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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Mr. Blues? MBA Mortgage Purchase Applications Rise +3.21% WoW

With all the bad news out there thanks to the Covid-19 such as crude crashing to around $10 per barrel, it is always good to get some good economic news. No more Mr. Blues … for at least the mortgage market for last week.

MBA mortgage purchase applications rising 3.21% WoW.

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The US is still on lockdown, but at least MBA mortgage purchase application rose last week 3.21% WoW.

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The MBA applications index is a survey, so 7+7 doesn’t necessarily equal 14. 

Let’s see what the little Fed book has to say about interest rates this week.

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Big Bubbles? Fastest Bear Stock Market (Down 20% From Peak) May Happen! Dow Closes Down 1,467

The WHO (World Health Organization, not the 60s/70s rock band) announced that the coronavirus is a new PANDEMIC.

Or it is a bubble pop? Not tiny bubbles as Don Ho sang.  But a BIG bubble … burst.

Yes, The Federal Reserve and other Central Banks kept their target rate near zero for almost the entire Obama Presidency, then started to raise rates only to lower them again. But the S&P 500 and NAREIT – all equity indices have risen dramatically as well.

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A bear market in equities is when prices fall 20% from their peak. Over the past month, we are almost in a bear market.

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Is this that fast 20% in history? Nearly.

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And there is lots of downward rotation in global equities.

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Yes, equity markets are fragile thank to the central banks. And now the bears have been awakened.

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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.

 

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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S&P 500 SINKS: SIX-DAY ROUT EXCEEDS 10% (Pending Home Sales UP 6.7% YoY)

Another day, another -500 point opening on the S&P 500 index.

This time, the S&P 500 index led to a -10% decline over the past 6 days. Ain’t that a kick in the head!

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The 10-year Treasury yield has dropped … again … to its lowest point in modern history.

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US pending home sales YoY are a recipient of declining 10-year Treasury yields and 30-year mortgage rates.

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US Existing Home Sales RISE 9.64% YoY As Mortgage Rates Plunge, Inventory Remains MIA

Today’s headlines scream “Existing home sales decline 1.3% MoM in January!!” True, but on a YoY basis, US existing home sales are up 9.64%.

A big reason? The 30-year mortgage rate plunged faster than a paralyzed falcon. Mostly due to slow global economy and the Corona-virus fears.

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Now look at the median sales of existing homes. It continues to be low helping drive up existing home prices.

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Notice that EHS inventory increased with median price during the housing bubble, but after 2012, they went their own ways.

I hope the housing market remains Corona-virus-proof!

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