U.S. homebuilder confidence weakens in November

The nation’s low-interest rates and strong job market weren’t enough to maintain homebuilder confidence in November as the National Association of Home Builders and Wells Fargo said sentiment fell 1 point to 70 points in this month’s Housing Market Index.

Despite the decline, the November reading now marks the second-highest level in 2019 and is 10 points above the year-ago month.

“Single-family builders are currently reporting ongoing positive conditions, spurred in part by low mortgage rates and continued job growth,” NAHB Chairman Greg Ugalde said.  “In a further sign of solid demand, this is the fourth consecutive month where at least half of all builders surveyed have reported positive buyer traffic conditions.”

The index measuring current sales conditions fell to 76 points, while buyer traffic slid to 53 points and sales expectations over the next six months rose to 77.

The three-month moving averages for
regional HMI scores show the Northeast increased to 62 points, the South grew
to 74 points, the West climbed to 81 points and the Midwest held steady at
58 points.

Although all regions improved during
the month, NAHB Chief Economist Robert Dietz notes
homebuilders across the country continue to struggle with affordability.

“We have seen substantial year-over-year improvement following the housing affordability crunch of late 2018, when the HMI stood at 60,” said Dietz. “However, lot shortages remain a serious problem, particularly among custom builders. Builders also continue to grapple with other affordability headwinds, including a lack of labor and regulatory constraints.”

NOTE: The NAHB/Wells Fargo Housing
Market Index gauges builder opinions of single-family home sales and
expectations, asking for a rating of good, fair or poor. Builders are also
asked to rate prospective buyer traffic from very low to very high. The scores
are used to calculate a seasonally adjusted index with a rating of 50 or over
indicating positive sentiment.

The post U.S. homebuilder confidence weakens in November appeared first on HousingWire.

Nov. 18: Lenders wanted; licensing, loan data, non-QM products; customer service survey; no Fed move ’til April?

Do you dread “Smonday?” (That’s when Sunday stops feeling like a Sunday, and the anxiety of Monday kicks in.) Here is something to dread. All this talk about MLOs losing their jobs to automation, or real estate agents losing their job to internet options. Automation, algorithms, and artificial intelligence have already reduced the amount of human labor in specialty manufacturing, warehouse parcel delivery and resume screening. A new report from analysts at Bank of America Merrill Lynch estimates the rise of automation could make up to 800 million jobs (nearly half of all jobs worldwide) obsolete by 2035. Guess we’ll all sit around playing Sudoku and selling Hot Wheels or Matchbox sets back and forth on eBay. Seriously, the personal touch is critical in lending. I guess it isn’t in warehouse parcel delivery.

Employment

Guaranteed Rate is seeking acquisition opportunities nationwide. Licensed in all 50 states, Guaranteed Rate is on a mission to find the right partners to expand market share across the U.S. The ideal situation is to acquire mortgage companies originating between $200M and $10B annually that are looking to maximize their profitability and revenue by implementing best-in-class pricing, lower corporate cost per loan, world-class technology, marketing, recruiting, and business development resources. Allow us to handle the logistics of the business with our proven model and technology that provides companies with the opportunity to focus on growing their business. Interested parties please e-mail Mark Filler and specify this listing.

Guaranteed Rate Affinity announced that Jon Altizer has joined the company as an SVP of Mortgage Lending to focus on loan origination for Guaranteed Rate Affinity and bolster his relationships with real estate agents in the region.

Lender services and products

First Tennessee Warehouse Lending is now First Horizon Bank Warehouse Lending, named after its parent First Horizon National Corporation. Once the recently announced merger with Iberia Bank is complete, the combined First Horizon Bank, headquartered in Memphis, Tennessee, will have $75B in assets and will continue to serve mortgage bankers throughout the nation. First Horizon Bank (formerly First Tennessee) has nearly 300 mortgage warehouse clients and over $8 billion in active warehouse lines. If you have recently had reliability issues with your warehouse bank, or if you need better or additional warehouse capacity, please give us a call.  We listen and we understand. Contact Scott Walker (901-759-7770).

Here’s a true story about the power of personalized marketing automation: On a Mortgage Company’s Production Cruise in 2003 one of the winners slipped near the pool and landed on the back of his head. He was unconscious for 20 minutes, but when he woke up, he felt fine. Turns out he wasn’t fine. In fact, he almost died and spent a year in the hospital. The crazy thing is he did $12 million in production that year. How? He had great relationships, a great assistant, and his marketing was automated. His Realtors and Customers had no idea he was even sick. They continued to get great service from his assistant and targeted, personalized marketing from Usherpa. According to the Loan Officer, “Without Usherpa, I’d be out of business.” Killer Content sent to the right people at the right time with the right message: Usherpa.com

 

In today’s marketplace, loan originators need the right tools to navigate non-QM products to increase loan volume and serve more customers. LoanNEX has the answer. The LoanNEX Qualifier is designed specifically to serve the expanded credit market, and is pleased to announce the addition of Luxury, Angel Oak and Sprout to the LoanNEX platform joining Caliber, Deephaven, NewRez, NewFi, Silvergate, SG Capital, and Verus. Larry Maitlin, of Luxury’s Correspondent Lending Division said: “Luxury is focused on ease of use in the Non-QM loan manufacturing process. With the addition of the LoanNEX platform, our correspondent lenders are able to quickly and confidently find a fit for their borrowers across Luxury’s Non-QM loan programs.” The platform is a free service to correspondent sellers. LoanNEX is serving over 200 sellers and is pricing over $1.5 billion of expanded credit loans monthly. For more information, email sales@loannex.com or click to request a demo.

Caliber Home Loans, Inc. is launching “Caliber HomeRate Advantage” a new strategy that improves the most competitive segments of our rate sheets. Caliber believes this is an opportunity to help our Loan Consultants target and grow their production. That’s how Caliber Rules Retail! Visit us online or email Brian Miller today to learn more.

Mortgage Intelligence Platform allows mortgage professionals to visualize their loan data in real-time! We already told you about how X-Ray transforms massive amounts of information on loans, leads and accounting from your loan operating systems, into easy-to-understand, readily available analytics and reports that drive top-level decisions at mortgage companies/branches. The new version of the dashboard features three new benchmarking tools that help you quickly get accurate reads on the close of loans and projected close rates. It also features a goal report based on historical performances. These benchmarking tools give you the ability to forecast in real time at the touch of a button from a smartphone or tablet. If you haven’t checked X-Ray out yet, sign up for a demo.

CLOES.online presents Deb Killian introducing Mortgage Professional Practices, a post-licensing course focused on day-to-day skills in originating. Comprised of 18 video sessions, case studies and continuous assessment, the course elevates loan originator education to increase practical knowledge and competency in origination activities. Loan originators learn “Best Practices” in originating and closing loans into the 2020’s. Mortgage Professional Practices is part of the Mortgage Professional Certification program, 60-hours of comprehensive origination competencies providing detailed instructions for each step through the mortgage process. This cost-effective program compliments internal training, providing a foundation for all originators. Assessments identify knowledge gaps and aid in evaluating originator performance. Consistent delivery insures all employees learn the same content in the same way. Courses offered on demand, on any device, any time. Contact Deb Killian to learn about using CLOES.online as part of your training program.  Charter Oak Systems, LLC, NMLS Approved Provider #1405047

Customer satisfaction is what its all about

STRATMOR Group would like to congratulate the top performers in the J.D. Power 2019 U.S. Primary Mortgage Origination Satisfaction Study, including MortgageSAT client Guild Mortgage, a “Top 3” lender for the third consecutive year. The study included 20 lenders with results representing 4,602 borrowers. Special mention goes to PrimeLending who placed fourth in the 2018 study and had higher scores in 2019 but missed the sample size cutoff this year. STRATMOR also extends congratulations to mid-size IMBs like Certainty Home Loans and Universal Lending Corporation whose samples size may not have met the J.D Power cutoff, but whose results, according to data from STRATMOR’s MortgageSAT Borrowers Satisfaction Program of more than 40 lenders and 100,000 borrower survey respondents YTD, shine along with those of the very top J.D. Power performers.

Colorado CHFA FHA Streamline Refinance Program is now available with PRMG. A pre-recorded training webinar can be accessed at the PRMG University YouTube channel.

First American announced the launch of Endpoint, a mobile-first title and escrow company that provides a re-imagined closing experience for buyers, sellers and their real estate agents. “Developed as a new stand-alone company, Endpoint combines First American’s title and settlement expertise with the innovative approach of an agile startup to provide a digital real estate closing experience from start to finish. First American has invested $30 million to drive the company’s development and growth.” “Our investment in Endpoint reflects our commitment to developing innovative, state-of-the-art technologies that improve the process of transacting real estate.” said Dennis Gilmore, CEO at First American Financial Corporation.

HouseThis rolled out an app for your computer or mobile device at www.HouseThis.app as well as the Chrome extension that integrates our app into Zillow and Trulia. “We just announced that the HouseThis neighborhood app is now available on Amazon Alexa. You can now ask Alexa to provide real estate information about a specific zip code/area. Open Alexa Skills page on your mobile device or go to  https://www.amazon.com/alexa-skills/ on your computer. In the skills search field type in: HouseThis.”

eOriginal Inc. has launched ClosingCenter a cloud-based solution designed to deliver a simple and intuitive closing experience for lenders, borrowers and settlement agents. “ClosingCenter was designed to deliver the closing experience the mortgage market is demanding. We’ve made it simple to use and scalable to grow transaction volumes over time, and it’s built on our open platform to integrate with doc prep providers and other solution extensions,” says Simon Moir, Chief Product Officer at eOriginal.

Capital markets

As we move towards the end of the year, one question concerning the economy seems to be whether consumer spending will continue to support expansion or will slowing global growth and a manufacturing recession spill over into the rest of the economy. Strong consumption, buoyed by the lowest unemployment in nearly 50 years, has offset declining capital expenditures and a prolonged downturn in manufacturing. Although retail sales increased more expected in October, the details were not as rosy. Increasing motor vehicle costs made up for a nearly 600,000 decline in unit auto sales and rising gasoline prices helped to bolster the official gas station sales figure. Manufacturing output continued its downward trend which began last December, but analysts are hopeful for a rebound in November’s data now that the GM strike has ended. Inflation at the core level remains under control for both producers and consumers. Both measures of inflation were well below the Fed’s target over the last twelve months. In recent testimony before Congress, Fed Chair Jay Powell indicated a desire to leave the Fed Funds rate steady, however the Fed would lower again if economic conditions worsen. Currently, the markets expect the Fed Funds rate to remain steady until April.

Put another way, consumer spending continues to be a bright spot for the US economy, but it is likely not expanding enough to warrant increasing business investment. Retail sales rose in October, offsetting September’s decline. The increase was due in part to higher gasoline and motor vehicle prices. Consumer inflation increased 0.4% during the month, the quickest rate over the last eight months, however core CPI was up only 0.2 percent. Interestingly, prices for the consumer goods subject to the recent 15 percent tariffs which went into effect in September, such as apparel and household furnishings, declined during the month. Producer prices also increased during October, but industrial production fell last month as slowing global growth and trade uncertainty took their toll. Additionally, the numbers were negatively affected by the GM strike, which ended towards the end of the month as well as the ongoing Boeing 737 Max issues. Mining has also come under pressure as declining energy prices over the last year weighed on capital investment by energy producers.

U.S. Treasuries ended an abbreviated last week pulling back slightly, including the 10-year yield closing +2 bps to 1.83 percent. Markets were forced to react to scant progress on the trade front (though this was disputed by several officials from the Trump Administration), and make of Fed Chair Powell’s testimony before Congress what they wished.

The Fed’s goal is to maintain both full employment and low and stable inflation, though the traditional indicators may be more unreliable tools than ever. Officials have long believed that very low joblessness would quickly push prices higher, but the historically low current rate of unemployment coupled with slow wage growth and inflation remaining well below the Fed’s 2 percent goal has challenged that notion. Federal Reserve Chair Powell painted an optimistic picture of the United States economy before Congress, though he warned that threats to the economic outlook, such as sluggish growth abroad and trade developments, persist.

 

The United States’ central bank has cut interest rates three times since late July, in the hope consumers, the main engine of economic growth, keep spending. The Fed now appears more comfortable than it once was maintaining a seemingly tight labor market, which could keep it from rushing to raise rates out of fear that prices might take off. In terms of future rate cuts, the Fed appears to be in wait-and see mode going forward. Fed Chair Powell pinpointed unemployment in this regard, saying it appears the economy can operate at a much lower level of unemployment than many would have thought, and that the Fed may not know where maximum employment precisely is.

Turning to this pre-Thanksgiving week, today’s calendar begins later this morning with the NAHB Housing Market Index for November. That is the only economic release of the day outside of TIC data for September, though Cleveland Fed’s Mester speaks. The Fed will conduct its usual buying, one of three this week (Wednesday and Friday) targeting up to $2.724 billion MBS when they purchase up to $1.604 billion UMBS30 2.5 percent ($531 million) and 3 percent ($1.151 billion). Tomorrow sees October Housing Starts and Building Permits before markets receive October FOMC Minutes in the midweek session. Slated for Thursday is the November Philadelphia Fed Survey, October Existing Home Sales, and October Leading Indicators, in addition to Class D 48-hours and the announcement of month-end 2-, 5- and 7-year notes along with reopened 2-year FRN. The week closes with Final November Michigan Consumer Sentiment Survey. We begin today with Agency MBS prices better by a few ticks (32nds) and the 10-year yielding 1.83%.

Thanksgiving, already just next week! Let the pranks appear.

Visit www.robchrisman.com for more information on our industry partners, access archived commentaries, or to subscribe to the Daily Mortgage News and Commentary. If you’re interested, visit my periodic blog at the STRATMOR Group web site. The current blog is, “Fannie & Freddie: A Snapshot” If you have both the time and inclination, make a comment on what I have written, or on other comments so that folks can learn what’s going on out there from the other readers.

Rob

(Market data provided in partnership with MBS Live. For free job postings and to view candidate resumes visit LenderNews. Currently there are hundreds of mortgage professionals looking for operations, secondary and management roles. For up-to-date mortgage news visit Mortgage News Daily. For archived commentaries, or to subscribe, go to www.robchrisman.com. Copyright 2019 Chrisman LLC. All rights reserved. Occasional paid job listings do appear. This report or any portion hereof may not be reprinted, sold or redistributed without the written consent of Rob Chrisman.)

Nov. 16: State-level lending changes & trivia; primer on the term “repo” & why it’s good to know the basics

How ‘bout this letter this week from an MLO. “I have been in the industry for 35 years and received a question from a past customer below. I have never heard of this product nor does it make a lot make a sense to me based on the logistics, like running credit reports every month. Have you heard of it, and/or perhaps your readers can shed some light on this. ‘It’s been 7 1/2 years since you assisted my husband and me in purchasing our first home. Thank you for all your help! I have a question regarding a type of loan I have never heard about. My friend has a 30-year, fixed-rate mortgage, but the payments fluctuate if her credit score changes. It’s not due to increases in taxes or insurance. Have you ever heard of such a loan? If it helps, she obtained the mortgage in Arizona. Would refinancing into a different loan product be possible?’” This one “stumped the chump” (aka, me), so if anyone has any information that I can pass along, let me know.

There are all kinds of things going on at the state level. Although LeBron James traded the Buckeye state for the Golden state, he could afford it. That probably isn’t the case for most of us. It turns out Akron, Ohio, has the most affordable housing (median house price divided by median annual household income), with a ratio of 1.83. That figure is 8.2 times cheaper than in Berkeley, California, the city with the least affordable housing, with a ratio of 15.04.

 

Looking for rental affordability? Move to Cedar Rapids, Iowa, which boasts the lowest median annual gross rent divided by median annual household income. The figure comes to just over 15 percent, 2.7 times lower than in Hialeah, Florida, with 41.25 percent. But if you are looking to buy rental units, don’t go to Little Rock, Arkansas. Its rate of vacant units at 16 percent is over 11 times higher than in Burlington, Vermont and Santa Ana, California, the cities with the lowest at 1.40 percent.

 

Want to live large on a budget? Laredo, Texas, may be for you, as it has the lowest cost-of-living index. To put that in perspective, the cost of living is 2.5 times lower than in San Francisco. So a $10 burger in San Francisco would only be $4 in Laredo.

 

Wow, Virginia Beach, Virginia is an amazing place to live! Of the 62 largest U.S. cities, it boasts the highest homeownership rate (64 percent), the lowest share of residents living in poverty (8 percent), and the fewest violent crimes per 1,000 residents (1.38). To put that in perspective, only 30 percent of Miami residents own their homes, nearly 38 percent of Detroit residents live in poverty, and St. Louis recorded 20.8 violent crimes per 1,000 residents.

 

Did you know San Francisco has the lowest median debt rate per median earnings of the 62 largest cities in the U.S.? The figure sits just below 14 percent, which is six times lower than the nearly 84 percent figure Aurora, CO registered.

 

The shortest average commute time of the 62 largest U.S, cities belongs to Wichita, Kansas, at just above 18 minutes. Compare that to New York City at almost 41 minutes, which is 2.2 times as much.

The Department of Financial Services (DFS) proposed changes to the Loan Servicing Rule. In response to this proposal, New York MBA and MBA issued a joint letter to New York DFS.

WMBA Members were notified that the extension of fee waivers for of a portion of the MLO renewal fee along with the renewal fee. View the letter from Rick St. Onge, the Acting Director of the Division of Consumer Services from the Department of Financial institutions for details.

DFI spoke at a WAMP meeting regarding DFI’s work toward changing both the Consumer Loan Act and Mortgage Broker Practices Act. DFI filed a CR-101 with the Code Reviser to begin rulemaking under the Consumer Loan Act rules and the Mortgage Broker Practices Act. Click the link to see the dates for upcoming Meetings and Hearings.

On October 10, 2019, the California attorney general issued proposed regulations under the California Consumer Privacy Act (“CCPA”). The proposed regulations focus on the form and content of required notices and disclosures, practices for handling of consumer requests, practices for verifying the identity of the consumer making those requests, practices regarding the personal information of minors, and the offering of financial incentives or price or service differences in exchange for the sale or retention of consumers’ personal information. For details on the proposal, read the full alert at K&L Gates HUB. Written comments to the proposed regulations must be submitted by no later than 5:00 p.m. on December 6, 2019.

Morrison and Foerster posted a Client Alert regarding money transmission licensing developments in Rhode Island and Michigan.

Beginning in January, in cooperation with the Multistate Mortgage Committee (MMC), ComplianceEase® will offer a complementary Pre-Exam Portal “sandbox” a public service to assist all residential mortgage lenders during their preparation for electronic examinations (e-Exams). Once enrolled in the portal, lenders will be able to submit up to one hundred LEF™ (Lending Examination Format) files for validation of proper formatting and evaluation against federal, state and local consumer protection compliance criteria. The Pre-Exam Portal will return complete ComplianceAnalyzer® audit reports, like those the examiner in charge (EIC) will eventually receive. These reports will enable lenders to identify data integrity, mapping and translation issues, as well as view compliance findings before submitting the LEF files for the “live” e-Exam through RegulatorConnect®, the regulators’ e-Exam platform. For more information on the Pre-Exam Portal, contact PreExam@ComplianceEase.com

 

Have you ever wondered how your monthly energy bill would stack up versus if you were to live in a different state? It turns out the most energy expensive states by average monthly bill are Connecticut ($373), Wyoming ($363), Alaska ($359), Georgia ($344), Massachusetts ($336), Indiana ($333), Alabama ($333), Maine ($332), Oklahoma ($331), and New Hampshire ($329). The least energy expensive states are Iowa ($286), New York ($284), Tennessee ($283), Illinois ($281), Hawaii ($279), Arkansas ($275), Louisiana ($271), Washington ($265), Colorado ($251), and the District of Columbia ($204).

 

Hawaii actually has the lowest average monthly consumption of electricity per consumer, 481 kWh, which is 2.9 times lower than in Louisiana, the highest at 1,416 kWh. But that may be because Hawaii maintains the highest cost per kWh at $0.2950. Compare that with Washington, which has the lowest average retail price for electricity, $0.0966 per kWh. Hawaii also has the highest average residential price for natural gas at $38.88 per 1,000 cubic feet. Compare that with the lowest, Montana, at $7.62 per 1,000 cubic feet.

 

A lot of people in cities don’t think it is worth it to have a car. The District of Columbia has the lowest average monthly motor-fuel consumption per driver, 22.52 gallons, which is 3.3 times lower than in Wyoming, the highest at 74.25 gallons.

What the heck is a “repo,” and why should I care?

After the Fed originally announced a series of ad hoc repurchase (repo) operations in September to ensure that repo rates and money market rates more broadly remain under control, the operations have remained in place. The Fed’s original intervention back in September was to curb surging money market rates that brought back frightful headlines reminiscent of the 2008 financial crisis, when short-term funding markets froze up and wreaked havoc on the financial system. Recent events are a far cry from what occurred during the Great Recession as they have far more to do with the post-crisis regulatory environment and the way in which the Federal Reserve operationally conducts monetary policy.

 

A repurchase agreement is, in short, a way for an institution to borrow or lend cash for a specific period of time, using financial securities as collateral. One institution sells a security to another, receives cash and agrees to ‘repurchase’ the security at some specific future date. The repo rate is effectively the interest rate the borrower of cash is paying the lender. Because Treasuries are arguably the world’s most liquid and safe financial asset, the healthy functioning of this market is critical to the financial system, as it underpins much of the short-term borrowing and lending that financial institutions do to manage their daily cash flow needs.

 

When primary dealers sit on more T-bills than they want or need, they lend these securities through overnight repurchase agreements, causing the supply of T-bills to outstrip the supply of cash, pushing the interest rate needed to clear the market up. The elevated repo rates we have seen at points over the past year and a half are consistent with declining reserves and a rapidly growing stock of Treasuries. The biggest driver of repo-related issues of late has been the fundamental change in the mix of Treasury collateral and cash (bank reserves) in the financial system. And what is happening in one short-term funding market often has implications for all money market rates, meaning the Federal Reserve is keenly interested in these developments. If elevated repo rates are putting upward pressure on the effective fed funds rate, then this can threaten the ability of the Fed to keep its main policy rate within its target range.

 

So what will the Fed do in the near term to keep repo markets operating smoothly? And how will the Fed deal with this issue over the longer run as a part of its operational framework? The Fed has several options that aren’t mutually exclusive: grow the balance sheet, continue performing open market repo operations, or adopt a standing repo facility.

 

The Fed always wants to ensure key financial markets are operating smoothly, and obviously, the Fed has a vested interest in ensuring it has well-established control over its main policy rate. Since repo rates are driven in part by demand for bank reserves, and since the Federal Reserve ultimately plays the leading role in determining the level of bank reserves in the system, it has a duty to ensure that the supply of reserves is adequate.

 

When the Fed purchases a security, such as a Treasury security, it gains an asset that is offset by a liability. Since the Federal Reserve is currently keeping the total size of its balance sheet steady, and since non-reserve liabilities like currency in circulation continue to steadily grow, total bank reserves are still outright declining, albeit much more slowly than they were when the balance sheet was shrinking. So the Fed can remove Treasuries and add bank reserves to the system, altering the supply dynamics between the two in a way that should alleviate some of the pressure within repo markets, all else equal. But that is reactive, as it requires the Fed to wait for funding markets to show signs of pressure, and then respond by buying Treasuries/adding reserves.

 

This has been the Fed’s approach since September: add reserves to the system, as necessary, on a temporary basis through ad hoc open market repo operations, while continuing to allow the private market to operate uninhibited on most normal trading days. Because this would involve repo operations rather than outright purchases, it would not result in a permanent expansion of the Fed’s balance sheet. The drawback is that market participants find themselves repeatedly asking: will the Fed intervene? And if so, by how much and at what price? Once some liquidity is injected into the system, it may be hard to fully remove it, as has been evidenced by recent repo operations. Thus, repo operations that began as ad hoc in nature could eventually become more permanent. The Fed should continue to use ad hoc repo operations to ensure that repo rates and money market rates more broadly remain under control. These open market operations also provide data on the demand for reserves.

 

The Fed announced no new balance sheet growth at its October 30 meeting, but the Fed’s current policy of replacing maturing mortgage-backed securities (MBS) with Treasuries one-for-one, at a pace of approximately $200 billion per year remains intact, with the Fed’s long-run goal to limit its balance sheet to only Treasuries.

All of this, in a roundabout way, helps borrowers by providing stability to the financial markets and dampening volatility. No borrower will ever ask an MLO about the repo market, but originators should know there’s a lot going on behind the scenes that helps.

Something special for all you football fans (part 5 of 5).

“If lessons are learned in defeat, our team is getting a great education.” – Murray Warmath / Minnesota

“The only qualifications for a lineman are to be big and dumb. To be a back, you only have to be dumb.” – Knute Rockne / Notre Dame

“We live one day at a time and scratch where it itches.” – Darrell Royal / Texas

“We didn’t tackle well today, but we made up for it by not blocking.” – John McKay / USC

“I’ve found that prayers work best when you have big players.” – Knute Rockne / Notre Dame

Visit www.robchrisman.com for more information on our industry partners, access archived commentaries, or to subscribe to the Daily Mortgage News and Commentary. If you’re interested, visit my periodic blog at the STRATMOR Group web site. The current blog is, “Fannie & Freddie: A Snapshot” If you have both the time and inclination, make a comment on what I have written, or on other comments so that folks can learn what’s going on out there from the other readers.

Rob

(Market data provided in partnership with MBS Live. For free job postings and to view candidate resumes visit LenderNews. Currently there are hundreds of mortgage professionals looking for operations, secondary and management roles. For up-to-date mortgage news visit Mortgage News Daily. For archived commentaries, or to subscribe, go to www.robchrisman.com. Copyright 2019 Chrisman LLC. All rights reserved. Occasional paid job listings do appear. This report or any portion hereof may not be reprinted, sold or redistributed without the written consent of Rob Chrisman.)

 

Congressional vote on “de facto QM Patch” postponed

The House Financial Services Committee postponed a vote on H.R. 2445 on Wednesday, a bill that would fix the so-called QM Patch that’s set to expire in early 2021.

“We see postponement as disappointing as ensuring lenders can rely on GSE underwriting systems is key to keeping credit box from shrinking,” Cowen Washington Research Group said in a note to clients on Friday.

The bill, which may be considered at a future date, gives originators the option of either relying on Appendix Q in the Qualified Mortgage rule to determine a borrower’s debt-to-income ratio or on standards set by the Federal Housing Finance Agency.

“This did not get a vote though we believe it is still likely to come up for consideration later this year or early next year,” Cowen said in the note. “There is simply no reason why this bill should run into partisan opposition and every reason why consumer groups and business groups should support it.”

The Qualified Mortgage rule issued in the wake of the financial crisis has pages of limits, known as Appendix Q, on when income can count and when it must be excluded, Cowen said. It also details which debts count and which are excluded.

“Our view has long been that if forced to rely solely on Appendix Q that lenders would shrink the credit box for fear that small errors could result in mortgages losing QM status,” Cowen said. “This is why we described the bill as a de facto extension of the QM Patch.”

The QM Patch, which expires in January 2021, permits loans with debt-to-income ratios above 43% to get QM protections such as the “safe harbor” provision that makes it harder for lenders to be sued.

“We continue to believe that giving originators the ability to rely on the automated underwriting systems rather than having to interpret Appendix Q is critical for credit availability,” Cowen said. “Appendix Q is complex with many pages on when income counts and when it does not count.

The post Congressional vote on “de facto QM Patch” postponed appeared first on HousingWire.

Guaranteed Rate Affinity brings back Jon Altizer

Residential mortgage company Guaranteed Rate Affinity, a partnership created between Realogy and Guaranteed Rate, announced Friday the hiring of Jon Altizer as senior vice president of mortgage lending.

Altizer has previously worked at Guaranteed Rate for nine years. He has 20 years of mortgage lending experience.

“It’s great to have him back,” said Guaranteed Rate Founder and CEO Victor Ciardelli. “Jon has built such strong relationships with his customers and referral partners here in Chicago and throughout the Midwest, and I look forward to seeing how he can build on that momentum as a part of our platform.”

After he left Guaranteed Rate in 2017, Altizer was a senior loan officer at Compass Mortgage and after that was an originating branch manager at CrossCountry Mortgage.

Altizer has funded over $1 billion in loan volume throughout his career.

“I’m excited to return to the Guaranteed Rate family and work with Victor and the leadership team at Guaranteed Rate Affinity,” said Altizer. “With this platform and the amazing support of my team, I’m looking forward to super-charging our production and building business collaboratively with agents throughout the Midwest.”

The post Guaranteed Rate Affinity brings back Jon Altizer appeared first on HousingWire.

Starter homes may be making a comeback

A survey by the National Association of Homebuilders this fall revealed that 80% of American households now believe the nation is suffering from a housing affordability crisis. 

Even more recent, a report last week by the National Association of Realtors revealed that more than 30% of first-time homebuyers used down payment help from family and friends.

Across the housing industry, experts are pointing to new inventory concerns. Economic research consultancy Capital Economics echoed these sentiments in its latest report.

“With volumes low, builders have concentrated on more expensive, higher-margin homes,” the report stated. “By the end of 2017, just 40% of new homes sold for under $300,000. That compares to a share of around 65% in early 2007, when overall house prices were only 7% lower.”

But change may be on the horizon. Economists at Capital Economics are anticipating a rise in new homes sold for under $300,000, from under 50% currently to about 55% by the end of 2020. According to the report, this would boost overall housing starts to 950,000 annualized.

“Tight supply of affordable homes, and a relatively large increase in their price, are encouraging builders back to the starter home sector,” the report said.

However, the report goes on to add, “a slowing economy and tighter credit conditions rule out a substantial shift to cheaper homes.”

For first-time homebuyers, this would be a welcome change. As Millennials continue to enter the housing market and Gen Z joins as well, the lack of affordable homes has been a strain on their homebuying prospects. With both generations battling an unprecedented amount of student loan debt, a comeback in starter homes would create a better chance at homeownership. 

“Admittedly, credit conditions have seen some mild tightening over the past year,” the report states. “But they are a lot more favorable compared to the post-crisis environment. Furthermore, tight supply conditions have led to relatively larger price gains for cheaper homes.”

Of course, a cheaper home could mean sacrificing some square footage.  

“Indeed, new homes have been getting smaller,” Capital Economics reported. “At 2,245 sq.ft. in the second quarter, median floor space for new SF homes was at its lowest since early 2011. Admittedly, smaller homes can be built in costly areas. But the share of new homes sold for under $300,000 hit a three-year high in September. 

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Multifamily rents gain 3.2%

Multifamily rent growth remained positive in October, a new report from YardiMatrix said.

Multifamily rent increased by just $1, to $1,476. Year over year rent growth remained at 3.2%.

(Image courtesy of RentCafe. Click to enlarge.)

Of the 30 major markets covered in the report, 17 saw year-over-year rent growth of at least 3.3%. San Jose and Houston remained below the 2.5% long-term average.

Although the multifamily market boasts positive results, three states had bills passed to limit rent growth.

Rent control affects the multifamily sector because it puts a chill on development during a period of low housing stock, YardiMatrix said.

Although rent has topped historical growth levels, occupancy rates still remain strong.

According to RealPage, this year was the second-highest apartment leasing season ever, with 281,800 units rented. The highest leasing season was in 1997 during the tech boom.

In the third quarter this year, multifamily vacancies fell to 3.6%.

RentCafe found that in the 260 large cities it analyzed, 1% of them experienced a decrease in apartment rates since last month and 4% have seen increases, while monthly rents generally flatlined in the remaining 95%.

Essentially, renting in 65% of the cities are below the national average, while the remaining 35% are above $1,476, RentCafe said.

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AOC and Bernie Sanders reveal green housing plan

Green New Deal policies and housing policies are beginning to merge.

Rep. Alexandria Ocasio-Cortez (D-NY) and Senator Bernie Sanders (D-VT), announced yesterday the launch of their “Green New Deal for Public Housing.”

This bill promises $180 billion over 10 years to cut carbon dioxide emissions from public housing across the country.

According to CNBC, roughly 40% of total U.S. energy consumption comes from residential and commercial buildings. The legislation could reduce public housing costs by $97 million per year and cut energy costs by $613 million.

“Representative Ocasio-Cortez introduced the Green New Deal for Public Housing Act to establish a prosperous society that provides affordable and modern housing for all,” according to Ocasio-Cortez’s website.

“This legislation serves to train and mobilize the workforce to decarbonize the public housing stock and improve the quality of life for all. It is time that our government invests in our infrastructure, our people, and our future.”

With this promise, solar panels will be added to public housing units as well as other renewable energy resources.

The bill will establish seven federal grant programs to public housing authorities to rehabilitate, upgrade, innovate and transition public housing into zero-carbon homes.

Earlier this year, Ocasio-Cortez and Sen. Ed Markey (D-MA), revealed a Green New Deal resolution, targeting climate change itself.

Sen Elizabeth Warren (D-Mass.) is also a co-sponsor of the housing legislation.

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Minority homeownership gains on low mortgage rates

Mortgage rates near three-year low are helping to boost homeownership rates for black and Hispanic Americans, the National Association of Home Builders said in a blog post on Friday.

The minority homeownership rate rose to 48.3% in the third quarter, up almost a percentage point from a year earlier, the post said. The 0.9% gain was higher than the 0.4% increase in the overall U.S. homeownership rate, which rose to 64.8%.

“Lower mortgage rates (at a three-year low) and a healthy job market have helped to make homeownership more affordable,” the post said. “These factors are most likely contributing to the recent upticks in the overall and minority homeownership rates.”

The average U.S. rate for a 30-year fixed mortgage declined every month of 2019 until ticking up eight basis points in October. The average was 3.69% last month, rising from a three-year low of 3.61% in September, according to Freddie Mac data. The higher rate seen in October is still more than a percentage point below the 4.83% in October 2018.

Breaking down the minority homeownership rate, the Hispanic rate gained the most in the third quarter, with a 1.6 percentage point increase to 47.9%, NAHB said.

The black homeownership rate posted the second-largest gain, up 0.8 percentage point to 43.3%. It was the largest gain in the black homeownership rate since the third quarter of 2017.

“It is important to note that this quarter’s gain stands in contrast to five out of the six prior quarters, going back to the 1st quarter of 2018, which were marked by significant declines in the black homeownership rate,” NAHB said.

The rate for black Americans fell to 40.6% in 2019’s second quarter, the lowest level ever recorded in the Census Bureau’s quarterly data going back to 1994. It was the lowest rate for black households since the 1950 decennial Census when it was 34.5%.

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Shopping around for a mortgage really paid off for borrowers last week

Mortgage borrowers who
shopped around last week could’ve saved $48,911 on the life of a $300,000 loan,
according to LendingTree‘s Mortgage Rate Competition
Index.

The index measures the spread in the APR of the best
offers available on its website. LendingTree derives that savings claim by
comparing the amount a borrower would pay out of over the life of a loan at the
lowest available interest rate on its site versus the highest
available interest rate.

According to the company’s data, although the share of borrowers that received rates under 4% moderately edged down from last week, nearly 50% of borrowers received rates under 4%, with the index growing to 1.03 for the week ending Nov. 10, 2019. 

LendingTree indicates that for 30-year fixed-rate
mortgages, 48.2% of purchase borrowers received offers under 4%, falling from 53.5%
the previous week.

Despite the decline, the percentage is still a significant increase from 2018, when virtually no purchase offers were under 4%.

Additionally, the report highlights that across all
30-year, fixed-rate purchase mortgage applications made on LendingTree’s site, 13.1%
of borrowers were offered an interest rate of 3.75%, making it the most common
interest rate.

When it comes to 30-year
fixed-rate refinance borrowers, 48.6% received offers under 4%, retreating from
54.7% one week prior. Nevertheless, the rate is still much higher than it was
in 2018 when 0% of refinance offers were under 4%.

So, with a wider refinance
market index of 1.17, the typical refinance borrowers could have saved $55,868 by
shopping around for the lowest rate.

According to the report, across all 30-year, fixed-rate
refinance applications, the most common interest rate was 4%. This rate
was offered to about 15.5% of borrowers.

This image highlights the distribution of last week’s
mortgage fees:

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