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MORTGAGE NEWS

Increasing Number of Homes Built as Rental Property

Mortgage News Daily -- May 22, 2018 12:18:59 PM

Posted To: MND NewsWire

As if the new home inventory wasn't tight enough, the National Association of Home Builders (NAHB) say a higher proportion of those homes are being built as rentals rather than owner occupancy . Robert Dietz, writing in NAHB's Eye on Housing blog says the numbers are small, but the increase has continued for several recent quarters. From the first quarter of 2017 through the first three months of 2018, construction starts for homes built specifically as rental property rose from 33,000 to 37,000. Seven thousand of those starts were in the first quarter of this year. According to Census Bureau estimates, the market share of single-family homes built to be rented (and not including those built and sold to someone who then rents them out) accounted, on a one-year moving average basis, for 4.3...(read more)

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Nullification of Auto Loan Rule Has Broad Implications

Mortgage News Daily -- May 22, 2018 10:19:28 AM

Posted To: MND NewsWire

It only impacts auto lending, but if Mick Mulvaney, acting director of the Consumer Financial Protection Agency (CFPB) keeps his word, a Congressional resolution signed by the President on Monday is likely to have an eventual impact on mortgage and other lending as well. The Joint Resolution, S.J. Res. 57, sponsored by Senator Jerry Moral (R-KS) and Rep Lee Zeldin (R-N.Y.) used the Congressional Review Act (CRA) to formally disapprove a rule from CFPB relating to "Indirect Auto Lending and Compliance with the Equal Credit Opportunity Act"(ECOA). This causes that rule to "have no force or effect." Some background, and because today there always seem to be two various of facts, we summarize the story from both perspectives, that of the National Auto Dealers Association (NADA) and of The Leadership...(read more)

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MBS Day Ahead: The Biggest Risk to Fledgling Bond Bounce

Mortgage News Daily -- May 22, 2018 9:21:40 AM

Posted To: MBS Commentary

Today begins the 3rd day where US Treasuries aren't imploding after hitting 7 year highs last Thursday. At this point, we might consider the resilience to be some sort of fledgling bounce attempt, even though we can continue to be concerned about technical floors (discussed here ). But let's say that 3.06% is convincingly broken today and confirmed tomorrow. Then what? If that happens, I will be looking squarely at the Italian political drama and European bond markets. What follows is a bit of an outline for a more robust primer on the topic of European bond markets as they interact with US bond markets. Does rate volatility in Europe really affect US rates? There can be no greater proof of this than the summer of 2012, when the EU debt crisis was at its apex. There's no way we...(read more)

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Lender Products; State-Level Changes; Does the Yield Curve Matter?

Mortgage News Daily -- May 22, 2018 9:10:47 AM

Posted To: Pipeline Press

The U.S. mortgage industry likely recorded an operating loss in the first three months of 2018 due to falling loan volumes and growing expenses, the Mortgage Bankers Association’s chief economist, Michael Fratantoni, said yesterday here in New York. On a personal note, I know many owners and CEOs of residential lenders, however, and would never bet against their success. They represent a very savvy, entrepreneurial, and street-smart group of individuals but are faced with many risks, with LO comp, technology, housing inventory, and shrinking margins in the forefront. Check out The Plight of the Small Independent Lender . Company News Saturday this commentary mentioned that bitcoins were not suitable for a down payment in Fannie’s guidelines. David T. showed me that there are state...(read more)

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MBS RECAP: Bond Yields Struggle to Break Last Week's Floor

Mortgage News Daily -- May 21, 2018 4:56:51 PM

Posted To: MBS Commentary

There were no significant economic reports or events today, and only a few newsworthy developments. The biggest of these also happened the earliest (yesterday night, in fact) when the White House announced the suspension of certain tariffs on China. Stock futures liked the news (after all, the threat of a trade war has been a big deal), but bonds didn't react much. As the overnight session progressed, a familiar trade took shape in European bond markets with core yields continuing to rally. Whereas that had been helpful for US bond markets on Friday, they were less responsive today. Both before and after the European rally, US yields approached and bounced at the 3.06% technical level (to be fair, it's more like 3.055%). This is right were bonds ran into resistance on Friday afternoon...(read more)

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Mortgage Rates Unchanged to Begin Week

Mortgage News Daily -- May 21, 2018 3:38:00 PM

Posted To: Mortgage Rate Watch

Mortgage rates held steady today, which is better than what could be said for most of last week when rates shot up to the highest levels in 7 years. Friday was the only day of improvement, but it was scarcely enough to undo the damage from the previous 4 days. That said, it did raise questions. Specifically, was Friday some sort of indication that the worst was behind us in terms if upward rate momentum? Answering that question is tricky business because the time frame matters greatly. In the short term, there's always a possibility that a prevailing trend toward higher rates will cool-off and reverse course. While that's also technically possible over longer time horizons, we can begin to talk more about probabilities and less about random chance. With that in mind, we've be discussing the...(read more)

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Will "Freeing" Fannie/Freddie Improve Housing Finance?

Mortgage News Daily -- May 21, 2018 3:07:24 PM

Posted To: MND NewsWire

In a prior article we summarized the options the Trump Administration might utilize to reform the residential mortgage financing system should Congress continue to drop the ball. Two noted economists, Jim Parrott and Mark Zandi, writing for the Urban Institute, address the notion of shrinking Fannie Mae and Freddie Mac's (the GSEs) footprints and eliminating their cross-subsidy of higher risk borrowers. This article summarizes their alternatives for ending the 10-year government conservatorship of the two companies. The director appointed to replace Melvin Watt when his term as director of the Federal Housing Finance Administration (FHFA) expires next year will undoubtedly reflect the attitudes of the Administration including their claimed commitment to changing the GSEs' status. The authors...(read more)

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Lenders: Income Verification Needs for "Gig" Economy

Mortgage News Daily -- May 21, 2018 11:10:55 AM

Posted To: MND NewsWire

Late last year Fannie Mae included questions in one of its National Housing Surveys about working in the "gig" economy. About a fifth of respondents claimed they earned at least some of their income through such employment. Gig-economy workers tend to have flexible work arrangements, working on single projects or tasks preforming on-demand services such as transportation (Uber, Lyft) lodging rental (Airbnb and VRBO) food/goods delivery, and personal tasks (TaskRabbit). Because of its "on-demand" nature, the income stream from gigging can be less stable and its source less reliable . With the numbers involved increasing, this is likely to become an issue in mortgage lending, so Fannie Mae's Economic and Strategic Research (ESR) group included some self-employment and gig-economy related questions...(read more)

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Automated Construction - Robot Frames Small Home in Two Days

Mortgage News Daily -- May 21, 2018 10:36:00 AM

Posted To: MND NewsWire

Last week the National Association of Home Builders (NAHB) reported that severe shortages of construction tradespeople were slowing homebuilding and increasing costs. The shortages, as reported by NAHB's new home builder members, affected all trades from rough carpenters to plumbers and masons. Now, from Australia, comes news that brick masons at least may not have as much job security as that NAHB report would suggest. The Hadrian X, developed by Perth-based Fastbrick Robotics, can lay more than 1,000 bricks an hour and, in tests, has framed a small home in two days. Hadrian, essentially a long robotic arm that can be mounted on a track, crane, or barge, uses a 3-D model of the house, cuts its own bricks, applies adhesive, then conveys them to the arm which puts them in place. The plumbing...(read more)

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MBS Week Ahead: Holiday-Shortened Week. Time For Consolidation?

Mortgage News Daily -- May 21, 2018 9:54:05 AM

Posted To: MBS Commentary

Much like last week , this week's event calendar is limited in terms of top tier data and events, but nonetheless carries the potential for technical momentum. The underlying reasons are a bit different , however. Last week, the risk was that rates had been super flat and narrow for 2+ weeks. The longer and narrower those sideways streaks become, the more likely a breakout becomes (obviously), and those breakouts tend to have more momentum than normal. This week's set-up is somewhat similar to the highs in rates seen at the end of April. In both cases, we'd just spiked to the highest rates seen in a long time and then saw one really solid day of improvement. In the late-April case, it was that day of improvement that preceded the sideways drift. In this week's case, today would...(read more)

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