Carrington Mortgage Services, LLC (CMS) has made an immediate adjustment to the Wholesale Rate Lock policy. Effective, May 14th, 2019, the Lock Desk will no longer process any lock extensions on VA IRRRL transactions. In addition, automated lock extensions are no longer available in BrokerIQ/CorrIQ/Encompass on VA IRRRL loan programs.
In response to continued feedback and clarification from the VA and others, the Carrington Mortgage Services, LLC (CMS) VA Interest Rate Reduction Refinance Loan (VA-IRRRL) Guidelines and Matrix are being republished with updated requirements regarding recoupment and NTB.
As a reminder, The Protecting Veterans From Predatory Lending Act of 2018 (the Act), was enacted to protect Veteran borrowers from predatory lending practices known as “loan churning” or “serial refinancing”, when obtaining a VA-guaranteed refinance loan. CMS has taken steps to ensure all VA-guaranteed loans meet the fee recoupment, net tangible benefit and loan seasoning requirements.
Loan applications submitted on or after May 9, 2019 must meet the following requirements. There will be no impact to the existing pipeline.
When issuing a VA-IRRRL, Lenders must provide the Veteran or borrower with the following fee recoupment and net tangible benefit requirements:
(1) VA IRRRL LTV: Drive-By or Interior Inspection Appraisal required if discount points are charged; Points > 1% Max 90% LTV; Points <= 1% Max 100% LTV; No Points: No appraisal required.
Last Week in Review: The US economy remains “durable”
Good news is typically bad news for Bonds and home loan rates. That has not been the trend of late, and certainly not this past week.
Durable Goods Orders is a report which shows buying demand for products with a life cycle beyond 4 years — think cars, washing machines and planes. And that buying demand of long-lasting goods is up at the highest levels since last summer, highlighting that the US economy continues to grow, and consumers and businesses feel confident in investing.
Adding to the good-news week were continued strong corporate earnings reports, and future guidance from the likes of Amazon, Microsoft and Facebook.
Finally, the first look at 1st quarter GDP showed the US economy grew at a blistering 3.2% pace — way above economists’ expectations of 1.9%. The US economy is reaccelerating.
In the face of all the good news, home loan rates held steady and remain near one-year lows.
Bottom line: when you consider the strong labor market, rising wages, growing economy, low inflation, high consumer confidence, and low rates — it truly is a Goldilocks situation in the economy and for anyone looking to buy a home.
Join us to learn why FHA Manual UW is even more important after recent DU TOTAL Scorecard Updates.
During this webinar we will cover:
- What factors in the file can trigger a downgrade to Manual Underwrite
- What Non-Traditional Credit options are available for borrowers without a credit score
- What are Compensating Factors, and how can they help with a higher DTI
- Parameters for working with derogatory credit events
- Submitting the best possible file for fewer conditions the first time through
In an effort to better serve our broker partners, Carrington Mortgage has created a Marketing Resouces center in brokerIQ for approved brokers. The materials available include flyers in PDF format that are customizable with your name, logo, contact information and disclaimers. The flyers can be printed and/or emailed to your prospective borrowers.
Please browse the page to see what flyers are available and contact your Account Executive if you have any questions.
Last Week in Review: Good times continue
Initial Jobless Claims is a weekly report that tracks how many people have filed for unemployment benefits. It is both a solid gauge on the state of the labor market and economy, and a leading indicator on what to expect in the months ahead.
So, what are Initial Jobless Claims telling us today? Last week’s 196,000 recorded was the lowest in over 50 years! This is what it’s telling us:
- The labor market continues to strengthen.
- The chance of a recession in 2019 is near zero.
Low Initial Jobless Claims also leads to continued higher wage gains, which is wonderful for consumer spending and housing.
Another great data point this past week was the JOLTS (Job Openings and Labor Turnover Survey) which showed the US economy still has a 1,000,000-person shortfall against the current 7,000,000 job openings. This is just another example of how tight the labor market remains.
Bottom line — the great story remains — low rates + great job market = nice housing market.
In observance of Good Friday, the Carrington Mortgage Services, LLC (CMS) Lock Desk will be closed Friday, April 19, 2019. Normal Lock Desk hours will resume on Monday, April 22, 2019.
As a reminder, pursuant to the Lock Policy all lock extensions must be requested prior to expiration. If a lock expires on Friday, April 19th, 2019 it will need to be extended no later than Thursday, April 18th, 2019.
Issues related to locks should be sent via email to firstname.lastname@example.org.
Spring is the peak home buying season for many parts of the country. After years of softer home sale activity – thanks to low housing inventory, affordability issues, and more – this Spring home buying season could prove to be one of the best in years. Why?
Call it the “Goldilocks” economic scenario – and here are several bullets that should help housing not just this Spring, but for the foreseeable future:
- The Fed has stated they will not raise rates in 2019. Yay!!! There is actually a better chance of a rate cut before 2019 comes to an end. This means home loan rates won’t go too high.
- Inflation remains subdued – for now. Low inflation means lower rates.
- Home price gains are slowing year-over-year to healthier levels, and at equilibrium with personal wage gains. In years past, housing prices were gaining 10% to 15% or more, and wages were growing at 2%. Now we are seeing house prices increase 4% to 5% year-over-year, just slightly more than wages.
- Housing inventory is increasing. This is a big change from years past and should it continue, buyers will continue to come to the market and take advantage of the “Goldilocks” conditions.
- The Labor market remains solid. People buy homes because they feel good about their job and their future. Unemployment is at a 50-year low. This is very positive for housing.
- Europe can’t get out of their own way. Their economies are weak and that is keeping their bonds yields ultra-low. This is putting downward pressure on US Bond yields. Yes – you can thank Europeans for your low home loan rates.
- The Stock market is right at all-time highs. This means higher 401K and IRA values create a positive wealth effect that should provide a nice tailwind for housing. People with money spend it.
- Consumer Confidence and Sentiment are increasing again thanks to the Fed no longer hiking rates, the strong job market, and Stocks up nicely in 2019. “Confident” consumers purchase homes.
- No fear of a US recession as Friday’s March Jobs Report showed 196,000 new jobs created, a great rebound higher from February’s 33,000 – which had stoked some recession chatter.
- Home loan rates continue to hover near 14-month lows, thanks to the many bullets above.
This past week we saw mortgage rates experience their largest one-week decline in 10 years!!! What caused the sharp decline in home loan rates? Recessionary fears, and the likelihood the Fed’s next move on rates may be a cut and as soon as this year.
The Treasury’s Two-Month Bill yielded 2.40% this past week and the 10-Year Note yielded a low of 2.34%. This “inverted yield curve”, where short-term Bonds yield more than long-term Bonds, elevated the recession talk.
Bond yield curve inversions are not always accurate, and the lead time to a recession can be as much as three years.
It will be more important to track how the 2-Year Note, presently yielding 2.23%, performs against the 10-Year Note in the weeks and months ahead, because a sustained inversion between them would be a more serious recessionary signal.
The financial markets were spooked this week when potential Federal Reserve Board Nominee Stephen Moore said if he were brought onto the Fed, he would immediately vote for a .50% cut to the Fed Funds Rate. This surprise statement brought uncertainty to the financial markets, which led to Stocks moving lower and Bonds moving higher in price.
Bottom line: Inflation is not a threat, and was evidenced in last Friday’s PCE reading of just 1.8% year-over-year. Plus, the idea that the Fed may now cut rates next means this complacent “wait and see” attitude may continue to keep home loan rates at low levels for the spring homebuying season, and more.
On March 15, 2019, we surveyed our broker community to find out more about their media consumption habits. 116 people responded and these are the results. We think they are very interesting and we hope you do too.