Wednesday, November 25, 2015


“When I started counting my blessings, my whole life turned around.” –Willie Nelson

Today in the U.S. we are celebrating Thanksgiving Day. A national holiday, it is a day that is traditionally dedicated to serving turkey, eating too much, football, and family moments.

It is also a day for giving thanks.

While everyone at Global Home Finance is enjoying the day with their families and friends, we did want to drop a quick email to let you know how fortunate we feel to have you as a member of our Global Home Finance community.

In fact, we wanted to take time to let you know how truly thankful we are for YOU.

Which is why today’s email is dedicated to six reasons we are grateful to have you as one of our Global Home Finance faithful.

We are thankful for you because you…

  1. Are a remarkable person. The caliber of our Global Home Finance borrowers is spectacular. Smart, funny, deep-thinking, creative, thought-leaders are just a few of the words that come to mind when I think of the people we meet day in, day out when speaking with Global Home Finance borrowers. 

  1. Encourage us to be our best. Because you demand and expect the best of us (as you should,) this helps push us to be better. To always strive to improve. To deliver better rates, better programs, better service, and better results.

  1. “Get it.” Let’s face it. As a homeowner, you have worked hard to make a place for yourself you can call your own and renters may not why you push so hard to make your house your home. It’s great to be around people who get it. So thanks for striving to be your best and understanding why we at GHF do the same.  

  1. Said “yes.” We know it takes a lot these days to put your trust in a business. Especially because there is so much misinformation about what really works. We appreciate that you continue to put your trust in us…  

  1. Stick around. We’ve had a lot of borrowers who have been with us for years. And others who, while they haven’t been customers as long, have stuck around beyond their first home purchase or refinanctestimonials and honest feedback this year.  We appreciate youworking with us and are exceedingly glad that you have stayed in touch and given us guidance on how we can best serve you and others in the future . That means a lot to us. Without you, we would never be able to continue doing what we do.  

  1. Share your great ideas and successes with us and other Global Home Finance customers. Every day we receive emails, letters, and phone calls sharing results you have acheived by placing your your trust in our assistance. Thank you for letting others know how we have served you in exceptional fashion and to help us get the message out to other consumers in the markets we serve.  Education is the key to better financial decisions for all of us here in Texas and Georgia.  Letting others know how we have made your financial life better than our competitors and how we added value at every step of your mortgage transaction is commendable.  Letting others know that they can expect similar results is magnifying our reach and allowing us to help more of our neighbors.  Only through increased awareness in all communities we serve can we continue to spread the message that using a NAMB mortgage broker is a more cost effective way to successfully place your home finance needs.  We promise to continue to work tirelessly into 2016.  Global Home Finance will be releasing 6 new websites to educate the markets we serve about 6 unique sectors of mortgage lending with highly tailored information that will increase awareness about each lending sector represented.  Our goals are to increase the knowledge that our customers can gain at the stroke of a few keys 24/7, provide more value in one place than any of our competition and continue to contribute to your financial success at the highest level possible, as well as support our philanthropic goals to improve the communities we all live in together.  Thank you for a fantastic 2015 and to a prosperous financial future for all we have the privilege of reaching this coming year.  

1.  Avoid carrot sticks. Anyone who puts carrots on a holiday buffet table knows nothing of the Holiday spirit. In fact, if you see carrots, leave immediately. Go next door, where they're serving rum balls.
2. Drink as much eggnog as you can. And quickly. It's rare. You cannot find it any other time of year but now. So drink up! Who cares that it has 10,000 calories in every sip? It's not as if you're going to turn into an eggnog-alcoholic or something. It's a treat. Enjoy it. Have one for me. Have two. It's later than you think. It will soon be Christmas!
3. If something comes with gravy, use it. That's the whole point of gravy. Gravy does not stand alone. Pour it on. Make a volcano out of your mashed potatoes. Fill it with gravy. Eat the volcano. Repeat.
4. As for mashed potatoes, always ask if they're made with skim milk or whole milk. If it's skim, pass. Why bother? It's like buying a sports car with an automatic transmission.
5. Do not have a snack before going to a party in an effort to control your eating. The whole point of going to a holiday party is to eat other people's food for free. Lots of it. Hello?
6. Under no circumstances should you exercise between now and New Year's. You can do that in January when you have nothing else to do. This is the time for long naps, which you'll need after circling the buffet table while carrying a 10-pound plate of food and that vat of eggnog.

Tuesday, November 24, 2015

Trends in Credit/Credit Scores in Residential Lending

What is a huge concern of Fannie Mae and Freddie Mac? It isn't rates, or credit risk. It is having their business flow, and that of their client's, interrupted due to some type of cyberattack. And I have received plenty of e-mails talking about "ransomware" which is where a type of malicious software designed to block access to a computer system until a sum of money is paid. Usually companies just pay it and go on with their business, but it should be reported to authorities, and there is a site to do exactly that run by FS-ISAC.

Credit is definitely part of lending. What is going on with trends out there and what are lenders & vendors seeing?

Last week TransUnion is releasing its quarterly debt and delinquency data. "Overall, consumer credit markets have maintained a strong performance in Q3. Mortgage delinquency rates continued the trend of double-digit annual declines, and both auto loans and credit cards showed strength through stable default rates and balance growth. The mortgage delinquency rate declined to 2.40% in Q3 2015, from 3.36% in Q3 2014. Millennials and the 60+ age group are the least risky consumer groups, with delinquency rates at 1.62% and 1.77%, respectively. Super prime and prime consumers continue to have strong appetite for mortgage loans, with a 50% and 40% year-over-year increase in originations, respectively (viewed one quarter in arrears). And every U.S. state experienced yearly declines in mortgage delinquency rates."

TransUnion also reported in on the credit card market, saying that total bankcard balances grew 4.7% to $637 billion in Q3 2015, compared to $608 million in Q3 2014. There were 15.1 million new credit card originations in Q2 2015, up from 13.5 million in Q1 2015. And that the credit card delinquency rate rose to 1.43%, from 1.19% the previous quarter." For more information visit Q3 2015 Industry Insights Report.

And Equifax reported that, "Banks' Mortgage Portfolios Not Matching Hot Pace of Originations." "Equifax today provided new data and insights on a major frustration facing some of the nation's leading mortgage bankers: Why their mortgage loan portfolios have stagnated at the same time originations are soaring."

Nekeidra Taylor from the Wilbert Group shared data from Equifax's National Consumer Credit Trends Report indicating that subprime mortgage originations have risen across the U.S. The amount of first mortgages to borrowers with low credit scores increased 30.5 percent, home equity installment was up 29.5 percent and HELOCS rose 20.4 percent. Subprime loans still only account for a small amount of overall total mortgage originations, mainly due to the low credit score requirement, which is generally below 620. In the first five months of the year, 525,000 HELOCS were originated and only 7,800 were considered subprime and those who obtained a HELOC with low credit saw a 21.5 percent decrease in borrowing power from May 2014 to May 2015. This indicates that those getting HELOCs generally have a credit score above 620, suggesting that more lenders are taking the necessary precautions to limit their risk.
Recently, for all loan types, U.S. Bank Home Mortgage removed the requirement to close the account when paying off revolving debt to qualify. Revolving debt paid off prior to application that continues to be listed on the borrower's credit report must be properly documented as paid in full by the creditor statement dated after the credit report or a credit report supplement.

Revolving account(s) paid during the transaction will require a copy of the cancelled check, the paid statement from the creditor or a credit supplement showing the balance has been paid to $0. Evidence the account has been closed will no longer be required. Revolving account(s) paid off at closing must be reflected on the HUD1/Closing Disclosure. All funds used to pay off debt must be sourced and verified.

Reaching back into the summer, Zelman & Associates published their July Mortgage Originator Survey emphasizing that entry-level credit availability was better than anticipated. The credit quality index declined to 64.6 in July from 65.1 the previous month, reaching its lowest level since mid-2012 and the underwriting criteria index dropped to 64.9 to 65.5 as 26 percent of lenders cited easing of standards. The average credit score for purchase loans dropped to 728 in July from 731 in June and 48 percent of lenders expect standards to become more lenient over the next year compared to 5 percent that expect a tightening of standards. For more information about the survey, contact Ivy Zelman .

And even earlier this year BofA Merrill Lynch released a report on mortgage lending trends highlighting that the MBA's mortgage credit availability Index has been increasing the past few months, reaching 125.5 in July, which is the highest level since June 2009. The index is still only a fraction of its pre-crisis level, although credit availability is improving, it's moving at a slow pace. Similarly, the most recent housing affordability reading (May) indicates affordability has dropped to the low end of the post-crisis range, mainly due to the rise in home prices. The share of refinances has also been on the decline, and most lenders have shifted focus towards the purchase market. The housing demand is expected to drop if interest rates inch higher but long term interest rates should remain at current levels.

Monday, November 23, 2015

The cost of regulations

For me this week included spending time with veteran bankers and mortgage bankers in Northern California, Colorado, and Kansas City. What I see are a lot of people caring about and doing their jobs, and helping their clients in spite of the continued escalating cost of regulation (which is passed on to consumers) and the nebulous, impossible-to-keep-track-of, web of local, state, Federal, and regulator requirements & regulations. Some say that most LOs and brokers have given up, and have shifted the "keeping track" burden to processors, underwriters, pre-funding QC, and compliance personnel. Many would beg to differ, saying that the successful originators have a very good handle on compliance.

Understandably the CFPB doesn't appear to care about the cost of regulations, any more than an investor would care about a broker's cost of business, or you care about the cost of trucking paper towels to your store. Regardless, I received this note from a senior manager along the Atlantic Seaboard. "When I starting tracking costs in mid-2009, average fees for certain brokered loan services were as follows: average underwriting fee of $395, average appraisal fee of $250.

"The underwriting fee for a brokered loan now seems to average around $800 which can be attributed to additional regulatory requirements and time deadlines. The appraisal fee average is now around $450 in our state, primarily due to the addition of the AMC 'layer.'

"Also, back in 2009, I don't remember ever having a purchase closing where the title company acted as settlement agent; funds were normally disbursed through the attorney's trust account. While the trend towards attorneys farming out the settlement/disbursement responsibilities to the title agencies has expanded over the last few years, I believe that the last 'holdouts' of attorneys we regularly work with (which until now had still acted as settlement agent) have thrown in the towel and delegated settlement services to title due to TRID. So that adds at least another $375 to the cost of the transaction. The result is that a typical purchase loan at my shop now costs around $975 more than before the regulators added all this consumer protection."

I asked compliance expert Annemaria Allen who replied, "One of my compliance officers got this question the other day and our general advice was if the realtor wants a copy of the CD they can ask the borrower to provide them with a copy and the borrower may if they choose to.  The CD is provided by the lender for the benefit of the borrower. The realtors can get a copy of the settlement statement from escrow/title that show the settlement fees. We worry about sharing sensitive information, even with the borrower's authorization. Those are just our unofficial opinions and are not necessarily backed by any regulation. 

"In addition, if a Lender perhaps had an authorization form from the Borrower allowing them to provide the CD to parties to the loan transaction it might work but I would want to make sure that they have clear policy and procedures surrounding this and that the Borrower clearly understands the authorization form. I'm not sure that Lenders will want to take on this risk but it may be a Borrower by Borrower situation. Lastly, in past lives, when working for lenders and/or broker shops, we could never give HUD's directly to the Realtors - they had to get it from Escrow and/or the Borrower. Unfortunately there isn't clear regulation or commentary on this.  It's almost a 'Best Practice' that a Lender will have to implement and with that being said...keeping GLBA in mind."

"The HUD is gone! You can tell me the HUD is gone, but when we did the first closing and there was no HUD, it was astonishing. Look, this is just an outright abuse of Government power and it is basically mean spirited, arbitrary and capricious that they removed the HUD. It is like waking up one morning and all the stop signs in the US are now round and painted purple, not red and octagon-shaped. The HUD is the universal document that everyone, from the person working the front desk to the accountant wanting to do your taxes knows and understands universally. It is its' own language. Gone overnight. There was no reason for it being removed and I could explain it to a HUD novice in 15 seconds.

"I just came from an operations/pipeline meeting. The entire conversation was about dates, process to meet those dates, and deadlines that are arbitrarily set up about which the client could not care less. The client is being notified of things they are already aware of and trust us to deliver on it. If they knew that their process was getting delayed buy this, they would tell us to stop it. We are bothering the clients asking them to sign something that they already know is the case, but have to be bothered days before closing and again at closing. My staff is being distracted from their important work to meet dates that are irrelevant, the clients couldn't care less about and are very, very cumbersome.  We have Encompass, so I know much of the industry is struggling with the exact same issues. The client loses, the industry loses and the bottom line suffers for these Government inefficiencies. We are making changes to a process that has served everyone perfectly well for 50 years and have replaced it with a bureaucratic process that serves no body well:  is all I can say."

Friday, November 20, 2015

Appraisal news across the board

Every day we all hear rumors, big and small, mostly unfounded. Rumors like that large companies in the vein of Franklin American and Freedom Mortgage will soon announce large settlements with regulators, Navy Fed's CFPB exam is wrapping up, that Wells Fargo retail won't be able to do HARP or 203(k) loans until early 2016, that startups like Privlo are being shuttered. But one thing we know for sure is that mortgage denial rates were down last year compared to 2013, especially for black and Hispanic borrowers. The amount of conventional mortgage applications increased from 2013's 2.0 million to 2.1 million in 2014, but the denial rate fell to 11.2 percent from 12.4 percent during the same time period. Denial rates had dropped 5.1 percent for black applicants and 3.1 percent for Hispanic applicants.

For those looking for a new correspondent investor, "The Money Source is growing by leaps and bounds. One of the reasons for TMS's dramatic growth is their customer-centric approach: a Correspondent and Seller relationship can either be a 'partnership' or a 'transactionship.' A partnership is where all parties' interests are aligned and they are each working toward a mutually beneficial goal. One way TMS brings this to life with their Correspondent partners is by co-branding their servicing statements, thus giving them the ability to have information such as your company's name, logo and contact information on the Borrower's monthly mortgage statement. TMS calls this their Balance Sheet Builder Program. Basically, TMS is trying to send business back to their Sellers - a refreshing approach in an industry not known for promoting others. To learn more about how you can build your balance sheet with The Money Source, email EVP of Correspondent Sales, Jeff Vanderluit."

And under the "new products" flag, MarX Financial Commercial is pleased to announce a nationwide "Fix and Flip" financing revolving Line of Credit (LOC) for real estate developers, and investors, that can provide financing of up to 85% of the total project cost. The line is available on non-owner occupied single family properties, multi-family, office, retail and industrial types of properties. Jay Michalowski, CEO of Marx states, "We can go up to 85% LTC financing for the acquisition and renovations. So the borrower walks into the closing with 15% of the total project and we will fund the rest."  Escrow funds are set-up and draw requests and payments are made after each inspection. Michalowski adds, "For residential and commercial mortgage bankers who receive these inquiries, and we know who your originators are, and we can provide a non-bankable, quick solution to meet your demand." To find out more about Marx Financials fix and flip and commercial programs, please contact Jay Michalowski.
This is your personal invitation to the launch of National Mortgage Professional Magazine's biggest FREE Holiday Networking Parties in years. The 2015 parties will be in Irvine, CA on Tuesday, December 8th, Dallas, TX on December 10th and Orlando, FL on December 15th. Each party starts off with the Next Gen Mortgage Professionals Rally to launch its campaign titled, "Recharge the Mortgage Profession" and college students, veterans and individuals interested in changing careers are invited to attend. The rallies will be followed by business building workshops from industry leaders such as Greg Frost from PRMI, Barry Habib from MBS Highway, and Frank Garay and Brian Stevens from NREP.  Workshops will be followed by a networking party where attendees will mix and mingle with other successful mortgage loan officers and celebrate the evening with music, complimentary food, prizes, and a heavy dose of holiday cheer! MLOs with NMLS numbers, college students and veterans attend free. Register by clicking the state that you wish to attend: California, Texas, or Florida.
Congrats to Blackstone: it has grown its size nearly four-fold since its 2007 IPO. "But the biggest private equity firm on Wall Street has seen even greater growth in its real estate division, which has expanded from a $17.7 billion business when Steve Schwarzman took his company public to one that today manages nearly $100 billion worth of property." If that is correct it could very well be the largest private owner of real estate in the world.
And while we're discussing growth, The Mortgage Collaborative, an independent mortgage lending cooperative, announced the formal approval of 10 new preferred vendor partners to its national network. Rich Swerbinsky, EVP of National Sales & Strategic Alliances, sent over a list of the new "partners": AcuClix Social Media Compliance, Advantage Credit, American Mortgage Law Group, Credit Plus, DataTree by First American, Docutech, Icon Advisory Group, Richey May, The Rule Tool, and Spiegel Accountancy.
  And in political chatter, the House of Representatives passed a QM-related bill. The "Portfolio Lending and Mortgage Access Act" would broaden the definition of qualified mortgages - those that qualify for the safe harbor - to include all mortgages held on a lender's balance sheet. Most, however, believe that even if it makes it to the President's desk it will be vetoed.
Appraisal-related news? Let's take a look at trends over recent months. The industry, of course, knows that the number of appraisers is declining - for reasons that are well documented.
HUD Handbook 4000.1, which became effective on case numbers assigned on or after September, contains numerous updates to previously established property eligibility criteria and appraisal requirements.
Onboarding to the Federal Housing Administration's (FHA) Electronic Appraisal Delivery (EAD) portal is well underway for FHA-approved mortgagees participating in the first onboarding phase. The second onboarding phase began on November 15 and mortgagees intending to participate in this phase must be registered before this date.
Going back a ways, the June issue of Mortgage Banking magazine featured an article, "State of the Appraisal Industry," authored by CoesterVMS CEO Brian Coester. In the piece, Coester described an appraisal environment that is in flux, attempting to balance professional expertise with big data and waning licensure with increased demand. Coester identified and proposed solutions to several current issues including Appraisal Accuracy, Implementation of Collateral Underwriter and Alternative Valuations.

Thursday, November 19, 2015

Who can keep track?

Where the heck did 40 years go? Call any person who underwrites loans or draws docs and ask if they'd like to do that for 40 straight years. The answer would probably be hearing a "click" when they hung up. On the other hand, on this exact date in 1975 at Hammersmith Odeon, London, Bruce Springsteen & The E Street Band played their first gig outside of the United States during the Born to Run tour. Yes, time flies. In fact it's already been seven years since Fannie & Freddie were placed into conservatorship (September 2008). A bill authored by Rep. Ed Royce, R-Calif., to cap annual pay at $600,000 for Fannie Mae and Freddie Mac CEOs has passed with bipartisan support. I think we all know plenty of LOs and AEs that will make more than that this year.

A recent decision by the Minnesota Supreme Court (Quik Payday Inc. v. Stork) serves as a painful reminder that lenders can't ignore state laws and instead rely on Federal statutes. Ballard Spahr commented, "The perils faced by Internet lenders seeking to avoid application of a borrower's home state law also include the risk of a CFPB UDAAP enforcement action. Despite its lack of authority under the CFPB to regulate interest rates, the CFPB has brought two lawsuits against internet lenders in which it has claimed that the lenders engaged in UDAAP violations by making loans at rates that exceeded usury limits in the borrowers' home states.

"In December 2013, the CFPB filed a lawsuit in Massachusetts federal court against CashCall, several related companies and their principal.  The companies allegedly funded, purchased, serviced and collected online payday loans made by a tribally-affiliated lender the CFPB did not sue.  The CFPB charged the defendants with engaging in UDAAP violations by seeking to collect loans that were purportedly void in whole or in part under state law because the lender charged excessive interest and/or failed to obtain a required license.

"In July 2015, the CFPB filed a complaint in federal district court in New York against a group of commonly-controlled companies for allegedly engaging in unlawful conduct in connection with making payday loans over the Internet. (In its press release, the CFPB described the action as a suit against an "offshore payday lender.") According to the complaint, the defendants performed different functions such as purchasing leads from lead generation companies, brokering loans, originating loans, and collecting loans. The complaint alleged that the defendants made payday loans to residents of states in which the loans were void under state law because the defendants charged interest rates that exceeded state usury limits or the defendants failed to acquire required licenses. The CFPB claimed that the defendants engaged in UDAAP violations by actions that included misrepresenting that consumers were obligated to pay debts that were void under state law.

And for anyone who missed it remember that the CFPB issued non-binding guidance in the form of Bulletin 2015-05 on marketing service agreements (MSAs). Based on the CFPB's investigative efforts, "it appears that many MSAs are designed to evade RESPA's prohibition on the payment and acceptance of kickbacks and referral fees." The CFPB addressed the use of a third party to value services to be performed under an MSA in stating that "independently established market-rate compensation for marketing services, alone, does not suffice to ensure the legality of an MSA." The CFPB wrote, "The Bureau's experience in this area gives rise to grave concerns about the use of MSAs in ways that evade the requirements of RESPA. In consequence, the Bureau reiterates that a more careful consideration of legal and compliance risk arising from MSAs would be in order for mortgage industry participants generally."
As if preparing for TRID wasn't enough, a while back the CFPB announced a new final rule, modifying Relegation C, which implements HMDA. The 800 page rule will expand HMDA reporting requirements and include new information that will need to be gathered. For example, lenders will need to report on an applicant's DTI ratio, interest rate of the loan, and the discount points charged for the loan. The final rule is effective January 1, 2018.

Wednesday, November 18, 2015

Slew of vendor updates

I do a little traveling (this week, hopefully, is California, Colorado, and Kansas) so it was interesting to see that Pro Teck Valuation Services recently identified 29 of the hottest markets, with 21 of them west of the Rockies. Some of the top markets include, Anaheim-Santa-Ana-Irvine, CA, Bellingham, WA, Boise City, ID, Chico, CA, Durham-Chapel Hill, NC, Medford, OR, Olympia, WA, Phoenix-Mesa-Scottsdale, AZ, Portland, OR, Seattle, WA and Salt Lake City, UT. Coldwell Banker reports the most expensive housing markets (in order) the US are: Newport Beach (CA), Palo Alto (CA), Saratoga (CA), Cupertino (CA) and Los Gatos (CA). Meanwhile, the least expensive cities in order are: Cleveland (OH), Riverdale (GA), Wilkes-Barre (PA), Detroit (MI) and Alma (MI).

Lenders continue to outsource tasks to vendors, and there has certainly been plenty of vendor news!

MCT Trading, Inc., a mortgage risk management company which provides pipeline hedging, best-execution loan sales and centralized lock desk services, announced that it has acquired certain key assets of PLar Analytics, LLC, a provider of financial models for mortgage bankers, and of PB Pacific Partners, LLC, which offers consulting services on capital markets and mortgage servicing. The deal expands MCT's advisory services to include specialization in mortgage servicing rights (MSR) valuation business. This new MSR Services Group will be headed by Phil Laren, founder of PLar Analytics and PB Pacific Partners

A while back Levy & Watkinson, a New Jersey law firm devoted to representing the mortgage industry in the New Jersey metropolitan area, announced that it is joining Offit Kurman Attorneys At Law, a full service law firm located in the mid-Atlantic Region. E. Robert Levy and Wayne Watkinson, partners in Levy & Watkinson, will join Offit Kurman as principals and as members of the firm's Financial Institutions Regulatory Practice Group.  


Playing some catch up, a while back (like 6 months ago) Flagstar Bank has joined The Lenders One Mortgage Cooperative as a new preferred investor. Read all the details in Flagstar and Lenders One agreement announcement.


The IRS has released a revised Form 4506-T (version 9/2015). The only significant change is the new form contains a borrower attestation box which must be checked (above the signature line).
Credit Plus announced a new feature that can be added to its credit reports to help validate a borrower's name, address, date of birth, Social Security number and phone number. In addition, FraudPlus ID goes even further and reviews the borrower's data against the Industry Standard Exclusionary Watch lists. Click here to read the latest news on FraudPlus ID from Credit Plus.

Tuesday, November 17, 2015

Terror that Europe will feel for a long time to come

The savage attacks in Paris Friday night by ISIS clearly escalate the terror that Europe will feel for a long time to come. Will the attacks have a major impact on the EU economy, will the US actually respond with a major effort? Two questions that presently are being debated around the world. That the attacks happened on Friday evening has kept markets generally settled; had those attacks happened during the week we would have momentary chaos in markets. This morning the markets began relatively calm, here and in Europe; stocks starting quietly, the bond and mortgage markets also stable.

The NY Fed Empire State manufacturing index was expected at -5 frm -11.4 in October, the index collapsed to -10.74. Manufacturing in NY isn’t a major industry but the report continues to show US manufacturing is in deepening trouble. Orders component at -18.18 the lowest of the year, the work week down to -14.55 the fifth time it has been declining and the worst reading since June 2013. The employment component -7.27 he weakest since Nov 2009.

Right out of the gate this morning the financial media has leaped in with the question; will the terrorist attacks in Paris keep the Fed from increasing interest rates that is widely expected? Until Friday evening the only potential impediment to a rate increase was the Nov employment report due on Dec 4th. Now another layer to consider; if the US were to add more troops in Syria or in any way become deeply involved the Fed would likely pass on an increase. A huge unknown presently, and the US has not shown much interest in escalating our involvement, just a smattering of commitments.

The bond and mortgage market a little better this morning; as we noted last week we expect some improvements in the rate markets, mostly from a technical perspective; our models implied the rate markets very oversold when viewed form a near term perspective. Since last Monday the 10 yr note yield hit a high at 2.33%, this morning in early activity at 2.25% -2 bps frm Friday’s close. MBS prices since last Monday haven’t gained much; recent selling in the bond market was primarily in treasuries, a rebound won’t be as significant as in treasuries.

Global markets are taking the Paris attacks seriously, increasing a number of questions that are not going to answered or understood for weeks. Traders and investors however are not panicking as we might have expected. The attacks were not even on the table of concern, governments believing ISIS didn’t have the capability to move out of the Mid-East in its reach. A new development now showing ISIS has a much farther reach than anyone believed. One attack though, isn’t a trend, and hopefully it won’t escalate further. Europe’s economy is weak, even Germany’s economy slipping. More attacks would bring additional slowing to the economies. How will the Fed respond now? We don’t believe the Fed will be too concerned and change its plans unless there is another attack soon.