Buyer of Lenders, Good Training in Subjects Ranging from Cybersecurity to Taking an App, ECOA Legal Opinion

By rchrisman@robchrisman.com

The last day of February, already? Wasn't it just New Years? Time flies by, things progress. Yesterday the Chamber of Digital Commerce, the world's largest trade association representing the blockchain industry, and the Structured Finance Industry Group (SFIG) announced the formation of a strategic partnership focused on advancing the use of blockchain technology in securitization markets. Heck, I barely know how a simple battery works...

 A quick note of correction. Yesterday I published news regarding InHouseUSA's presences at next week's Ellie Mae Encompass event. Here is the correct website: InHouseUSA. The company will discuss Predictive Estimated Due Date (PEDD) technology, how they provide clear proactive communications during appraisal process and their secret to reducing appraisal turn times at the Ellie Mae Experience 17. One can have a live session by booking a meeting with an InHouseUSA team member here or sign up here to get on their invitation list to Senor Frogs.

 Upcoming events, training, conferences, webinars, and the like, in no particular order:

 A free webinar titled, "The NY Cybersecurity Regulation - How It Impacts You and Your Company" is being held this Friday, 3/3, at 1PM ET. On March 1, the New York State Cybersecurity regulation goes into effect. "This first-in-the-nation cybersecurity regulation requires banks, insurance companies and other financial services institutions regulated by the NY Department of Financial Services to establish a cybersecurity program that protects consumer data. Join industry experts Joe Kelley, Privacy Attorney, Offit Kurman, Bob Olsen, CEO, Compass Cyber Security and Monique Jean, General Counsel, Strategic Compliance Partners for a FREE webinar as they discuss what New York Lenders and Brokers must do going forward to meet NY State regulation standards. Webinar topics will include who is covered by the regulation, new standards, and the impact to your company. If you are licensed in New York state, you MUST understand this new regulation."

 Guaranty Trust reminds everyone that "the MBAs of AR, MO, MS, and TN invite you to join them for the annual Great River Conference. The 2017 Great River Conference promises 3 full days of impactful sessions, motivating speakers, and endless opportunities for networking. Represent your state, your market, and your company. And position yourself for great things in 2017. Sessions include:  Day 1 Certainty, Consumer Direct and Retail Marketing, Loan Officers Sales Training, Fraud, Trended Data and Podcasting! The conference will be May 9-11^th at the Peabody Hotel in Memphis, TN. For more information click on the link above or email info@greatrivermba.com; sponsorship opportunities are still available.

 Are you tired of losing loans to a competitor over as little as 1/8? With the increased competition, many loan officers are struggling to win the business. On Thursday, March 23rd at 1 p.m. EDT, Ron Vaimberg, President and Head Coach of nmpU, one of the nation's leading loan officer trainers, will be presenting a 90-minute private live stream video training broadcast "How to Win the Rate Battle Against Your Competition". Master in just 90 short minutes the sales presentation that keeps borrowers from shopping you against other lenders. One low price and you or your entire office can attend this national live stream video broadcast. (This is NOT a Webinar). Click Here for Details & save $100 with discount code "Chrisman".

 The International Union for Housing Finance is having its biannual Congress in Washington DC highlighting developments in mortgage markets around the world, and may be of interest for US lenders looking for a different perspective. MBA's Research Institute for Housing America is hosting a reception for this event. MBA members may register at the IUHF member rate for this conference.

 On Wednesday March 1^st, join Plaza's webinar designed to teach you how to navigate its reverse mortgage online software, Bay Docs.

 Taking an application is just like creating the blueprint for a new home. Complete, quality information ensures everyone knows the plans for successful execution. Join Plaza's March 2^nd webinar to learn why certain information is required, how an AUS decision is impacted, and key questions you can ask to help your borrower feel more open to sharing financial details.

 Franklin American just published its March Wholesale "Monthly Customer Training Calendar".  This month's calendar offers a variety of training opportunities such as "Seizing Market Share", "Getting Your Name Out", "Understanding Credit Reports and Credit Scores", "How to Review an Appraisal", and "Detecting and Avoiding Fraud in Loan Files", to name a few. To access FAMC's Wholesale "Monthly Customer Training Calendar" click here:  https://wholesalestorefront.franklinamerican.com/calendar/  (be sure to scroll to the March calendar to view our new courses).

 Join Morrison Foerster for its 7th Annual Financial Services, Regulatory and Compliance Conference on March 8^th at the Ritz Carlton Charlotte. Their attorneys will offer insights regarding the future of financial services regulation. The morning sessions will focus on consumer financial services and privacy and cybersecurity developments. The afternoon sessions will focus on wholesale, capital markets and tax developments.

 Tailored for originators, check out the exciting line-up of March conferences. March 16-18 NAMB East will hold its 2017 conference in Atlanta.Sunday through Thursday, March 19-23, the Regional Conference of Mortgage Bankers will be held in Atlantic City, NJ. And from Thursday through Sunday, April 6-9, the National association of Minority Mortgage Bankers of America (NAMMBA) inaugural conference will be held in Atlanta.

 Fannie Mae has successfully made the transition to a new reporting environment, an important step toward implementing industry standards that will save servicers time and effort. Throughout March, it will host weekly live webinars to highlight and share best practices about reporting while enabling servicers to ask questions about the process. Be sure to review the Navigation Tips Checklist to stay on track with reporting compliance. Register for a webinar and learn more on the Fannie Mae Changes to Investor Reporting page.

 For you legal eagles out there...

 Law firm BuckleySandler reported that on February 16, the U.S. Court of Appeals for the Fifth Circuit issued an opinion addressing whether Section 8 mortgage applicants may claim discrimination under the Equal Credit Opportunity Act (ECOA) by both a mortgage originator and a subsequent investor in the secondary mortgage market. See Alexander v. AmeriPro Funding, Inc. No. 15-20710, 2017 WL 650193 (5th Cir. Feb. 16, 2017). At issue before the Appellate Court were claims alleging that both the mortgage originator that interacted with borrowers, made credit decisions, and actually gave mortgages to home buyers, and the investor, engaged in the business of investing in or buying mortgages originated by the mortgage originator, were subject to liability for discriminatory conduct in violation of ECOA based upon plaintiffs' allegations that "they applied for mortgages through [the mortgage originator] and that [the mortgage originator] did not consider their Section 8 income in processing the application because it intended to sell the mortgages to [the investor]."

 Capital markets

 Greystone Real Estate Advisors announced it closed over $1 billion in multifamily investment sales in 2016. This volume, which represents the multifamily division's first full year in operation, caps an active year of expansion during which the team extended its reach and capabilities in affordable housing and market rate multifamily advisory. During 2016, Greystone Real Estate Advisors added several notable sales advisory teams in Atlanta, Austin, Denver, Los Angeles and San Francisco, "further establishing Greystone's nationwide presence as a preeminent commercial real estate lending, investment sales and advisory firm." The team expanded its capabilities in affordable housing advisory, with a specialization in Section 8 and LIHTC disposition and redevelopment advisory services.

 Up until yesterday the markets were pricing in an approximate 40% chance of a rate hike, with a move in May more likely than March. In addition, President Trump gives his State of the Union address tonight which many investors are focused on. Why? For details surrounding tax cuts and other economic plans, which could influence economic activity, the demand for capital, and therefore interest rates.

 With the bond market and interest rates moving around the same range now for many weeks, however, most of the attention is focused on the stock markets. In equities, the Standards & Poor 500 Index and Dow Jones Industrial Average ended up on the day yesterday. The DJIA has now hit 12 consecutive daily highs which is the longest streak since 1987.

 Back to rates & lending! Residential lenders reported locks coming in higher last week, 15-25% week over week. But U.S. Treasuries, and MBS prices along with them, sold off as investors revised up their probabilities for a rate hike at the March 14-15 FOMC meeting. The U.S. economic data Monday wasn't great, with pending home sales unexpectedly falling in January and the durable goods orders data slightly missing forecasts. Pending Home Sales increased in the Northeast and South but fell in the Midwest and West. On the supply and demand side of things we still have the Fed buying $1-2 billion a day (they've been very transparent about this - a good thing), and the usual entities selling and delivering mortgage-backed securities.

 This morning we've had the second estimate for Gross Domestic Product (GDP) numbers for the 4^th quarter: +1.9%, unrevised, with inflationary targets moving closer to the government's target. Coming up are the S&P/Case-Shiller Home Price Index, February Chicago PMI and the February Consumer Confidence numbers, along with three speakers from the Fed in various parts of the country.

 For those numerically inclined, yesterday the 10-year note closed 14 ticks lower on the day to yield 2.37%, and 5-year T-notes and agency MBS prices worsened about .250. This morning agency MBS prices are nearly unchanged and the 10-year at 2.36%.

Quality Control Jobs, Rent trends Continue to help lenders, FHA & Ginnie Changes in the Marketplace

By rchrisman@robchrisman.com

Two newlyweds quickly realized their marriage wasn't working and filed for a divorce.

The judge asked them what the problem was.

The husband replied: "In the five weeks that we've been together, we haven't been able to agree on a single thing."

The judge turned to the wife: "Have you anything to say?"

She answered: "It's been six weeks, your honor."

If you're a lender in only one state, just think about the state and federal regulations you must deal with, not to mention the investor or agency rules. If you're a nationwide lender, you can grapple with 49 other rules and regulations. If you service loans, throw on some more. What if you're a worldwide bank? Citigroup will place a "global regulatory affairs team" in Washington, D.C., to help the bank "assess the impact of existing and proposed regulations on our franchise, clients and customers," according to an internal memo.

 In job news, Fannie Mae has an opportunity to join its team of Quality Control Specialists. "In this role, you will provide oversight and consultation to many of our lenders on all aspects of loan quality. The ideal candidate will have 10+ years' experience in underwriting and quality control with an in-depth knowledge of the Selling Guide's QC requirements for lenders. Strong analytical, creative problem solving, and negotiation skills. The preferred locations are Chicago, Dallas, Philadelphia, or Pasadena, although alternative locations may be considered. To join our talented team of risk analysts, please apply here." For more information contact Lorna Kamau.

 In wholesale & job news, Mid America Mortgage has been quietly establishing itself as the premier national agent of eClosings and eNotes for the Wholesale and Emerging Banker space. To that end, we have collaborated with Calyx to create an interface allowing Calyx users to obtain MAM pricing indications, guidelines and eligibility criteria, as well as generate a timely, compliant LE, without leaving the Calyx platform. MAM is also giving its brokers free access to the validation services offered as part Fannie Mae's Day One Certainty initiative and eliminating the 4506-T requirement for agency loans that use AUS findings that qualify under Day One Certainty. Finally, MAM has released a series of pricing enhancements to its FICO adjusters on government products, which can be found in Optimal Blue, Mortech, Calyx Point and MortgageElements.com. Our Wholesale & Non-Delegated Correspondent division is selectively seeking regional Account Executives to support our efforts in this area. Interested parties should contact Adam Rieke, MAM's Director of TPO Lending.

 And in appraisal management news, InHouseUSA will discuss Predictive Estimated Due Date (PEDD) technology, how they provide clear proactive communications during appraisal process and their secret to reducing appraisal turn times at the Ellie Mae Experience 17. The InHouseUSA team will be found at Booth 12, their private meeting suite, or at the cocktail reception that they will host at Senor Frog's on Tuesday, March 7^th. InHouseUSA offers lenders integrated with Ellie Mae Encompass the bandwidth to work compliantly with a lender's panel and a limitless number of AMCs to maintain a single system for reporting and a consistent quality control policy. The Encompass Experience 2017 is at the Wynn Las Vegas on March 6-8. Do not miss the chance to have a live session by booking a meeting with an InHouseUSA team member here or sign up here to get on their invitation list to Senor Frogs.

 "I come home one Friday, had to tell the landlady I'da lost my job.

She said that don't confront me, long as I get my money next Friday.

Now next Friday come I didn't get the rent, and out the door I went!"

 So sang George Thorogood and the Destroyers. It is always good for residential loan originators to know the rental situation in their area. If rental rates, or house prices, are going up 5% a year and incomes are only going up 2% a year, well, that is a problem. Until recently, the combination of a shortage of multifamily units, booming demographic demand from Millennials, and an improving economy meant strong demand for apartments. This resulted in strong rental growth and large increases in supply. But, things are reversing. The largest cohort of Millennials is almost 26, job growth is slowing, years of new supply are saturating the market, and now banks are becoming skittish about lending to multifamily developers.

 RentRange identified 25 markets with the largest rental rate increases. First prize went to McAllen, Texas while Orlando, Florida rent growth was the lowest. RentRange, a provider of market data and analytics for the housing industry, released data ranking the top 25 U.S. Metropolitan Statistical Areas (MSAs) by average rental rate increase for single-family homes between the fourth quarter (Q4) of 2016 and the same quarter in 2015. The data analysis also identified the average vacancy rate within these markets in Q4 2016.

 "The Q4 2016 RentRange data identified rental rate increases in areas like Cape Coral and Portland, both of which moved up the list into the top five, as well as newcomers including McAllen, Denver, Boston, Nashville and Miami. While rents remain high in the Bay Area, San Francisco dropped several positions, indicating that the year-over-year rent change was not as significant as seen in past years. Comparatively, San Jose made the list as a new addition in Q4 2016."

 The highest vacancy rates are in the Southeast region, where vacancy rates range from 10.5 percent in Charleston to 20.4 percent in Myrtle Beach. "In these areas, builders and investors may need to compete for a limited number of renters. An oversupply of new properties can drive up the vacancy rate and eventually push rental rates down, and this is currently happening in Myrtle Beach, where more than 3,100 new homes were built in 2015, a 94 percent increase compared to two years earlier."

 "As we begin 2017, it continues to look bright for single-family rental investors," said Wally Charnoff, chief executive officer, RentRange Data Services. "Compared to the Q3 2016 change in rent, we are seeing the percentage change begin to lessen while rents continue to increase, which should ultimately stabilize demand, keeping vacancy rates down. It remains important for investors to look at stability within a market, focusing on the market's activity over time to ensure there is a good balance - low historical volatility with a current upswing."

 It seems that landlords are taking over the U.S. housing market.  As Wall Street backs off of buying rental homes, small investors are picking up the slack. Rising home prices slow new home construction, and demographic shifts push homeownership rates to 50-year lows, the U.S. is increasingly a country of renters and landlords.

 First time homebuyers face a shortage of real estate going into 2017, according to Redfin. For starter homes, the problem is acute. Over the past year, prices have risen 7.5% as inventory fell 12%. This increased the percent of income needed to buy a median home in that segment to 38.5%, an increase of about 2 percentage points. They are hopeful that the bottom is in with respect to tight inventory, however some of that will depend on regulatory policies of the new administration. On the plus side, credit will probably ease a bit as the financial system gets more clarity on regulation. On the negative side, immigration limits will exacerbate the construction labor shortage we currently are experiencing.

 Rental trends are greatly influenced by demand, and much of the demand comes from people in their 20s. And the trend is evident at the end of 2016. While mortgages for home purchases made up the bulk of loans taken out by millennials over the second half of 2016, they gradually declined as a percentage of all loans as the year went on. The Ellie Mae Millennial Tracker first started tracking in June of 2016. More than half (57 percent) of millennial borrowers took out conventional loans during the latter part of 2016, followed by FHA loans (40 percent) and VA loans (1 percent). FICO scores on closed purchase loans by millennials hovered in the low 720s from June through November. The average FICO score on refinances started at 721 in June, rose to a peak of 750 in October, then tapered off to 747 in November.

 "While we have seen a steady increase in refinances among millennials, the bulk of this generation is still entering the market as first-time homebuyers," said Joe Tyrrell, executive vice president of corporate strategy at Ellie Mae. "Across the board, we're continuing to see strong interest in home ownership from this younger generation."

 And when you think "first time home buyer" it is good to know about...Ginnie & FHA changes.

 In case you missed Ginnie Mae's recent Notes & News.

 Back in early January, FHA announced its intention to implement the new Loan Review System (LRS), which will provide an electronic platform for FHA's Title II Single Family quality control functions. FHA is in the final stages of technology development, and will announce the implementation date soon. Loan Review System (LRS): Implementation and Process Changes. Mortgagees are encouraged to view the recording accessible from the Single Family Housing Archived Webinars page. This recorded webinar provides an overview of LRS functionality and related process changes.

 Effective Tuesday, February 28, PennyMac is updating the FHA loan DTI overlay for Best Effort and Mandatory deliveries.

 Down Payment Resource has a new program that tackles student loan and down payment challenges. Find out how it works. Wondering who qualifies for the down payment program? Find out eligibility requirements.

 Ditech has rolled out Home Possible & Home Possible Advantage. Ditech now offers a full complement of low down-payment programs... FNMA 97, Home Ready, Home Possible, Home Possible Advantage, FHA, USDA & VA.

 US Bank issued underwriting guideline updates that effect 2^nd Appraisal Requirements, 2017 FHA / VA Loan Limits, and VA - Student Loan Debt Calculations. Refer to the full Guidelines, in the Seller Guide, for complete details. These changes are effective immediately for any new registration / lock or loans in the pipeline.

 Effective immediately, M&T Bank will no longer require the completion of a Warranty form for FHA Streamline Refinance Condominium or PUD transactions. Lenders are reminded to underwrite all projects to meet FHA requirements as published in FHA Handbook 4000.1.  

 Mountain West Financial announced product enhancements which include FHA deduction of #2106 expenses - no deduction of #2106 expenses will be required for wage earners, or commission earnings of 25% or less. Direct Pricing is no longer required for 5 - 6 financed properties.  Conforming conventional guidance applies. DU Refi Plus 12-month reserve is no longer required for DTI greater than 50%. FHA High Balance with lowered FICO score to 620. FHA High Balance lowered FICO score to 680 for DTI up to 55%, cannot exceed 55%.

 Effective immediately, NewLeaf Wholesale added Manufactured Homes located in Condominium Projects or Planned Unit Developments (PUDs) as an eligible property type under the following products: NewLeaf 1 - DU-LP Conforming Manufactured Housing. NewLeaf 2 - DU Conforming Manufactured Housing. NewLeaf FHA Conforming and High Balance. NewLeaf VA Conforming, High Balance and IRRRL.

 Capital Markets

 Seasonal patterns going back decades suggest that Treasury yields may slide, despite business-friendly policies of the Trump administration and indications that the Federal Reserve will increase rates. "I would make sure to respect the seasonals in thinking about the odds that we get a significant sell-off based on Trumponomics," said Ian Lyngen of BMO Capital Markets.

 Interest rates continue to be range-bound although last week we closed near the lower end of the rate range. In fact, if one uses the 10-year T-note as a proxy for the general interest rate environment, it hit its lowest rate in over a month (2.31%, closing at 2.32%). On the mortgage side rates were helped by the continuing slowdown in supply and the continued strong demand for product (especially by the NY Fed). On Friday, the 10-year improved .625, the 5-year (which more closely mimics MBS) and MBS prices improved about .375.

 This week's economic calendar is busy despite February payrolls not being released until the following week on March 10. This morning we've already had January's Durable Goods (+1.8%, but ex-transportation -.2%). Coming up are January Pending Home Sales Index, at 10:00am, expected higher. Tuesday brings GDP, International Trade in Goods, S&P/Case-Shiller HPI, Chicago PMI and Consumer Confidence. Wednesday has the MBA's application figures, Personal Income and Outlays, PMI Manufacturing Index, ISM Manufacturing Index, Construction Spending, and the Fed's Beige Book. Thursday brings the usual Jobless Claim but also Challenger Job Cuts. Friday closes out with ISM Non-Manufacturing Index (no unemployment data).

 That's a lot of economic news. Will it make any difference? Perhaps. The bond market certainly believes that the Fed is going to raise short-term rates a couple times this year, although global problems could certainly drive money into our bond market pushing down rates. Or our economy could slow slightly, which would also push rates lower. In the meantime, we start the week with the 10-year yielding 2.34% and agency MBS prices worse .125 from late last week.

Non-Qualified Mortgages Heating Up, Upcoming Events, Banks and Lenders Adjusting Business Models

By rchrisman@robchrisman.com

(Here is a timeless classic, and a repeat, that surfaces with every new administration; feel free to change as you see fit.)

A young man named Donald bought a horse from a farmer for $250.

The farmer agreed to deliver the horse the next day.

The next day, the farmer drove up to Donald's house and said, "Sorry, but I have some bad news... the horse died."

Donald replied, "Well, then just give me my money back." The farmer said, "Can't do that. I went and spent it already."

Donald said, "Ok, then, just bring me the dead horse."

The farmer asked, "What ya gonna do with him?"

Donald said, "I'm going to raffle him off."

The farmer said, "You can't raffle off a dead horse!"

Donald said, "Sure I can... Watch me... I just won't tell anybody he's dead."

A month later, the farmer met up with Donald and asked, "What happened with that dead horse?" Donald said, "I raffled him off".

"I sold 500 tickets at $5 apiece and made a profit of $2245."

The farmer said, "Didn't anyone complain?"

Donald said, "Just the guy who won. So I gave him his $5 back."

Donald moved into the White House.

Boss: "Working hard here, Jimmy?" Jimmy: "Yep, ever since I heard you coming down the stairs!" Mortgage banks are working hard, but banks and other financial institutions have the inside track when it comes to offering other products - more a few paragraphs down. While we're talking about working, here's a column from the Sunday New York Times' Adam Bryant on how to hire the right person from his interviews with CEOs.

 Some events & training of note that I mistakenly did not mention Wednesday:

 Fannie Mae is offering three additional Day 1 Certainty eLearning courses: Implementing Day 1 Certainty focuses on the benefits, process, technical information, and quality control considerations for the DU validation service, Property Inspection Waiver (PIW), and certainty on appraised value. DU Validation Service Overview of Income, Employment, and Assets uses detailed examples to cover how income, employment, and assets are evaluated by the DU validation service. (DU and/or Fannie Mae Connect user credentials are required to access this course.) And DU Validation Service Quality Control Overview reviews Fannie Mae's requirements for lender QC in connection with the DU validation service, including process efficiencies.

 MGIC is offering a wide range of webinars throughout the month of March. Trainings include topics such as the fundamentals of the Mortgage Process, Millennials: Obstacles, Opinions and opportunities, and Analyzing Self-Employed borrowers business and personal tax returns.

 Are you looking for something more than the typical mortgage conference to attend this year? I recommend checking out Todd Duncan's Sales Mastery Event. I attended Sales Mastery last year and can tell you first hand that it is head and shoulders above the typical conference experience. This year is the 25th anniversary of this industry changing conference and will be in San Diego California October 3-6. I'll be there, how about you?

 Changing business models for financial institutions

 There is no law barring financial institutions from branching out into offering other services, and in fact many use this tool as a way to expand and recruit. SoFi, for example, notes that nearly 30% of its clients take advantage of other product the finance company offers. Lenders such as California's Opes Advisors gives loan originators the potential for training in financial planning consulting.

 I mention this because this week it was announced that PNC Bank ($366B, PA) will acquire the US equipment finance business of Canadian company ECN Capital for about $1.3B in cash. The move gives PNC $1.1B in loans and leases. Indiana's MainSource Bank ($4.1B will acquire independent investment advisory firm First Service Capital Management Inc. (KY). B. Riley Financial will acquire investment banking firm FBR for about $160mm in stock. Synchrony Bank ($72B, UT) will acquire health card portfolio Citi Health Card from Citibank for an undisclosed sum. The move gives Synchrony 110,000 consumer accounts and connections to more than 14,500 providers.

 And for various reasons depository banks continue to merge. In Indiana First Merchants Bank ($7.2B) will acquire the remaining portion of IAB Financial Bank ($1.1B) for about $251mm in stock, after purchasing 12% prior. West Town Bank & Trust ($280mm, IL) will acquire Sound Banking Co. ($185mm, NC) for about $24.6mm in cash (35%) and stock (65%) or roughly 1.4x tangible book. The mother's milk of banking is lending, of course, and earning the spread between what they pay for deposits versus what they earn by lending.

 And through it all lenders continue to want to help their clients in a compliant, cost-effective manner while keeping an eye on what is happening in Washington DC. Word went out this week about a "Call to Action" from the MBA and others to tell your Representative to support and assist H.R. 916, a bipartisan bill that prohibits unfair housing taxes. In other words, not to use the g-fee to support other government operations.

"Answer the Call to Action. It literally takes 2 minutes to support your clients, your neighbors, and your industry. Do you remember when G-Fees increased to pay for 2 week extension of unemployment benefits? Do you remember when Congress tried to raise G-Fees to pay for the Gulf Coast Cleanup? Do you remember when Congress tried to use G-Fees to pay for highways? When G-Fees go up, consumers pay more and housing affordability is already an issue in this country. The bottom line is simple. Artificially raising the price of homeownership to pay for non-housing items is bad policy and possibly unconstitutional. H.R. 916 is a great example of bipartisan 'make sense' legislation which will prohibit taxing homeowners to pay for non-housing related items. (READ THE BILL HERE)."

 We don't need to make loans more expensive for consumers, especially with some of the drop-offs in business many are already seeing. Freddie Mac has a somewhat gloomy outlook for origination this year, forecasting a drop of 25% from 2016's level of $2 trillion in origination. Their team sees the 30-year mortgage rate averaging 4.4% and total home sales falling from 6 million to 5.75 million. House price growth is expected to moderate to 4.7% from 6%. Freddie Mac is baking in some possibility of expansionary fiscal policy coming out of Washington, especially with respect to tax reform, where an increase in the standard deduction will reduce the incentive to itemize and reduce the subsidy from the mortgage interest deduction.

 Interest rate news

 Hah! There is none, except for, "There's more buyers than sellers." The only scrap of information may have come from Treasury Secretary Mnuchin who said that most of the administration's fiscal policies would have a larger growth impact starting in 2018. And that sure isn't this year. But remember that lender volumes are declining, and the laws of supply and demand suggest higher prices and lower rates. By the time the day ended the risk-free 10-year's price had improved .250 and the yield was 2.39%, and the 5-year and MBS prices rallied .125-.250 depending on coupon and security.

 There is some good news, and that is that the Fed does not appear to be in any rush to shrink the balance sheet, i.e., divest itself of its trillions of dollars in Treasury securities and agency MBS.

 There was no early morning news today, but at 10AM ET we have Michigan Sentiment (the final number for February) and New Home Sales for January. Out of the gate this morning the 10-year is at 2.36% and MBS prices are better by nearly .125.