Treasury yields jump, AmeriHome sells to Western Alliance and more of the week's top news
February 19, 2021 6:04 PM
Mortgage rates jump to 3-month high as Treasury yields climb
Borrowers holding out for mortgage rates to keep dropping may have missed their chance.
After a two-week holding pattern, mortgage rates finally caught up with the growing Treasury yields and gradual economic recovery driven by the most recent stimulus package.
The 30-year fixed rate mortgage shot up 8 basis points to 2.81% from 2.73%one week earlier , according to Freddie Mac’s Primary Mortgage Market survey. That compares to a rate of 3.49% from the same time a year ago and it marks the highest weekly average since reaching 2.84% on the week ending Nov. 12 , 2020.
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After a two-week holding pattern, mortgage rates finally caught up with the growing Treasury yields and gradual economic recovery driven by the most recent stimulus package.
The 30-year fixed rate mortgage shot up 8 basis points to 2.81% from 2.73%
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Western Alliance to buy parent company of AmeriHome Mortgage
Western Alliance Bancorp’s planned purchase of a big mortgage company fits a narrative predicted for 2021 — banks buying fee-producing businesses to counter low interest rates and limited commercial lending opportunities.
Western Alliance agreed on Tuesdayto buy Aris Mortgage Holding , the Thousand Oaks, Calif., parent of AmeriHome Mortgage, in a $1 billion deal that should increase the proportion of fees at the $35 billion-asset company from 5% of revenue to 31% after the acquisition closes in the second quarter.
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Western Alliance agreed on Tuesday
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Biden extends mortgage forbearance and foreclosure protections
With the end of the first 12-month CARES Act forbearance periods fast approaching, President Biden extended borrower payment protections for federally backed mortgages.
The administration pushed both the forbearance enrollment deadline and the foreclosure moratorium on FHA, VA and USDA loans by three months to June 30, 2021. Borrowers who entered forbearance prior to June 30, 2020, will be allotted an additional six months of coverage in three-month increments.
The announcement comesone week after the Federal Housing Finance Agency allowed borrowers with mortgages backed by Fannie Mae and Freddie Mac to request an additional three months of forbearance. These combined efforts should protect about 70% of U.S. single-family home loans, according to the White House’s press release.
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The administration pushed both the forbearance enrollment deadline and the foreclosure moratorium on FHA, VA and USDA loans by three months to June 30, 2021. Borrowers who entered forbearance prior to June 30, 2020, will be allotted an additional six months of coverage in three-month increments.
The announcement comes
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LoanDepot's earnings reveal strong originations, thinning margins
Initial earnings released by the newly public loanDepot on Thursday put a little downward pressure on its stock, but the price remains above that of its competitors.
The company recorded $2 billion in net income and a more than 100% year-over-year gain in annual originations, outstripping the industry’s average growth, which was closer to 50% according to the Mortgage Bankers Association.
However, while its 3.38% gain-on-sale margin was up from 2.81% a year ago, it was down from 4.48% in the third quarter. Its stock price at deadline was down a little over $2 on the day of the earnings announcement, at $25.69. LoanDepot’s closest competitor among nonbank mortgage companies new to the market, Rocket Cos., has been trading at roughly $20 per share.
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The company recorded $2 billion in net income and a more than 100% year-over-year gain in annual originations, outstripping the industry’s average growth, which was closer to 50% according to the Mortgage Bankers Association.
However, while its 3.38% gain-on-sale margin was up from 2.81% a year ago, it was down from 4.48% in the third quarter. Its stock price at deadline was down a little over $2 on the day of the earnings announcement, at $25.69. LoanDepot’s closest competitor among nonbank mortgage companies new to the market, Rocket Cos., has been trading at roughly $20 per share.
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CoStar boosts its offer to acquire CoreLogic to $6.9 billion
CoStar Group Inc. boosted its offer to acquire CoreLogic Inc. to $95.76 a share, topping a bid the property-data company accepted earlier this month.
CoreLogic’srecent agreement with funds managed by Stone Point Capital and Insight Partners “was materially less than our last all-stock offer,” CoStar Chief Executive Officer Andrew Florance said in a letter Tuesday to CoreLogic’s board.
He added he was “stunned” to read about the deal.
CoStar’s newest offer represents an equity value of approximately $6.9 billion, a 20% more than the earlier offer, CoStar said in a statement.
“We do not believe the pending transaction maximizes value for CoreLogic stockholders and we continue to believe in the strong strategic rationale for the combination of our two companies,” Florance said in the letter. “The fact that CoreLogic stock continues to trade well above the pending transaction price is a clear indication that the shareholders agree with us.”
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CoreLogic’s
He added he was “stunned” to read about the deal.
CoStar’s newest offer represents an equity value of approximately $6.9 billion, a 20% more than the earlier offer, CoStar said in a statement.
“We do not believe the pending transaction maximizes value for CoreLogic stockholders and we continue to believe in the strong strategic rationale for the combination of our two companies,” Florance said in the letter. “The fact that CoreLogic stock continues to trade well above the pending transaction price is a clear indication that the shareholders agree with us.”
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Two reports predict a foreclosure wave will be avoided
While analysts have expressed concern foreclosures could overwhelm servicers when forbearance ends, new data suggest that outcomes will be manageable in most areas.
That’s in part because the Biden administration’sextension of borrower relief measures this week will give borrowers more time to recover. Also, the number of households with long-term forbearance is stabilizing, and a recent analysis suggests many distressed homeowners ultimately won’t enter foreclosure.
There were 841,977 borrowers in the government-sponsored enterprise forbearance plans in November, down from 922,589 the month before, according to the Federal Housing Finance Agency. That decrease, combined with broader declines in unemployment, means the incidence of distress is stable to lower for the average mortgage borrower.
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That’s in part because the Biden administration’s
There were 841,977 borrowers in the government-sponsored enterprise forbearance plans in November, down from 922,589 the month before, according to the Federal Housing Finance Agency. That decrease, combined with broader declines in unemployment, means the incidence of distress is stable to lower for the average mortgage borrower.
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Refinancing activity dies down on the heels of rate rise
The share of mortgage applications taken out to refinance an existing loan slipped as rates climbed to a high not seen since November, according to the Mortgage Bankers Association.
The dip in refis during the week ending Feb. 12 brought their share below 70% for the first time since October, the trade group found. The refi share during the latest week tracked by the MBA was 69.3%, down from 70.2%the previous week.
Between the dip in refis and the approach of the spring buying season, mortgage lenders are likely to start paying a little more attention to the purchase market, which is less rate-sensitive but constrained by inventory shortages.
“The uptick in rates has slightly dampened refinance activity, with MBA’s index falling for the second week in a row,” said Joel Kan, MBA’s associate vice president of economic and Industry forecasting.
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The dip in refis during the week ending Feb. 12 brought their share below 70% for the first time since October, the trade group found. The refi share during the latest week tracked by the MBA was 69.3%, down from 70.2%
Between the dip in refis and the approach of the spring buying season, mortgage lenders are likely to start paying a little more attention to the purchase market, which is less rate-sensitive but constrained by inventory shortages.
“The uptick in rates has slightly dampened refinance activity, with MBA’s index falling for the second week in a row,” said Joel Kan, MBA’s associate vice president of economic and Industry forecasting.
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Fed sounds alarm on commercial real estate, business bankruptcy
The Federal Reserve warned of significant risks of business bankruptcies and steep drops in commercial real estate prices in a report published on Friday.
“Business leverage now stands near historical highs,” the central bank said in its semiannual Monetary Policy Report to Congress. “Insolvency risks at small and medium-sized firms, as well as at some large firms, remain considerable.”
In part encouraged by government and Fed programs, businesses have taken on more debt over the past year as they’ve struggled to deal with the economic and financial fallout from COVID-19, including in some cases forced shutdowns.
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“Business leverage now stands near historical highs,” the central bank said in its semiannual Monetary Policy Report to Congress. “Insolvency risks at small and medium-sized firms, as well as at some large firms, remain considerable.”
In part encouraged by government and Fed programs, businesses have taken on more debt over the past year as they’ve struggled to deal with the economic and financial fallout from COVID-19, including in some cases forced shutdowns.
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Appraisers get 24-hour payment cycle from Incenter
Ahead of what promises to be a busy spring season, appraisers may've scored a win in a long-running dispute with many appraisal management companies regarding timely payment.
Incenter Appraisal Management is rolling out a new program that allows appraisers to be paid within 24 hours of submitting a report.
Theshrinking ranks of appraisers , an ongoing trend for many years, combined with the record number of loan applications in 2020, created "the perfect storm between supply and demand," said Mark Walser, the president of Incenter Appraisal Management, in an interview. The company developed the payment program in a bid to keep Incenter top of mind for these independent contractors, and thus more willing to accept its work orders.
"We looked at that problem, we realized we could do something about it," Walser said. "In our case, we looked to take the billing piece [and provide] peace of mind and make that a reality for our appraiser panel."
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Incenter Appraisal Management is rolling out a new program that allows appraisers to be paid within 24 hours of submitting a report.
The
"We looked at that problem, we realized we could do something about it," Walser said. "In our case, we looked to take the billing piece [and provide] peace of mind and make that a reality for our appraiser panel."
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Why the spring home selling season may be obsolete
With the conditions surrounding the upcoming spring home buying season looking much like last year’s — itself a dramatic departure from the past— a new normal might be established: a sales season that lasts throughout the year.
Home sales activity in 2020 was far different than any year in recent memory, as the pandemic forced changes to traditional patterns and practices. After the pandemic’s onset and subsequent lockdowns in March, April and May, buyers — many motivated by recordlow mortgage rates and the ability to work from home — began buying homes throughout the summer and beyond.
"The housing market is unseasonably hot — it's behaving like it normally does in the spring, with plenty of demand from homebuyers," Redfin Chief Economist Daryl Fairweather said in a Jan. 15 press release. "Typically, the vast majority of homes for sale in December are homes that have been sitting on the market because they're overpriced or there's a problem with the property. This December, with so many Americans moving, scores of desirable homes hit the market — but not enough to satisfyinsatiable demand from homebuyers."
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Home sales activity in 2020 was far different than any year in recent memory, as the pandemic forced changes to traditional patterns and practices. After the pandemic’s onset and subsequent lockdowns in March, April and May, buyers — many motivated by record
"The housing market is unseasonably hot — it's behaving like it normally does in the spring, with plenty of demand from homebuyers," Redfin Chief Economist Daryl Fairweather said in a Jan. 15 press release. "Typically, the vast majority of homes for sale in December are homes that have been sitting on the market because they're overpriced or there's a problem with the property. This December, with so many Americans moving, scores of desirable homes hit the market — but not enough to satisfy
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One-stop-shop trend continues with Propertybase’s Unify buy
With its acquisition of Cross Media this week, real estate software provider Propertybase joins a host of companies completing mergers and acquisitions with the goal of becoming an all-encompassing one-stop shop for housing-related needs.
Cross Media owns Unify, a customer relationship management platform for the residential mortgage industry aimed at lead generation and client retention, as well as real-time loan origination system integration. The company works with roughly 80 mortgage companies in North America, mining and analyzing potential borrower data through automation to produce higher-intent leads. Its new owner, PropertyBase, offers lead generation, CRM, compliance management and other software tools, which are used by 4,500 real estate entities across the country, the company said.
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Cross Media owns Unify, a customer relationship management platform for the residential mortgage industry aimed at lead generation and client retention, as well as real-time loan origination system integration. The company works with roughly 80 mortgage companies in North America, mining and analyzing potential borrower data through automation to produce higher-intent leads. Its new owner, PropertyBase, offers lead generation, CRM, compliance management and other software tools, which are used by 4,500 real estate entities across the country, the company said.
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Despite shrinking inventory, 2021 home sales started ‘with a bang’
With record low mortgage rates encouraging an atypically high volume of home sales for the time of year, 2021 opened with indicators for another strong year, according to Remax.
But constraints remain: the number of for-sale properties fell to the lowest point since Remax started its National Housing Report in 2007, setting up high demand and potentially limiting future sales volumes. January inventory dropped 12.1%month-over-month and 35.7% year-over-year. The national supply decreased to 1.7 months from 1.8 months in December and 3.5 months the year prior.
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But constraints remain: the number of for-sale properties fell to the lowest point since Remax started its National Housing Report in 2007, setting up high demand and potentially limiting future sales volumes. January inventory dropped 12.1%
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5 ways to increase the Black homeownership rate right now
The homeownership rate for Black households was 44.1% in the fourth quarter, down from 46.4% in 3Q 2020, and virtually unchanged from both a year ago and when the Fair Housing Act outlawed discrimination in 1968. For years, it’s consistently been more than 20 percentage points lower than the average homeownership rate, and over 30 percentage points lower than the homeownership rates for whites.
With historic barriers including discrimination,wealth inequities and predatory lending to overcome, change may take time, but there are steps lenders can take now, industry leaders say.
“Since 2015 there have been approximately 1 million new Black homeowners. Unfortunately, the number of black applicants has not reached pre-2008 levels,” said Antoine Thompson, executive director of the National Association of Real Estate Brokers, the oldest minority trade group in the nation. “Marketing and outreach, diversity in loan officers and staff and mortgage underwriting criteria may play key roles in increasing Black homeownership.”
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With historic barriers including discrimination,
“Since 2015 there have been approximately 1 million new Black homeowners. Unfortunately, the number of black applicants has not reached pre-2008 levels,” said Antoine Thompson, executive director of the National Association of Real Estate Brokers, the oldest minority trade group in the nation. “Marketing and outreach, diversity in loan officers and staff and mortgage underwriting criteria may play key roles in increasing Black homeownership.”
Read the full story
Cash-out refis help drive pandemic-era mortgage boom
A fuller picture of the factors that drove the great U.S. mortgage boom of 2020 is starting to emerge.
The homebuyers who took advantage of rock-bottom mortgage rates during the pandemic included many investors and purchasers of second homes who flocked to the market at levels unseen since before the Great Recession, according tonew data from the Federal Reserve Bank of New York.
Cash-out refinancings also hit a post-financial-crisis high, as many households tapped into the equity they have accumulated as home prices have climbed over the last decade. Mortgage origination volume last year totaled $3.7 trillion, by far the highest level since 2003.
The data is most notable for one major contrast that it reveals between the current boom and the previous one: borrowers’ creditworthiness. Last year, roughly 70% of mortgage borrowers had credit scores of 760 or higher, compared with around 30% in 2003.
Read the full storyhere .
The homebuyers who took advantage of rock-bottom mortgage rates during the pandemic included many investors and purchasers of second homes who flocked to the market at levels unseen since before the Great Recession, according to
Cash-out refinancings also hit a post-financial-crisis high, as many households tapped into the equity they have accumulated as home prices have climbed over the last decade. Mortgage origination volume last year totaled $3.7 trillion, by far the highest level since 2003.
The data is most notable for one major contrast that it reveals between the current boom and the previous one: borrowers’ creditworthiness. Last year, roughly 70% of mortgage borrowers had credit scores of 760 or higher, compared with around 30% in 2003.
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Ellington set to price next $251.8M non-QM RMBS
Ellington Financial is sponsoring its first non-qualified mortgage securitization since October, in another pool of large-sized loans its LendSure Mortgage Co. affiliate made to primarily wealthy and self-employed homebuyers.
Ellington Mortgage Trust 2021-1 is a $251.8 million transaction, which includes a Class A $188.7 million tranche with preliminary AAA ratings from Kroll Bond Rating Agency and S&P Global Ratings.
A “notable” concentration of loans were issued with alternative income documentation under qualified-mortgage rules of the Consumer Financial Protection Bureau, according to Kroll, with 66.1% of the loans made to self-employed borrowers, with 49.6% of the loans underwritten with bank statement income verification (including less than 24 months verified).
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Ellington Mortgage Trust 2021-1 is a $251.8 million transaction, which includes a Class A $188.7 million tranche with preliminary AAA ratings from Kroll Bond Rating Agency and S&P Global Ratings.
A “notable” concentration of loans were issued with alternative income documentation under qualified-mortgage rules of the Consumer Financial Protection Bureau, according to Kroll, with 66.1% of the loans made to self-employed borrowers, with 49.6% of the loans underwritten with bank statement income verification (including less than 24 months verified).
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