rose

Apache is functioning normally

Apache is functioning normally

The rollercoaster is still climbing. Mortgage rates are approaching 4.5%, a level economists forecasted would not be reached until the tail end of 2022. And there’s good reason to believe mortgage rates will be in the 5% range before too long.

According to data from Freddie Mac‘s PMMS survey, mortgage rates on the traditional 30-year fixed-rate mortgage jumped 26 basis points to 4.42% this week, with increases across all loan types.

“Rising inflation, escalating geopolitical uncertainty and the Federal Reserve’s actions are driving rates higher and weakening consumers’ purchasing power,” Sam Khater, Freddie Mac’s chief economist, said in a statement.

He added: “In short, the rise in mortgage rates, combined with continued house price appreciation, is increasing monthly mortgage payments and quickly affecting homebuyers’ ability to keep up with the market.”  

The Fed made its first move to increase rates last week, raising the benchmark rate by a quarter of a percentage point.

The Fed said there would likely be six more rate hikes in 2022 and three more in 2023, the primary tool the central bank is using to reduce inflation, which climbed to a 40-year high in February, at an annual rate of 7.9%. But last week, Fed Chairman Jerome Powell said he believed inflation was still too high and that the central bank would take ‘necessary steps’ to address it. He noted those rate rises could go from the standard 25 basis point moves to more aggressive 50 basis point increases starting in May. That would push mortgage rates even higher, potentially into the 5% range.

Here’s how home price appreciation impacts taxes – And what that means for servicers

Real estate prices (and home appreciation) have been on a tear over the past few years. But sooner or later all this good fortune will translate into higher assessments and tax increases. Here’s what servicers should be doing to anticipate tax issues this year.

Presented by: LERETA

The 30-year-fixed rate rose 26 points from 4.16% for the week ending March 24, according to Freddie Mac. A year ago, the 30-year averaged 3.17%. Freddie Mac assumes borrowers bought 0.8 mortgage points on their loan.

The 15-year fixed-rate mortgage averaged 3.63%, up from 3.39% last week. A year ago, the 15-year fixed-rate mortgage averaged 2.45%. The 5-year Treasury-indexed hybrid adjustable-rate mortgage averaged 3.36% with an average of 0.3 point purchase by borrowers, 17 basis points higher last week. A year ago, the 5-year ARM averaged 2.84%.

The increase in rates in recent months has chilled activity in the mortgage market. According to the Mortgage Bankers Association, mortgage applications this week are down 8.1% from the prior week.

The seasonally adjusted purchase indexdecreased 1.5% from one week earlier and was 12% lower year-over-year. Meanwhile, refi applications fell 14.3% from the prior week and were down 54.2% from a year ago.  

Source: housingwire.com

Apache is functioning normally

Apache is functioning normally

The existing home sales market is a face on a milk carton, and homebuilders are salivating at the opportunity to meet strong consumer demand. So why aren’t they?

New data from the U.S. Census Bureau speaks to the growing strength of the new home market, which stands in stark contrast to the moribund re-sale market. May’s housing starts rate was actually the highest since April 2022, which was then the highest since 2006. 

Let’s dive in a little deeper. Get a load of these figures: 

  • Privately‐owned housing starts in May were at a seasonally adjusted annual rate of 1.63 million, 21.7% above the revised April estimate of 1.34 million and 5.7% above the May 2022 rate of 1.54 million. The 291,000-unit monthly increase in starts was the most since January 1990, and the 21.7% rise was the largest percentage gain since October 2016.
  • Single‐family housing starts in May were at a rate of 997,000; 18.5% above the revised April figure of 841,000. The May rate for units in buildings with five units or more was 624,000. Interestingly, the share of single-family housing starts dropped to 61.5% of total housing starts over the past 12 months through May, the lowest share since 1986. The share of multifamily starts in buildings of 5+ units rose to 38.7%, the highest share since 1974.
  • Privately‐owned housing units authorized by building permits in May were at a seasonally adjusted annual rate of 1.491 million. This is 5.2% above the revised April rate of 1.41 million but is 12.7% below the May 2022 rate of 1.7 million. Single‐family authorizations in May were at a rate of 897,000; this is 4.8% above the revised April figure of 856,000. Authorizations of units in buildings with five units or more were at a rate of 542,000 in May.
  • Currently there are 695,000 single-family units under construction, which is actually 136,000 units below the peak in May 2022. And there are currently 994,000 multifamily units under construction, the highest level since 1973.

Homebuilders are now completing more single-family homes than they are starting, but starting more multifamily units than they are completing. The latter is likely due in part to construction delays and stalled projects, but the permitting data suggests builders in single-family and multifamily see different levels of opportunity. 

The industry probably won’t hit the extreme highs of 2022 in terms of housing starts, but multifamily is still booming. We’ll likely see a lot of units delivered later this year and into next year, though I would keep an eye on banks pulling back on construction financing, which could sharply reduce completions.

Single-family construction deliveries, meanwhile, will likely be more muted. That’s despite various housing economists projecting existing home sales to fall about 20% in May. (We’ll know more when the existing home sales report is released on Thursday and new home sales next week.) 

In other words, the multifamily deliveries will likely relieve pressure in the form of rents and help with overall supply, but the inventory deliveries likely won’t do much for the sales market. And we still have a long way to go in meeting overall housing demand.

Homebuilders today have a big advantage. Their products now comprise about 30% of the sales market — nearly three times the normal rate — and that’s because there’s so few total homes. Cancellation rates among national homebuilders are now down to about 9% (you may recall that KB Homes reported a cancellation rate of 68% in Q4 2022) and the vast majority of them can throw major incentives like mortgage rate buydowns at choice-restricted homebuyers. The few existing homeowner sellers aren’t incentivized to negotiate much, and there’s no reason to think they will for a long while.

So why aren’t builders going even harder, particularly with single-family homes? The answer won’t shock you: beyond their own specific profit incentives, in much of America, it is simply way too hard to build a home, and way too expensive. Zoning restrictions, inane building code regulations/restrictions, NIMBYs and the weaponization of environmental laws have resulted in housing death by a thousand cuts. A nation doesn’t end up with a shortage of 6 million-plus homes by accident. 

We’ve talked before about the regional disparities in inventory – the demographic trends for housing look strong through at least 2030, but also look at where we are building, courtesy of John Burns Research & Consulting. 

State legislatures and governors on the coasts have failed to address their respective housing crises, particularly by allowing suburban towns to block housing. They desperately need to institute reforms and override local control.

It will certainly be an uphill battle. While homebuilders stick shovels in the suburbs and exurbs of the Sunbelt, few new homes are being built in the Northeast or on the West Coast. 

New York Gov. Kathy Hochul failed to get her YIMBY-friendly housing package through the legislature, though the sought reforms — which include mandating housing in the suburbs by overriding local zoning rules — are hopefully a future reference point for housing policy changes. And in California, Gov. Gavin Newsom in late September signed into law a major reform to homebuilding in the state, which will override local zoning codes to allow more affordable housing units to be built on commercially zoned land. He’s also looking to limit the procedural scope of the environmental law known as CEQA, which has been used to kill all sorts of projects in California. But under Newsom, California has built roughly 500,000 total housing units in six years. In a healthier market with fewer constraints, that figure would be closer to 2 million.  

With arguably fewer incentives than ever for existing homeowners to sell, homebuilders must be able to maximize their productivity and build where demand is strong. Permit reform and policy changes alone won’t be enough to create millions of new housing units, but you gotta start somewhere.

Share your thoughts on permit reform and housing policies that would result in more housing by emailing me at [email protected].

In our weekly DataDigest newsletter, HW Media Managing Editor James Kleimann breaks down the biggest stories in housing through a data lens. Sign up here! Have a subject in mind? Email him at [email protected]

Source: housingwire.com

Apache is functioning normally

Apache is functioning normally

It’s back to work after the holiday but mortgage rates aren’t really moving around much. The big economic event of the week will happen tomorrow morning when the monthly jobs data for June gets released. We could certainly see mortgage rates move around when that happens so keep an eye out for any market adjustments. Read on for more details.

Where are mortgage rates going?                                    

Rates decline in Freddie Mac PMMS

After being closed on Wednesday for July 4th, the markets are open again. As one would expect, it’s a fairly quiet day, keeping mortgage rates basically unchanged.

Current mortgage rates have bounced around a little this week but are still staying in a narrow range. It was good news for anyone looking to purchase or refinance today as the Freddie Mac Primary Mortgage Market Survey (PMMS) showed that rates declined again. Here are the numbers:

  • The average rate on a 30-year fixed rate mortgage fell three basis points to 4.52% (0.5 points)
  • The average rate on a 15-year fixed rate mortgage sunk five basis points to 3.99% (0.4 points)
  • The average rate on a 5-year adjustable rate mortgage dropped thirteen basis points to 3.74% (0.3 points)

Here is what the Freddie Mac Economic and Housing Research Group had to say about rates this week:

“After a rapid increase throughout most of the spring, mortgage rates have now declined in five of the past six weeks.

The run-up in mortgage rates earlier this year represented not just a rise in risk-free borrowing costs, but for investors, the mortgage spread also rose back to more normal levels by about 20 basis points. What that means for buyers is good news. Mortgage rates may have a little more room to decline over the very short term.

Although the current economic expansion is in its 10th year, residential single-family real estate was initially slow to recover. Now, backed by the demographic tailwind provided by millennials reaching the peak age to buy their first home, the housing market should have some room to grow going forward.”

Rate/Float Recommendation                               

Lock while rates are down             

Mortgage rates have stayed in a tight range these past couple of months but are still expected to move higher later this year as the Fed brings the nation’s benchmark interest rate up.

If you are thinking about buying a home or refinancing your current mortgage, we strongly recommend that you take advantage of today’s environment and lock in a rate.

Learn what you can do to get the best interest rate possible.  

Today’s economic data:         

ADP Employment Report

The ADP Employment Report showed that 177,000 jobs were added to the U.S. economy in June. That’s slightly below the 190,000 that analysts had projected. The ADP report is the precursor to the more influence jobs report that will be released tomorrow morning. The two reports don’t always sync up, so it’s hard to make any assumptions about tomorrow’s numbers.

Jobless Claims

Applications filed for U.S. unemployment benefits for the week of 6/30/18 came in at 231,000. That puts the four-week moving average at 224,500. Claims have been getting higher recently, but analysts are still expecting a strong jobs report tomorrow.

PMI Services Index

The PMI Services Index came in exactly as expected at 56.5.

ISM Non-Mfg Index

The ISM Non-Mfg Index struck a 59.1 in June. That’s basically right in line with what was expected.

FOMC Minutes

The FOMC Minutes from the Fed’s meeting a few weeks ago will be released this afternoon at 2pm. It’s always possible that investors will make some trades based on the details that are revealed.

EIA Petroleum Status Report

For the week of 6/29/18:

  • Crude oil: 1.2 M barrels
  • Gasoline: -1.5 M barrels
  • Distillates: 0.1 M barrels

Notable events this week:     

Monday:   

  • PMI Manufacturing Index
  • ISM Mfg Index
  • Construction Spending

Tuesday:   

Wednesday:         

  • Markets Closed: July 4th

Thursday:     

  • ADP Employment Report
  • Jobless Claims
  • PMI Services Index
  • ISM Non-Mfg Index
  • FOMC Minutes
  • EIA Petroleum Status Report

Friday:          

  • Employment Situation
  • International Trade

*Terms and conditions apply.

Carter Wessman

Carter Wessman is originally from the charming town of Norfolk, Massachusetts. When he isn’t busy writing about mortgage related topics, you can find him playing table tennis, or jamming on his bass guitar.

Source: totalmortgage.com

Apache is functioning normally

Apache is functioning normally

First, total home sales should be 6.2 million or higher during 2020-2024. This is new home sales and existing home sales combined. The demographic bump in 2020-2024 is giving us a push in demand.

Second, because of the downtrend in inventory since 2014 and the demand pick-up we will see in the years 2020-2024, we had a risk of home prices accelerating too much. So, I set a five-year home-price cumulative growth level of 23%. If home prices grew between 0-23% in the five years of 2020-2024, we should be OK with where wage growth was going.

The fact that the 23% home-price growth level has been smashed in just two years and inventory just collapsed to all-time lows has created the most unhealthy housing market post-2010. The only risk to that 6.2 million line in the sand has been this:

  • Home prices grow above that 23% level: check
  • Mortgage rates spike higher: check

The two things I had as risk factors are now in play. 

We have a risk to sales here, and the one area where we could be most in trouble is the new home sales sector. This sector on an apples-to-apples basis is more expensive than the existing home sales market. It’s also driven more by mortgage buyers who tend to be older and make more money than the new-home buyers. Compared to the existing home sales marketplace, it doesn’t have a high cash buyer or investor buyer profile.

Today, new home sales came in as a miss of estimates at 772,000, but the revisions were all positive so there’s not too much going on here. The builders are struggling to finish their homes, and there is a risk to builders in a rising rate environment when you have people wait so long to build a house.

Regarding the new home sales sector itself, it’s just an OK marketplace and has been for some time.

From Census: Sales of new single‐family houses in February 2022 were at a seasonally adjusted annual rate of 772,000, according to estimates released today by the U.S. Census Bureau and the Department of Housing and Urban Development. This is 2.0 percent (±11.9 percent)* below the revised January rate of 788,000 and is 6.2 percent (±13.7 percent)* below the February 2021 estimate of 823,000.

As you can see below, the new home sales market from 2018-2022 doesn’t look like the housing market we had from 2002-2005. Without exotic loan debt structures, credit always has limits, which is a good thing. Could you imagine this housing market if we eased lending standards? I would be protesting in front of Congress and speaking at congressional hearings if lending standards were reduced.


From Census: The seasonally‐adjusted estimate of new houses for sale at the end of February was 407,000. This represents a supply of 6.3 months at the current sales rate.

My rule of thumb for anticipating builder behavior is based on the three-month average of supply:

  • When supply is 4.3 months and below, this is an excellent market for the builders.
  • When supply is 4.4 to 6.4 months, this is an OK market for the builders. They will build as long as new home sales are growing.
  • When supply is 6.5 months and above, the builders will pull back on construction.

Currently, the monthly supply headline is 6.3 months, and the three-month average is at 5.93 months. This is just an OK marketplace, so don’t look for the builders to be really pressing to build now, especially when rates have risen so much. They’re mindful of higher rates because in 2013, 2014 and 2015 they had to deal with a miss in sales expectations. Then in 2018, when mortgage rates got to 5%, we saw a supply spike in the monthly home sales data and their stocks were down over 30%. 

As you can see below, the completion data looks terrible. It’s taking forever to build a home and that has created a huge number of homes under construction. The risk is that cancellations can rise by the time the home is ready for move in. 

From Census: The median sales price of new houses sold in February 2022 was $400,600. The average sales price was $511,000. 

As always, the years 2020-2024 were going to be different. The builders have pricing power that means they can push the price onto their consumers. Like home sellers, they try to make as much money as possible. The only thing we have that creates balance in this market is higher rates, hence why I am team higher rates.

From the National Association of Home Builders, the builder’s confidence has faded recently, and you have to go with this data because it has been good historically with where housing starts and new home sales. Until you find a base on the data line, go with the trend. We no longer have the COVID-19 comps in play with the moderation in the data that needed to happen.

Purchase application data

Regarding the purchase application data that came out on Wednesday, some context needs to be discussed here. Purchase application data is down 2% week to week, 12% year over year. This data line has been negative year over year since June of 2021. A big theme of my work on HousingWire is to try to talk about housing data making COVID-19 adjustments because if you didn’t realize that we had some high comps due to the make-up demand of COVID-19, you might have thought housing was crashing in the middle of last year.

First, as you can see from the chart below, the market we had from 2002-2005 never existed in housing from 2014-2022. We cannot have a credit boom because speculation debt has been taken off-grid post-2010 with credit. It was always a slow and steady ride from the 2014 lows.

This is the year-over-year data since the start of the year. I have talked about how we would still have some makeup demand COVID-19 comps into February, and that’s what happened from my view: makeup demand spilled over into early 2021.

  • Jan. 5: -12%
  • Jan. 12: -17%
  • Jan. 19: -13%
  • Jan. 26: -11%
  • Feb. 2: -7%
  • Feb. 9: -12%

Those make-up demand comps are now gone.

  • Feb. 16: -7%
  • Feb. 23: -6%
  • March 2: -9%
  • March 9: -7%
  • March 16: -8%

Now, this week the year-over-year data shows -12%. You can see some of the weakness, but nothing too drastic. We can compare these previous times when housing was soft too.


In 2013-2014, when the 10-year yield went from 1.60% – to 3%, it created a negative 20% year-over-year data trend for most of the year. As you can see below, that downtrend was noticeable but we are far from those levels today.

2014 was the last year total inventory rose from weakness in demand. When rates rose toward 5% in 2018, we only had three negative year-over-year prints in the purchase application data, and the total inventory didn’t grow that year.


This year, inventory has collapsed again, and I have downgraded the housing market to a savagely unhealthy market because we simply lack homes, creating forced bidding. For me to stop saying this housing market is unhealthy, I need to see inventory get back up in a 1.52 – 1.93 million range, which takes us back toward 2018-2019 levels. Historically, that level of inventory is low but the market was still much more balanced then. 

Speaking at a housing conference in 2019, I explained to the audience that it was a good thing that real home prices went negative. I had a big smile back then as housing was balanced. We don’t have a balanced housing market any longer.

Why won’t inventory grow? At the end of 2017, existing home sales went from 5.72 million and trended toward 4.98 million by Jan 2019, and we saw no inventory growth back then!

Housing tenure has doubled; homeowners on paper in 2018-2019 were already in great shape and now look better than ever on paper with the last refinance boom. What a hedge against inflation this year! But, housing tenure has become a severe problem in the housing market as inventory is collapsing in 2022.

While I am on team higher rates and welcome this significant bit of news to try to create more days on the market to cool this terrible home-price growth down, I am not blinded by the reality that this can also cause issues with home sellers who want to buy a home. Home seller data has been showing some stress, and that is the last thing I wanted to see right now.

However, it makes sense when inventory has collapsed to such low levels, and now rates are higher. Are you going to risk selling your home, not getting the home you want, and renting at a higher cost? This is the last thing I wanted to see in 2022, and since we are so close to April, it’s a reality we have to deal with for the rest of the year as long as inventory is still negative year over year. 

Going out for the rest of the year, keep an eye out for that new home sales data. One of my six recession red flags is that new home sales and housing starts fade into a recession. Because the new home sales marketplace means more to an economy than the existing home sales marketplace, it’s more important to look at that.

Housing construction jobs and big-ticket item purchases are things that move with the demand of new homes. The existing home sales market results in a transfer of commission, moving trucks and some big-ticket item purchases.

Going back to my summer of 2020 premise of what can cool down the housing market, a 10-year yield over 1.94% should. Even though mortgage rates are still low historically, rising rates do matter, and with the home-price growth we saw in 2020, 2021 and 2022, it matters even more. You can see why I believe in economic models; they keep us in line.

Source: housingwire.com

Apache is functioning normally

Apache is functioning normally

We’re expecting mortgage rates to remain in a tight range this week but we could see some slight movement as the economic reports roll out. The most important report for investors will be the monthly jobs report on Friday morning. That report always has the potential to influence where mortgage rates go. Read on for more details.

[embedded content]

Market Outlook 7.2.18 from Total Mortgage on Vimeo.

Where are mortgage rates going?                                   

Rates inch lower to start holiday shortened week

Here we go with another week. U.S. financial markets are closed for July 4th on Wednesday, but we still have several economic reports out that could influence mortgage rates, including the monthly jobs report for June on Friday morning.

That report is always one of the biggest market moving pieces of economic data each month, and there’s no reason to believe that this time around will be different. Analysts are calling for an increase of 191,000 jobs to the U.S. economy.

That’s a solid reading that would likely put some upward pressure on mortgage rates. Typically, positive economic data signals to investors that they can take on more risk, pushing money out of bonds and into stocks.

Mortgage rates are largely tied to long-term government bond yields, such as the 10-year Treasury yield. When demand for these bonds lessens, yields rise and bring mortgage rates with them.

Rate/Float Recommendation                              

Lock before rates rise             

What happens this week largely depends on the monthly jobs report on Friday. If the numbers come in as expected, it would signal to the Fed that the U.S. economy is strong enough to follow through with the two more rate increase projected for this year.

That would likely cause investors to move out of bonds and into stocks, bringing mortgage rates higher.

Learn what you can do to get the best interest rate possible.  

Today’s economic data:         

PMI Manufacturing Index 

The PMI Manufacturing Index hit a 55.4 in June. That’s slightly above the level that analysts had predicted.

ISM Mfg Index 

The ISM Mfg Index came in at a 60.2 for June. That’s just above the mark that analysts had expected.

Construction Spending  

Construction spending for May rose by 0.4%, putting it at 4.5% year over year.

Notable events this week:     

Monday:   

  • PMI Manufacturing Index
  • ISM Mfg Index
  • Construction Spending

Tuesday:   

Wednesday:         

  • Markets Closed: July 4th

Thursday:     

  • ADP Employment Report
  • Jobless Claims
  • PMI Services Index
  • ISM Non-Mfg Index
  • FOMC Minutes
  • EIA Petroleum Status Report

Friday:          

  • Employment Situation
  • International Trade

*Terms and conditions apply.

Carter Wessman

Carter Wessman is originally from the charming town of Norfolk, Massachusetts. When he isn’t busy writing about mortgage related topics, you can find him playing table tennis, or jamming on his bass guitar.

Source: totalmortgage.com

Apache is functioning normally

Apache is functioning normally

Existing home sales marginally increased in May, but were still down significantly from a year prior, according to the latest report from the National Association of Realtors (NAR).

Total existing home sales rose 0.2% from April to a seasonally adjusted annual rate of 4.30 million in May. Year-over-year, sales dropped 20.4% from 5.40 million in May 2022.

Home sales have been dropping on an annual basis since the Federal Reserve began hiking the benchmark rate in spring of 2022. Mortgage rates have settled into the 6% to 7% range over the last three months, which has led to several consecutive months of consistent, if unimpressive, home sales.

Total housing inventory recorded at the end of May was 1.08 million units, up 3.8% from April, but down 6.1% from May 2022 (1.15 million). Unsold inventory is at a 3.0-month supply at the current sales pace, up from 2.9 months in April and 2.6 months in May 2022, the trade group said.

“Available inventory strongly impacts home sales,” Lawrence Yun, chief economist at NAR, said. “Newly constructed homes are selling at a pace reminiscent of pre-pandemic times because of abundant inventory in that sector. However, existing home sales activity is down sizably due to the current supply being roughly half the level of 2019.”

Though all four regions experienced year-over-year sales declines, the South and West posted month-over-month improvements while sales faltered in the Northeast and Midwest from April. Prices grew in the Northeast and Midwest but fell in the South and West.

Sales in the South rose 1.5% from April to an annualized rate of 2 million; the median price in the South fell to $361,000, down 2.7% from May 2022.

In the West, where affordability challenges and a tech downturn have led to a softer market, existing home sales rose 2.6% from April to an annual rate of 790,000, an overall 25.5% decline from a year ago. Prices in the West came in at $596,500, down 5.7% from May 2022.

Meanwhile, existing home sales in the Northeast declined 2.0% from April to an annual rate of 500,000 in May, down 25.4% from May 2022. The median price in the Northeast was $439,000, up 2.5% from one year ago.

In the Midwest, existing home sales dropped 2.9% from April to an annual rate of 990,000, decreasing 20.8% from the previous year. The median price in the Midwest was $298,000, up 1.1% from May 2022.

The median existing home price in May for all housing types – which includes single-family homes, condos and townhouses – was $396,100, a decline of 3.1% from May 2022 ($408,600). The median existing single-family home price was $401,100 in May, down 3.4% from one year prior.

“Despite the report of prices falling in May, we could be seeing the bottom and prices should be stable or increasing across much of the country in the second half of the year,” said Lisa Sturvetant, chief economist for Bright MLS. “The pace of existing home sales will continue to be slow for the rest of the year, and it is likely we will see total annual home sales down more than 10% compared to last year’s level. Lower mortgage rates and an increase in supply could spur a busier market in 2024.”

Properties typically remained on the market for 18 days in May, down from 22 days in April, but up from 16 days in May 2022. Nearly three-quarters of homes sold in May were on the market for less than a month. First-time buyers were responsible for 28% of sales in May, down from 29% in April, but up from 27% in May 2022.

All-cash sales accounted for a quarter of transactions in May, down from 28% in April and identical to one year ago. Individual investors or second-home buyers, who make up many cash sales, purchased 15% of homes in May, down from 17% in April and 16% the previous year.

To the continuing dismay of housing bears, distressed sales represented just 2% of sales in May, virtually unchanged from last month and the prior year.

Though the existing home sales market is faring poorly, homebuilders have been capitalizing on a lack of competition and injecting supply into the marketplace. New home sales now account for roughly one-third of transactions, and housing starts in May were at one of the highest readings in history.

“This slow flow of new existing home listings coming onto the market is suppressing sales from levels seen a year ago as there are so few homes available to transact, but this spring season is getting back into the normal rhythms of the market and sales have increased from a year ago,” said Nicole Bachaud, a senior economist at Zillow. “Low inventory will continue to keep a hold on this market and suppress overall existing home sales numbers, and thus put pressure on prices and affordability. But thankfully the new construction market is churning out a steady flow of new homes to help fill the gap.”

Source: housingwire.com

Apache is functioning normally

Apache is functioning normally

Referral, Servicing Strategy Products; FHA, USDA, Ginnie News; Mortgage Application Stats

<meta name="smartbanner:author" content="We now have a native iPhone
and Android app.
Download the NEW APP”>


This website requires Javascrip to run properly.

Referral, Servicing Strategy Products; FHA, USDA, Ginnie News; Mortgage Application Stats

By:
Rob Chrisman

Wed, Jun 21 2023, 9:50 AM

I realize that this is a mortgage commentary, but our business touches many aspects of many lives. Today is the summer solstice, marking the astronomical first day of summer in the Northern Hemisphere. Yes, there is quantitatively less sunlight going forward. While we’re on quantitative things… “Two hearts are better than one… two hearts gonna’ get the job done…” Are you thinking about your heart? Me neither. It just motors along while you’re doing mortgage stuff, beating 32 million times a year, year in and year out, pumping two thousand gallons of blood each day. Up until recently there were only about 2,000-2,500 heart transplants but 2022 set a U.S. record with over 4,000. On average that’s only about 6 per month per state. They’re special. Amy Silverstein was well known about speaking on improving organ donor drug regimens, and the quality of treatment received by those receiving organs. Amy died last month. I hope that she had an impact. Like being a loan officer and prospecting for loans, transplants are a numbers game. The majority of Americans, 95 percent, are in favor of organ donation. But only 58 percent are actually registered. The most commonly transplanted organs are the kidney, liver, heart, lungs, pancreas and intestines. Register today. It won’t hurt a bit. (Today’s podcast can be found here and this week’s is sponsored by MCT and its Hedge Advisory division. Download their recently released whitepaper, Mortgage Pipeline Hedging 101, for more information on hedging in today’s market. Today’s includes an interview with Morris, Manning & Martin, LLP’s Bonnie Hochman Rothell on risks and legal considerations for lenders in a high-rate environment.)

Broker and Lender Services, Products, and Software

This 25,000 sq. ft. Malibu Beach compound is California’s most expensive Zillow listing, priced at a cool $195,000,000. Whether you are closing loans on palatial properties or starter homes, Nexus Closing by SimpleNexus, an nCino company, supports a top tier eClosing experience that borrowers and their agents will love. Nexus Closing’s single sign-on convenience makes it easy for borrowers to review and sign documents from anywhere. Also, it provides the flexibility of conducting in-person, hybrid, and full eClosings. Title and settlement partners also love the ease of centralized collaboration that keeps them up to date on closing docs and signing status. Learn how Dan Windell of Thrive Mortgage has been winning with Nexus Closing. Or schedule a demo to see Nexus Closing in action for yourself.

When thinking about effective approaches for succeeding in this market, two ideas come to mind. First, understand prospective homebuyers within the context of their economic uncertainty and get back to the basics of why homeownership still makes sense. Highlight building equity, and consider discussing the framework of creating generational wealth, especially for first-time buyers! Also, underscore the emotional aspects of ownership, like pride, stability, and better family environments. Next, articulate secure tactics to make purchasing more affordable: things like down payment strategies, interest buydowns, and ARMs offering lower payments as the market steadies. (Keep in mind buyer bias against ARMs; counter with education on their contemporary framework). Usherpa, the #1 ranked Mortgage CRM in both customer satisfaction and loyalty, is here to help you through this and every challenge. Download this free, informative PDF for homebuyers.

Your company has collected enough customer and contact data from across your tech stack to shut down a server farm. Now what? Data by itself isn’t that useful. It needs to be organized, categorized, and analyzed before it can truly be utilized. Otherwise, you’re just relying on instincts and blind luck to generate leads and drive growth. Total Expert Customer Intelligence aggregates all that data you’ve collected and constantly monitors it for key behaviors to identify and surface the most promising opportunities. Now, you can spend less time digging through your database and more time engaging customers about their financial needs and goals. Learn how Prosperity Home Loans uncovered 2,000+ new opportunities within their existing database using Total Expert Customer Intelligence.

As lenders adapt to volatile mortgage rates, many are stopping to reconsider their servicing strategy. Do inconsistent mortgage origination volumes have you questioning what makes more sense: retaining servicing or selling servicing released? Seth Sprague, CMB, Richey May’s Director of Mortgage Banking Consulting Services (aka, resident servicing expert), outlines the 13 key trends and strategies in servicing including recommendations on how to make the right decisions for your business. Want more help defining the optimal strategy? You know where to find us.

NEW EBOOK: How to fill your pipeline with referral business, even in today’s tight market. Right now, a steady stream of referrals means the difference between maintaining a pipeline and scrounging for leads. And real estate agents still hold the keys to the referral kingdom. To create this eBook, Maxwell interviewed agents and broker-owners across the country. The result is firsthand advice to help you better network to create a strong funnel of referral leads. Download your free copy to learn the 4 qualities real estate agents value in their lending partners, agent networking dos and don’ts, 5 ways to become a go-to lender for real estate agents, and more. Click here to download “Winning Agent Business: The Lender’s Guide to a Strong Referral Network.”

You know the headaches that come with your tech: you have too many screens to navigate, too many emails from too many departments, that file from three weeks ago just went missing, and your computer has slowed to a crawl… again. But ask yourself: are these normal hiccups, or is aging and outdated technology struggling to keep pace with your business? Shop-worn tech isn’t just an annoyance. It puts you at a competitive disadvantage in a market that leaves little room for lagging behind. Read Black Knight’s blog “Spotting Signs of Wear,” and see why so many decision-makers recommend investing in your technology now – even (and especially) in a downturn market.

FHA, VA, HUD, Ginnie, and USDA Program News

Although conventional conforming loans continue to represent the lion’s share of our biz, “government” product volume is somewhat steady, and substantive. Last week, the FHA share of total applications was 13.3 percent, the VA share of total applications was 11.9 percent, and the USDA share of total applications was 0.4 percent. And so, the changes that HUD and other government loan programs make are followed by lenders who originate that product. And the FHA has more than a dozen measures planned for proposal and final action, according to the Department of Housing and Urban Development’s spring agenda.

The result of audits was released last week by the Office of Inspector General for the U.S. Department of Housing and Urban Development. OIG looked at how mortgage servicers handled loss-mitigation aid during the pandemic, and it was not good: they failed to help two-thirds of distressed borrowers.

Bob Broeksmit, CMB, President and CEO of the Mortgage Bankers Association (MBA), issued the following statement in response to the news. “The report from the OIG confirms what we all know: the COVID-19 pandemic presented unprecedented challenges to homeowners, servicers, and the federal agencies like HUD that administer loan guarantee programs. Since the pandemic began in March 2020, mortgage servicers provided payment relief to nearly 8 million borrowers via forbearance. Today, only approximately 255,000 borrowers remain in forbearance, and delinquency rates are near historic lows.

“The OIG’s report details the difficulties that HUD faced in effectively communicating extensive and rapidly changing COVID-related loss mitigation program requirements. These difficulties are understandable in light of the challenges faced by both HUD and servicers in an unprecedented and rapidly changing environment. Those difficulties increased the challenges that servicers faced in implementing these new and evolving programs for a never-before-seen volume of borrowers.”

FHA announced that its FHA Catalyst Claims Module is being updated to further align module functionality with FHA’s claim certification requirements published in Single Family Housing Policy Handbook 4000.1, IV.A.1., Claim Submission Process. On July 14, 2023, the FHA Catalyst Claims Module will be updated to reinforce user profile accuracy and to be consistent with FHA policy that only mortgagee employees may certify claim submissions.

FHA is taking new steps to remove an important barrier to homeownership for those who have limited English proficiency. FHA just announced the availability of multilingual educational materials on its new Language Access Resources web page.

Ginnie Mae announced in All Participants Memorandum (APM) 23-09​ that it is extending the use of electronic signatures in conjunction with Remote Online Notarization (RON) to include power of attorney (POA) mortgage documents.

(Recall that in December Ginnie Mae announced new loan limits for 2023 for single-family forward mortgages eligible for pooling in its mortgage-backed securities programs. Loan limits for most of the country increased this year due to house price appreciation during the first half of 2022, which is factored into the statutorily mandated calculations that determine the limits each year. One-unit properties in the contiguous 48 States, District of Columbia, American Samoa, and Puerto Rico will have a loan limit of $726,200 while one-unit properties in Alaska, Hawaii, Guam, and the U.S. Virgin Islands have a loan limit of $1,089,300.

Ginnie Mae has added “Ginnie Mae Mortgage-Backed Securities Portfolio Reaches $2.404 Trillion in May “.

USDA Rural Development SFHD posted a new bulletin updating exhibits in RD Instructions 1944-N, Housing Preservation Grants.

PennyMac issued a reminder to correspondents with Announcement 23-40 of the USDA Guaranteed Rural Housing Loan Program annual income eligibility requirements, specifically as it pertains to asset review requirements.

Help your low to moderate-income borrowers, who are looking to purchase a single-family home, with Hometown Equity Mortgage new CalHFA Down Payment Assistance Program which provides low interest home financing, down payments and closing cost assistance for homebuyers in California.

Capital Markets

Federal Reserve Chair Jerome Powell will have an opportunity this week to clarify what many found a confusing message on the path of interest rates, with the added task of assuring Democrats and Republicans the economy is on track. Who the heck would want that job?

Rates dropped to open the holiday-shortened week despite a report that residential construction is gaining momentum. Housing starts rose 5.2 percent above April to a 1.63 million annualized figure in May, which exceeded expectations. The number is still down 12.7 percent from May 2022 and total starts are down 15.5 percent on a year-to-date basis. Continued growth in new home construction is consistent with improving home builder sentiment and ongoing lack of existing homes for sale. Building Permits rose to 1.49 million.

This morning the industry learned that mortgage applications increased 0.5 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending June 16, 2023. It’s nice to see an increase, albeit small, and not another decline. “The refinance share of mortgage activity decreased to 26.9 percent of total applications from 27.3 percent the previous week. The adjustable-rate mortgage (ARM) share of activity decreased to 6.3 percent of total applications. The FHA share of total applications increased to 13.3 percent from 13.0 percent the week prior. The VA share of total applications decreased to 11.9 percent from 12.6 percent the week prior. The USDA share of total applications decreased to 0.4 percent from 0.5 percent the week prior.”

The rest of the week won’t have much in the way of market-moving data, but we will have plenty of Fed speak, including Fed Chair Powell heading to Capitol Hill for his semiannual testimony today and tomorrow. Markets will also receive remarks from Chicago President Goolsbee and Cleveland President Mester. Today’s data, besides the MBA’s application data, only has supply and demand monitoring with a Treasury auction of $12 billion reopened 20-year bonds. We begin the day with Agency MBS prices roughly unchanged from Tuesday afternoon, the 10-year yielding 3.75 after closing yesterday at 3.73 percent, and the 2-year is at 4.71.

 Download our mobile app to get alerts for Rob Chrisman’s Commentary.

Source: mortgagenewsdaily.com

Apache is functioning normally

Apache is functioning normally

Underwriting, LOS, Appraisal Tools, Broker and Automation Products; Freddie and Fannie News; Housing Starts Skyrocket

<meta name="smartbanner:author" content="We now have a native iPhone
and Android app.
Download the NEW APP”>


This website requires Javascrip to run properly.

Underwriting, LOS, Appraisal Tools, Broker and Automation Products; Freddie and Fannie News; Housing Starts Skyrocket

By:
Rob Chrisman

Tue, Jun 20 2023, 9:40 AM

I am fortunate to travel around some (no, I am not on the missing Titanic tourist submarine, nor personally shepherding the new Credit Trigger Bill in MA), and am in the Bay Area to give a speech on the eve of the Summer Solstice, and am reminded of the passage of time and how my skill sets have become outdated. I can refold a map correctly, unknot curly telephone wire to get all the curls facing the right way, and can cover a textbook with a brown paper bag. I know how to write in cursive. But I don’t know why cars don’t need to warm up anymore, or why my cell phone doesn’t work in the guest bedroom. I barely understand how electricity actually works, aside from my Mom telling me not to poke my fork in the electrical wall outlet. But others have a better grasp of it, and it’s a great time to be one of the 1.032 million electricians in America, the most ever, and LOs pay attention to changes in demographics and job markets. Electricians’ pay has skyrocketed, averaging $37.51 per hour for an annual wage of around $78,000, a 7.8 percent year-over-year increase. A boom in the housing market plus the passage of the Inflation Reduction Act in 2022 (which steers $369 billion to beefing up energy infrastructure) is driving the golden age of electricians. (Today’s podcast can be found here and this week’s is sponsored by MCT and its Hedge Advisory division. Download their recently released whitepaper, Mortgage Pipeline Hedging 101, for more information on hedging in today’s market. Today’s includes an interview with MCT’s Andrew Rhodes on secondary market happenings in the current rate environment and the importance of loan sale automation.)

Broker and Lender Services, Products, and Software

National Homeownership Month means new opportunities for your business. June is National Homeownership Month and ICE Mortgage Technology® is sharing resources all month long to help mortgage professionals put more people into homes. Did you know, according to their 2023 Borrower Insights Survey, fewer than one in 10 borrowers wanted a fully digital experience? By leveraging mortgage automation, you can streamline the previously manual steps that slowed your team down, and ensure they have time to deliver the high touch experience your borrowers are looking for. Click here to learn how ICE Mortgage Technology can partner with you to streamline the various steps in the mortgage process.

It’s industry belief that transferring your loans to a new subservicer is slow, risky, and just too scary to even try. As a result, most originators have FOMO (Fear of Moving On), but Servbank clients found there was no need to fear the move because Servbank has the loan transfer process down to a science. They handle dozens of client transfers per year, with a fully assisted, stress-tested transfer process that is entirely transparent. Once aboard, all loans get the same compassionate, compliant servicing that has turned Servbank into one of the nation’s Top 10 Subservicers. But the proof isn’t in the claims, it’s in the numbers. In April 2023, Servbank efficiently transferred 175,000 loans timely, with imperceptible disruption to the customers or their existing clients. So, if you have a FOMO from your current servicer, let Servbank share all the details with you on how they can make transferring your loans a seamless and worry-free process that will enhance your brand and improve your bottom line. Ready to learn more? Visit here.

“AFR Wholesale® (AFR) is incredibly honored and blessed to be providing homeownership for over 25 years. As a leading manufactured home lender amongst wholesalers and to be a leading FHA 203k lender for sponsored originations and an innovator in construction and renovation lending, AFR is steadfast in providing more homeownership opportunities to more families. AFR wants to teach the masses how to leverage programs such HomeOne®, Home Possible®, Home Ready®, and a full suite of other lending products to help diversify your lending toolkit. You still have time to join! We invite you on June 21st at 2 PM EST. to join AFR and special guests from Fannie Mae to learn about HomeReady® and how to leverage this program. Register Today! This is a live webinar and will not be recorded, so sign up today and don’t miss it! Contact AFR by going to afrwholesale.com, email [email protected] (1-800-375-6071).”

“One of the ways Xactus is serving to innovate and innovating to serve is with its powerful residential and commercial appraisal valuation management technology, Appraisal FirewallX. It shortens appraisal times and lets you manage your own appraisal process. Appraisal FirewallX also improves efficiency because it is integrated with numerous LOS systems such as Encompass by ICE Mortgage Technology. Cambridge Savings Bank has been using Appraisal FirewallX since it launched Encompass in 2017 and it has enabled the Cambridge team to maintain partnerships with its approved appraisers and move away from a very inefficient manual process to a highly automated one. It considers Appraisal FirewallX’s customer service to be top notch too. In fact, it’s one of Cambridge’s top vendor relationships. See how this innovative technology solution can improve your appraisal process and how Xactus is advancing the modern mortgage. Email us for a demo.”

Integrated LOS and POS systems are essential to creating the quick, easy, and fully digital mortgage application process that today’s borrowers expect. Learn how MeridianLink® Mortgage LOS is leading the charge toward better borrower experiences in its recent ebook on the importance of integrated systems in creating an automated online application process from start to finish.

Cover your staff’s time off with Maxwell’s on-demand underwriting. As a mortgage professional, you know the value of an uninterrupted workflow. Maxwell Fulfillment services empowers you to seamlessly maintain your operations while your team enjoys time off this summer (and beyond). With direct integrations to your LOS, our experienced onshore team of underwriters provides a seamless, fast, and cost-effective experience. To learn more about Maxwell’s on-demand underwriting or other fulfillment services, click here or schedule a call today.

Freddie and Fannie Updates

The two Agencies, under the guidance of the FHFA, continue making the changes that the industry keeps following, given 60-70 percent of production follows their processing and underwriting guidelines. This includes the increasing issue of climate change.

The Federal Housing Finance Agency (FHFA) issued its 2022 Report to Congress. The statutorily required report provides information about FHFA’s 2022 examinations of Fannie Mae, Freddie Mac (the Enterprises), Common Securitization Solutions (CSS), the 11 Federal Home Loan Banks (FHLBanks), and the FHLBanks’ Office of Finance.

Of note, the FHFA increased its efforts to address the climate-related risks faced by Fannie Mae, Freddie Mac and the Federal Home Loan Banks. The agency’s latest annual report to Congress outlined the progress made by FHFA’s eight climate-focused working groups.

Fannie Mae’s Appraiser Update June 2023 edition focuses on certain appraisal quality issues and share examples of ways they identify and mitigate the resulting risks. Also, several recent appraisal-related policy changes and the Uniform Appraisal Dataset (UAD) and Forms Redesign project are discussed.

Fannie Mae implemented 2023 area median incomes (AMIs) in Desktop Underwriter® (DU®), Loan Delivery, and the Area Median Income Lookup Tool. There was a 7.73 percent average increase for 2023, meaning more borrowers may meet AMI requirements. AMI is also used to determine eligibility for certain loan-level price adjustment (LLPA) waivers. Lenders may use this information to determine income eligibility for HomeReady® and other loans with AMI requirements.

PennyMac Announcement 23-44: Freddie Mac Bulletin 2023-11 Credit Underwriting Updates.

Fifth Third Correspondent Lending Communiqué edition 2023-5-6.16.23 provides information on Agency and FHA Products Temporary Buydowns, Investment Property QM Points and Fees, Long Term Lock Updates.

With SEL-2023-04, Fannie Mae announced multiple Selling Guide changes, including updated requirements related to shared equity and shared appreciation, subordinate financing, and alternatives for tax filing documentation. View AmeriHome Mortgage Announcement 20230511-CL for details.

Pennymac is aligning with Freddie Mac’s selling guide updates on property appraisals and condominium projects. Updates are listed in Announcement 23-41: Freddie Mac Bulletin 2023-9 Property Appraisals and Condominium Project Updates and are effective immediately.

PennyMac posted Announcement 23-43: Updates to Conventional LLPAs. Pennymac updated Conventional LLPAs effective for all Best Efforts Commitments taken on or after Tuesday, June 13, 2023. The “Purchase Special” will improve by 0.10 for loan balances <= $175,000.

Citizens Correspondent National Bulletin 2023-13 includes information on Conventional Conforming Product and All Product Updates. See the bulletin for additional information and all lock, delivery, and purchase by dates, if required.

Of course, the private mortgage insurance companies, like Arch, Enact, Essent Guaranty, MGIC, National Mortgage Insurance, and Radian, are very interested in anything that the Agencies are up to or impact their business. Seth Appleton, President of U.S. Mortgage Insurers (USMI), released a statement on the U.S. Senate Reintroduction of The Middle-Class Mortgage Insurance Premium Act of 2023 sponsored by Senators Maggie Hassan (D-NH) and Thom Tillis (R-NC).

Capital Markets:

Okay class, let’s review. Our Federal Reserve (the “Central Bank”) doesn’t want to be seen as weak on fighting inflation. We learned last week that consumer prices rose 0.1 percent in May, in line with many analysts’ expectations. Year over year numbers are always rolling, dropping off the one 13 months ago. Sure enough, over the last year, prices were up 4.0 percent versus 4.9 percent in April. This marks the lowest annual inflation reading in over two years. Are we having a “soft landing?”

Shelter costs continue to buoy the headline number, however rental prices have moderated significantly from last year’s large increases. Consumer expectations for future inflation also fell to their lowest since March 2021. Meanwhile, the Federal Open Market Committee kept the Fed Funds Rate steady at a range of 5.00 – 5.25 percent following its June meeting. While this was in line with expectations, the dot plot released following the meeting indicates the committee still feels more tightening is appropriate this year. Officials continue to reinforce their expectations for rates to remain elevated for longer than some analysts’ forecasts. Employment and housing remain significant headwinds to inflation subsiding to levels where the Fed would consider declaring an end to the current tighter policy cycle.

After yesterday’s holiday, markets resumed today with Philadelphia Fed non-manufacturing figure for June (-16.6), as well as May housing starts and building permits (+21.7 and +5.2 percent, respectively, an enormous jump). Two Fed speakers are currently scheduled, St. Louis President Bullard and New York President Williams. The bond market, and therefore interest rates, begins the trading week little changed from last Friday: the 10-year is yielding 3.75 after closing last week at 3.77 percent, the 2-year at 4.71, and Agency MBS prices unchanged.

Employment

Nations Lending Continues Growth with Highest Ever Rank on Scotsman Guide! Nations Lending has once again been recognized by Scotsman Guide as one of the Top Mortgage Lenders in America. The company secured the 42nd position on the 2023 list, which was based on its impressive volume of nearly $3 billion. This marks the eighth consecutive year that Nations has been included in the ranking. Over the last few months, the company has introduced a slew of new products and improvements that have seen immediate success. This includes the RIO, a Nations investor-product-focused on generational wealth for investors with simplified qualifications, a temporary buydown solution for the Jumbo product line, giving Nations an advantage in promoting payment solutions in the early years of the loan, enhancements to its agency product line-up with lowered FICO scores to 500 for FHA/VA loans, and focusing on a borrowers Positive Rent Payment History for borrowers that are past tenants. Any IMB interested in joining Nations can reach out to John Owens.

“Who onboarded over $1B producing LO’s in May-June? Who won a Regional HW Tech100 Award? Who made the Scotsman Top Lenders list …again? Who made 2023 National Mortgage News Best Mortgage Companies to work for? Who was the 4th fastest growing company Inc Regionals Rocky Mountain Region? Who developed a highly efficient proprietary LOS that allows LOs to do more volume with less effort? Who has a business model that is sustainably good and profitable in any market? …heard enough yet? Join us and we’ll revolutionize the mortgage industry together. Reach out to Josh Neumarker at Canopy Mortgage for more information 888-696-9076.”

“Are you frustrated as a retail loan officer or mortgage banker with the lack of flexibility to provide custom loan options? Take control: follow the lead of an estimated 24,000 MLOs like you who have joined the wholesale channel in the last year. Whether you open your own independent mortgage brokerage or join a team as a loan officer, you’ll have the ability to provide your clients with the personalized solutions they need. Contact our team at BeAMortgageBroker.com today and you’ll be well on your way to a more fulfilling tomorrow.”

 Download our mobile app to get alerts for Rob Chrisman’s Commentary.

Source: mortgagenewsdaily.com