Morning Report: FHA prepay speeds rise 11/8/17

Vital Statistics:

Last Change
S&P Futures 2584.3 -2.5
Eurostoxx Index 393.8 -0.9
Oil (WTI) 57.1 -0.2
US dollar index 87.8 -0.1
10 Year Govt Bond Yield 2.31%
Current Coupon Fannie Mae TBA 102.875
Current Coupon Ginnie Mae TBA 103.938
30 Year Fixed Rate Mortgage 3.95

Stocks are flat this morning on no real news. Bonds and MBS are down.

Mortgage applications were flat last week as the purchase index increased 1 percent and the refi index decreased 1%. The average 30 year fixed rate mortgage fell 4 basis points to 4.18%.

The House and Senate continue to work on tax reform. Here is the latest state of play. Biggest difference between the House and Senate is the state and local tax deduction, where the Senate bill excludes all state / local / property taxes, and the House bill which allows some deductions. Lawmakers are still working on a way to prevent companies from taking advantage of lower-tax jurisdictions overseas to shelter income. Accountants and lawyers are still getting their arms around what the proposals actually entail, and as expected it will be complicated. The estate tax will probably survive in some form in the Senate.

Capital One (What’s in your wallet?) is exiting the mortgage origination business. “These businesses are in a structurally disadvantaged position, given the challenging rate environment and marketplace,” Sanjiv Yajnik, president of financial services at Capital One, said in a memo to employees. “These factors do not allow us to be both competitive and profitable for the foreseeable future.”

Mortgage Credit availability decreased slightly in October, especially on the jumbo side of things, according to the MBA. This indicates that lenders are tightening standards a little. The index has been pretty much flat for the past year.

Many FHA borrowers are refinancing into conventional mortgages, which has resulted in higher prepayment speeds than expected for FHA loans. This is low-hanging fruit for loan officers: home prices appreciation has been strong enough for most MSAs that someone who did a 3.5% down FHA loan a few years ago may be eligible for a 20% conventional and no longer have to pay MI. Serious delinquencies fell for FHA loans as well, from 5% to 4.3%.

Problems in fin-tech land? Lending Club down 20% pre-open on lousy guidance.

43 Responses

  1. Frist!

    What do @novahockey and @jnc4p think of the Virginia results?

    Like

    • Ed G should have never tried to be something he clearly is not . that said, the idea of a former lobbyist running for gov isn’t disqualifying IMHO.

      i mean, the guy who was “we need to be inclusive if we want to win” 10 years ago is running against MS-13. lame.

      but FFS, VA GOP, you bundled this so bad a 30 year old socialist took out the majority whip.

      For his part — and i’m stealing this — Northram is about as exciting as a bag of mulch. This was the inverse of last year. The Ds would have crawled over broken glass to vote this time.

      disclosure — my parents know Ed and i voted for him even though there was an L on the ballot.

      Liked by 1 person

      • I admire your support for your parents. 🙂

        That’s a good synopsis, I think. I just hope that Democrats nationwide can do this again in 2018 and 2020.

        Thanks!

        Like

      • I split my ticket. Northram for governor and the Republican for AG along with my delegate.

        I figured that was the best option for maximum gridlock.

        I also didn’t want to take a chance on Trump spinning a victory in Virginia as vindication for himself and thus be emboldened.

        Liked by 1 person

    • http://www.cnn.com/2017/11/08/politics/virginia-exit-poll-findings/index.html

      Northam wins big with women
      Northam won women by 22 percentage points. Yes, you read that right — 22 points. Hillary Clinton won them by 17 points last year. Mark Warner won women by 12 in his 2014 Senate race. Terry McAuliffe won them by nine points in his 2013 run for governor. So while women were a smaller share of the electorate in 2017 (48%) compared to those races, Northam’s staggering advantage more than made up for Gillespie’s narrow two-point spread among men.
      In particular, Northam outperformed previous Democratic candidates with white, college-educated women, winning that group by 16 points — 58% to 42%. Compare that with Clinton’s six-point advantage among that group in 2016.

      This feels very much like a Trump effect. Will be interesting to see that operate nationally.

      I look forward to a huge sweep of the congress by Democrats, the upcoming impeachment, and the general squandering of the victory over the next two years is nothing happens but an impeachment of Trump that still leaves him in office. Doing it GOP-style!

      Like

      • Also:

        The Trump effect
        While all of these factors contributed to Northam’s success, the effect of President Donald Trump on the race is inescapable. Nearly six in 10 Virginia voters (57%) disapprove of the president, including 47% who strongly disapprove. They broke 95% to 4% in favor of Northam. And by a two-to-one margin (34% to 17%) voters said they were voting in opposition to Mr. Trump rather than in support of him. Roughly half said the President was not a factor.

        Like

  2. Northram did better than I thought and the legislative races are truly devastating for the Republicans given the number of incumbents voted out. I don’t think new Republican candidates will have the same appeal.

    Mostly I view it as the Democratic base being motivated to turn out and vote against Republicans due to Trump.

    Liked by 1 person

  3. The swamp struck back…

    Liked by 2 people

  4. Interesting read:

    “How Trump is dismantling a pillar of the American state

    Donald Trump is presiding over the most withering, devastating, and trenchant attack on the American administrative state this nation has ever known

    by Jon Michaels
    Tuesday 7 November 2017 08.36 EST”

    https://www.theguardian.com/commentisfree/2017/nov/07/donald-trump-dismantling-american-administrative-state

    Like

    • It never occurs to the author that Trump’s predecessor overreached…

      More regulation is more better.

      Like

    • jnc:

      The Guardian is doing its level best to convince me to vote for Trump in 2020.

      BTW, from the article:

      At the same time, Trump is vilifying the professional bureaucracy, that vast community of apolitical, career officials…

      Apolitical? What a maroon.

      Liked by 1 person

      • Its the Guardian…

        But yes, doing this and fast-tracking judges that believe in the Constitution trumps having a wall..

        Liked by 1 person

      • “Apolitical”?

        And the press wonders why we don’t believe a single thing they say. It’s not all right or left or Republican or Democrat, but the government bureaucracy is entirely political, in some way or other. It’s ALL politics.

        Goofball.

        Like

    • Is he really actually accomplishing anything of any permanence on this front? I am dubious.

      Like

  5. Worth noting:

    “A Dying Boy Gets a New, Gene-Corrected Skin

    Doctors took his stem cells, corrected a faulty mutation within them, and used them to replace 80 percent of his skin.

    Ed Yong 1:00 PM E”

    https://www.theatlantic.com/science/archive/2017/11/epidermolysis-bullosa-new-skin/545291/

    Liked by 1 person

  6. This, if true, says two things,

    1. Highly motivated D base, bad news for R’s in midterms (which is normal for party out of power in 1st midterm after POTUS election.

    2. Virginia is no longer purple.

    Liked by 1 person

    • Mark:

      From Murdoch’s Australian flagship paper, but not on FOX:

      You subscribe to an Australian newspaper? I couldn’t see your link without a subscription.

      Like

      • Copy-paste:

        The Australian
        12:00AM August 16, 2017

        Tessa Akerman
        Reporter
        Melbourne
        @TessaAkerman
        Michael McKenna
        Reporter
        Brisbane
        @McKennaattheOz
        Troy Bramston
        Senior writer
        Sydney
        @TroyBramston

        Donald Trump’s plan to build and operate Sydney’s first casino was killed off in 1987 by the NSW government on the back of a high-level police report that warned against the now-US President’s bid because of his “mafia ­connections’’.

        The secret report by the NSW Police Board into the suitability of tenderers for the inner-city ­Darling Harbour casino project cautioned that it would be “dangerous’’ to go ahead with Mr Trump’s joint venture with the Queensland-based Kern Corporation, headed by the late developer Barry Paul.

        Documents show that the ­Unsworth Labor cabinet met in May 1987 to discuss the assessment of the four tenderers for the project, which also included a fin­ancial report that concluded Mr Trump’s consortium had overstated projected revenues from the ­casino.

        At the time the Kern-Trump consortium was making its play, Mr Trump owned two ­casinos in Atlantic City — Trump Plaza and Trump’s Castle — and was about to open a third with the Trump Taj Mahal.

        Mr Trump had been ­approached by the Kern Corporation — a then successful developer of shopping centres, with strong ties to superannuation funds — to front and operate the casino.

        read more
        Inside story: Donald and the mafia dons

        Cabinet minutes from May 4, 1987, contain a summary of the Police Board’s position and show they considered the Kern/Trump bid to be unacceptable. “Atlantic City would be a dubious model for Sydney and in our judgment, the Trump mafia connections should exclude the Kern/Trump consortium,” the report concluded.

        The documents show cabinet considered casino bids from three other companies: Australian Federal Hotels and Sabemo; Malaysia’s Genting Berhad with Civil and Civic; and Hong Kong Macau Sydney consortium.

        Like

        • Thanks Mark. Did they, at any point, explain what these alleged “mafia connections” were?

          Like

        • Apparently the named mafia boss of Atlantic City was deeply involved with the AC casino operation in some way. That appears in still another article from the same paper. You know that was typically part of the price of doing business in many parts of Jersey for many years, as it was in Las Vegas and some NYC businesses as well.

          Another competitor for the Sydney casino license was found to have ties to the Triads. I am guessing that a Sydney casino was a great money laundering magnet. In fact, all three competitors for that first bid were rejected as unsuitable by reason of criminal enterprise connections.

          Like

  7. PL bears this out every day:

    “Cable TV for the blue-state crowd is one giant SCREW TRUMP! ad, and the progressive idea of a political discussion these days is a bunch of people sitting around comparing notes to see who is the most excited about “indictment day.”

    It wouldn’t have seemed possible a decade ago, but behaviorally, culturally, Donald Trump has turned Democrats into Republicans.

    Remember the Bush years? Remember that first experience with going to the house of some long-lost friend or family member, who had gone conservative in the intervening years?

    Remember how you spent the entire time at that dinner trying to steer conversations away from politics, but your Republican counterpart kept trying to steer things back that way? Remember that peculiarly annoying form of needling?

    “Bet you love the Clintons, huh? Bet you love Sean Penn, amirite? Bet you’re worried about the rights of terrorists, huh? Huh? Huh?”

    Remember that horseshit? Remember how much you hated it? That’s us now. All we talk about is how much we hate Trump. And we don’t shut up about it.”

    http://www.rollingstone.com/politics/features/taibbi-a-year-after-trumps-election-nothing-has-changed-w511229

    Like

    • “It wouldn’t have seemed possible a decade ago, but behaviorally, culturally, Donald Trump has turned Democrats into Republicans.”

      PL has always been kind of like that. Where it’s really interesting, and kind of different, is amongst the rank and file Democrats (say, Facebook, where previously mildly political people have often gone insane) and in the general media where, while always present, the volume of insane hyperbole has gone up to 11. That, and all the pundits and politicians embracing this McArthy-era red-scare stuff–because of Trump, as Russia wasn’t doing anything Russia hasn’t done in some form since forever–that’s where it’s really true. And with the politicians waiting for Indictment day, and a big victory in 2018 so they can impeach Trump.

      Like

      • I think at the end of the day, it’s the Russia stuff getting to Taibbi. Having lived and reported on Russia, he knows how counter-factual all the breathless collusion reportage is, and politically opportunist it is.

        Like

  8. How is this not a description of Obama?

    ut we don’t have a president like that. We have a president who lies constantly,

    If you like your plan/doctor you can keep your plan/doctor.

    who disregards the norms of American government,

    “I have a pen and a phone…”

    who’s openly disdainful of the social function of a free press,

    Let’s ask James Rosen and Cheryl Atkinson.

    and who’s set up his administration in a way that seems to generally sideline expertise while opening the door to massive financial conflicts of interest.

    Kathleen Sebilius
    Debbie Wasserman Schultz
    Hillary Clinton
    Joe Biden
    Ben Rhodes

    I could go on.

    Under those circumstances, any actions he takes naturally fall under a pall of suspicion, and it’s easy for companies who are adversely impacted by his administration’s regulatory decisions to raise questions about them.

    Sing it, Juicer!

    https://www.vox.com/2017/11/8/16625242/trump-att-time-warner

    Liked by 1 person

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