MBSQuoteline Blog

Special Update: 2.5% 30 Yr Agency MBS prices now available!

JoeFarr — Tue, 20 Nov 2012 21:49:28 +0000

Are any of you looking for 2.5% 30 yr Agency MBS prices? MBSQuoteline now makes them available as part of its mortgage market information service. Not only can you see live MBS prices at any time during the day, you can see the path of price movement throughout the day. The prices are conveniently available on your desk top, as well as your smartphone. Go to www.mbsquoteline.com to start a free trial to see how this information and more can be a benefit to you.

Special Update: Update on G-Fees

JoeFarr — Thu, 01 Nov 2012 17:00:11 +0000

We have received a few questions today about why mortgage-backed securities (MBS) prices do not show the same drop in prices as seen from the Fannie Mae window. The reason is that Fannie Mae, this morning, built into their whole loan prices an increase in their required guarantee fee (G-fee). Since G-fees are paid from the borrower’s loan rate and not by the owner of an MBS, MBS prices are unaffected by a change in G-fees. Most lender rate sheets began reflecting the increase in G-fees over the last few weeks, depending on lock term and delivery method.

Special Update: More on G-Fee Increase

MBSQuoteline — Tue, 25 Sep 2012 20:36:53 +0000

On August 31st, FHFA announced another increase in the guarantee fee (G-fee) charged by Fannie Mae and Freddie Mac on the loans they insure. The amount of the increase is set to average 10 basis points, but the amount of the increase may vary by product and seller. The increase is to be effective on loans sold directly to Fannie or Freddie beginning in November and for any loans to be pooled in a mortgage-backed security (MBS) with a December 1st or later issue date. Longer term locks already reflect this increase. Short term locks may as well, depending who is buying the loan and whether the loan will be pooled in a MBS. If they don’t now, they will very soon. G-fees are paid by the borrower from the interest paid on the loan or are collected upfront as a cost to the borrower. The cost is approximately five times the increase in G-fee. The effect of this increase in G-fee on the borrower has been masked somewhat by recent price increases in the MBS market. Loans locked at prices before the G-fee increase was added will incur heavy extension fees, if required, so timely delivery of well documented, high quality loans is extremely beneficial.

In The News: Greece Receives Bailout 2.23.12

DanAlpert — Thu, 23 Feb 2012 16:40:02 +0000

Economic troubles in Europe have helped mortgage rates move lower in recent months. One reason is that slower global economic growth reduces the risk of inflation, and inflation is negative for mortgage rates. The second reason is that investors have been concerned that the debt problems in Europe could spread to other countries and hurt the global banking system. As a result of the uncertainty, investors have shifted some funds to relatively safer assets, including US mortgage-backed securities (MBS).

Greece has experienced the worst of the European debt troubles. After weeks of negotiations, on Monday European officials finally agreed to provide a $172 billion bailout package to Greece. This aid will allow Greece to avoid defaulting on debt maturing on March 20, removing some uncertainty from the market. As it became clearer last week that a deal was close, investors began to reverse the flight to safety trade, selling MBS, and mortgage rates moved a little higher.

Investors will continue to watch the situation in Europe. It is not at all certain that Greece will fully implement the severe austerity measures required in the deal, and other countries such as Portugal are teetering on the same economic edge as Greece. With the Greek bailout package done, events in Europe, at least for the short-term, may have less influence on daily US market movements. Investors likely will focus more on incoming US economic data which has generally been surprising to the upside so far this year. A stronger economy, although great for employment and the stock market, is potentially inflationary and may not be good for mortgage rates.

Blog Talk Radio Show February 6, 2012: Retaining Servicing

JoeFarr — Tue, 07 Feb 2012 17:27:32 +0000

Is your company one of the many looking into selling their mortgage loan originations on a servicing retained basis? If so, the Lykken on Lending show today is one to which you should listen. Servicing experts Austin Tilghman and David Stephens, from United Capital Markets, were guest speakers. They explained that economics have forced many former release shops to consider retaining servicing. With so many correspondent lenders out of the market or having curtained their volume, there is very little competition for loans and as a result the correspondents are not having to pay full value for servicing.

Even though the economics may compel originators to retain servicing, there are several complicating factors to be considered before doing so. One should consider the time it takes to become approved as a servicer with the agencies, the need to acquire sufficient net worth to qualify, employing servicing knowledge, and adapting to the changing cash flows of your business.

Other non-economic risks need to be understood in making a decision to retain servicing, including the significant regulatory uncertainty surrounding servicing and that there is an unclear secondary market for servicing rights in the future. What is clear is that the servicing cash flows from today’s originations, sub-4% rates with very high quality, should be some of the most valuable servicing rights ever.

Click PLAY to listen to the podcast of this week’s BlogTalkRadio/Lykken on Lending with Dave Lykken and MBSQuoteline‘s Joe Farr:

Listen to internet radio with David Lykken on Blog Talk Radio

MBSQuoteline supplies the essential market information necessary for effective decision making by Originators when assisting borrowers during the loan origination process, and for secondary marketing departments while managing pipelines. For additional information or to sign up for a free 2-week trial subscription, visit www.MBSQuoteline.com or call (800) 627-1107.

Tune in every Monday at 1:00pm(et) for up-to-the-minute information on interest rates, loan programs and “hot” industry news related to the mortgage industry. Dial: (646) 716-4972 or log in at: www.blogtalkradio.com/lykken-on-lending

Blog Talk Radio Show January 23, 2012: Chief Economist Fannie Mae

JoeFarr — Tue, 24 Jan 2012 18:28:16 +0000

Our special guest on the Lykken-on-Lending blog talk radio show today was Doug Duncan, the Chief Economist for Fannie Mae. Doug provided his thoughts on the economy, housing, Europe, and inflation, but the most interesting comments had to do with his answer to a question asking how he would characterize what will happen in 2012. Doug answered by directing the listeners to a Fannie Mae research paper entitled 2012 – Year of the Political Economy. This paper can be found on the Fannie Mae web site at http://www.fanniemae.com/portal/about-us/media/financial-news/2012/5609.html. Doug explained that 2012 will be very heavily effected by the number of regulations just added to the books, as well as the many new regulations to be issued in the months to come. The consequence of the huge number of new regulations is UNCERTAINTY. He estimates that uncertainty will cost the economy 1% in Gross Domestic Product or $500 to $750 billion in 2012, effecting both the consumer and businesses.

Click PLAY to listen to the podcast of this week’s BlogTalkRadio/Lykken on Lending with Dave Lykken and MBSQuoteline‘s Joe Farr:

Listen to internet radio with David Lykken on Blog Talk Radio

In The News: Greek Debt Negotiations 1.24.12

DanAlpert — Tue, 24 Jan 2012 17:57:06 +0000

Greece has experienced the worst debt troubles of any European nation, and its debt burden is clearly unsustainable. European officials and bondholders both want to avoid a default, so they have been negotiating a “voluntary” agreement to reduce Greece’s debt burden by 50%. As usual, though, the sticking point for the two sides is price. In the case of bonds, this means the yield on the new bonds. Bondholders want the highest possible yield. A higher yield means higher debt payments, however, and Greece will require financial aid from the IMF and other European Union countries to make the payments. A default would trigger many costs and raise the level of uncertainty for investors, possibly raising yields for other European countries, which gives bondholders some leverage. On the other hand, if the Greek government defaults, there is little reason to give bondholders anything. The lack of progress has caused a flight to safety, which has helped relatively safer investments, including US mortgage-backed securities (MBS). Mortgage rates are largely determined by MBS prices, and a “messy” deal or a default would likely cause US mortgage rates to move lower. If bondholders agree to a deal at a yield which Greece can handle comfortably, then investors may partially reverse the flight to safety trade, leading to higher US mortgage rates. The negotiations have been going on for months, and it’s not clear what will break the impasse. Meanwhile, US financial markets continue to be influenced by the news from Greece.

Special Update: G-Fee Increases – Update 12.29.11

MBSQuoteline — Thu, 29 Dec 2011 22:41:32 +0000

FHFA has answered a couple of the questions we raised on Tuesday regarding the Congressionally mandated increase in Fannie Mae and Freddie Mac guarantee fees (G-fees). Effective April 1st all G-fees charged by Fannie and Freddie will be increased by 10 basis points. In addition, FHFA said that during the first part of 2012 they will determine whether the new law will require additional increases in the G-fees.

Since G-fees are paid from the interest on a loan, this increase will cause mortgage rates on loans going into Fannie and Freddie mortgage-backed securities after April 1st to rise by a similar amount.

Special Update: G-Fee Increases 12.28.11

MBSQuoteline — Wed, 28 Dec 2011 15:46:06 +0000

On Friday, President Obama signed into law the Temporary Payroll Tax Cut Continuation Act. This Act uses increased guarantee fees on new mortgages to pay for reduced payroll taxes. The amount of the g-fee increases will be included in future mortgage rates. Below are general provisions pertaining to increasing the Guarantee Fees for Fannie, Freddie, and FHA. Several elements in the bill are not quite clear and may take weeks or months to determine. The primary questions are:

1. How much will the Fannie and Freddie g-fee rise? The Act calls for a minimum increase of 10 basis points, but the amount of the increase is to be determined by FHFA and is supposed to a)”cover the risk of loss associated with the guarantee”, and b) be based on “the cost of capital allocated to similar assets held by other fully private regulated financial institutions”. This definition could result in a wide range of fee increases. The early expectation from insiders is that the increase will be 10 basis points.

2. When will the increase become effective? The Act says the increase is to be applied to guarantees issued after enactment of this section. The date this provision is to be enacted is not clear. FHFA and the GSEs will require substantial effort to prepare for this, so it may take some time.

3. Will the increase in guarantee fees hit all at once? The Act says the FHFA may phase in the increase over a two-year period. This could make the initial effect on mortgage rates fairly small. However, the FHFA could make the increase applicable all at once.

4. How much will the FHA’s annual insurance premium increase? This is the only easy question. The answer is 10 basis points.

5. When will the FHA increase take effect? The bill allows HUD to phase it in over two years following enactment of this subsection. Again, the date of enactment is not clear and the pace at which it is phased in is as HUD deems appropriate.

Blog Talk Radio Show November 21, 2011: HARP II Guidelines

JoeFarr — Mon, 21 Nov 2011 22:08:12 +0000

HARP II guidelines were released last week and I was more confused than before. We are fortunate to have Alice Alvey to interpret what the guidelines say about who will be able to offer borrowers this new product and when. She too found it difficult, but this is what she thinks the guidelines say regarding who and when. First, the current servicer of a loan will be able to refinance their serviced loans beginning with applications taken after December 1, 2011. For these loans, certain provisions will not be available for settlements prior to January 3, 2012, so most loans will not fund until after then. Access to the HARP II does not open up to non-servicer originators (Open Access) until March 15, 2012. This is when the automated underwriting engines will be programmed to accept loans with the LTV waiver.

Click PLAY to listen to the podcast of this week’s BlogTalkRadio/Lykken on Lending with Dave Lykken and MBSQuoteline‘s Joe Farr:

Listen to internet radio with David Lykken on Blog Talk Radio