Labor Day Holiday Lock Desk Hours

The Carrington Mortgage Services, LLC – Wholesale Lending Division Lock Desk will be closed on Monday, September 2, 2019 for Labor Day, which is a Federal Holiday. Normal lock hours will resume on Tuesday, September 3, 2019.

Additionally, the Lock Desk will close early on Friday, August 30, 2019 at 11:00 A.M. PST due to the early close of the financial markets.

Locks that expire on the holiday will automatically roll to the next business day. In addition, there are some important disclosure considerations associated with the holiday:

  • Monday, September 2, 2019 cannot be included in the rescission period for refinance transactions.
  • Monday, September 2, 2019 cannot be included in the seven (7) business day waiting period between the date the initial Loan Estimate (LE) was provided to the borrower and the consummation of the loan
  • When re-disclosure of the LE is required, Monday, September 2, 2019 cannot be included in the four (4) business day waiting period between the date the revised LE was provided to the borrower and the consummation of the loan.
  • When re-disclosure of the CD is required, Monday, September 2, 2019 cannot be included in the three (3) business day waiting period between the date the revised CD was provided to the borrower and the consummation of the loan.

Issues related to locks should be sent via email to lockdesk@carringtonms.com.

Thank you.

Risk of Recession has risen

Last Week in Review: Yield Curve Inversion Discussion

This past week we watched Bond yields/interest rates decline around the globe on rising fears of a global recession.

It’s worth noting that home loan rates did not partake in the declining interest rate party this week as the Treasury market, not the Mortgage Backed Security market, received the majority of investment dollars.

A recession is defined as two consecutive quarters of negative growth, so when Germany reported its economy shrank or contracted, financial markets were spooked and investors fled into the safe haven of the U.S. dollar and U.S. denominated assets like Treasuries.

The flood of capital into the U.S. caused our 10-year Note yield to drop sharply and beneath that of the 2-year Note yield, causing a yield curve inversion for the first time since 2007… right before the global financial crisis.

History has shown that each time the 10-year yield moved beneath the 2-year yield in the last 50 years, a U.S. recession followed sometime in the next 22 months.

So, is the U.S. headed for a recession? Maybe, and the chances increase everyday as the U.S. economy is in the midst of the longest economic expansion (without a recession) in our nation’s history.

Could the yield curve inversion be a false signal this time around? Also, a maybe.

With term premium or the added yield investors demand to park their money in long-term Bonds declining for over 30 years, it’s more likely to see yield curve inversions today. And with global yields collectively at 120-year lows and negative around much of the globe, money is literally pouring into our Treasury market as our anemic 1.59% 10-year yield is relatively attractive.

The chance of a recession in 2020 has climbed to about 30%. It will be interesting to see what happens with a couple of Fed rate cuts before 2019 ends.

A U.S./China trade deal, while not likely soon, would go a long way to help lift uncertainties and help many global economies possibly avoid recession.

Bottom line: the risk of recession has risen, but we are not seeing a recession in the cards at the moment. Being the cleanest shirt in the laundry, the U.S. is attracting investment dollars in droves and helping cause an inversion. Home loan rates have not declined further as the gains in the Bond market have been limited to the Treasury market. So if you are in the market to either buy a home or refinance, today is a great day to do so.

New Interest Only ARM Program Option

Overview

Carrington Mortgage Services, LLC (CMS) is pleased to announce effective Monday, July 15, 2019, the Carrington Advantage (Flexible Advantage/Advantage Plus and Investor Advantage) programs will offer a new Interest-only product option. Interest-Only loans offer borrowers lower monthly payments by allowing borrowers to pay only the interest during the 10 year interest-only period.  Once the interest-only period ends, borrowers must begin making principal payments to pay off the debt.

The new Interest-only product has the following features:

  • Terms Available: 5/1 ARM-IO, 7/1 ARM-IO, and 10/1 ARM-IO
  • Doc Types: Full Doc, 1-Year Alt Doc, 12 or 24 Month Bank Statements
  • 5/1 Caps = 2/2/5 (Initial cap at 2%; Interim cap at 2%; Life cap at 5%)
  • 7/1 and 10/1 Caps = 5/2/5 (Initial cap at 5%; Interim cap at 2%; Life cap at 5%)
  • Margin = 3.50% (Flexible Advantage Plus), 5.00% (Flexible Advantage)
    and 6.00% (Investor Advantage)
  • Floor = Start Rate
  • Index = 1 Year LIBOR

Interest-only Qualifying Payment

Interest-only loans qualify using the fully amortized payment calculated over the fully amortizing period, based on the greater of the note rate or the fully indexed rate to determine qualifying PITIA. For example, a 30-year loan with a 10-year interest-only period would have a 20-year fully amortizing period (see guidelines for details).

Example 1:

  • Loan Amount: $400,000
  • Interest Rate: 5.75%, Full Indexed Rate 6.75%
  • 5/1 IO ARM
  • Principal and Interest to Qualify borrower = $3,041.46 (Fully Indexed Rate over 20 Year Amortization)

Example 2:

  • Loan Amount: $250,000
  • Interest Rate: 7.25%, Fully Indexed Rate 6.75%
  • 7/1 IO ARM
  • Principal and Interest to Qualify borrower = $1,975.94 (Interest Rate over 20 Year Amortization)

View the Guidelines here.

Please Note: All Interest-only Terms are amortized over 20 years for qualification and have an Interest-only period of 10 years regardless of the fixed period of the ARM.

Calm before G20 storm

This past week financial markets around the globe traded in a bit of a calm sideways pattern ahead of arguably the most important economic event of 2019 — the US/China trade talks at the G20 meeting.

Depending on when you read this newsletter, the headlines may already be out as talks between President Trump and China’s President Xi are to take place on Saturday, June 29th.

How the trade talks go could have a major impact on global economies and even determine whether the Fed cuts rates, which at the moment is widely expected to happen in late July.

So, if you are looking to buy a home or potentially refinance an existing one, it’s hard to overstate the magnitude this event can have on rates for the foreseeable future.

At the moment we are watching the 10-Year Note yield hover near 2.00%, which has served as a psychological barrier preventing rates from moving lower. How the US/China talks go could very well determine which side of 2.00% the 10-Year Note trades.

Why is this important? Because if the 10-Year Note yield moves lower and beneath 2.00%, it will push Mortgage Bond prices higher and home loan rates lower still. The opposite is also true.

Bottom line: home loan rates are within .50% of the best rates ever and there is a very real chance we might see even lower rates in the very near future … like next week.

Independence Day Holiday Lock Desk Hours

Overview

The Carrington Mortgage Services, LLC (CMS) Lock Desk will be closed Thursday, July 4, 2019 for Independence Day, which is a Federal Holiday and also Friday July 5, 2019 for a Company Holiday. In addition, the lock desk will close early (10:00 AM PST) on Wednesday, July 3, 2019. Normal lock hours will resume on Monday, July 8, 2019.

Locks that expire on the holiday will automatically roll to the next business day.  In addition there are some important disclosure considerations associated with the holiday:

  • Thursday, July 4, 2019 cannot be included in the rescission period for refinance transactions.
  • Thursday, July 4, 2019 cannot be included in the seven (7) business day waiting period between the date the initial Loan Estimate (LE) was provided to the borrower and the consummation of the loan
  • When re-disclosure of the LE is required, Thursday, July 4, 2019 cannot be included in the four (4) business day waiting period between the date the revised LE was provided to the borrower and the consummation of the loan.
  • When re-disclosure of the CD is required, Thursday, July 4, 2019 cannot be included in the three (3) business day waiting period between the date the revised CD was provided to the borrower and the consummation of the loan.

Issues related to locks should be sent via email to lockdesk@carringtonms.com.

Carrington Delivers A BIG Non-QM Pricing Improvement on 3 programs

Big Pricing Improvement with our Non-QM Loan Programs

The team at Carrington Mortgage Services is extremely excited to announce some big changes to our Non-QM pricing:

Carrington Flexible Advantagesm:

  • LLPA’s improved .25% (Full Doc and lower FICO loans) – see the matrix

Carrington Flexible Advantage PLUS:

Carrington Investor Advantage:

  • Base price improved by 100bps across the board! – see the matrix
  • Increased max price from 101 to 102.25
  • FICO x LTV LLPA improvements across the broad
  • Prepay Buy out – reduced from 1.5 to1.25
  • Reduced DSCR bands to help simplify your pricing scenarios

SUBMIT YOUR SCENARIO

VIEW THE GUIDELINES

VIEW TODAY’S RATES

Update to VA IRRRL Guidelines

Overview

Effective Tuesday, June 25, 2019, all VA IRRRL’s submitted to Carrington Mortgage Services, LLC (CMS) must have a 36 month or less recoupment of fees.  This applies to all VA IRRRL’s regardless of any other benefits to the borrower.  Specifically, loans with term reductions and payments going up are now ineligible for an IRRRL.  As VA provides more clarity around this subject we will update our guidelines accordingly.

  36 Month Recoup Rate Reduction
ARM to Fixed Yes At least .50%
Term Reduction Yes At least .125%
Fixed to Fixed Yes At least .50%
No Term Reduction Yes At least .50%

Please contact your Account Executive with questions.

June Scotsman Guide Cover

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!

 

Memorial Day Holiday Lock Desk Hours

Overview

The Lock Desk will be closed on Monday, May 27, 2019 for Memorial Day, which is a Federal Holiday. Normal lock hours will resume on Tuesday, May 28, 2019.

Additionally, the Lock Desk will close early on Friday, May 24, 2019 at 10:00 A.M. PST due to the early close of the financial markets.

Locks that expire on the holiday will automatically roll to the next business day. In addition there are some important disclosure considerations associated with the holiday:

  • Monday, May 27, 2019 cannot be included in the rescission period for refinance transactions.
  • Monday, May 27, 2019 cannot be included in the seven (7) business day waiting period between the date the initial Loan Estimate (LE) was provided to the borrower and the consummation of the loan
  • When re-disclosure of the LE is required, Monday, May 27, 2019 cannot be included in the four (4) business day waiting period between the date the revised LE was provided to the borrower and the consummation of the loan.
  • When re-disclosure of the CD is required, Monday, May 27, 2019 cannot be included in the three (3) business day waiting period between the date the revised CD was provided to the borrower and the consummation of the loan.

Issues related to locks should be sent via email to lockdesk@carringtonms.com.

Good News for the Housing Market

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:

  1. Slowing home price gains
  2. Rising wages
  3. Uptick in homes for sale
  4. Strong job market
  5. High Consumer Confidence
  6. 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.

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