To confirm the value determination for Carrington Advantage Product (CFA, CFA Plus, and Investor Advantage) loans with amounts of $1 Million and greater, effective June 17, 2019, Carrington Mortgage Services, LLC (CMS) will implement the following new appraisal requirements. These requirements apply for all loans received in Loan Set-Up (LSU) on and after the June 17, 2019 effective date.
When the new loan amount is greater than or equal to $1.0 Million CMS will require the following:
- Two full appraisals are required.
- Appraisals must be from different AMCs and must use different Appraisers.
- The second appraisal should be ordered once the loan file is approved.
- A CMS Underwriter will condition for the second appraisal.
- A Collateral Desk Review (CDA) is not required when a second appraisal is ordered.
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Last Week in Review: Fed cuts and home loan rates
For the sixth consecutive week home loan rates declined, once again fueled by the ongoing trade tensions between the US and China.
However, the decline in rates was halted on the notion the Fed is likely to CUT rates soon. Huh? That’s right — a couple of Federal Reserve members were speaking this week and suggested that the time might be right for a Fed rate cut.
How come home loan rates didn’t improve further upon news? When the Fed cuts or lowers rates, they can only lower the Fed Funds Rate, which is an overnight lending rate between banks. The Fed doesn’t control home loan rates.
When the Fed cuts rates it is doing so to fuel economic growth and/or allow inflation to rise — both of these are bad for long-term rates like home loan rates. Additionally, Stocks love Fed rate cuts and moved nicely higher midweek, taking money out of Bonds thereby limiting their decline in yield or rates.
The ongoing trade tensions and slowing growth around the globe may very well continue to push home loan rates lower in the weeks and months ahead — but we must now pay attention to the Fed who will look to “help” the Stock market from further declines by cutting rates. And anything that helps Stocks is usually not great for home loan rates.
Bottom line — we are staring at 2-year lows in home loan rates and the time could not be much better to lock in on a purchase or refinance loan.
Carrington Mortgage on the June 2019 Scotsman Guide Cover
Carrington Mortgage Services, LLC is on the June 2019 Scotsman Guide cover. We are committed to Delivering More to our clients as our niche is your success!
Last Week in Review: Interest rate disconnect
“Sell in May and go away”… an old Wall Street investment strategy which suggests not owning Stocks during the Summer months.
That investment strategy certainly worked this past May as Stocks declined each week in response to escalating US/China tensions, weakening global economic reports, and increased fears of a US recession.
When Stocks fall in price, typically rates fall as well. And this past week we watched the 10-year Note yield decline to 2.14% — a 20-month low. However, home loan rates, which did decline slightly this past week, didn’t experience the same sharp drop as the 10-year Note yield.
Why the disconnect? Why did the 10-year Note yield drop so much but home loan rates didn’t?
Home loan rates are driven by the trading activity of mortgage-backed securities, and not how the 10-year Note yield moves.
When there is global unrest like we have seen this past week, investors around the globe look to park their money and investments into the “safe-haven” of the US Dollar by purchasing the US 10-year Note. Hence the reason for the larger decline in 10-year Note versus mortgage backed-securities and home loan rates.
Bottom line: Home loan rates may continue to drift lower if the US/China trade turmoil goes unresolved or escalates further.
Last Week in Review: Uncertainty helping rates
The ongoing and unresolved US/China trade turmoil is the biggest story to follow right now. The uncertainty and negative headlines associated with the negotiations have pushed Stocks lower for most of May, with Bonds and home loan rates being the beneficiary.
We would like to think that the talks over the past year or so will bring forth a positive agreement — but it’s unclear whether this will come to pass. The next round of talks is scheduled for June 28-29 at the G20 meeting, so there is likely to be no progress before this time. If that is the case, US interest rates will remain near multi-year lows.
One thing’s for sure…the Fed will not be hiking rates anytime soon if this trade turmoil goes unresolved or escalates. In fact, there’s actually a chance we see a Fed rate cut in 2019 — especially if the US economy reacts poorly to the US/China trade dispute.
It’s important to understand that this story, while very negative and uncertain at the moment, could change very quickly. If a positive resolution comes to pass, we should expect Stocks to reclaim all of their recent losses and more — all at the expense of bonds and home loan rates.
Bottom line: Home loan rates are back near 16-month lows and coupled with the current strong US economic backdrop, it is an incredible moment to either refinance or purchase a home.
Last Week in Review: US/China uncertainty
The biggest story in the financial markets and around the globe is the ongoing US/China trade negotiations.
At the moment, there is no resolution and it appears there will be no resolution for at least several weeks as the US and China are not expected to talk again until the G-20 Summit June 28-29.
The uncertainty surrounding the talks helped home loan rates improve this week, and are at lows seen in January 2018.
The US, China and the entire globe would benefit from a deal and should it happen, Stocks will likely recover all of their recent losses and then some. At the same time, should the story drag on and escalate as higher tariffs are instituted — it would have a negative effect on global economies and Stocks may suffer as home loan rates improve further.
Looking at the US economy, it continues to do very well. Walmart posted incredibly strong corporate earnings this past week. Seeing they have $500B in annual sales — if Walmart is doing well, the US economy is doing well.
In housing news, April Housing Starts and Building Permits came in higher than expectations, providing further evidence of confidence in the sector.
Bottom line: The backdrop to housing could not be much better. The economy is strong and home loan rates are historically low. Today presents an incredible window to consider buying or refinancing a home.
Last Week in Review: Americans favor owning
Americans Favor Owning Versus Renting a Home
The Census Bureau recently reported a homeownership rate of 64.2% in the first quarter of 2019, up from the 10-year low of 63.7% in the first quarter of 2015.
A recent study by LendingTree shows that 67% of homeowners surveyed aged 22 and older believe that owning a home is a better option that renting. In addition, the longer you remain in a home, the stronger you believe that owning is better than renting. The survey revealed that 72% of homeowners who have resided in their home for seven to nine years agree with the statement.
The survey also showed that about 15% of homeowners believe renting is easier than owning a home, and another 18% are neutral on the topic. “Just 13% of homeowners across all ages wish they could go back to renting, but when broken down by age, 1 out of every 5 homeowners ages 22 to 37 say they miss renting.”
In conclusion, the US “Goldilocks” economy includes:
- Slowing home price gains
- Rising wages
- Uptick in homes for sale
- Strong job market
- High Consumer Confidence
- Historically low rates
The above points will continue to be a tailwind for new home buyers on their way to the American Dream of owning a home.
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