declined in each of the two
previous weeks.

The
Refinance Index increased 11 percent from the previous week, also reversing two
weeks of losses, and was 60 percent higher than the same week one year ago. The
refinance share of mortgage activity increased to 71.4 percent of total applications
from 70.7 percent the previous week.

The
seasonally adjusted Purchase Index ticked up 0.1 percent and was 8 percent
higher on an unadjusted basis. The index was 16 percent above its level the same
week in 2020.  

 

Refi Index vs 30yr Fixed

 

Purchase Index vs 30yr Fixed

 

 

“After
increasing for three consecutive weeks, the 30-year fixed mortgage rate dropped
3 basis points to 2.92 percent. The one-week reversal in the recent upswing in
rates drove an increase in both conventional and government refinance activity,
as borrowers continue to lock in these historically low rates. MBA’s refinance
index hit its highest level since March 2020 and jumped 60 percent year-over-year,”
said Joel Kan, MBA’s Associate Vice President of Economic and Industry Forecasting. “Purchase activity was unchanged last week, with a 1 percent increase in
conventional applications offset by a 3 percent decline in government
applications. Average purchase loan amounts in early 2021 continue to rise
across all loan types, driven by a strong pace of home sales, tight housing
inventory and high home price growth.
Conventional, FHA and VA purchase loan
sizes all set new survey records last week.”

The FHA share of total applications
decreased to 9.1 percent from 9.4 percent the prior week prior and the VA share
dipped to 12.1 percent from 12.4 percent. The USDA share of total applications
decreased to 0.4 percent from 0.5 percent. The average balance of a mortgage
was $332,100 compared to $329,700 a week earlier while the average balance of a
purchase mortgage increased $400 to $398,600.  

While the conforming 30-year mortgage
caught a rate decrease last week, other rates were mixed. The average contract
interest rate for 30-year loans with origination balances at or below the conforming
limit of $548,250 decreased to 2.92 percent from 2.95 percent, with points
remaining at 0.32. The effective rate decreased to 3.01 percent.   

The average contract interest rate for
jumbo 30-year fixed rate mortgages (FRM), loans with balances greater than the
conforming limit, decreased to 3.12 percent from 3.17 percent, with points increasing to 0.32 from
0.31. The effective rate was 3.22 percent. 

Thirty-year
FRM backed by the FHA saw a 6-basis point increase to 2.94 percent. Points
decreased to 0.29 from 0.34 and the effective rate rose to 3.03 percent.  

The average contract interest rate for
15-year FRM was 2.44 percent with 0.32 point. The prior week the rate was 2.43
percent, also with 0.32 point. The effective rate increased to 2.53 percent.  

The
average contract interest rate for 5/1 adjustable-rate mortgages (ARMs) rose to
2.88 percent from 2.60 percent, with
points increasing to 0.46 from 0.38. The effective rate increased to 3.05
percent. The ARM share of activity was unchanged at 2.2 percent of total
applications.

MBA’s Weekly Mortgage Applications
Survey has been conducted since 1990 and covers over 75 percent of all U.S.
retail residential applications Respondents include mortgage bankers,
commercial banks, and thrifts. Base period and value for all indexes is March
16, 1990=100 and interest rate information is based on loans with an 80 percent
loan-to-value ratio and points that include the origination fee.

The
number of loans in active forbearance plans was unchanged from the previous
week according to MBA’s latest Forbearance and Call Volume Survey. As of January
24, there were 2.7 million mortgages in forbearance, 5.38 percent of all mortgage
loans.  By stage, 18.07 percent are in the initial
forbearance plan stage, while 79.30 percent are in an extension. The remaining
2.64 percent were program reentries.   

The
share of Fannie Mae and Freddie Mac loans in forbearance decreased to 3.10
percent
– a 1-basis-point
improvement. Ginnie Mae (FHA and VA) loans in forbearance decreased 10 basis
points to 7.51 percent, while the forbearance share for portfolio loans and
private-label securities (PLS) increased by 22 basis points to 9.16 percent.
The percentage of loans in forbearance for independent mortgage bank (IMB)
servicers dipped 2 basis points to 5.77 percent, and the percentage of loans in
forbearance for depository servicers grew by 1 basis point to 5.37 percent.

“The share of loans in forbearance was unchanged in the
prior week, with a gain in the portfolio/PLS loan segment offset by declines in
the Ginnie Mae and GSE investor loan categories. When servicers buy out
delinquent loans from Ginnie Mae pools, they are reclassified as portfolio
loans, which can lead to a decrease in the Ginnie Mae forbearance share and an
increase in the portfolio/PLS share,” said Mike Fratantoni, MBA’s Senior Vice President and Chief Economist. “While
new forbearance requests dropped slightly, the rate of exits from forbearance
was at the slowest pace since MBA began tracking exit data last summer.” 

Fratantoni added, “Overall, the forbearance
numbers have been little changed over the past few months. Homeowners still in
forbearance are likely facing ongoing challenges with lost jobs, lost income,
and other impacts from the pandemic.”

MBA’s latest Forbearance and Call
Volume Survey covers the period from January 18 through January 24, 2021 and
represents 74 percent of the first-mortgage servicing market (37.1 million
loans).

 

Source: mortgagenewsdaily.com

Forbearance rate slowly descends to 5.35%

The U.S forbearance rate is falling, though not as quickly as it once was.

Data released on Monday by the Mortgage Bankers Association showed that the share of servicers’ portfolio volume in forbearance fell 3 basis points to 5.35% last week.

For the third month in a row, the MBA estimated 2.7 million homeowners are in some form of forbearance, and for almost four months now, forbearance portfolio volume has hovered between 5% and 6% — the longest a percentage range has held since the survey’s origins in May.

However, in the current environment, any sign of forbearance waning is a welcome one. Last week every investor class managed to see declines, with Fannie Mae and Freddie Mac once again claiming the lowest forbearance rate at 3.07%.

Ginnie Mae loans in forbearance, which include loans backed by the Federal Housing Administration, also fell 5 basis points to 7.46%. And even though servicers continued to buy out delinquent loans from the Ginnie Mae pool (subsequently reclassifying them as portfolio loans) the forbearance share for portfolio and private-label securities also managed to fall to 9.14%.


Here’s how to find property owners ready to sell

In today’s low-inventory environment, complicated by external factors such as forbearance and foreclosure moratoriums, it’s crucial for real estate agents and brokers to be proactive in order to grow their business.

Presented by: PropStream

The MBA data shows that homeowners who remain in forbearance are more likely to be in distress, with fewer continuing to make any payments. According to Mike Fratantoni, the MBA’s chief economist, almost 14%of homeowners in forbearance were reported as current on their payments at the end of last month, but that share has declined nearly every month from 28% in May.

“While new forbearance requests increased slightly at the end of January, the rate of exits picked up somewhat, but remained much lower than in recent months. We are anticipating a sharp increase in exits in March and April as borrowers hit the 12-month expiration of their forbearance plans,” Fratantoni said.

Starting Nov. 2, the MBA began reporting the number of borrowers who continued to make their monthly payments during their forbearance period and have since exited. Since that date, the MBA has revealed that the number of up-to-date borrowers has consistently dropped.

To Fratantoni, servicers and policy makers need to be looking at the long-term unemployed, especially those who have been actively looking for work for 27 weeks or more as reported in January’s job data.

“These are the homeowners who are likely to still be in forbearance and
need additional support until the job market recovers to a greater extent,” Fratantoni said.

But economists are still showing signs of confidence in the market. HousingWire’s lead analyst, Logan Mohtashami, noted with an improving employment situation comes an economic improvement well past forbearance’s peak. Couple that with strong credit profiles from homeowners and nested equity and Mohtashami can outperform on rising home prices.

“This isn’t 2008 all over again. That recovery was slow, but today our demographics are better, and our household balance sheets are healthier. The fiscal and monetary assistance now is hugely improved from what we saw after 2008. We have everything we need to get America back to February 2020 jobs levels; we just need time,” Mohtashami said.

Source: housingwire.com