We've sailed
through half of 2017 already. ("Life is like a roll of toilet paper. The
closer you get to the end, the faster it goes." Since many folks have
today off, very few people are reading this, so I can get away with remarks
like that.) Turning up the intellectual level a little, who is William Stanley
Jevons? He was an English economist and logician, and while living in Australia
wrote a book titled, "A General Mathematical Theory of Political
Economy." I bring this up because in it he developed a theory about value.
Should prices be based on the cost of making goods, or should the price reflect
the degree to which a consumer values a product? Should mortgage prices to the
borrower be based on the cost of originating a mortgage, or should the price
reflect the degree to which a borrower values the mortgage? A good discussion
to have at your next sales event.
Ginnie Mae
has provided disclosure
information for its MBS Multifamily New Issuance Loan Level data.
Ginnie is also restoring
access to the legacy REMIC search page and adding a link from its
existing data search page to access the legacy page as well.
Lenders
react to disaster news
Most
investors and lenders rely on FEMA to
define a disaster and the area impacted. Of course, any monies about
to be lent, and recently lent, in a disaster area are questionable from an
investor's perspective. Is the borrower safe, will they make their payments, is
the collateral sound? Typically a correspondent investor will have verbiage in
their contract referring the seller to it in the event an area is declared an
investor and requiring additional appraisals.
Certain Counties
in Arkansas have been declared by FEMA as Major Disaster Areas for the Incident
Period Date:From April 26, 2017 to May 19, 2017.
In response
to the Federal Disaster declaration for Arkansas counties of Boone,
Carroll, Clay, Faulkner, Fulton, Lawrence, Randolph, Saline, Washington and
Yell County and Missouri counties of Bollinger, Butler, Carter, Douglas,
Dunklin, Franklin, Gasconade, Howell, Jasper, Jefferson, Madison, Maries,
McDonald, Newton, Oregon, Osage, Ozark, Pemiscot, Phelps, Pulaski, Reynolds,
Ripley, St. Louis, Shannon, Stone, Taney and Texas;
Residential
legal tidbits
Hard
money lenders provide financing for borrowers who are left out of
the conventional lending process, and offer supplemental loans to help complete
real estate deals. These kinds of lenders typically take a second position to
the lender of the primary loan, which is typically a bank.
When a
borrower recently defaulted on two loans secured by a four-unit residential
property in Berkeley, the hard money lender in second position faced the
possibility of being wiped
out by the foreclosure initiated by the institutional lender in
first position. Attorney
Henry Chuang of The Law Offices of Peter N. Brewer stepped in to
help protect the client. First by reinstating the first loan, and then by
defending claims of predatory lending and fraud lodged by the borrower.
The strategy
utilized by attorney Henry Chuang not only won the case but also resulted in
100% of the attorney fees paid. If you would like to read more about this case,
download
the Case Study.
The broker
agreed to assist a "friend" in purchasing a $40+ million home in Bel
Air but didn't get anything in writing as to the terms of his assistance. The
broker prepared 2 offers for purchase which were rejected. But, the seller remained
interested. A couple months later, the "buyer" hired an attorney to
prepare a new slightly higher offer which was accepted. The attorney received
$925,000 commission. The broker filed suit against the buyer claiming he was
owed the commission under a breach of an implied contract theory. The brokers
suit did not meet the statute of frauds according to both the Trial Court and
Appellate Court, here's why.
The Appellate
Court held that even though the two unsuccessful offers contained language that
stated that the broker would collect a commission, since the broker was not the
procuring cause of the eventual purchase, he had no right to a commission.
California
statute of frauds declares invalid any "agreement authorizing or employing
an agent, broker, or any other person to purchase or sell real estate"
unless that agreement is in writing and signed by the brokers client (Civ.
Code 1624, subd, (a)(4).) Merely putting a prospective purchase on
the track of a property which is on the market will not suffice to entitle the
broker to the commission contracted for, and even though a broker open
negotiations for the sale of the property, he will not be entitled to a
commission if he finally fails in his efforts.
Capital
markets
FHFA Director
Watt, before the American Mortgage Conference of the North Carolina Bankers
Association indicated that the GSE are looking to expand credit risk transfer
programs to include 15-year and ARMs while Treasury Secretary Mnuchin, before
the Senate Committee on Banking, Housing, & Urban Affairs, indicated
stressed the importance of housing finance reform and the need to resolve the
GSEs. Of course, there is a lot of talk about what to do with the very
profitable Fannie Mae and Freddie Mac. But what happens if they have a losing quarter?
Casting a
quick look at interest rates (yes, the bond market is open today), on Friday
the 5- and 10-year U.S. Treasury were the highest they've been in over a month.
Fixed-income securities here and in Europe continued their sell-off that began on
Tuesday (prices move inversely to yields). Despite Mario Draghi's hawkish
remarks earlier in the week supposedly being "misinterpreted" by the
market, investors & traders have continued to sell. Granted, the economic
news here in The States (personal income & consumption/spending, Core PCE
Prices, the Chicago PMI, and the Michigan Sentiment Index of consumer
confidence) either met or exceeded expectations.
For Friday's
session, the 10-year note price worsened nearly .375 to close yielding 2.30%
while the 5-year, which is a little closer in price movement to the typical
mortgage-backed security, worsened about .125. Mortgage rates experienced one
of their worst weeks in 2017 as originators were posting rates 0.125% to 0.25%
higher compared to the same time a week ago. The 10-year treasury finished the
day at 2.30% and for the month of June the 10-year increased by approximately
10bps.
There's an
early close today in the bond market, and most companies are only partially
staffed, but we do have some news coming out: Markit Manufacturing PMI,
Construction Spending for May, and the ISM PMI. Wednesday we'll have the MBA's
application data for last week, May Factory Orders, and the June 13-14 FOMC
Minutes. Thursday are June Challenger Job Cuts, June ADP Employment Change,
Initial Jobless Claims, May Trade Balance, and June ISM Services Index. And
then on Friday is all the employment data. We start the day and week with rates
a shade higher than Friday afternoon: the risk-free 10-year T-note is
yielding 2.31% and agency MBS prices are worse a few ticks.