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Posted To: MBS Commentary

Bond markets sold-off today in a slightly more alarming way than we've seen so far in 2019. This was accompanied by 11th straight trading session where stocks closed higher than they opened, as well as the best S&P prices in more than a month. One of three things could be going on. At face value, this is alarming . The first option is that all of the above is cause for concern. After all, we were worried about stocks and bonds reversing course in 2019 after the strong and correlated move in late 2018. This is the worst case scenario, but not necessarily a guaranteed scenario. The 2nd option is that all of the above is a 'false alarm.' Perhaps stocks are overly optimistic about a trade deal. Perhaps markets are too smart for their own good thinking they know what will happen...(read more)

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1/18/2019 3:11:44 PM

Posted To: Mortgage Rate Watch

Mortgage rates rose gently today. Most mortgage borrowers (and many mortgage professionals, for that matter) wouldn't be aware of slightly more alarming risks lurking underneath the surface. Those risks involve the broader bond market from which mortgage-related bonds take their directional cues. More simply put, if US Treasuries are improving, mortgage-backed bonds tend to improve as well. The level of correlation varies though. For nearly all of 2018, mortgages weren't improving as quickly as the most widely-used rate benchmark: 10yr Treasury yields. That began to change recently--especially when 10yr yields began moving higher 3 weeks ago. During that time, we've seen moderate moves higher in 10yr yields met with modest moves higher in mortgage rates. Today was another one of those days...(read more)

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1/18/2019 2:47:00 PM

Posted To: MND NewsWire

In accordance with requirements of the Dodd-Frank Wall Street Reform and Consumer Protection Act, the Consumer Financial Protection Bureau (CFPB) recently conducted five-year assessments of two rules it promulgated under the act. We summarized their assessment of the Ability-to-Repay/Qualified Mortgage rule last week. What follows is a brief summary of the assessment of the Real Estate Settlement Procedures Act's (RESPA's) servicing rule. Many provisions of the rule relate to servicer obligations to review delinquent borrowers for foreclosure avoidance options such as loss mitigation. These include requiring servicers to make certain disclosures, take certain procedural steps, and meet prescribed timelines when borrowers are applying for and being evaluated for these options. The data showed...(read more)

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1/18/2019 11:55:46 AM

Posted To: MBS Commentary

Ever since bottoming out in early 2019, 10yr Treasury yields faced a pretty clear line in the sand from a technical standpoint. 2.82% stuck out like a sore thumb overhead due to multiple instances where it acted as a floor in 2018. It may have seemed too far away to worry about 3 weeks ago, but with 2.75% being broken yesterday/today, 2.82% is next in line. Would a break above 2.82% be the end of the world for bonds? Not necessarily. In fact, in the biggest of pictures, as long as yields don't break above 3.26%, the longer-term outlook could remain positive. It would just be getting off to a rockier start compared to a scenario where yields are instead able to hold fairly steady in the 2.75-2.82 range until finding a reason to rally. Either way, the longer-term outlook will depend on bonds...(read more)

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1/18/2019 8:44:53 AM

Posted To: Pipeline Press

For the first time in history, the six biggest banks — JPMorgan Chase, Bank of America, Wells Fargo, Citigroup, Goldman Sachs and Morgan Stanley — made $100 billion in profit in a year. Yowzah! There’s a lot going on out there, and Ben Smidt put out his “Mortgage Expert Insights on Business Planning Strategies” that is worth a gander. Every basis point counts, right? With the increase in short-term rates, for non-depository lenders, does your accounting team tell you how much it costs every day to have a funded but unsold on your warehouse? If they haven’t, they should. Conventional Conforming Changes For the most part Freddie and Fannie have motored on, regardless of the PUGS (partial U.S. government shutdown). Let’s see what they’ve been up...(read more)

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1/18/2019 8:11:33 AM

Posted To: MND NewsWire

Applications for new home purchases dropped in December , falling 6.8 percent behind those a year earlier. The deficit from November was even larger, a decline of 13 percent. The Mortgage Bankers Association (MBA) estimates that those numbers, which do not include any adjustment for seasonal patterns, translates into new home sales during the month at an annual rate of 552,000 units, a 12 percent decrease from the estimated November pace of 627,000 units. On an unadjusted basis, MBA says there were 37,000 new homes sold during the month, down 17.8 percent from the 45,000 new home sales in November. "New home sales declined for the second straight month in December, from 627,000 units to 552,000 units, as factors such as a volatile stock market and economic uncertainty , both here and abroad...(read more)

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1/18/2019 7:22:35 AM

Posted To: MBS Commentary

The Wall St Journal ran a story this afternoon suggesting Treasury Secretary Mnuchin was pushing for a compromise deal to ease Tariffs on China in order to grease the skids for trade talks. As a result, stocks and bonds lost their cool --relatively. Case in point, in the 30 minutes following the headline, nearly 350k 10yr Treasury futures contracts traded. To put that in perspective, the 30 minutes following the January 4th jobs report saw just over 250k. To be fair to the jobs report, it created lasting volume throughout the day whereas the trade-related headlines made for a much more condensed dose. Even so, the reaction speaks to importance of trade-related updates as the US works on hammering out a deal with China. We could also argue that it speaks the deprivation that markets have been...(read more)

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1/17/2019 3:01:42 PM

Posted To: Mortgage Rate Watch

Mortgage rates were technically steady today. In fact, as of this writing, most lenders are offering slightly better terms compared to yesterday, but only by barely-detectable amounts. The afternoon brought volatility in financial markets owing to trade-related headline. That volatility isn't moving in a good direction for mortgage rates at the moment. The takeaway is that, all other things being equal, lenders will be offering slightly weaker terms tomorrow morning, assuming they don't see quite enough weakness to adjust today's offerings with only a few hours left in the day. Combine the volatility risk with the fact that rates are still very close to their lowest levels since last April, and this is still a compelling opportunity for potential homebuyers or owners interested in refinancing...(read more)

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1/17/2019 2:28:00 PM

Posted To: Pipeline Press

Time has a way of slipping by. For example, I’ve really been meaning to transfer a bunch of Lotus 1-2-3 and Quattro Pro spreadsheets I have off of some floppy disks and onto my laptop but never seem to get around to it. Speaking of time passing, Moody’s send out a warning that if the partial US government shutdown (PUGS) continues it could create problems for the U.S. bond market. Entities that depend upon federal money for revenues or paying debts could experience "liquidity strains." As we know the lack of liquidity will take a company, or person, down to their knees faster than anything. Yet nothing is certain but death and taxes, and the IRS plans to recall thousands of workers now on furlough because of the PUGS. Lender Products and Services Wrapping up a record-breaking 2018...(read more)

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1/17/2019 8:41:57 AM

Posted To: MBS Commentary

Unless you've missed the past few days of commentary, you've heard me say something about the sideways uncertainty in markets as investors wait for a government shutdown resolution. There are only so many ways to say it. So I'll let someone else say it this morning. The following is from the head of US Rates Strategy at BMO Capital Markets, Ian Lyngen: "Treasuries are in a classic holding pattern as we await further clarity on a variety of fronts. The government shutdown remains front and center, if for no other reason than the dearth of economic data the closure has created and mounting concerns the stalemate will impact the real economy." It can't be said with much more clarity. Even if we want to argue the shutdown, itself, isn't a major market mover, it's...(read more)

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1/17/2019 8:00:19 AM

Ken Flory, Bennion Deville Homes 760-485-2123 or email: flry7@aol.com  California BRE Lic#01361850


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