Vaultedge Newsletter - Gearing up for MBA Annual in Nashville!

October 18, 2022

As mortgage rates rose more than 90 basis points to finish September at 6.72%, overall rate lock volumes predictably fell sharply – down 10% from August and almost 60% off levels from 2021. Falling rate lock dollar volume was driven by a 26.2% drop in cash-out refinance locks in September from the previous month, which is now down 78% from the same period in 2021, according to Black Knight’s originations market monitor report. Rate/term locks, which had been falling precipitously in recent months, marginally declined 0.1% from August but were down 93.3% from September 2021.

_____________________________________________

A foreclosure process often starts when a borrower has received a default notice after missing four monthly mortgage payments in a row, although most lenders will reportedly send a notice of default when they are 90 days – or three months - past due. Lenders started the foreclosure process on a total of 67,249 properties across the US in Q3 - up by a staggering 167% from a year ago, according to a new report by real estate data firm, ATTOM. The surge was close to pre-pandemic levels and 1% up from the previous quarter.

______________________________________________

Mortgage rates jumped to the highest levels in more than sixteen years last week, data from an industry group indicated Wednesday, as borrowing costs edged towards the 7% mark amid the Federal Reserve's ongoing effort to cool what it called a 'red hot' U.S. housing market.

The Mortgage Bankers Association said 30-year fixed rates for conforming loan balances of less than $647,200 rose 6 basis points to 6.81% for the week ending on October 7, a move that takes that headline rate to the highest level since May of 2006.

The MBA's seasonally-adjusted Purchase Index, which tracks mortgage applications for the purchase of a single-family home, fell 2.1% as buyers backed away from new transactions amid the surge in borrowing costs, while new applications were down 2% for the week and just under 40% for the year. The MBA also said its refinancing index fell 1.8%.

______________________________________________

Switzerland-based global lender Credit Suisse Group AG had a rough start this week after its stock was beaten down by 11%, the value of its riskiest debt fell more than 10%, and the cost of purchasing derivatives insuring against the bank defaulting rose sharply. Still, the global lender’s market capitalization is at about half of what it was at the start of the year and its earnings for the first half of the year are in the red. Adding to the global lender’s woes this week was investor speculation on social media questioning the bank’s stability. That speculation raised the specter among some market watchers that if Credit Suisse did fail, it might trigger a global contagion similar to the Lehman Brothers’ crash that helped to spark the Great Recession a decade and a half ago. That concern is overblown, according to several market experts.

Homepoint, the nation’s third-largest wholesale lender, has reduced its lending capacity by $925 million. The reduction was announced by Home Point Financial Corp., which does business as Homepoint, In three separate filings with the Securities & Exchange Commission in September and October, Home Point Financial Corp. Two of the filings announced the termination of master repurchase agreements and securities contracts, one with Credit Suisse First Boston Mortgage Capital LLC and the other with Morgan Stanley Bank N.A.

While the ongoing wholesale price war continues, several lenders — including AmeriSave and loanDepot — have exited the channel. But not everyone is leaving. Some see opportunity, and Michael Turturro of Jet Mortgage is among them. He plans to go about it differently, though, than slashing margins. Turturro said his management team has been together for 10 years and is focused on sales and service, and in the current market, that will suffer most as the margins continue to shrink.

______________________________________________

The MBA Annual 2022 at Nashville is near and Vaultedge Software has been gearing up to put its best foot forward. We’re excited to share our expertise in enabling mortgage companies to harness the power of AI, and automation to reduce loan production & income analysis costs.

After all, it’s one of the biggest events in our mortgage industry studded with great thinkers, game-changers, radicalists (I mean in a good way), and innovators of this industry. The list is endless. I am extremely delighted to be a part of this and we have a booth too. So, if you are interested in learning how automation changes the loan processing dynamic one document at a time, let’s talk.

See you soon!

As mortgage rates rose more than 90 bps in September, overall rate lock volumes fell sharply – down almost 60% off levels from 2021.

Mortgage rates jumped to the highest levels in more than sixteen years last week, data from an industry group indicated Wednesday, as borrowing costs edged towards the 7% mark amid the Federal Reserve's ongoing effort to cool what it called a 'red hot' U.S. housing market.

167% increase from a year ago, but borrowers selling homes to avoid foreclosure auctions

A trio of federal agencies on Thursday announced that the 2023 threshold for exempting loans from special appraisal requirements for higher-priced mortgage loans will jump to $31,000 from $28,500.

Things have been worse in the non-agency MBS market for sure, but the third quarter saw one of the sharpest production downturns in years, according to a new analysis from Inside MBS & ABS. The market generated $21.19 billion of new non-agency MBS during 3Q22, a severe 36.4% drop from the prior period.

Credit Suisse Group AG had a rough start this week after its stock was beaten down by 11%, the value of its riskiest debt fell more than 10% and the cost of purchasing derivatives insuring against the bank defaulting rose sharply.

The capital available in the wholesale lending channel continues to shrink. Homepoint, the nation’s third-largest wholesale lender, has reduced its lending capacity by $925 million. The reduction were announced by Home Point Financial Corp., which does business as Homepoint, In three separate filings with the Securities & Exchange Commission in September and October, Home Point Financial Corp.

While the ongoing wholesale price war continues, several lenders — including AmeriSave and loanDepot — have exited the channel. But not everyone is getting out. Some see opportunity, and Michael Turturro of Jet Mortgage is among them. He plans to go about it in a different way, though, than slashing margins.

Fannie Mae's ESR group releases latest GDP and home price growth forecasts. The impact of the higher mortgage rate environment will be felt in both the single-family and multifamily sectors. The ESR Group lowered its total single-family home sales forecast in 2022 and 2023 to 5.64 million and 4.47 million, respectively. The downward revision will represent annual declines of 18.1% and 20.8%.