Overnight funding markets may be on their own during the next bout of turbulence as a key Federal Reserve backstop is unable to support the entire space unless upgrades are made, according to Barclays Plc.
Tag Archives: mortgage fraud news
Single-family rental company secures $1B capital infusion
Evergreen Residential has secured $1 billion in capital commitments to support its three business lines, including lending, in investment real estate.
Why banks’ office loan troubles may soon fade
Lower borrowing costs, reduced exposure to the urban office sector and flattening vacancy rates could collectively save lenders from beleaguered corners of the commercial real estate market.
Community lenders escalate Ginnie Mae transfer concerns
Government-guaranteed securitization rules complicate servicing sales and are a growing problem for nonbanks, the Community Home Lenders of America says.
Bipartisan group asks FHFA to stop title waiver pilot
In the aftermath of the election, a bipartisan group of House members are the latest to ask the FHFA to put the owner’s title insurance waiver pilot on hold.
Two Ways to Look at Residential Construction Slowdown
The most common interval for scheduled economic data is “monthly.” That means that things like inflation, sentiment, job counts, unemployment, retail sales, and many other economic metrics are updated and released every month, even when nothing very interesting is happening. On that note, there are several regularly scheduled housing related reports. This month’s installment of New Residential Construction is today’s example and, as you may have guessed, nothing very interesting is happening. At a glance details:
Housing Starts (1st phase of actual construction)
1.311 million annual pace vs 1.33m forecast, 1.353m previously
Building Permits
1.416m vs 1.430m forecast, 1.425m previously
Neither measurement stands out on a longer term chart. Both have dialed back from the long-term highs seen between late 2020 and early 2022, but both remain in strong territory relative to 2019. This is the first way to view the slowdown in construction. The other way to view the slowdown is to focus solely on the slowdown in greater detail and attempt to connect it to another variable. That ends up being fairly easy if we merely consider the massive rate spike that coincided with the rapid contraction in building permits. In not so many words, construction metrics have been bouncing around their current levels ever since mortgage rates spiked to the 6-8% range. This isn’t to say that interest rates are the exclusive reason for the slowdown, but the rate spike coincides with other headwinds. Those include things like affordability, labor costs, machinery/material costs, and financing costs for builders.
Mortgage Rates Only Modestly Lower Despite Seemingly Big News
Ask your favorite curmudgeonly old market watcher and they’ll be happy to explain what “always” happens in financial markets when there’s breaking news regarding large scale geopolitical risk. It would be a surprise if you didn’t hear a phrase like “flight to safety,” the most common shorthand reference to selling stocks and buying bonds. Why would mortgage rates care about all that? A few reasons… First off, rates are driven by bonds. “Buying bonds” would help rates move lower, all other things being equal. Another reason to care is that, within the last 24 hours, the U.S. authorized Ukraine to use long range missiles to attack Russia, Ukraine has already attacked Russia, and Russia has already threatened to respond with nuclear weapons in not so many words. Feed those details into a magical trading computer and it would predict exactly what we saw in overnight trading. Stocks fell and bonds/rates improved. The computer would likely vastly overestimate the size of the improvement in rates, however, as well as the fact that stocks would end up higher by the end of the day. All that to say that the improvement in mortgage rates was wholly underwhelming relative to the news headlines–likely because it’s far from the first such threat from Russia, or because traders are skeptical that anyone wants to push any of the red buttons on the “mutually assured destruction” machine. [thirtyyearmortgagerates]
Bonds Give Back Most of The Overnight Gains
Bonds Give Back Most of The Overnight Gains
Stocks and bonds had a logical response to the threat of global nuclear war overnight, but even at the height of that trade, the gains weren’t too big for Treasuries/MBS. Starting at 9am ET, bonds began giving back the overnight gains and that process continued in a slow and steady way throughout the session. MBS ultimately hit unchanged levels and 10yr yields rose roughly 6bps from the lows. The stock market made an even bigger round trip, ultimately ending higher for the 2nd day in a row.
Econ Data / Events
Housing Starts
1.311m vs 1.330m f’cast, 1.354m prev
Building Permits
1.416m vs 1.430m f’cast, 1.425m prev
Market Movement Recap
09:31 AM moderately stronger overnight on Ukraine escalation. MBS up less than an eighth. 10yr down 4.2bps at 4.374
12:56 PM weakest levels of the day. MBS up 2 ticks (0.06) and 10yr down 3.2bps at 4.385
02:56 PM Little changed since previous update. MBS up 2 ticks (.06) and 10yr down 4.3bps at 4.374
03:41 PM 10yr yields are still 3bps lower on the day at 4.387. MBS now up only 1 tick (.03).
Threat of Global Nuclear War Barely Worth a Bond Rally
Tuesday brings a classic example of a seemingly significant geopolitical headline resulting in a completely underwhelming bond market reaction. When it comes to such matters, we must ask “who thought it seemed significant?” Quite a few people, most likely, but not as many bond traders. One big issue is that global nuclear posturing is all posturing until it’s not. The bond market can’t afford to freak out in response to every apparent escalation, and so it’s not. Overnight gains were driven by a classic flight to safety “sell stocks, buy bonds” both in Europe and the US. Volume has been quite strong, but the gains have been lackluster at best.
Despite the air of resignation in this qualitative assessment, bond bulls can’t help but notice the early stages of a potential breakout in the prevailing uptrend in Treasury yields.
Could this be a thing? Sure, but it’s far too soon to conclude that it will be a thing right now. We’d need several more days moving sideways or lower outside this trend to confirm any kind of supportive ceiling.
Jumbo, Non-QM, Milestone, HMDA Review Tools; Disasters and GSE Loans; Interview with Cross Country’s Matt Weaver
“What do giraffes and zoning regulations have in common? They both don’t exist in Texas.” I am not heading there for a while, but instead head to St. Louis this morning for the MBA of St. Louis event. I received this note from a veteran broker. “Someone please remind government officials, bank management, and industry leaders what happened when regulations were removed or not enforced. Anyone else remember 2008-2010? We need regulations as banks don’t give a damn about anything but profits and stock prices. The financial, food, geriatric care, or whatever industries will not police themselves.” As if on cue, today at noon PT, 3PM ET, Marty Green from Polunsky Beitel Green, Matt VanFossen, Chief Executive Officer of Absolute Home Mortgage Corporation, and Loretta Salzano from Franzen & Salzano will be exploring what Trump’s election win means for the mortgage industry, including the FHFA, CFPB, and the Fed, and discuss the uncertainties around his policy decisions: Regulation Central. HUD knows a thing or two about rules and regulations, and HUD’s Julia Gordon is on Mortgage Pros 411 today at 11AM PT, 2PM ET. (Today’s podcast can be found here and this week’s is sponsored by PHH Mortgage. If you are looking for a Correspondent Lending partner or an experienced, award-winning subservicer who can manage your forward and reverse, residential and commercial, and performing and non-performing loans look no further than PHH. Hear an interview with Cross Country Mortgage’s Matt Weaver, who ranked No. 1 for Most Loans Closed and No. 4 in Top Dollar Volume per Scotsman Guide in 2023, on what sets apart quality originators and how to grind out volume in this rate environment.)