Recovery
from the housing crisis has been different in almost every community throughout
the U.S. Some places have fully recovered, while others continue to struggle.
One major factor in this recovery is the difference in foreclosure laws
(judicial vs. non-judicial) from state to state. Pro Teck Valuation
Services' Home Value Forecast recently analyzed the impact these
foreclosure laws are having on the U.S. Housing Market-particularly in the
communities of Phoenix, AZ and Cleveland, OH. Obviously servicers are more
interested in a fast, straightforward process in the event of foreclosure
rather than a long, drawn-out process - and that also impacts the value of servicing.
As the
private mortgage insurance companies march toward better prices for higher
credit score loans and worse pricing for lower credit score loans (thus pushing
business toward FHA), let's see what they've been up to lately.
MGIC
(MTG) reported monthly operating statistics for February. New notices were down
3.9% Y/Y, and the ending delinquent inventory was down 4.0% M/M and down 20.2%
Y/Y. (In February 2015, new notices were down 23.8% Y/Y and down 27.4% M/M.)
Insurance in Force (IIF) came in at $174.9 billion, flat with $174.9 billion
reported in January. February delinquency trends and IIF growth were largely in
line with expectations. Cures of 6,748 were up 26.6% M/M vs. a 1.4% increase in
January and a 48.8% increase in February 2015. The cure ratio increased to
124.5% from 80.6% in January. This was down from 154.7% in February 2015. Paid
claims rose 5.3% M/M versus a decline of 0.6% in January and a decline of 7.1%
in February 2015.
Genworth
Mortgage Insurance Corp. plans to change its pricing structure for
borrower-paid policies. Yes, Genworth announced that it has standardized and simplified for
customers its Borrower Paid Mortgage Insurance ("BPMI") premium
structure. Genworth's updated rate card features reduced rates across all
loan-to-value ratios for borrowers with credit scores of 740+ and results in
weighted-average rates that are consistent with its existing card given the
current mix of business. The changes also enable Genworth to remain competitive
with government-backed insurance provider, the Federal Housing Administration
("FHA"). Genworth's new
pricing takes effect April 4, 2016, additional information is available.
Genworth Mortgage Insurance has forged an exclusive partnership with Roostify, a web
and mobile platform that streamlines and accelerates the home buying
process. Roostify's platform gives consumers the power to submit a
complete and accurate application in under 20 minutes, allowing loan officers
to spend more time focused on closing loans rather than searching for
information and documents. It also serves as a networking tool, allowing
for interaction among loan officers, real estate agents, underwriters, and
consumers all in one digital hub. The full press
release is available here.
Good
news for the state of Georgia: Arch MI RateStar is now approved and available.
AIG,
American International Group and parent of UG, continues to be under pressure
from activist investors announced it will cut 242 jobs at five locations in New
York City. CEO Peter Hancock, under pressure by activist investor Carl Icahn to
shrink the company and improve profitability, has been reducing costs by
eliminating jobs and shifting thousands of positions to less expensive
locations outside of New York. He told investors in November that he planned to
dismiss almost a quarter of the top 1,400 members of senior management, and
told staff not to count on lifetime employment. He said about 2,000 jobs
annually were being moved to low-cost
centers.
Apparently something is needed: AIG shares have fallen 13 percent this year,
compared with the 0.6 percent advance of the Standard & Poor's 500 Index.
United Guaranty
announced the introduction of its MI NOW
mobile phone app, one way to obtain a rate quote with the benefits of
Performance Premium pricing. (The free download for iPhones is now available to
United Guaranty MI Guide users at the Apple App store.) United Guaranty worked
with loan officers to incorporate a host of flexible features within the MI NOW
app, including: providing a rate quote with six required fields (and the
flexibility to submit additional information). UG also continues to spread the
word about its Secure Quote: the MI rate will not increase for 90 days unless
the loan changes materially. It enables users to send the quote to their email
account and receive a PDF to share and keep for their records. Users can edit
their current rate quote on the mobile app or access their submitted rate
quotes through MI Guide to submit a new application.
Radian
announced it has commenced a debt offering of $325 million principal amount of
senior unsecured notes that mature in 2021. The company expects to use the
proceeds to repurchase its convertible notes due in 2019, as well as
potentially repurchasing common stock and convertible notes due in 2017. One
can expect the offering to be accretive to EPS estimates and to reduce book
value slightly.
The
bad weather around the U.S. continues to push lenders to remind clients of
their disaster policies.
In regard FEMA's announcement regarding
individual disaster assistance for 26 Louisiana Parishes due to severe storms
and flooding beginning on March 8, 2016, until an incident end date is
declared, AmeriHome will require re-inspections for all properties in
the affected parishes, irrespective of appraisal date. Also noteworthy, AmeriHome is changing the requirements for events of
default and for remedies related to Early Payment Defaults (EPDs) and Early
Payoffs (EPOs). Changes are effective for loans with commitments dated on or
after 4/15/2016.
The New Jersey severe winter disaster, incident
period of January 22, 2016 to January 24, 2016, was declared a major disaster
on March 14, 2016. All jurisdictions in New Jersey are eligible to apply for
assistance with Bayview Loan Servicing under the Hazard Mitigation Grant
Program.
In response to the Flooding in Louisiana
and in anticipation of a Federal Disaster Declaration, M&T Bank will
enforce the Disaster Re-inspection Policy for all properties located in the
affected counties.
At
this time, Pacific Union is imposing Disaster Area Policy requirements
for properties located within all impacted areas of Arkansas.
First
Community Mortgage also alerted its clients: Please reference Wholesale Product and Pricing Bulletin 2016-5 FEMA Disaster
Counties Update for an announcement regarding updated disaster
counties.
Resitrader, Inc., a
Calabasas, California-based provider of whole loan mortgage trade management
software, announced that over $100 million of mortgage loans were traded on the
company's whole loan platform in February, the first month of live
trading. "12 financial institutions completed 24 trades in February,"
said John Ardy, CEO of Resitrader. This is a secure platform that automatically
normalizes loan data so loan buyers can easily search by investment criteria
and loan type. Resitrader also makes it simple for buyers and sellers to
communicate in real time, notify each other of loan pools they wish to trade,
exchange loan data, documents and pricing information, and settle
transactions. The platform enables users to directly integrate their
pricing tools, loan origination systems and service providers.
Even
though Quantitative Easing (QE) has officially ended, folks need to keep in
mind that the Federal Reserve, through its desk in New York, continues to
purchase agency mortgage-backed securities (MBS). It uses the money from
mortgages that pay off in its portfolio - kind of like dividend reinvestment.
And since mortgage rates are determined by supply and demand, the Fed's demand
for MBS is carefully watched - especially as it ranges around $1.5-2 billion a
day!
And
thus we all watch interest rates as a gauge for refinancing activity -
even though fewer and fewer borrowers want to go through the hassle of
refinancing to save $80 a month. And the market watches the MBA's Wednesday
application index as a reflection of what might be coming down the pipe 30-60
days from now.
Traders
also watch prepayment speeds. These are projected to jump in March due to a
higher number of collection days and increased refinancing activity in response
to lower mortgage rates. More refinancing leads to more purchases from the Fed.
Month
to date gross issuance stands at $79.3bn; 37.8% in GNMAs, 36.6% in FNMAs, and
25.6% FHLMCs. Supply is now on track to reach $85 billion area versus a
previous estimate of roughly $77 billion as it picked up over the past week.
Paydowns are estimated at $86 billion, which would result in flat to slightly
positive net issuance. In February, paydowns totaled $68.5 billion with net
issuance at +$8.8 billion. With the home buying season getting underway, net
supply is anticipated to increase with Ginnies in particular expected to feel
the brunt.
Make
no mistake about it, negative interest rates are an act of desperation, a
signal that traditional policy options have proved ineffective and new
limits need to be explored. They punish banks that hoard cash instead of
extending loans to businesses or to weaker lenders. This is an important
point. Central banks in Europe have placed a transactional cost of sitting on
money in an attempt to force investments in a shaky economy. Has it worked,
should it work, will it continue to work? All great questions. In the words of
'80's anti-hero Gordon Gecko, "money never sleeps, pal." In the never
ending chase for yield Bloomberg notes, "Norway's biggest life insurer is
stepping up investments in direct loans as a way to escape negative interest
rates. Storebrand ASA has a "strategic intention" to buy more
asset-backed loans and bank syndicate loans, according to the insurer's asset
management chief....the loan market offers us an opportunity to get a higher
running yield than in the bond market."
Up
some, down some, so go rates. Wednesday they headed lower with about as much
conviction as they headed higher Tuesday. New home sales for February (512K)
were reported to be a hair above estimates, and the median sales price shot up
over 6% to $301k.
Today,
besides an early close in the bond market (it is closed entirely tomorrow)
we'll have Initial Jobless Claims for the week ending 3/19 and Continuing
Jobless Claims for the week ending 3/12, as well as February Durable Goods
Orders - both at 7:30AM here in Chicago. We wrapped up Tuesday with the
10-year's yield at 1.88% and in the very early going this morning we're at
1.87% with agency MBS prices better by a smidge - a very technical term.
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