“I
don't like making plans for the day because then the word 'premeditated' gets
thrown around in the courtroom." We don't want that, but one thing
Realtors and lenders want is young folks with less debt. (There is one company
that I know of that is refinancing student debt and helping potential first
time home buyer's credit: Social Finance.) A Wells
Fargo survey of Millennials finds 47% spend at least 50% their paychecks
servicing debt related to credit cards, student loans, mortgages and others.
With
the majority of the millennial generation already saddled with debt it may be
surprising to find that more millennials are moving to larger and more
expensive metropolitan areas. While these cities do attract young adults
for their cultural attractions and public transportation, these cities offer
more job opportunities for millennials than other areas. Zillow's analysis of
U.S. Census data suggests that there is an inverse relationship between a
city's unemployment rate and its share of millennial movers. There are outliers
in the data that include Chicago, San Francisco and New York that are
attracting a large number of millennials even though the unemployment rate is
high. Also, cities like Miami, Las Vegas and Phoenix should be attracting more
millennials, since rent is affordable and unemployment rates are low, but they
are not. In fact, older movers are more inclined to move to Arizona or Florida
and may outnumber younger movers in these areas. Since millennials are moving to
cities where home prices are very expensive, more young adults may not intend
to a buy a home in the near future as it is out of their reach. Instead, they
are moving to these cities because of income growth and employment
opportunities.
The
Mortgage Bankers Association (MBA) announced a new private exchange which will
offer healthcare and other employee benefits for its member companies. The announcement noted
that, "Addressing the challenges of maintaining a competitive employee
benefit program, 'MBA Health Link'
will provide an easy solution for employers wanting to control costs while
offering more benefit options to meet the varied needs of their employees. The
creation of MBA Health Link is being made possible through an
exclusive partnership with Arthur J. Gallagher & Co., a US-based
global insurance brokerage and risk management services firm. 'MBA is
pleased to partner with Gallagher to create MBA Health Link and
thus offer healthcare and employee benefits that are exclusively for our
diverse membership,' said MBA Senior Vice President, Residential Policy &
Member Engagement, Pete Mills." Companies that adopt MBA Health Link will
utilize a defined contribution (DC) strategy. Unlike the defined benefit
approach, a DC strategy allows for transparency in total employee compensation
and makes it possible for employers to link their long-term benefits budget
with metrics relevant to their business. A DC strategy works best in a
private exchange environment, where employees have a choice on how to spend
their benefits dollars. For more information, contact Tricia
Migliazzo.
The
results from the 2013 American Housing Survey
is a detailed report that presents a summary of statistical data in the form of
a spreadsheet covering a variety of housing figures. Topics include
single-family homes, apartments, manufactured homes, vacant units, family
composition, income, housing and neighborhood quality, housing costs,
appliances, fuel type, remodeling and repair, and recent moves. The American
Housing Survey is conducted biennially and is sponsored by HUD. This year, new
topics to the survey include disaster planning and emergency preparedness,
public transportation, household involvement in neighborhood and community
activities, and the presence of adult children living at home.
Zillow
analyzed U.S. home construction by decade and state, beginning in 1900 up to
the current decade. The analysis grouped homes
according to the decade they were constructed, encompassing a total of 12
decades, excluding homes that were previously built and then destroyed or
rebuilt. Nationally, the greatest portion of existing homes was constructed
between 2000 and 2009, representing 16% of all homes built during that decade.
Eleven percent of all U.S. homes were built before 1950 and the majority of
U.S. homes were constructed in 1950 or later. Homes constructed before 1920
only account for 3% of the current national housing stock, whereas the largest
portion of Washington D.C.'s housing stock was built before 1920. Nevada and
Arizona saw the largest amount of homes built from 2000 to 2009, at 36% and 29%
respectively. Construction has waned since the beginning of the current
decade, and is below par the rate set in the latter half of the 20th
century and previous decade.
Let's move on to Freddie and Fannie updates from the last
few weeks - they never stop!
I
have been asked recently about Fannie's HomePath product. No, it is not
discontinued. Rather than offer HomePath as a negotiated variance, Fannie
created a new version of HomePath is now available to all lenders as
guide-eligible product. This was done in response to feedback from lenders who
wanted direct access to some of the flexibilities in HomePath. Lenders
should review the guide and the announcement at www.fanniemae.com in order
to be familiar with the differences and/or speak with your rep.
Fannie
Mae is accepting delivery of HUD-guaranteed Section 184 (HUD-184) Native
American mortgage loans and Rural Development (RD)-guaranteed Section 502
(RD-502) loans as standard products for whole loan committing and delivery,
with no variance required (MBS execution will be available at a later date).For
more information, click here.
Fannie Mae updated policies related to project standards requirements, including changes and clarifications to fidelity/crime insurance and liability insurance for certain projects. In conjunction with these policy changes, the Condo, Co-op, and PUD Eligibility web page has been enhanced and new and updated resources are available. Policy change pertaining to how loan-level price adjustments are applied to certain mortgage loans for borrowers without credit scores, allowing for applicable loan-level price adjustments to be applied based on the credit score of a co-borrower, if applicable, rather than the lowest credit score range. To view the entire announcement 2014-13, click here.
Fannie
Mae posted Advance Notice of Future Changes to Investor Reporting Requirements
This Lender Letter provides advance notification to servicers of changes to certain investor reporting requirements that will become effective in or around the third quarter of 2016. To view the letter, click here.
Fannie Mae announced the publication of the new Single-Family Servicing Guide, which will replace the 2012 Servicing Guide in its entirety. For details, view the announcement by clicking here.
This Lender Letter provides advance notification to servicers of changes to certain investor reporting requirements that will become effective in or around the third quarter of 2016. To view the letter, click here.
Fannie Mae announced the publication of the new Single-Family Servicing Guide, which will replace the 2012 Servicing Guide in its entirety. For details, view the announcement by clicking here.
Freddie
Mac and Fannie Mae have rescheduled the update to the Submission Summary Report
(SSR) in the Uniform Collateral Data Portal® (UCDP®) for December 7. To review
the planned UCDP changes, click here.
Fannie
Mae has provided notification of upcoming changes related to the assessment of
compensatory fees for delays in the liquidation process. To view the Lender
letter, click here. Additionally,
servicers are notified of changes to two Servicing Guide Exhibits, Foreclosure Time Frames and Compensatory Fee Allowable
Delays, and Allowable Foreclosure Attorney Fees.
Freddie
Mac's recent bulletin covers several servicing requirement changes including MI
delegation of authority for foreclosure sale bidding and requirements for
handling insurance loss settlements when the mortgage premises is located in an
eligible disaster area as well as properties that are not. To view the complete
bulletin, click here.
Fannie
Mae released its new Servicing Guide that
would replace the 2012 Servicing Guide in hopes of making it
easier for servicers to do business with Fannie Mae. The new guide is intended
to make locating policies and requirements easier, has created a separate
Servicing Guide Procedures and allows for real-time updates. All announcements
issued through October 17, 2014 have been incorporated into the new guide. The
Servicing Guide has been rewritten to exclude policies and requirements that
are not required or duplicative and content has been revised to be consistent
with the selling guide. Other changes include submitting the term "lender"
for "seller/servicer", "seller", or "servicer",
there is a separate Balloon Mortgage Loan Servicing Manual and Investor
Reporting Manual.
Turning
to the secondary markets, Cerberus' FirstKey is coming to market with an
MBS. Besides being guilty of being yet another company with a midDle
letTer capitalized, the security is of interest to the market since it is a
jumbo deal, rated by Kroll, and backed by loans from CMG and Cornerstone.
Market Report:
The 19th day that the bellwether 10 yr has traded in an 8 bps
yield range; this morning the 10 opened at 2.34% then increased to 2.36%
when October housing starts and permits were reported at 8:30. October starts
were -2.8% on the headline but the details were good for single family starts;
single family starts increased 4.2% in October while the volatile multi-family
starts were down 15.4% from Sept. Sept starts were revised from 1010 mil to
1040 mil. Through the first 10 months of the year, single family starts are up
5.3%. Multi-family starts have increased 19.6% so far this year, compared with
the first 10 months of 2013. That is an improvement, but not the breakout year
that some had forecast. Building permits, a bellwether of future construction,
increased 4.8% last month to a 1.08 million rate, estimates for permits was an
increase of 1.7%. The decline in multi-family October starts masked the nice
increase in single family, a more significant sector. Single family permits
increased 1.4%, the best rate for the category since November 2013. Yesterday
the NAHB housing market index jumped 4 points to 58 from 54, a much stronger
report than had been expected.
The bond and mortgage markets took the report hard but in the
context of the wider perspective the 10 is still well-contained in its19 day trading
range between 2.30% an 2.38%; at 9:30 the 10 traded at 2.36% up 4 bps from
yesterday’s close and 30 yr MBS price down 20 bps from yesterday’s close and
down -15 bps from 9:30 yesterday. The DJIA opened down 32, NASDAQ -10, S&P
-5.
Nothing else on the calendar to be concerned with until the FOMC
minutes from the October meeting are released at 2:00 this afternoon. At that meeting the Fed
decided to finally end the monthly purchases of MBSs and treasuries, it was not
a surprise though, it was widely expected. The debate will be interesting;
there is an increasing view that the Fed is falling behind the curve in terms
of increasing the FF rate, recent data like today’s starts and permits will add
to that thought but it is still likely the Fed will begin increasing rates
until at least mid-2015.
After the elections two weeks ago we thought the first major
vote would be to approve the Keystone pipeline; wrong…last night the Senate defeated
the legislation by one vote 59 to 41, it takes 60 to win. Republicans, who won
a Senate majority on Election Day, are already planning to bring the pipeline
up for a vote as one of their first acts when they take control in January. It
is of course not a market mover but does suggest even though the Senate went to
Republicans they don’t have a walk over on any legislation.
As long as the 10 remains in its 19 day range between 2.30% and
2.38% we consider the market neutral; all of our technicals are essentially flat (or neutral); not
bullish or bearish. In this kind of activity floating is more a guess for
anticipating interday changes. We have tried floating a few time recently; in
every case we didn’t benefit, however we didn’t lose either. In a trading
pattern like we have now the problem is we can get whipped-sawed (floating when
we should lock, and locking when we should float). Best to keep locked as long
as the equity markets hold gains.
PRICES @ 10:00 AM
- 10 yr note: -9/32 (28 bp) 2.36% +4 bp
- 5 yr note: -6/32 (18 bp) 1.65% +4 bp
- 2 Yr note: -2/32 (6 bp) 0.54% +3 bp
- 30 yr bond: -16/32 (50 bp) 3.06% +3 bp
- Libor Rates: 1 mo 0.154%; 3 mo 0.231%; 6 mo 0.325%; 1 yr 0.561%
- 30 yr FNMA 3.5 Dec: @9:30 103.33 -20 bp (-15 bps from 9:30 yesterday)
- 15 yr FNMA 3.0 Dec: @9:30 103.74 -14 bp (-10 bps from 9:30 yesterday)
- 30 yr GNMA 3.5 Dec: @9:30 104.17 -20 bp (-15 bps from 9:30 yesterday)
- Dollar/Yen: 117.63 +0.77 yen
- Dollar/Euro: $1.2552 +$0.0016
- Gold: $1196.70 -$0.40
- Crude Oil: $74.65 +$0.04
- DJIA: 17,650.95 -38.87
- NASDAQ: 4675.48 -29.96
- S&P 500: 2045.26 -6.54
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