Tuesday, April 26, 2011

Weekly Mortgage Forecast for April 25th-29th

This is very busy week in the interest rate world.

The Federal Reserve begins it “two day open market committee meeting” on April 26th with a decision on interest rate policy being released on Wednesday, April 27th.  While the Securities were able to rise up above a level of resistance last week (which did see a nice small increase in pricing and a decrease in rates) this two day meeting is vitally important to the rate forecast. The decision will be released on Wednesday at 12:15 and for the first time ever, Chairman Ben Bernanke will be holding a press conference at 2:15 to discuss the outlook going forward as it pertains to inflation and the US Dollar.  The comments from these meetings and Chairman Bernanke are going to be market movers.  

At this time we are uncertain which way it is going to go.

Thankfully, the Mortgage Backed Securities came up above the level of resistance  - which is now the floor of support.  Barring anything extraordinary, as far as comments from Bernanke, I see this week being stable. We may possibly have an increase in pricing which equates to a  decrease in rates. Hopefully we can get back to the 4.5% level we have seen recently.

We will send out a midweek update - depending on the outcome of Wednesday’s meetings.

Thank you for your follow.

Michael Liles
Director of Secondary Marketing
Advantage Loans, Inc.
NMLS 91257

Monday, April 18, 2011

Mortgage Rate Forecast for April 18th - 22nd 2011

With traders pricing in a 64.5% chance that Greece will default on it's issued debt within 5 years, money has been flowing into the safe haven of U.S. Bonds. This had caused Mortgage Backed Securities to move slightly higher near the end of last week, but has also caused the Mortgage Backed Securities to battle a tough line of resistance at the 100 day moving average. A line of resistance that the Mortgage Backed Securities has fought and lost numerous times recently.
Short term the outlook is for stable or slight improving rates, while the long term outlook remains in favor of rising rates. When rates do finally make the turn around and head higher, it will happen very quickly. At this time it's best to advise your buyers to get off the fence and take advantage of what are still historically low rates.

Do not forget that the markets will close at 2:00 p.m. in Thursday and will be closed all day Friday, so any action that is going to take place in the Mortgage Backed Securities markets will do so by Wednesday.

It is our hope everyone has a safe holiday weekend.

Michael Liles NMLS# 91257
Director of Secondary Marketing
Advantage Loans, Inc.

Monday, March 21, 2011

Interest Rate Forecast for March 21st-25th 2011

It appears the key word this week is going to be “INFLATION”.  With rising inflation overseas,  especially in China, and last week’s economic reports  in the United States showing better than expected, it appears inflation is going to get here sooner rather than later.   The effect will be investors pulling their money out of the Mortgage Backed Securities and Treasuries to place the funds into the equity markets.  You have to remember in the mortgage world - inflation is our worst enemy - it erodes the value of those fixed return securities. 
This combined with easing tensions in Libya , investors are rapidly pulling their money from the safe haven of the bonds to place in the stock market where a greater return is anticipated.

This leads us to believe that we will see a week of volatility and a trend toward higher rates.
As always if you have questions regarding this release, please do not hesitate to contact the loan officer that sent you this link.

Michael Liles - NMLS 91257
Director of Secondary Marketing
Advantage Loans, Inc.

Monday, March 7, 2011

Economic Forecast: Slow and Steady Wins the Race by Mike Sorahan

This article was sent to us the Mortgage Banker's Association of the Carolinas -- GREAT READ ! - I hope that you enjoy.

DALLAS--Mortgage Bankers Association Chief Economist Jay Brinkmann said the U.S. economy continues to improve, albeit not at a rate to make anyone happy.

“Our projection is that, all things being equal, we’ll see some degree of economic growth, no downturn, no double-dip, no recession, with steady growth building,” Brinkmann said here yesterday at the MBA National Mortgage Servicing Conference & Expo. “Consumers are spending money--that is what drives the economy. Additionally, business spending is picking up, thanks to stable tax rates, inventories higher profits and increased profitability. We’re also seeing modest increases in construction spending even as we see excess of office space and housing.”

Threats to economic growth continue, Brinkmann said, not the least in higher energy prices due in part to continued turmoil in Middle East countries. However, he said the energy price spike is likely temporary and will stabilize as protests in these countries ease and changes in government take place.

“We have to acknowledge that what is happening in Europe, Egypt and other Middle East countries are going to pose risks that could hurt imports and exports,” Brinkmann said.

Back in the U.S., other factors that could impact recovery include state economies, which face huge deficits and pressure to balance budgets. “The elections brought into power a lot of governors who have said they are going to cut spending, but many will have to raise taxes, which in turn will limit growth,” Brinkmann said.

Interest rates did not go where they were generally predicted last year, Brinkmann noted; rates dropped well below 5 percent before moving back above 5 percent at the beginning of the year. He predicted an increase in mortgage interest rates, although he said he did not expect the Federal Open Market Committee to raise the federal funds rate above the current 0-0.25 percent floor this year.

“We have an expected scenario, in which borrowing demands in Europe drive up rates in the U.S.,” Brinkmann said. “Inflation fears, stoked by energy costs, could drive that increase. The other scenario could result in a repeat of flight to quality, which could lower interest rates. If continued turmoil in Europe, the Middle East, even North Korea, it could trigger the same flight to quality that we saw last year.”

In the U.S., jobs and unemployment continues to be the primary factor in U.S. economic recovery and the speed in which it recovers. Brinkmann noted that job numbers are improving, “though not at the pace we’d like to see.” During the recent recession, many jobs were lost in manufacturing and construction; he said, while some manufacturing jobs have returned, construction job recovery has yet to happen.

“Where we see recovery is in business and professional services, leisure and hospitality,” Brinkmann said. “For other professional services, such as information provision and financial services, growth has been less so.”

Jobs will also dictate housing recovery, Brinkmann said, noting that the recent recession caused a sharp drop in household formation and an increase in rentals. The homeownership rate fell by nearly three percentage points since 2007.
“We’re starting to see some more household formation, but it’s still going to take a while to sponge up the excess housing inventory,” Brinkmann said. He said while new home inventories have dropped--mostly because home builders have dramatically cut back on construction--the “shadow” inventory of homes remain high. Florida, for example, has 24 percent of its homes in the foreclosure process.

Part of the problem, Brinkmann said, is “sand in the gears,” such as roadblocks set up by states such as Florida in which foreclosures go through the judicial process, and changes in policy for repurchase demands by the government-sponsored enterprises, including extensive documentation requirements, increased appraisal requirements and multiple fraud check requirements that have “dramatically slowed up loan closings, increased costs and reduced the willingness of lenders to assume any risk.”

Additionally, the Dodd-Frank Act’s new risk retention requirements, which require originators to retain 5 percent of the risk of mortgages that are not considered to be “qualified residential mortgages,” will likely lead to fewer borrowers being able to qualify. “It will also lead to higher costs that could leave lenders vulnerable to lawsuits alleging racial and geographical discrimination,” Brinkmann said.

From a servicing standpoint, Brinkmann noted that most servicing costs are not a function of loan size, but revenue is. He said over the past 10 years, direct costs to largest servicers have dropped, but so has servicer productivity as more employees have taken on loan modification and other loss mitigation functions.

“When you end up having to play one-on-one with borrowers, there’s not a lot of efficiency gained from that process,” Brinkmann said.

Thanks for the follow,

Advantage Loans, Inc.
NMLS 86598

Mortgage Interest Rate Forecast for March 7th - March 11th, 2011

Wednesday, February 23, 2011

North Carolina Legislative Update February 21, 2011


February 21, 2011


NC Weekly Legislative Update -- as presented by the Mortgage Banker's Association of the Carolinas

This past week of the North Carolina General Assembly was significant because it was the week of arrival of the long-awaited budget proposal from Governor Beverly Perdue.  As might be expected with a year of severe shortfalls, almost everyone is mad!  Partisanship is at its peak and, as always, the State employees are furious. 
Counties are looking at a cut of $200 million in school construction funds each year of the biennium by the elimination of the set-aside from corporate income taxes and a reduction of the county's share of lottery funds.

Prior to the unveiling of the proposed budget, the Governor had reduced the shortfall from $3.7 million to $2.4 million through a series of cuts, program eliminations and agency consolidations, as well as higher than expected tax collections.

Missing from the proposal is the legalization (taxing) of video poker and privatization of the ABC system.  However, the previously mentioned "temporary" sales and income tax increases from 2007 are partially extended, and teacher/teacher assistant positions are protected.  The corporate income tax rate would be reduced from 6.9% to 4.9%.  The personal and corporate income tax surcharges enacted in 2009 would expire. However, 3/4 of the one cent sales tax increase which was scheduled to sunset on June 30, would continue.  There is an unemployment tax credit for 135,000 small businesses.

Employee positions numbering 10,000 are eliminated, but only 3,000 are currently filled.  Parks will be closed for two days each week.  There will be an elimination of 1,400 jobs in the University of North Carolina system.  The System enrollment growth request was cut in half.

The previously discussed medical malpractice reform bill was heard in committee on Thursday, but no vote was taken.  One of the most controversial provisions is the $250,000 cap on non-economic damages.  Look for a compromise on the amount of the cap as the bill goes forward.

The fast track charter school cap bill was placed on a side track in the Senate when it was referred from the floor to the Finance Committee.

House Bill 138 will amend the High Risk Pool statutes, setting up a system of premium subsidies from federal grants and the Pool's own funds.  We will report more on that bill next week.  The bill to create the Joint Regulatory Reform Committee (Senate Bill 17) passed second reading in the House and appears to be on its way to passage. 

On the heels of passage is the bill to repeal the federal Patient Protection and Affordable Care Act (House Bill 2), House Bill 126 would establish the North Carolina Health Benefit Exchange, a step toward implementation of "Obama-care".  We don't think that bill will be approved by this General Assembly.

A bill with a greater chance of adoption is House Bill 129 (Senate Bill 87) "Level Playing Field/Local Government Competition".  Applicable only to cities, the bill would set up a framework for cities to compete with private telecommunications companies.  However, House Bill 101 would give counties some of the same powers as cities. 

Senate Bill 27, imposing a moratorium on involuntary municipal annexations, appears to be moving through the Senate and is likely to pass.

House Bill 135 would create consumer enhancements and incentives to encourage energy conservation and efficiency.  Senate Bill 75 would promote the use of electricity demand reduction to satisfy renewable energy portfolio standards.

House Bill 139 would limit campaign contributions from vendors to state agencies.  House Bill 95 would again establish railroad corridors, as recommended by the Railroads Study Commission.  The bill was unsuccessful during the last session. 

House Bill 117 is a bi-partisan bill to prohibit electric cities from using revenues from electric systems for purposes other than the costs of operating the system and debt service.  Other revenues must be used to reduce consumer rates.  House Bill 119 is a potential "Christmas tree" bill which includes a number of environmental provisions pertaining to landfills, storm water capture and reuse, and irrigation modifications.  Another potential "Christmas tree" bill is House Bill 122 which makes various revenue law changes.

Committee action should pick up next week as the House starts consideration of the Governor's budget proposal and continues preparation of its budget bill.

Thank you for your business,

R. Bryan Wright
NMLS 103880
Advantage Loans, Inc.

Tuesday, February 22, 2011

Changes to FHA Annual Mortgage Insurance

R. Bryan Wright with A.L.I. discusses the upcoming changes with FHA in regards to the Annual Mortagge insurance.