First Time Homebuyer Blues! GSEs Will Charge 5% To Purchase Loans From Lenders For First Time Homebuyers

According to the GSEs, they will charge a loan-level price adjustment of 500 basis points (5%) for loans where the borrower is a first-time homebuyer. For all other loans, the GSEs will charge 700 basis points (7%).

That means it will cost lenders either 5% or 7% of the loan’s value to sell the loan in forbearance to the GSEs.

That’s a steep cost. On a $200,000 loan to a first-time homebuyer, for example, it would cost the lender $10,000 to sell the loan, meaning the lender is losing money on that loan. And for a loan that touches the GSEs’ loan limit of $510,400, a lender could have to pay nearly $36,000 for a GSE to buy the loan.

On the other hand, the alternative would be for the lender to keep a delinquent loan on their books. This solution at least allows the lender to sell the loan and preserve some liquidity, as the FHFA noted.

Like Abner Jay, first-time homebuyers are so depressed.

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Black Knight: More than 3.8 Million Homeowners Now in COVID-19-Related Forbearance Plans

No, not Gary Player, golf’s legendary Black Knight. But Black Knight the mortgage data company.

Their most recent report indicates that 6.4% of all mortgages are in Covid-19-related forbearance plans.

• As of April 30, more than 3.8 million homeowners are now in forbearance plans, representing 7.3% of all active mortgages.

• Together, they account for $841 billion in unpaid principal and includes 6.1% of all GSE-backed loans and 10.5% of all FHA/VA loans.

• At today’s level, mortgage servicers would need to advance a combined $3 billion/month to holders of government-backed mortgage securities on COVID-19-related forbearances.

Another $1. 5 billion in lost funds will be faced each month by those with portfolio-held or privately securitized mortgages (some 6.7% of these loans are in forbearance as well).

• Ginnie Mae announced a pass through assistance program through which it will advance principal and interest payments to investors on behalf of servicers, and FHFA announced last week that P&I advance payments will be capped at four months for servicers of GSE-backed mortgages.

• Even so, given today’s number of loans in forbearance (and these numbers are climbing every day), servicers of GSE-backed loans still face nearly $8 billion in advances over that four-month period.

Fannie Mae and Freddie Mac have the majority of loans in forbearance with the FHA & VA in second place.

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And the SEC football conference (Mississippi, Louisiana and Alabama) lead the nation in non-current mortgage percentage.

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MBA Mortgage Purchase Applications Decline 35% YoY

Mortgage applications increased 7.3 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending April 10, 2020.

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The Refinance Index increased 10 percent from the previous week and was 192 percent higher than the same week one year ago. The seasonally adjusted Purchase Index decreased 2 percent from one week earlier. The unadjusted Purchase Index decreased 1 percent compared with the previous week and was 35 percent lower than the same week one year ago.

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On the bright side, most of the decline in purchase application occurred before last week.

So, it appears that no more snake juice is required.

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Courtesy of the great Jesse from Jesse’s Cafe Americain!

Tumble! Mortgage Purchase Applications Drop 33% YoY As Economic Shutdown Continues

According to the latest survey from the Mortgage Bankers Association (MBA), the Refinance Index decreased 19 percent from the previous week and was 144 percent higher than the same week one year ago. The seasonally adjusted Purchase Index decreased 12 percent from one week earlier. The unadjusted Purchase Index decreased 12 percent compared with the previous week and was 33 percent lower than the same week one year ago.

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Yes, 33% lower than the same week a year ago.

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And this was in spite of the historic drenching of the market by The Fed with liquidity and trillions in economic something by Congress.

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And nearly a third of U.S. apartment renters didn’t pay April rent.

This was a tumble!

Mortgage Apps Crash Most Since 2009 (Covid-19 Lockdown Edition)

(Bloomberg) — U.S. loan applications for buying and refinancing homes plunged last week by the most since the global financial crisis, amid coronavirus shutdowns and related financial turmoil that pushed borrowing costs higher.

The Mortgage Bankers Association’s index of applications fell 29.4% in the week ended March 20, the biggest decline since early 2009. Home-purchase applications dropped by 14.6% while refinancing applications plummeted 33.8%.

The average contract rate on a 30-year fixed mortgage increased 8 basis points to a two-month high of 3.82%, despite the Federal Reserve cutting the benchmark interest rate to near zero.

The decline in applications is an early sign suggesting home sales will slow and that refinancings are coming off a spike. That follows other data indicating a precipitous dropoff in business activity this month as stores and schools shutter to prevent the spread of the virus.

Yes, MBA mortgage applications fell the most since 2009 and the financial crisis.

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Mortgage rates actually rose last week (yellow line) but will likely decline this week.

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The biggest decline came in mortgage refinancing applications, down 33% WoW.

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Mortgage purchase applications dropped 14.64% WoW.

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Housing and COVID-19 (Existing Home Sales Rise 6.5% In February) -30% Likely In March 😩

The US housing and residential mortgage market have benefitted from the dreaded COVID-19 virus … in the sense that the 10-year Treasury yield and contemporaneous mortgage rates (30-year) have fallen since September 2019 (pre-COVID-19 breakout).

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But the recent EHS numbers are for February (+6.5% MoM), not March. Expect around a 30% decline in existing home sales for March.

Here is a Washington DC area Realtor in action!

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The Morning After! US Treasuries Surge, Mortgage Rate Spread Highest Since Q4 2008

It is the morning after the Fed panicked and lowered its lower bound for The Fed Funds Target rate to … 0%. Here is Fed Chair Jerome Powell calling to The Fed to take evasive action!

The result? US Treasuries yields are falling like a rock. US Treasury 10Y yields are down around 20 basis points this morning.

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And unless lenders lower their 30-year mortgage rates, the spread between Bankrate’s 30 year average mortgage rate and the 10 year Treasury yield is at its highest level since Q4 2008, the epicenter of the financial crisis.

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This morning before the US equities markets open, Europe is already down around 7% – 8%.

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Here is Fed Chair Jerome Powell wishing us all the best!

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What Virus? MBA Mortgage Applications SOAR With Rate Declines (Particularly Refi Apps Up 55.43% WoW)

If you are watching panic at the Bank of Japan, European Central Bank, and Bank of England, you would think that the Spanish Flu from 1918 that killed between 17 and 100 million people was back.

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While we watch the DJIA shed another 800 points in the first 30 minutes of trading, mortgage applications for last week skyrocketed as is there was no coronavirus.

Mortgage applications rose 55.43% from the preceding week. Refinancing applications rose 78.585 (NSA) while mortgage purchase applications rose 7.21%, far less than refinancing applications.

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Here is a chart of refinancing applications as mortgage rates tumble.

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Let’s see what happens with existing home sales in the next report.

Gold Trading Hits Record High As Treasury 10 Yield Near All-time Low (Swaption Vol Escalates, Fannie’s 30Y Current Coupon Falls Below 2%)

Its a wonderful day in the financial neighborhood! … NOT!

Gold trading hits record high.

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As gold keeps on rising.

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S&P 500 futures are down 3.201%.

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USD Swaption vol is escalating.

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The US Treasury 10-year yield is down another 20 bps.

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Fannie Mae’s 30-year current coupon just fell below 2%.

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What up with that?

Mortgage Lenders Hire Like Mad to Meet Demand as Rates Slide (Mortgage Applications Boom with Coronavirus)

Mortgage interest rates and US Treasury yields keep on going down. This is resulting in a wave of jobs for mortgage lenders and underwriters.

(Bloomberg) – By Shahien Nasiripour and Prashant Gopal – A drop in interest rates in response to the coronavirus outbreak is adding urgency to a hiring spree across the mortgage industry.

Executives at four of the nation’s 15 biggest mortgage lenders, already gearing up for a busy 2020, anticipate hiring thousands of employees this year to keep up with what they expect to be a flood of demand for purchase loans and refinancings.

Lenders are zipping through applications so fast that some expect to blow past origination records they set just last year. At Quicken Loans Inc., the nation’s largest mortgage lender, Monday was the busiest day for mortgage applications in the company’s 35-year history, said Chief Executive Officer Jay Farner.Michigan-based United Wholesale Mortgage, meanwhile, approved $2.5 billion of preliminary loans, a single-day record for the company, according to Alex Elezaj, its chief strategy officer.

The drop in rates, coming as Treasury yields plunge, is taxing an industry that was operating near capacity and setting off a battle for talent. Eric Mitchell, an executive at Michigan-based Gold Star Mortgage Financial, is luring underwriters with signing bonuses and the chance to make big money. That assumes they’re willing to work long hours while the market stays hot.

“If you’re not making a $1 million this year as a loan officer, you’re grossly incompetent,” Mitchell said. “‘I tell them, ‘We’re not working 40 hours a week, kiss your families goodbye.’”

Fears that the virus outbreak will stall growth have hammered stocks and raised fears of a recession. The Federal Reserve on Tuesday slashed its benchmark rate by half a percentage point in its first emergency move since 2008. And with the Treasury yields that guide mortgage rates sliding, loan officers juggling a mountain of refinancing applications, which soared last week to the highest level since May 2013.

Quicken expects to hire a few hundred new employees a month this year. United Wholesale Mortgage, a division of United Shore Financial Services Inc. and the nation’s third-largest home lender, plans to hire another 2,000 people in 2020 after it doubled in size last year to roughly 5,400 employees, Elezaj said.

Today’s MBA report on mortgage purchase applications and refinancing applications show a burst in application activity.

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Refi applications in particular are soaring as Treasury yields collapse.

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The spread between mortgage rates and Treasury yields is now at the highest level since the financial crisis.

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Only in America would a virus epidemic scare The Federal Reserve into lowering rates … that benefits mortgage borrowers and lenders.

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