Morning Report: Number of loans in forbearance drops

Vital Statistics:

 

Last Change
S&P futures 3142 34.1
Oil (WTI) 41.14 0.49
10 year government bond yield 0.73%
30 year fixed rate mortgage 3.16%

 

Stocks are higher despite a trade scare overnight. Bonds and MBS are down small.

 

I was interviewed by Steve Glener at IMN about the economy and housing. You can access the podcast here.

 

The Markit Purchasing Managers Index (a survey of businesses on the economy) came in better than expected. Manufacturing was a bit stronger than services. Overall it looks like the economy is back on trend.

 

The MBA has a new origination forecast for 2020. They expect to see $2.65 trillion in origination this year. I think the previous forecast was something like $2.05 trillion, so it is quite the jump. This should be the best year for originators since 2006, when Angelo Mozillo was a fixture on CNBC.

 

Despite the strong forecast, mortgage credit remains tight. Jumbos are hard to get, most lenders have high minimum FICOs for FHA, and the private label market is still digesting all the production from pre-COVID. My guess is that credit won’t ease up to pre-COVID levels until the whole forbearance issue is in the rear view mirror.

 

The number of loans in forbearance fell to 8.48%, according to the MBA. This is a decline from the 8.55% in the previous week and is the first decline in the MBA’s series. “The lower share of loans in forbearance was led by declines in GSE and portfolio and PLS loans, as more of those borrowers exited than entered a new forbearance plan,” said Mike Fratantoni, MBA Senior Vice President and Chief Economist. “Fewer homeowners in forbearance underscores the continued improvements in the job market, and provides another sign of the fundamental health of the housing market, which has rebounded considerably over the past several weeks.”

 

The CFPB put out a notice of rulemaking for dealing with the QM Patch. “The GSE Patch’s expiration will facilitate a more transparent, level playing field that ultimately benefits consumers through promoting more vigorous competition in mortgage markets,” said CFPB Director Kathleen L. Kraninger. “The Bureau is proposing to replace the Patch with a price-based approach to QM loans to preserve consumer access to mortgage loans while also making sure consumers have the ability to repay them. ” Essentially, the 43% DTI test will be eliminated and the CFPB will use a price test, which checks the loan’s interest rate versus the average prime offer rate for a comparable transaction. There will be an adjustment for smaller balance loans and manufactured housing loans. It will be interesting to see if they make some sort of adjustment for people who are willing to pay a higher rate in order to bring less money to the closing table.

 

Manhattan real estate prices could drop 10% more. Prices were already down 15% even before COVID-19, so it sounds like the NYC market is going to be a bit heavy.

 

Why working from home may be the new normal.

3 Responses

    • This Piece is absolutely hilarious!

      The second to last sentence in this paragraph is (chef’s kiss) perfect.

      “I’m not being judgmental,” said Carrie Nightshade, 44, who explained that she no longer felt comfortable letting her children, 12 and 9, play in the park by themselves. “It’s not personal. It’s just not safe.”

      This one’s a real beaut too!

      And while Ms. Albers used to feel only pride about the work she put in to revitalizing the community, now, she sees her work as gentrification that may have pushed out nonwhite residents. The neighborhood’s black population has dropped more than 5 percentage points since 2000.

      These people have lost all sense of self preservation. This form of Progressivism is a shove pact.

      Two days after an initial conversation, his position had evolved. “Been thinking more about it,” he wrote in a text message. “I regret calling the police. It was my instinct but I wish it hadn’t been. I put those boys in danger of death by calling the cops.”

      This story gave me a 6 hour Schadenboner.

      Like

      • Ugh. Well very glad I don’t live there. What kind of world where you get cornered by guys with guns who want your car and you feel bad about calling the police.

        Don’t think I’ve ever read an article with as many repetitions of the phrase “who are white”.

        I can see a way that articles like that will be seen as furthering white supremacy soon enough. White people are kind of the good guys in that white-centric narrative. Which kind of furthers systemic racism.

        Like

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