Mortgage News Daily

MBS RECAP: Technically an Early Close, but Buyers Never Showed Up

Matthew Graham — Fri, 24 May 2013 20:31:07 GMT

MBS Live : MBS Afternoon Market Summary After a morning fraught with volatility, MBS finally bounced just after the noon hour. Even then, such a bounce wasn't really indicative of much more than an automatic buying point being reached when MBS spreads had finally blown out wide enough. In other words, in the midst of planning the day filled with avoiding buying MBS, perhaps some trade desks left notes for whoever was left manning the desk to 'only buy if spreads get this wide.' Everyone else was off for the weekend, especially after 11am. The fact that we only got a moderate handful of negative reprices today helps paint that same picture. Given the volatility, we'd almost always expect more reprices that we got, but when combined with yesterday's rate sheets being weaker than MBS losses suggested...(read more)

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Mortgage Rates Hold Steady Ahead of 3-Day Weekend

Matthew Graham — Fri, 24 May 2013 18:47:00 GMT

Posted To: Mortgage Rate Watch

Mortgage rates finally paused their relentless push higher today, holding at unchanged levels compared to yesterday's latest rate sheets on average. Some lenders were slightly better or worse, but none of them by a wide margin. Data and events were limited and markets were in holiday mode. The most relevant market to mortgage rates, MBS, had a volatile day, but the volatility didn't transfer to rate sheets as much as it normally does, likely due to the shortened trading day and 3-day weekend ahead prompting lenders to price more conservatively yesterday. This would go a long way toward accounting for our observation yesterday that rate sheets were worse in the morning despite trading levels not being appreciably weaker. (If you missed this week's big news for rates, or want a refresher: Why...(read more)

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MBS MID-DAY: Negative Reprices in the AM: Breakfast of Champions

Matthew Graham — Fri, 24 May 2013 17:07:23 GMT

Posted To: MBS Commentary

MBS Live : MBS Morning Market Summary Please not the timestamp on the price table below as Fannie 3.0s are currently down 3 ticks at 101-19, but had been as low as 101-13 earlier this morning. Negative reprice alerts on MBS Live went out at 11:20am, 11:56am, and 12:20pm. Treasuries have had a calm morning while MBS had a mini-meltdown, moving to the lowest prices of the year, resulting in several investor reprices. Durable Goods data had relatively little effect and instead the lack of liquidity in MBS began taking its toll just after 10am. Buying triggers look to have been tripped at the lows (or "wides" in terms of MBS spread vs Treasuries). Volatility was a possibility from the outset given the shortened trading day and the Quadruple Witching options/futures expirations in equities markets...(read more)

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Delinquency Rate Hits Post Housing Crisis Low for Freddie Mac

Jann Swanson — Fri, 24 May 2013 14:42:50 GMT

Posted To: MND NewsWire

Freddie Mac said today that its total mortgage portfolio i ncreased by $951 million in April to $1.949 trillion , an increase of 0.6 percent. This was the second straight month the portfolio has increased. Purchases totaled $47.3 billion compared to $52.0 billion in March, liquidations were ($45.7) compared to ($44.85) billion and sales were ($627) million, up from ($617) million. The year to date growth in that portfolio is (1.1) percent and the annualized liquidation rate is 29.2 percent. The Mortgage-Related Investments Portfolio declined from an unpaid principal balance of $534.2 billion in March to 528.3 billion in April, a change of 13.2 percent . Purchases totaled $15.0 billion compared to $13.57 billion in March. Liquidations increased from ($10.10) billion the month before to ($10...(read more)

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Government Furlough Days; H.R. 1077's Impact on QM And 3% Limit; MBA on GSE risk sharing

Rob Chrisman — Fri, 24 May 2013 14:03:13 GMT

Posted To: Pipeline Press

T he IRS, furlough days, and the possible impact on 4506 transcript processing . I first heard about it through a Mountain West Financial e-mail: "The IRS announced the first 5 furlough days for 2013. All services will be shut down as they would be if it were a federal holiday. The furlough days currently scheduled will take place on May 24, June 14, July 5, July 22, and August 30 . All public-facing operations will be closed on these dates, including the toll-free operations and Taxpayer Assistance Centers. The IRS will not accept nor return any orders on those days, however Equifax will continue to receive and prepare request for submission. Transcript receipt and turn time delays normally associated with holiday closures can be expected." No one is arguing that the value of servicing is...(read more)

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The Day Ahead: Do or Die Time for MBS

Matthew Graham — Fri, 24 May 2013 11:37:00 GMT

Posted To: MBS Commentary

Welcome to a crazy day for markets, maybe. It's a quadruple witching session, meaning that futures and options for single stocks and stock indices are all expiring on the same day. It happens 4 times a year and though it's seen more than a few sideways, uneventful turnouts, it's known for inspiring inexplicable volatility. Add to that the fact that it's an early close for bond markets (2pm Eastern) and that it bookends a 3-day holiday weekend, and there are plenty of ingredients to make things quite hectic in the morning hours. The other matter at hand is the "do or die" situation that MBS find themselves in. We can use the following chart to map that out: The grey bars in the background are regular old Fannie 3.0 prices (high/low), and the green line is a 9 day moving average--used as a fairly...(read more)

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MBS RECAP: Attempting To Consolidate After Wednesday's Sell-Off

Matthew Graham — Thu, 23 May 2013 21:03:04 GMT

Posted To: MBS Commentary

MBS Live : MBS Afternoon Market Summary Treasuries had a bit of an easier time today than MBS, the latter feeling the effects of a shift in duration preference that has been historically unkind to Fannie 3.0 30yr Fixed MBS. So far in 2013, when 10yr yields have approached 2.0%, The lower end of the production MBS coupon range feels the biggest pinch. This has to do with the negative convexity inherent to MBS markets. In short, if the broad swath of interest rates in the financial world are at a certain level and moving higher, there is a certain point on the spectrum of liquid MBS coupons where liquidity begins to dry up and prices tend to fall much faster than higher coupons because investors don't want to be stuck earning interest at a lower rate in a rising rate environment. That's a bit...(read more)

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Mortgage Rates Carried Higher Still By Yesterday's Momentum

Matthew Graham — Thu, 23 May 2013 20:19:00 GMT

Posted To: Mortgage Rate Watch

Mortgage rates weren't quite finished with what they began on Wednesday, which was the worst we've seen in a long time . Despite bond markets managing to hold their ground for the most part today, rates were carried higher by yesterday's momentum--that is to say, lenders' rate sheets were worse this morning than yesterday afternoon despite the fact that trading levels in Mortgage-Backed-Securities weren't appreciably worse. (catch up with yesterday's big move: Why Did Mortgage Rates Skyrocket Past 2013 Highs on Wednesday? ) Considering that yesterday's rates were the highest in exactly one year, today's claim the "over a year" title and best-execution is pushing well into 3.75% for most lenders with some closer to 3.875% already. This isn't universally the case and a few lenders were closer...(read more)

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Can't Count on Low Rates Forever, Right? Why QE3 Could be Expensive; HUD disaster relief

Rob Chrisman — Thu, 23 May 2013 18:58:00 GMT

Posted To: Pipeline Press

The Fed giveth, and the Fed taketh away. Both stocks and bonds fell on Wednesday after a Q&A session with Ben Bernanke , and minutes from the latest U.S. Federal Reserve meeting, shed some uncertainty on the schedule of QE3. We also had U.S. existing home sales move higher in April, +.6%, and so once again we have numbers showing a continued improvement in the housing market. Even though sales have likely been restrained by limited available inventory in recent months, the pace of sales reported for April was the strongest of the expansion to date (excluding the home buyer tax credit periods). The sales mix has also become healthier lately with distressed sales accounting for only 18% of the market in April, down from an average of 23% in 1Q and 28% in April 2012. The median price of an...(read more)

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New Homes Hit Record Median Price in April, Sales Rise

Jann Swanson — Thu, 23 May 2013 17:41:24 GMT

Posted To: MND NewsWire

New home sales rose 2.3 percent on a seasonally adjusted basis in April to an annual rate of 454,000 units . The Census Bureau and the Department of Housing and Urban Development also revised the March estimate of new home sales dramatically upward from 417,000 units to 444,000. The April rate of sales was 29.0 percent higher than the April 2012 rate of 352,000 units. On a non-seasonally adjusted basis there were 45,000 sales during the month compared to 42,000 in March. This brings the year-to-date total to 153,000 units. Sales fell in April in two of the four regions. In the Northeast the seasonally adjusted annual rate was 30,000 units, down 16.7 percent from March but up 3.4 percent from April 2012. Sales in the Midwest were down 4.8 percent to a rate of 59,000, an annual increase of 18...(read more)

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MBS MID-DAY: Treasuries Green, MBS Red

Matthew Graham — Thu, 23 May 2013 16:47:46 GMT

Posted To: MBS Commentary

MBS Live : MBS Morning Market Summary Mortgage markets are less than thrilled with the broader move into higher rates that was effectively confirmed yesterday, and we have 2 negative reprice alerts on MBS Live , early in the session to show for it. Although Fannie 3.0s managed to open in the green, it was only a byproduct of a resounding rally in Treasuries overnight from 2.06+ to 1.96 by 4:30am New York time. From then on out, Treasuries leaked higher in yield into Jobless Claims. MBS were dipped briefly into negative territory, but managed to "fade" the Claims data (FADE: jargon for trading in such a way that runs counter to the conventionally accepted suggestion of the data), but only for so long before stronger home sales data and the Fed's Treasury buying operation (which proved difficult...(read more)

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Home Price Gains Triple Inflation, but Not Without Distressed Sales

Jann Swanson — Thu, 23 May 2013 16:10:59 GMT

Posted To: MND NewsWire

As has every other price-related report, the one issued by the Federal Housing Finance Agency (FHFA) today confirmed the upward momentum of home prices in the first quarter of 2013. FHFA's Home Price Index (HPI) rose 1.9 percent, the seventh consecutive quarter that the seasonally adjusted, purchase-only index has risen. The 1.9 percent quarter rise may actually understate a growing momentum; the seasonally adjusted index rose 1.3 percent just in March, the last month of the quarter. This was the 14 th consecutive increase in the monthly HPI. Since the first quarter of 2012 home prices have increased 6.7 percent . FHFA points out that the cost of other goods and services have risen 1.4 percent over the last four quarters so the inflation adjusted rise in home prices is 5.2 percent, 3.71 times...(read more)

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FHFA Watchdog Sends Milestone Report to Congress

Jann Swanson — Thu, 23 May 2013 13:44:51 GMT

Posted To: MND NewsWire

The fifth Semiannual Report from the Office of Inspector General ( OIG ) of the Federal Housing Finance Agency ( FHFA ) was released to Congress today. The report, prepared under the direction of Steve A. Linick, Inspector General, catalogues the audit and evaluation work done by OIG between October 1, 2012 and March 31, 2013 and the current status of FHFA, the government sponsored enterprises ( GSEs ) Fannie Mae and Freddie Mac, and the Federal Home Loan Banks ( FHLBanks ). It also recounts investigative activities in support of federal and state prosecutors pursuing instances of fraud in the housing industry. In a letter accompanying the report Linick said that his office is mindful that the long term success of FHFA is necessarily affected by the uncertainty surrounding the fate of the GSEs...(read more)

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The Day Ahead: MBS in Full Melt-Down Mode. What Next?

Matthew Graham — Thu, 23 May 2013 10:58:00 GMT

Posted To: MBS Commentary

The idea of "tapering" the Fed's long term asset purchases isn't as new as the past two weeks might make it seem. It was most visibly introduced in early February when both Bullard and Fisher spoke out in favor of the notion. But a quick count of all Reuters newswires in which the word has appeared since then shows that it really exploded on April 10th after the last FOMC Minutes release. Suddenly, "tapering" was the talk of the town and was strangely soothing to bond bulls fearing a more abrupt exit and strangely emboldening to Fed Hawks, seen as proponents of immediate tapering. Then a month of relative excellence for bond markets caused amnesia on tapering topics and the new FOMC Announcement on 5/1 even left the door open INCREASED asset purchases. In the midst of a raft of mostly negative...(read more)

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MBS Annihilated After Fed Confirms The Hype

Matthew Graham — Thu, 23 May 2013 00:11:03 GMT

Posted To: MBS Commentary

MBS Live : MBS Afternoon Market Summary Today was among the worst on record for MBS since the carnage that was late 2010. We still have yet to see anything rival Black Wednesday's, but almost exactly 4 years after that 2+ point evisceration (5/27/2009), today's loss of just over a point--in the midst of what was already an unpleasant downtrend--conjured up the same sort of gut-wrenching feelings. At least in the current case, there's some measure of logic involved, not to mention much more advanced notice. It might not prove to be the 4-month game changer that Black Wednesday was, but the problem is that it could be part of confirming that an already possible game-change is in progress--that being the ongoing long-term uptrend in rates that began after Treasuries hit all-time lows in mid 2012...(read more)

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Why Did Mortgage Rates Skyrocket Past 2013 Highs on Wednesday?

Matthew Graham — Wed, 22 May 2013 22:10:00 GMT

Posted To: Mortgage Rate Watch

Mortgage rates were utterly destroyed today. Not only did the average rate move above the highest seen in 2013, but rates haven't been this high since May 22nd of 2012! Of course, there's the "everything's relative" perspective, whereby we can attempt to appreciate the fact that best-execution is still around 3.75%, but the fact remains that the day over day movement was devastatingly swift, and on the the most aggressively negative end of the spectrum of possibilities heading into the day. We'll dig into some of the reasons for today's spike after the following housekeeping note. Mortgage News Daily's rate series is updated every day, once a day (usually near the end of the day to account for any intraday reprices from lenders). It's based on actual lender rate sheets and assuming you're viewing...(read more)

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House Rejects CFPB Testimony on Qualified Mortgage Rule

Jann Swanson — Wed, 22 May 2013 19:11:58 GMT

Posted To: MND NewsWire

Members of a House Financial Services subcommittee issued a press release Tuesday afternoon which essentially dismissed testimony heard earlier in the day from two officials of the Consumer Financial Protection Bureau (CFPB) regarding the impact efficacy of the new Qualified Mortgage Rule . Peter Carroll, CFPB's Assistant Director for Mortgage Markets, and Kelly Thompson Cochran, its Assistant Director for Regulations presented information to the Financial Institutions and Consumer Credit Subcommittee about the process the Bureau followed in developing the new Ability-to-Repay requirements of the Qualified Mortgage Rule required by the Dodd-Frank Wall Street Reform and Consumer Protection Act. The rule, the two said, was only finalized after a process in which CFPB considered nearly 2,000 comments...(read more)

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Distressed Sales Fall Under 25 Percent in California

Jann Swanson — Wed, 22 May 2013 19:04:00 GMT

Posted To: MND NewsWire

In April 2012 distressed properties accounted for 45.8 percent of home sales in California the states Association of Realtors® said Wednesday, but last month that share dropped to 24.4 percent and was down 3.5 points compared to March. There was of course a corresponding rise in the share of equity sales . The California Association of Realtors (C.A.R.) said that the share of short sales declined from 21.1 percent a year earlier to 14.8 percent as rising prices lifted more homeowners out of a negative equity position. Sales of bank owned real estate (REO) dropped into single digits (9.2 percent) for the first time in more than five years. The decline in distressed sales was evident throughout the state with at least seven of the state's 58 counties registering distressed sales in the single...(read more)

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Mel Watt Hearings; Current Origination Numbers; Foreclosure Process Slowdown Merely a Hiccup

Rob Chrisman — Wed, 22 May 2013 16:51:10 GMT

Posted To: Pipeline Press

Yesterday the commentary mentioned a rumored shut down of MGIC's Capital Markets Group . I received this e-mail: "MGIC has indeed reorganized certain, but not all, activities that were previously performed by our Capital Markets group. We did so to better align the services it provides with our needs of our customers and to operate more efficiently in the current business environment. So the services are not being eliminated, rather our customers' capital markets needs will continue to be supported by their local MGIC Account Managers, with assistance from MGIC's Marketing Department . Unfortunately, as a result of this realignment one individual will no longer be employed by MGIC." The industry is glad to hear that the services MGIC provides are still available, and that its customers' capital...(read more)

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MBS MID-DAY: THIS IS WHY YOU WANT MBS LIVE!

Matthew Graham — Wed, 22 May 2013 16:41:00 GMT

Posted To: MBS Commentary

MBS Live : MBS Morning Market Summary If you read this commentary with any sort of frequency, you may have noticed a trend of late, where the mid-day recap has been coming out later than normal. As we've said, this happens when MBS have sold off sufficiently, and early enough in the day to create negative reprice risk before the time the mid-day commentary is automatically collated in our system. Unfortunately for bond prices, that's happened quite a lot lately. During these times, I'm writing reprice alerts for MBS Live and interacting in real time with the other members of the MBS Live community on the dashboard. The first reprice alert today was out at 10:39am, well in advance of any lender reprice, and I've written two additional updates/alerts since then. Even before the alert, the MBS...(read more)

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Despite Tight Credit and Inventories, Existing Home Sales and Prices Continue Recovery

Jann Swanson — Wed, 22 May 2013 16:24:00 GMT

Posted To: MND NewsWire

Existing home sales remain constrained by limited inventory and tight credit but still managed to eke out a small increase in April the National Association of Realtors® (NAR) said today. Total existing home sales rose 0.6 percent to a seasonally adjusted annual rate of 4.97 million in April from 4.94 million in March. The March number reflects a substantial upward revision from the 4.92 million pace originally reported. Existing home sales in April were 9.7 percent higher than the 4.53 million sales rate one year earlier. Existing home sales in April were at the highest pace since the homebuyer tax credits caused the market to spike in November 2009 to a pace of 5.44 million units. Existing home sales and home prices have been above year-ago levels for 22 and 14 consecutive months respectively...(read more)

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Substantial Decline in Foreclosure Inventory Noted in LPS Report

Jann Swanson — Wed, 22 May 2013 15:29:58 GMT

Posted To: MND NewsWire

Lender Processing Services (LPS) has provided its regular advanced release of data from its Mortgage Monitor . This " first look " at April 2013 month-end mortgage performance data will be followed by the full report in early June. LPS reports that the total loan delinquency rate - loans 30 or more days past due but not in foreclosure - was 6.21 percent in April, down 5.81 percent from March and 9.61 percent from April 2012. Just over 3.11 million loans are currently delinquent but not in foreclosure and 1.394 million of these are over 90 days past due. Loans that are in foreclosure - the so called foreclosure inventory - now number about 1.59 million properties, 3.17 percent of U.S. mortgages. The inventory is down 5.83 percent month over month and has dropped by almost 25 percent since April...(read more)

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Mortgage Applications Fall Sharply as Rates Rise

Jann Swanson — Wed, 22 May 2013 12:33:37 GMT

Posted To: MND NewsWire

A big drop in applications for refinancing dragged the Mortgage Bankers Associations Market Composite Index, a measure of mortgage applications volume , lower during the week ended May 17. The index was down 9.8 percent on a seasonally adjusted basis compared to the week ended May 10 and was down 10 percent on an unadjusted basis. Refinancing, as measured by MBA's Refinance Index, was down 12 percent from the previous week and the refinance share of mortgage activity decreased to 74 percent of total applications from 76 percent. Applications for refinancing through HARP increased from 30 percent of all refinancing applications to 32 percent. Applications for purchase mortgages also declined and the seasonally adjusted Purchase Index was 3 percent lower than a week earlier. The unadjusted index...(read more)

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The Day Ahead: Has All the Hype Been Remotely Justified?

Matthew Graham — Wed, 22 May 2013 11:23:00 GMT

Posted To: MBS Commentary

Wednesday May 22nd, and we finally get to see what all the fuss is supposedly about . The "fuss" or hype, if you prefer, was theoretically kicked into high gear by a somewhat bungled pre-release ' leak ' of a Hilsenrath story about the Fed 'mapping an exit strategy.' Bond markets started selling off around the same time, but the extent to which this had much to do with the announcement of the impending Hilsenrath article is still a matter of debate. Reason being: it coincided with two or three other contenders that would have also been sufficient to engender such a spike. Well before any of the drama began, we'd discussed our own 'mapping' HERE , highlighting the risks that the May selling trend would continue and pointing out the technical ledge at 1.83-ish in 10yr yields as being a massively...(read more)

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MBS RECAP: Big Bounce Higher Ahead of Fed

Matthew Graham — Tue, 21 May 2013 20:28:39 GMT

Posted To: MBS Commentary

MBS Live : MBS Afternoon Market Summary In sort of an inverted reading of the recent script, bond markets weakened right out of the gate and began improving at 10am (several notable occasions in May have seen the opposite). From there, they kept on improving until hitting highs of the day at 2pm. For MBS it was a 20 tick swing all told, and Fannie 3.0s still hold 19 of those ticks (roughly a .625 move from lows to highs) but compared to yesterday's latest levels, only added about .375. Combine that with the fact that yesterday's latest levels were the worst of the day and it leaves today's highs right in line with yesterday's. Lenders passed on only token improvements in pricing ahead of more potential volatility tomorrow. Markets are eager to hear what Bernanke has to say in the morning when...(read more)

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