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Wage Growth Shocker Pushes Mortgage Rates to 2-Month Lows

Get out your calendar.  Flip, swipe, or glance back at May 29th.  That's where we have to go to see mortgage rates any lower than they are today.  After a delightful, but incredibly boring streak of mostly good days, rates finally swung for the fences.  Actually, that might be a bit of a stretch depending on your perspective, but consider the following. 

Mortgage rates tend to be broken up in .125% increments.  For the past several weeks (or more, depending on the lender), rates haven't moved enough for the actual interest rate to change.  Instead, the upfront costs act like fine-tuning adjustments for any given rate.

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CFPB Hits Servicer for Creating “Loan Modification Purgatory”

A Texas mortgage servicer has run badly afoul of the Consumer Financial Protection Bureau (CFPB) for repeated violations of servicing rules.  Residential Credit Solutions has agreed to pay $1.5 million in restitution to its victims and a $100,000 civil money penalty under a consent agreement announced on Thursday.

CFPB has a laundry list of complaints against the company which bills itself as specializing in servicing delinquent and "credit sensitive" mortgages loans.  Since 2009 approximately 75,000 borrowers have had loans transferred from other servicers to the company which has about $95 million in assets.

 

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Mortgage Rates Stay Steady After GDP

Mortgage rates were very close to unchanged despite market volatility surrounding the release of today's GDP figures.  GDP can occasionally cause a significant response in mortgage rates, and that's especially true of the "advance" release.  That's due to the fact that the "advance" release is the first look at GDP for any given quarter.  Subsequent releases merely revise the previous quarter's result.  Moreover, the Commerce Department implements revisions once a year that greatly affect past GDP reports.  So not only are we getting the first look at last quarter's GDP, but also a potentially significant revision to GDP numbers over the past 2+ years.

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Wells Fargo pulls out of Marketing Agreements with Agents, Builders

Well Fargo Bank announced today that it will immediately begin winding down its marketing services and desk rental agreements with real estate firms, builders, and some other referral sources.  Franklin Codel, executive vice president for mortgage production said the company was exploring a number of new options for enhancing and strengthening those relationships over the long term.

A press release issued by the company said that the withdrawal decision was made as a result of increasing uncertainty surrounding regulatory oversight of these types of arrangements "and as part of Wells Fargo's ongoing efforts to simplify the process that customers experience as they weigh all of their choices when shopping for a mortgage."

 

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Rental Housing a Growing Burden on Low Wage Earners

Finding an affordable place to rent within a reasonable distance of employment is becoming increasingly difficult according to Freddie Mac executive David Leopold.  Leopold, writing in the company's Executive Perspectives blog says that there is no state in the U.S. where a full-time minimum wage worker can afford the market-rate rent for a one or two bedroom apartment.

More than one of every four renters must pay over half their family income to pay for housing and utilities.  Since the recession ended new jobs have been heavily concentrated in low-wage industries while the growth of affordable housing has failed to meet the growing demand.  Leopold cites a recent Joint Center for Housing Studies (Harvard University) that found that even families with incomes at high at $75,000 can be burdened with housing costs.  Housing costs are generally considered burdensome when they consume more than a third of household income.

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Equity Acceleration Slows, Are Some Owners Cashing Out?

The rich get richer?  When it comes to equity that appears to be the case according to information released by RealtyTrac on Thursday. The company's U.S. Home Equity & Underwater Report shows an increase in the number of "equity-rich" properties, those with at least 50 percent equity rose by over a million between the second quarters of 2014 and 2015.

At the end of the most recent period there were an estimated 10.9 million properties considered equity rich, approximately 19.6 percent of all properties with a mortgages, compared to 9.9 million or 18.9 percent at the end of Q2 2014.  The latest number is lower than both of the previous quarters; there were 11.1 million such properties 19.8 percent) at the end of the first quarter and 11.3 million or 20.3 percent in Q4 2014.    

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Mortgage Rates Barely Budge After Fed Announcement

Mortgage rates had an exceptionally boring day despite the presence of the Fed Announcement.  Major communications from the Fed (which include announcements, meeting minutes, and certain speeches) always have the potential to cause significant movement in mortgage rates.  Obviously, today's didn't.  That's not too surprising considering the statement was very little-changed from the previous version.  Moreover, there's broad consensus among market participants that September is the earliest possible month for a Fed hike, and not even the most likely.

 

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June sees Pull-Back in Pending Sales

Pending home sales dipped slightly in June, ending five straight months of increases.  The National Association of Realtors® (NAR) said today that pending sales were down 1.8 percent from May, a month that reached the highest level on NAR's Pending Home Sales Index (PHSI), 112.3, in over nine years. The PHSI was 110.3 in June, 8.2 percent above the June 2014 number of 101.9 and the third highest reading this year.  It was also the tenth consecutive year-over-year increase.

A sale is listed as pending when the contract has been signed but the transaction has not closed. The sale is typically finalized within one or two months of signing.

 

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Modest Uptick in Refinancing After Modest Drop in Rates

Perhaps consumers viewed the recent retreat in rates as their last chance to refinance before the Fed starts ratcheting up rates - maybe today, maybe in September, but mortgage applications, especially for refinancing, increased during the week ended July 24. 

 The Mortgage Bankers Association's (MBA) said its Market Composite Index, a measure of mortgage loan application volume, increased 0.8 percent on a seasonally adjusted basis from the week ended July 17.  On an unadjusted basis, the Index increased 1 percent.

 

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Mortgage Rates Finally Buck Trend

Mortgage rates bucked the recent trend of steady, modest improvements to end just slightly higher today.  That said, the move was just as small as most recent examples, and barely returns most lenders to last Friday's rates.  At the time, those were the best of the month, so the current situation could be much worse.  Moreover, the small day-to-day changes mean that we're not really talking about "rates" moving higher and lower as opposed to the closing costs associated with prevailing rates.  In other words, the effective rate is changing microscopically, but not the contract rate in most cases.

 

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