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Archive for the ‘MND NewsWire’ Category

Not Just the Season; MBA Predicts New Home Sales Down Sharply

The Mortgage Bankers Association (MBA) added a little more evidence to the pile indicating a rather rapid slow-down in the housing market.  MBA's Builder Application Survey (BAS) data for November shows mortgage applications for newly constructed home purchases falling by 14 percent compared to October.  The MBA data is not adjusted to account for seasonal variations, and while sales nearly always decline this time of year, applications were also down 11 percent compared to November 2017. Based on the survey data and assumptions about market coverage and other factors, MBA estimates new home sales were running at a seasonally adjusted annual rate of 627,000 units in November. 

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Lenders Looking to New Tech as Pessimism Over Profit Margins Grows

Lenders continue to be pessimistic about their profit outlook as 2018 draws to an end.  Fannie Mae said its fourth quarter 2018 Mortgage Lender Sentiment Survey found the profit outlook reported by respondents at an all-time survey low.  This was true whether they were talking about purchase or refinance mortgages or about GSE-eligible, non-GSE-eligible, or government loans. It was the ninth consecutive quarter that lender outlook has declined. Smaller slices of a shrinking pie sums up the reasons given by lenders for their lowering outlook, especially for refinancing. 

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White House Nominates Calabria as New FHFA Chief

Almost exactly 10 years after he helped pass the legislation that established the Federal Housing Finance Agency (FHFA), Mark Anthony Calabria has been nominated by the White House to be its director.  If his nomination is confirmed by the Senate, Calabria, currently the Chief Economist in the Office of the Vice President, will succeed Melvin Watt whose five-year term expires in January. Calabria has a long history in housing and housing finance.  He was a senior aide to the Senate Banking Committee in 2008, helping to draft the Housing and Economic Recovery Act of 2008 (HERA), which created the Federal Housing Finance Agency and was a Deputy Assistant Secretary at the Department of Housing and Urban Development during the second Bush administration. 

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A Gift From Fannie/Freddie – Evictions Suspended for the Holidays

Both Freddie Mac and Fannie Mae have announced the suspension of eviction lockouts for single-family and two- to four-unit properties for the holiday season.  The moratorium will begin December 17 and end January 2. Fannie Mae said it will allow legal and administrative proceeding for evictions to proceed during the 16-day period, but families will be allowed to remain in the home.  "We believe it is important to extend the timeline of help for struggling borrowers during the holidays," said Jacob Williamson, Vice President of Single-Family Real Estate at Fannie Mae. "We encourage homeowners who may be struggling with their mortgage or facing possible foreclosure to reach out to Fannie Mae or your servicer to get help. We want to help pursue those options whenever possible."

 

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NAHB Says Second Homes Aren’t Just Vacation Destinations

The stereotype of a second home usually involves a tropical beach, a boat dock on a lake, or skiers whizzing past a picture window, but the National Association of Home Builders (NAHB) says that is not reality. Or at least not all of it.  Na Zhao, writing in NAHB's Eye on Housing blog says there are a good amount of second homes and lots exist in non-vacation-y areas. NAHB estimates there are 7.4 million homes, or 5.6 percent of the total housing stock that qualify for the second home mortgage tax deduction.  That information comes from the Census Bureau's 2016 American Community Survey (ACS.)

 

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New Fannie/Freddie Requirements May Penalize High-Risk Borrowers

Three researchers from the Urban Institute (UI) recently analyzed the new capital standards rule proposed by the Federal Housing Finance Agency (FHFA) for Fannie Mae and Freddie Mac (the GSEs.)  The proposed rule includes two alternative leverage ratio proposals.  Under the first, the GSEs would be required to hold capital equal to 2.5 percent of total assets and off-balance sheet guarantees, the second, to hold capital equal to 1.5 percent of trust assets and 4 percent of non-trust assets.  The second approach differentiates between the greater funding risks of non-trust assets and the lower funding risks of the trust assets while increasing the capital requirements for both relative to the current statutory requirements.

 

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UI Researchers Evaluate Proposed Changes to Fannie/Freddie

In June the Federal Housing Finance Agency's (FHFA) issued a proposed capital standard for the government-sponsored enterprises (GSEs), Freddie Mac and Fannie Mae.  Three Urban Institute researchers have analyzed the rule with an eye to answering two questions: how well it will align risk and capital across the various mortgage attributes and how the capital requirement might vary across the business cycle.  Requiring too much capital raises mortgage rates and reduces homeownership; too little results in insolvency and financial crisis. The proposed rule includes two alternative leverage ratio proposals.  Under the first, the GSEs would be required to hold capital equal to 2.5 percent of total assets and off-balance sheet guarantees.  

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Mortgage Applications Bouncing Back

Mortgage rates remained largely flat or even slightly lower during the week ended November 30.  This probably helped to maintain the upward trend in mortgage applications that began the previous week during the Thanksgiving holiday and despite a shortened work week.

The Mortgage Bankers Association (MBA) said its market Composite Index, a measure of loan application volume, moved up 2 percent on a seasonally adjusted basis and after an adjustment to the prior week's report to account for the holiday.   On a non-adjusted basis, applications shot up 42 percent.

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Freddie Mac Portfolio Grows 3.5 Percent, Delinquencies Decrease

Freddie Mac reported this week that its total mortgage portfolio increased at an annualized rate of 4.7 percent in October, up from 2.3 percent the previous month.  The portfolio balance at the end of the period was $2.159 trillion compared to $2.151 trillion at the end of September and $2.067 trillion a year earlier.   Purchases and Issuances totaled $33.968 billion, bringing the 2018 year-to-date total to $319.568 billion, Sales were ($686) billion and Liquidations ($24.927) billion in October and totaled ($17.602) and ($239.930) billion respectively so far this year.  The annualized growth rate for 2018 through the end of October was 3.5 percent and the annualized liquidations rate was (13.7) percent. 

 

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Decline in Originations Hurting Lender Profit

Financial concerns continued for independent mortgage banks and mortgage subsidiaries of chartered banks as they reported, on average, declining profit margins in the third quarter.  The Mortgage Bankers Association's (MBA's) newly released Quarterly Mortgage Bankers Performance Report shows that the 342 banks that responded to its third quarter survey reported a net gain of $480 on each loan they originated compared to $580 in the second quarter.  "These are very challenging times for independent mortgage bankers, with the average pre-tax net production income per loan reaching its lowest level for any third quarter since inception of our report in 2008," said Marina Walsh, MBA's Vice President of Industry Analysis. 

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