earnings

Apache is functioning normally

Apache is functioning normally

The honey badger labor market woke up on Friday and chose violence, biting the legs of any job recession bear it could find. The first reaction from the bond market was to shoot up bond yields and mortgage rates went higher. However, as the day progressed, bond yields decreased from the peak.

What is going on with the U.S. labor market? The answer is that we are just working back to normal. 

Jobs data

From BLS: Total nonfarm payroll employment rose by 336,000 in September, and the unemployment rate was unchanged at 3.8 percent, the U.S. Bureau of Labor Statistics reported today. Job gains occurred in leisure and hospitality; government; health care; professional, scientific, and technical services; and social assistance.

Nothing has changed from my long-term view on the labor market recovery premise I have written about for years. If COVID-19 had never happened, based on our population growth and job growth data pre-COVID-19, we should have between 157 million and 159 million jobs today. Until we get into this ballpark range, it’s all make-up demand. Today, we stand at 156,874,000, so we are close to breaking into the makeup labor data pool.

Here is a breakdown of the jobs gained and jobs lost in today’s report

In this job report, the unemployment rate for education levels looks like this:

  • Less than a high school diploma: 5.5% 
  • High school graduate and no college: 4.1% 
  • Some college or associate degree: 3.0% 
  • Bachelor’s degree or higher: 2.1%

From BLS: In September, average hourly earnings for all employees on private nonfarm payrolls rose by 7 cents, or 0.2 percent, to $33.88. Over the past 12 months, average hourly earnings have increased by 4.2 percent. In September, average hourly earnings of private-sector production and nonsupervisory employees rose by 6 cents, or 0.2 percent, to $29.06.

Wage growth data has been cooling down since January of 2022; we don’t see any data that would implicate a wage spiral. If the trend continues, we will be close to the Federal Reserve‘s target for wage growth next year with their goal of 2% inflation. To me, 3%-3.5% will make the Fed so happy, and If we get any productivity growth, that will be icing on the cake.

It’s been straightforward with the Fed, bond yields and mortgage rates in 2022 and 2023. I don’t believe the Fed will pivot until jobless claims break over 323,000 on the four-week moving average. The one data line improving since July has been jobless claims, and bond yields have been trending higher. The four-week moving average is running at 208,750.

Bonds and mortgage rates

What does this mean for mortgage rates and the bond market after a crazy week? The bond market is oversold so that a rally could happen anytime, but can it get much lower with the jobless claims data being this strong? As we can see in today’s action, bond yields shot up, moved lower, but still ended higher than today’s lows.

I am currently looking at the 4.87% level on the 10-year yield as a line in the sand. The 10-year yield has just had a massive sell-off, and we need to find a stable level to bounce from, or this can keep going higher and higher. We had a weak attempt by a few Fed presidents and Treasury Secretary Janet Yellen this week to try to talk the bond market down, but bond traders didn’t care much. Actions speak louder than words, and when the Fed went with a hawkish future outlook, it gave traders the green light to sell bonds. And the jobless claims data is too low for the Fed to pivot off that hawkish tone.

All in all, the jobs report was a good one with good revisions. Wage growth is cooling and most likely, we will see some negative revisions to this report. However, this doesn’t change my mindset about the labor data; we are still in make-up mode for labor and working our way back to a normal job market.

Over the next 12 months, there will be new variables to test the economy, not only with higher rates, but now student loan debt payments will need to be made. We will take the economic data one day at a time, but I believe the story so far in 2023 is how well the jobless claims data is doing and we can’t have a job loss recession in America until that data line breaks over 323,000.

Source: housingwire.com

Apache is functioning normally

Apache is functioning normally

TPO, Correspondent, Compliance, UW, Accounting Products; Conventional News; Employment Drives Rates Higher

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TPO, Correspondent, Compliance, UW, Accounting Products; Conventional News; Employment Drives Rates Higher

By:
Rob Chrisman

Fri, Oct 6 2023, 10:43 AM

National MI turned heads yesterday by announcing its temporary increase to AUS conforming loan amounts, despite the official FHFA word not coming until the end of November. (More below on the amounts.) Our biz is filled with “numbers people,” good or bad. According to Curinos, September 2023 funded mortgage volume decreased 30 percent YoY and 14 percent MoM. The average 30-year conforming retail funded rate in September was 7.01 percent, 18bps higher than August and 146bps higher than the same month last year. (Curinos sources a statistically significant data set directly from lenders to produce these benchmark figures.) Inventory and sales aren’t helping. Economist Dr. Elliot Eisenberg summed things up. “August data showed MoM housing starts down 11.3 percent to their lowest level since 6/20, the NAHB housing index down sharply M-o-M for the second month in a row, and new home sales weakening 8.7 percent MoM, the biggest decline since 9/22. Existing housing sales slipped to their lowest level since 1/23, and August pending home sales fell 7.1 percent.” (Today’s podcast can be found here and this week’s is sponsored by TRUE. TRUE creates accurate data that powers automation and optimizes every step of the lending lifecycle, helping lending organizations rapidly process loans, dramatically cut costs and risk, and radically improve the customer experience. Hear an interview with Ally Home’s Glenn Brunker on affordability across the nation and why potential homeowners should get off the sidelines.)

Lender and Broker Software and Services

Halcyon is the proud winner of the Innovation Challenge at Digital Mortgage 2023! Its API integration with the IRS provides tax transcripts for less than the average cost of traditional methods, with a quicker turnaround time, R&W from GSEs, and is delivered via PDF & digital format. Plus, with an option for online authorization by your borrower, ensure access to transcripts even if the government shuts down. Schedule time at MBA Annual to connect and learn more! Aren’t making it to MBA Annual this year? Contact them!

“The Loan Vision team is excited to attend the MBA Annual Convention! Stop by booth 1030 to learn how companies that run Loan Vision show a 25 percent reduction in OPEX/time to close, a 20 percent reduction in overall accounting headcount, complete LOS to G/L automation, and improved reporting and visibility that allow for better business decisions. Be sure book time with Carl Wooloff here to get an early introduction to our newest product that focuses on allowing our customers to be more profitable with less volume: LV-PAM – a modeling tool that provides actionable intelligence with consolidated loan data. Loan Vision’s innovation continues to provide you the ‘insights you need in the software you trust.’”

Ready to see what Borrower Surety in 90s looks like or full Credit Approval & Income Calculation in less than 15 minutes? Click the PreQual link to watch a video and see for yourself. Needs List, Credit Analysis & Borrower Surety… in 90 seconds! Income Calculations, Asset Verification & Credit Approval, in 15 minutes. 100 percent Loan Officer & Borrower Satisfaction!

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TPO and Correspondent Loan Programs

“Are you attending the upcoming annual MBA Convention? The Citi Correspondent Lending Team will be there and we’re eager to meet with both current and prospective clients! Citi continues to focus on supporting underserved communities in diverse markets, with Correspondent Lending playing a significant role in creating opportunities for home ownership. As a reminder, earlier this year we launched our HomeRun program, a portfolio product with no MI requirement, up to 97 percent LTV and as little as 1 percent borrower down payment contribution. This was the just first in a series of planned Community lending initiatives. Schedule some time to talk with us at the MBA or complete our Prospective Correspondent Questionnaire. We’d welcome the opportunity to discuss Citi Correspondent Lending’s program offering and how we can help your business thrive.”

Profitable Mortgage Companies are focused on the long-term value of the customer relationship. Essex Mortgage’s partners enjoy greater customer retention, GNMA pass-thru pricing, no overlays, no LLPAs, NO EPOs, and NO EPDs. They also receive Tax Deferred asset growth and a long-term cash flow stream without having to be a GNMA issuer themselves. Please contact us to discuss how the Essex GNMA Excess MSR program can help retain and enhance your customer relationship, broaden guidelines, and expand into new markets. Please contact Kimberly Schenck.

“AFR Wholesale® (AFR) Strong! In recent weeks, AFR has achieved record high OTC volume, successfully launched FHA OTC for Site-Built, and been honored as the “Top Employer 2023” by MPA. Our clients have always counted on AFR for superior service, a wide range of program offerings, and a dedicated team of experts guiding them at every step. MPA has recognized us for our commitment to Diversity, Equity, and Inclusion, and highlighting our sustainable product offerings. At AFR Wholesale, we’re constantly evolving and refining our processes to provide the financing solutions our clients and borrowers truly need. Our mission? To help bring more families home. Ready to partner with a leader? Partner Today! And you can always visit us at afrwholesale.com, email us or call 1-800-375-6071.”

Despite the headwinds facing our industry, AmeriHome Correspondent continues to find ways to add value to its partners, prospects, and industry participants. Join its quarterly conversation with Freddie Mac on October 11 at 10 am PDT and hear from Freddie Mac Senior Property Valuation executives alongside AmeriHome’s Head of Credit Operations as they discuss the latest trends and challenges with appraisals, provide guidance for avoiding appraisal bias, and go over the tools you’ll need to navigate changes to the UCDP requirements. Register here and have your questions ready for the Q&A session! AmeriHome will also be releasing its ability to purchase Construction-to-Perm Conversion loans later this month. Contact your sales rep or click here for more information. Don’t miss the AmeriHome team in Philadelphia during the MBA Annual Convention Oct 15-18. Check out the Upcoming Events, find your sales rep here, or send them an email to learn more about partnering with AmeriHome!

Conventional Conforming News

The FHFA is proposing to amend its regulation that restricts its regulated entities, Fannie Mae, Freddie Mac, and the Federal Home Loan Banks from purchasing, investing in, accepting as collateral, or otherwise dealing in mortgages on properties encumbered by certain types of private transfer fee covenants (PTFCs), and in related securities, subject to certain exceptions (PTFC Regulation).

The Uniform Appraisal Dataset (UAD) and Forms Redesign team has released additional documentation to support ongoing implementation efforts. This resource supplements the initial documentation released in March 2023, which kicked off industry development and preparation for the new appraisal dataset and report. This update includes the UAD Compliance Rules for the Uniform Residential Appraisal Report (URAR) which helps lenders and vendors deliver the XML in compliance with the UAD Delivery Specification. These rules verify data completeness, validity (format and data type), and reasonableness. Details are available on Freddie Mac UAD Webpage.

Fannie Mae announced new resources and programs to provide responsible access to housing and long-term sustainable homeownership opportunities across the country for Latino communities unveiling HomeView en Español, a Spanish-language digital consumer education platform providing 24/7 end-to-end access to information about financial literacy and homeownership. To address upfront housing costs, another housing obstacle that disproportionately impacts Latino renters and first-time homebuyers, Fannie Mae this month expanded access to its Special Purpose Credit Program (SPCP) pilot, which now can provide down-payment assistance to eligible first-time homebuyers living in majority-Latino communities located in Atlanta, Baltimore, Chicago, Detroit, Memphis, and Philadelphia. Fannie Mae plans to further expand the program to additional cities, to include those with large Latino populations early next year. Additional resources are available to learn more about Fannie Mae’s approach to providing equitable and sustainable access to housing opportunities for the Latino community.

For AUS loans, National MI has temporarily increased the conforming loan amounts as follows: 1 unit: $750,000, Alaska & Hawaii $1,125,000. 2 units $960,300, AK & HI $1,440,450. “Other than the AUS being ineligible due to the increased conforming loan amount, the loan must comply with National MI’s TrueGuide® AUS Conforming Loans or AUS Affordable Lending Eligibility Matrices. At this time, there is no change to National MI’s TrueGuide® AUS Conforming High Balance Loans Eligibility Matrix requirements…” Talk to your National MI rep for full details.

Tim Lucas with ThisIsMortgage.com writes, “Fannie Mae has dropped the down payment requirement for 2-4 unit properties from 15-25 percent down to 5 percent. Huge change for homebuyers.”

PRMG TPO Resource Center Updates 23-10 includes various PRMG Policies, Procedures, and Information updates. Appraisal Fee Schedule, Credit Standards Policy, Fannie Mae Condo Project Manager (CPM) Access, PRMG Insurance Requirements and TPO Polly Product and Pricing.

PRMG Product Update 23-44: Product Profile Updates: Freddie Mac Conventional Products, Agency Freddie Mac, FHA, VA and USDA products, Onyx Jumbo, Ruby Express, Symmetry HELOCS, and Expanded Access and Investor Solution.

A new resource document is now available regarding the upcoming change to SLS for Conventional Loans, view AmeriHome Mortgage Announcement Number 20230913-CL.

AmeriHome Mortgage General Announcement 20230912-CL summarizes previously published changes made during September, additional changes made with this announcement, and recent Agency and regulatory news. See the attached announcement for details.

PHH updated its Product Descriptions and Product Codes effective 9/20 for both Delegated and Non-Delegated loans. Visit the PHH company library for details.

Pennymac will update Conventional LLPAs effective for all Best-Efforts Commitments taken on or after Monday, October 2nd. For details, view Pennymac Announcement 23-65: Updates to Conventional LLPAs.

Capital Markets

The 10-year Treasury yield continues to trend toward 5 percent, a milestone not seen since right before the 2008 financial crisis. Concerns are mounting that the high cost of borrowing will further tighten global financial conditions, even without further action from policymakers.

The big data event of this week was always going to be today’s jobs report, where analysts anticipate the U.S. economy adding 170k jobs throughout the month of September, while the unemployment number is expected to slip by a tenth of a percent to 3.7 percent, and annualized average hourly earnings are expected to remain unchanged at 4.3 percent. As a reminder, ADP reported earlier this week that the economy added 89k jobs in September following an upwardly revised 180k in August, while Challenger reported that job cuts are back up to pre-pandemic levels after historically low figures in 2021 and 2022.

Some are calling September payrolls the most important job report of the year, and with positions squared (rates normally don’t move much before big events), continued stronger numbers from a robust jobs market could push bond yields back up and stocks down. A sustained slump in equities that revives the appeal of fixed-income assets is one scenario that could cause bonds to rally materially and rates to drop.

But there isn’t a magic level of bond yields that, when reached, will entice enough buyers to spark a sustained bond rally. The Freddie Mac 30-year rate is at nearly 7.5 percent, which is a long way from the 2.65 percent record-low from January 2021 during QE4. The average percentage of conventional 30-year borrowers with incentive to refinance (at least 50 basis points) sits at 0.03 percent and has averaged just 0.3 percent for the whole of 2023. Around 75 percent of Americans are at least 300 basis points away from having any refinance incentive.

Today, like other first Fridays of the month, brought the payrolls report, this time for September. We learned that non-farm payrolls increased 336k versus 170k expectations and 179k previously. The unemployment rate was 3.8 percent when it was seen ticking down to 3.7 percent from 3.8 percent, and average hourly earnings increased (+.2 percent) versus 0.3 percent MoM expectations and 0.2 percent previously. Later today brings August consumer credit and remarks from Fed Governor Waller. In the wake of the September payrolls report, we begin the day with Agency MBS prices worse .375-.5 and the 10-year yielding 4.81 after closing yesterday at 4.71 percent.

Employment

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“Evergreen Home Loans™ showcases its StepUp Program, enabling clients to buy a new property without immediately selling their existing home. The offering streamlines the buying process, allowing a smooth transition and refined mortgage options tailored to financial aspirations. Evergreen is not only a pillar of customer satisfaction but also a nurturing ground for meaningful and rewarding career paths. We create a dynamic environment where each member is a vital part of our mission to innovate and enhance the homebuying experience. If you value collaboration, innovation, and a customer-centric approach, consider joining our team. Discover the exciting opportunities waiting for you on our careers page.”

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Source: mortgagenewsdaily.com

Apache is functioning normally

Apache is functioning normally

Wachovia revealed today that is has enlisted Goldman Sachs, one of the few financial giants to largely avoid the mortgage crisis, to review its troubled loan portfolio.

A spokeswoman for the Charlotte-based bank told Marketwatch that Wachovia had hired the investment bank to perform analytics on its loan portfolio to explore a variety of alternatives, although she wouldn’t provide anymore details.

Despite the lack of details, it’s likely the bank is looking to part ways with its extensive option-arm holdings after being riddled with more than $5 billion in write-downs tied to the ongoing mortgage crisis.

The bank and mortgage lender acquired many of these time-bomb loans via the purchase of Golden West Financial in March 2006, for which it paid roughly $25 billion.

That led to the subsequent ousting of CEO Ken Thompson, who eventually conceded that the purchase was ill-conceived after the bank was forced to slash its dividend, raise capital, and revise underwriting policies.

Interestingly, Wachovia seems to still be offering its so-called “Pick-a-Payment“ mortgages, even via its wholesale channel, despite the nasty default rate and depreciating home prices.

Just two weeks ago, the company sent a memo to mortgage brokers, notifying them that it would contact customers electing to receive the option-arm loan program to ensure they fully understood what they were getting into.

And it wasn’t long ago that I saw advertisements for the controversial loan program being touted as a sensible choice for homeowners on national television, so let’s hope they get things straightened out quickly.

Last week, Washington Mutual announced that it would no longer originate negative amortization loans in a bid to get back to basics, so I wouldn’t be surprised if Wachovia announced similar action soon.

Shares of Wachovia were up 83 cents, or 4.96%, to $17.76 in late trading on Wall Street, well off their 52-week high of $53.10.

The company is scheduled to report second quarter earnings on July 22.

(photo: nicokaiser)

Source: thetruthaboutmortgage.com

Apache is functioning normally

Apache is functioning normally

The Carter’s credit card follows a similar playbook as other co-branded store cards: It earns rewards at certain stores, and those rewards can be redeemed only toward more purchases at those stores. Like others of its kind, the Carter’s credit card is promoted at the register in tandem with a coupon that can be applied to the day’s order.

To a parent-to-be who has just loaded up on onesies and is staring down the exorbitant costs of raising a child, a discount can seem irresistible. However, behind that one-time coupon is a mediocre credit card whose usefulness is largely restricted to Carter’s purchases. And kids will grow all too quickly out of Carter’s clothes.

Here are five things to know about the Carter’s credit card, issued by Comenity Capital Bank.

1. It can be used at select stores only

The Carter’s credit card is closed-loop, which means it can be used to make purchases only at Carter’s and its affiliated brands, OshKosh, Skip Hop and Little Planet. While the chain does have stores in all 50 states plus its website, its footprint is small in the overall scheme of the household shopping you’ll do.

If that feels too restrictive, consider open-loop cards such as the Wells Fargo Active Cash® Card, which earns 2% cash back on every purchase, or the Bank of America® Customized Cash Rewards credit card. The Customized Cash has a complicated rewards structure — it earns 3% back in a category of your choice until you hit the quarterly cap of $2,500 in combined spending in the 3% category, grocery stores and wholesale clubs — but one of those 3% categories is online shopping.

2. The sign-up bonus is modest

If a credit card comes with a sign-up bonus, there’s typically only one. The Carter’s credit card comes with two, but neither are worth much. New cardholders get 30% off their first purchase made with the Carter’s credit card and another 20% coupon when the credit card arrives in the mail. Neither coupon can be combined with other offers.

True, there’s no spending requirement to earn either welcome offer on the Carter’s credit card, which isn’t the case with most rewards credit cards. However, a one-time coupon isn’t terribly valuable. If you spent $200 on your first Carter’s haul, a 30% off coupon would save you $60. Welcome offers on other credit cards can be $200 or more.

3. The earnings are in a low percentile

The Carter’s credit card earns 2 points for every $1, except for a few times a year when the rewards rate increases to 3 points per $1 on triple points days. In-store purchases at Carter’s and OshKosh, and online purchases at carters.com, oshkosh.com, skiphop.com and carters.com/littleplanet that are shipped to the U.S. will earn points.

Rewards rates of 2x-3x aren’t exactly noteworthy. The best cash-back credit cards, for example, feature rates as high as 6%, and often, their rewards never expire as Carter’s do (keep reading for details).

A good alternative to the Carter’s card is the Blue Cash Everyday® Card from American Express. It earns 3% cash back on U.S. online retail purchases on up to a $6,000 annual spend. (After that, the rewards rate drops to 1%. Terms apply.) With such a broad rewards category, the Blue Cash is much more versatile than the Carter’s credit card.

🤓Nerdy Tip

Carter’s offers a free loyalty program called My Rewarding Moments that earns rewards for all shoppers who register. You’ll earn more if you’re also a Carter’s cardholder, but combining the free loyalty program points and the rewards from a general card will be more beneficial for most shoppers.

4. Rewards are small and delicate (but not in a cute way)

Just as an infant grows to a toddler in the blink of an eye, rewards earned from the Carter’s credit card can vanish just as quickly if you don’t pay close attention.

Cardholders will receive a $10 reward coupon for every 150 points earned in a six-month period, meaning that one point is worth about .07 cent. That value is inferior to the best credit cards, which earn points worth 1 cent — or more.

The other bad news: Reward coupons expire after 45 days of their issue date. Points expire six months after being earned.

Rewards are sent via email within 14 days of hitting the 150-point threshold and may be applied toward in-store purchases at Carter’s and OshKosh, and online at carters.com, oshkosh.com and skiphop.com.

5. Cardholders get a few extra perks

Carter’s credit cardholders get free standard U.S. shipping on purchases paid for with the card. Orders made on carters.com, oshkosh.com, skiphop.com and carters.com/littleplanet qualify for free shipping. The card also comes with a free anniversary gift every year.

Source: nerdwallet.com

Apache is functioning normally

Apache is functioning normally

As home affordability decreased, sellers reduced asking prices more frequently this September, with the pace coming in above typical seasonal patterns.

Approximately 6.5% of homes on the market saw asking prices reduced during the four-week period ending Sept. 27, according to new research from Redfin. The rate corresponds to approximately one in 15 properties on the market and represents an increase from 5.8% a month earlier. That is a sharp rise from what has been reported in past years over the same time frame, the real estate brokerage said.

The uptick in price cuts comes as low inventory and rising interest rates take a bite out of affordability, according to several recent reports. Conditions contributing to the current state of the market appear set to continue leaving their mark on affordability over the next several months, leading analysts said at this week’s Digital Mortgage conference in Las Vegas. 

Redfin found the median sales price rose 3.1% year-over-year, coming in at $372,500, even with “relatively low” demand. A recent rise in the volume of new listings, also atypical for the time of year, is giving home shoppers more leverage. 

“Buyers are using things like inspection negotiations and high insurance premiums to back out of deals,” said Heather Kruayai, a Redfin agent in Jacksonville, Florida, in a press release. “They’re holding a lot of the cards; today’s sellers need to concede on some details to close the deal.”

The latest affordability data from the Mortgage Bankers Association offers few signs of improvement for aspiring homeowners. In its monthly purchase-applications payment index released this week, the trade group reported the average monthly amount applied for by new home buyers increasing by a fraction to $2,170 in August, from $2,162 in both June and July. The current figure is higher by 18% compared to the mean level of a year ago — $1,839.  

“Prospective homebuyers’ budgets continue to be impacted by the combination of high home prices and mortgage rates that remain higher than 7%,” said Edward Seiler, MBA’s associate vice president, housing economics, and executive director, Research Institute for Housing America.

The latest PAPI report does not factor in September’s surge in mortgage rates, with the 30-year conforming average landing at 7.41% at the end of last week among MBA members — the highest point since late 2000. Similarly, Freddie Mac reported a consistent rise in the 30-year rate throughout September after a pullback in August.

Within individual segments, borrowers of Federal Housing Administration-backed mortgages saw their average payment hit a record of $1,901, jumping 2.5% from $1,854 in July and 29.4% from $1,469 in August 2022.

But even with the overall PAPI increase, conventional-loan borrowers saw a fall in the mean to $2,187 from $2,197 between July and August. But the number was still well above $1,901 a year ago.

The MBA’s national payments index for new purchase applications inched up 0.4% to a reading of 175.4 in August compared to 174.7 a month earlier. An increase in the number reflects declining affordability. Strong income earnings of over 4% over the past 12 months helped offset the steep climb upward in payment amounts. 

The states showing the smallest degree of affordability were concentrated in the Western U.S., according to the MBA. Idaho led the country with a PAPI score of 269.6, followed by Nevada and Arizona at 265.7 and 238.6. 

Source: nationalmortgagenews.com