A young man named John received a parrot as
a gift. The parrot had a bad attitude and an even worse vocabulary. Every word
out of the bird's mouth was rude, obnoxious and laced with profanity. John
tried and tried to change the bird's attitude by consistently saying only
polite words, playing soft music and anything else he could think of to
"clean up" the bird's vocabulary. Finally, John was fed up and he
yelled at the parrot.
The parrot yelled back.
John shook the parrot and the parrot got
angrier and even ruder. John, in desperation, threw up his hand, grabbed the
bird and put him in the freezer. For a few minutes the parrot squawked and
kicked and screamed. Then suddenly there was total quiet. Not a peep was heard
for over a minute.
Fearing that he'd hurt the parrot, John
quickly opened the door to the freezer.
The parrot calmly stepped out onto John's
outstretched arms and said "I believe I may have offended you with my rude
language and actions. I'm sincerely remorseful for my inappropriate
transgressions and I fully intend to do everything I can to correct my rude and
unforgivable behavior."
John was stunned at the change in the
bird's attitude. As he was about to ask the parrot what had made such a
dramatic change in his behavior, the bird continued, "May I ask what the
turkey did?"'
Just how much did rates go up recently? Freddie Mac's Primary
Mortgage Market Survey showed a 37 basis point (.375) jump in the average
30-year rate, week-over-week, to 3.95%. Convincing anyone with rate less than
that to refinance is going to be tough...roll out the home equity lines of
credit!
Is the only thing better than a closed loan a free party? This
industry works hard and plays hard. National Mortgage Professional Magazine
knows that! That's why this year's Holiday Networking Parties in December in Irvine, CA, Fort
Lauderdale, FL and in Long Island, NY they're giving originators a powerful
program of business building workshops before it's party time....and it's all
FREE. These events include strategies on building your purchase business from
Ron Vaimberg, a powerful presentation from Frank and Brian of National Real
Estate Post, a Certified Military Home Specialist Workshop by Boots Across
America, learn how to "Knock Out Your Competition" with Barry Habib,
and a Renovation Lending Workshop with Damon Richardson. 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! Learn more about
these Holiday Parties here.
Rain on the scarecrow, blood on the plow? The Fed reports the
number of banks seeking additional collateral on farm loans is now the highest
level in 25 years. A drop in farm land values and a global crop surplus has
led to a decline in loan payments so banks are acting. In addition,
yesterday I had CFPB updates. After the commentary went out the CFPB
published a list of counties determined to be
"rural" and a list of counties determined to be "rural or
underserved" during 2016 for purposes of applying certain regulatory
provisions related to mortgage loans during 2017 (2017 lists). Rural
counties are generally defined by using the USDA Economic Research Service's urban influence codes, and underserved counties are defined
by reference to data collected under the Home Mortgage Disclosure Act.
Appraising ag land can be a real challenge. Heck,
appraising a house in Phoenix or Ramsey, MN can be a real challenge as well. This week The Appraisal Institute, the largest professional association
of real estate appraisers, went to Washington DC told a Congressional
hearing there is a "better, less-complicated approach" that would
modernize the U.S. appraisal regulatory structure by improving quality,
reducing costs and addressing fundamental concerns that drive appraisers from
the profession.
In Capitol Hill
testimony before a subcommittee of the House
Financial Services Committee, the Appraisal Institute suggested that Congress
realign the appraisal regulatory structure with those of other industries in
the real estate and mortgage industries. The Appraisal Institute recommended
using as a model the National Mortgage Licensing System cooperative among state
agencies. "Appraisers are being choked by rules and regulations in nearly
every facet of their business," Bill Garber, Appraisal Institute director
of government and external relations, said in written testimony.
"Appraiser's' professional lives have become extremely complicated, more
expensive and less productive due to a dated and archaic regulatory structure.
Thus, consumers suffer from increased turnaround time, delays in loans and
potential higher costs."
Noting that the
federal regulatory structure for real estate appraisal essentially has been
untouched since 1989, the Appraisal Institute's written testimony said
regulation is "overwhelming" appraisers and proving to be
"counter-productive" for the profession and for users of appraisal
services. "Real estate appraisers face a 'layering effect' of rules and
regulations that creates a disincentive for potential entry into the
profession, while also diminishing the profession's profitability," the
Appraisal Institute said in its written testimony.
As examples of these
rules, the Appraisal Institute cited background checks with no federal mandate
or efficient processing system, and unappealing supervisor-appraiser and
trainee-appraiser requirements, among others.
"Presently,
real estate appraisers pay for the operation and maintenance of the regulatory
structure in a variety of ways, including imposing license renewal fees, course
requirements, and mandates to purchase rules and regulations. After almost 27
years, it is time to make the appraisal regulatory structure and process more
efficient and responsive to the needs of practitioners and consumers,"
Garber told the subcommittee at the hearing.
The subcommittee's
hearing on "Modernizing Appraisals: A Regulatory Review and the Future of
the Industry" took place in Room 2128 of the Rayburn House Office
Building. Representatives of the Appraisal Subcommittee, The Appraisal
Foundation, Clearbox, the National Association of Home Builders and Mountain
State Justice, Inc., also were scheduled to testify at the hearing.
Nationstar Mortgage now maintains and distributes a
monthly Appraiser Exclusionary List. Correspondents are encouraged to
review the Nationstar Mortgage Appraiser Exclusionary List prior to submitting
a loan for loan purchase.
Flagstar has updated its
Conventional guidelines to clarify that one-unit properties that contain
multiple accessory units on the same property are not permitted.
One discussion topic that comes up any time appraisers
and/or underwriters have a drink or two is why manufactured housing still has a
bad connotation. A recent article from our neighbors to the north is, "Factory Built homes Could Help Cities with Housing Crunch."
These aren't tiny homes that you see on the backs of the trucks driving on the
freeway, or with wheels and a license plate. "The public's negative
perception of new construction methods is a considerable factor that hinders
the development and use of modular construction as they are often thought to be
similar to mobile homes found in trailer parks." But, I think it is
important to pay attention to the fact that they aren't mobile homes. These
homes can be thousands of square feet. They are built in a factory then
transported in blocks and assembled at the building site. There are
transportation challenges and perceived product inferiority. The positives are
cheaper, faster results, fewer workplace injuries, and construction in a
controlled environment. The idea should be considered because in a time when
housing pressures mount, alternatives need to be heard.
Moving on to interest rates, supply and demand set
mortgage rates, not the U.S. Government. Traders have seen a shift in bond
markets since post-crisis regulations discouraged lenders from acting as market
makers, with investors facing difficulties finding attractive deals due to a
lack of trading activity. Two percent of outstanding bonds are traded daily
compared with 3.5% in 2008, per SIFMA. That may very well change...
In less than one week, mortgage rates have shot up by
nearly 0.5% and the global bond market has lost a whopping $1 trillion in
value. Gibran Nicholas, CEO of CMPS Institute conducted a webinar this week to
give loan originators scripts, charts and graphs to explain what's been
happening in the market. The webinar is called, "Trumponomics: How
the Trump Presidency Impacts the Mortgage & Housing Markets." Click here to "view" the recording.
Anyone who didn't lock prior to Tuesday, if they could
have, is ruing that decision, and every LO out there is tending to their locked
pipelines, knowing that the market is three points worse and "free"
extensions don't make much sense from an economics perspective. In fact,
yesterday the U.S. Treasury market, and agency MBS, took another leg lower
although the losses were concentrated in the longer maturities after Fed Chair
Yellen maintained her relatively dovish tone in her remarks. The case for a
rate hike has begun to build rather rapidly as market-based inflation
expectations have ripped higher over the past week, although Yellen merely said
that a rate increase could be appropriate "relatively soon."
And the economic news of late certainly bears that out. We
had a strong jump in housing starts during October, and Initial jobless claims
fell to a 43-year low. What do bond traders think? As ThomsonReuters put it,
"Further adding to the malaise of 30-year 3% and 3.5%, in particular, was
the long end leading the market lower as the recent curve flattening was a
welcome reprieve for the MBS basis as traders became more comfortable with
their durations. That was being threatened in the afternoon, with the long bond
breaking back through 3% with 10s comfortably through 2.25%." There you
have it. But by the end of the day the 10-year sold off .5 in price to close at
2.28% and agency MBS prices worsened .250.
There is no scheduled news to move rates, although Leading
Economic Indicators is later this morning. There are plenty of Fed Presidents
speaking around the country, pretty much all saying the same thing but in sly,
subtle, varying ways: rate increase in mid-December. Fortunately, it is pretty
much priced into the current market. In the early going the 10-year's yield
is still 2.28% and agency MBS prices are better about .125.
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