• Frank E. Nothaft and Leonard Kiefer, Freddie Mac's chief and deputy chief economists have come up with a formulafor lifting the economy from its continuing low-growth status to a trajectory of robust sustainable growth.  And that's what they are calling it, L.I.F.T.  The acronym stands for Labor, Income, Fixed Investment, and Trust and in the current edition of the company's U.S. Economic and Housing Market Outlook they lay out the parameters for each.

    Labor

    The labor market must fully recover, providing solid employment gains, less long term unemployment, and broad-based income growth.  Unless the labor market recovery accelerates, any improvement in the housing market will also lag.  Last month the unemployment rate finallyfell below 6 percent for the first time since the recovery began but that number does not tell the full story.

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  • Falling interest rate precipitated a major refinancing rally during the week ended October 17 even though Columbus Day shortened the business weeks in some locations.  The Mortgage Bankers Association's (MBA's) Refinance Index jumped 23 percent compared to the previous week, the largest increase for the index this year, far surpassing an 11 percent gain in January and taking the index to its highest level since November 2013.  Applications for refinancing made up a 65 percent share of all applications compared to 59 percent the previous week and the average size of a loan for refinancing rose to $306,000 the highest level since MBA started its survey in 1990.

     

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  • Financial regulators on Tuesday finally released the final rule defining Qualified Residential Mortgages (QRM).  The definition is intended to determine which loans are exemptfrom the risk retention requirements of the Dodd Frank Wall Street Reform and Consumer Protection Act. 

    As expected, the final QRM is aligned with the definition of Qualified Mortgages (QM) which defines how lenders determine if a borrower has the ability to repay the loan and sets out a safe harbor for lenders as they make that determination and underwrite the loan.

    The regulatory agencies issuing the regulation (Treasury, Housing and Urban Development, the FDIC, Securities and Exchange Commission, Federal Housing Finance Agency, and the Federal Reserve) observed in the preamble to the proposals presenting the rule the securitization markets are an important part of the provision of credit to the nation's households and businesses.  "When properly structured, securitization provides economic benefits that can lower the cost of credit."

     

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  • Existing home sales, which ended four straight months of gains with a 1.8 percent decline in August, bounced back in September the National Association of Realtors® (NAR) said today. Sales increased 2.4 percent to a seasonally adjusted annual rate of 5.17 million homes, the highest pace of the year, from the August rate of 5.05 million.

    Despite the recovery, sales in September are still 1.7 percent lower than in September 2013.  Existing homes were selling then at a rate of 5.26 million.  

    Sales of single familyhomes rose 2.0 percent to an annual rate of 4.56 million from 4.47 million in August but were 1.9 percent below the annual rate of 4.65 million units a year earlier.  Existing condo and cooperative units sold at a 5.2 percent higher rate than in August, 610,000 units compared to 580,000, but were unchanged from September 2013.

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  • David Stevens, President of the Mortgage Bankers Association (MBA), told an audience attending the association's s annual convention in Las Vegas that the rules for Qualified Residential Mortgages will be, as rumored, released on Wednesday. This rule, which was sent back to the drawing board two years ago after housing stakeholders complained it would shut down mortgage lending will, in this iteration, he said be aligned with the Qualified Mortgage Rule and will not have steep downpayment or strict debt-to-income requirements.  He credited the industry and consumer groups for advocating on the issue.  

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  • Federal Housing Finance Agency (FHFA) Director Melvin L. Watt focused his remarks to attendees at the Mortgage Bankers Association annual conference on the issue of representation and warranties.  He acknowledged that fears of being forced to repurchase large numbers of loans after they have been sold to one of the two government sponsored enterprises (GSEs) Fannie Mae and Freddie Mac has created unease among lenders almost from the start of the mortgage crisis.

    Watt said that the Representation and Warranty Framework in use by the GSE's provides them the necessary assurances they need to purchase loans in an efficient and responsible manner without checking each loan individually or attending every closing. They also provide the Enterprises remedies to address situations where a lender's obligations to meet the Enterprises' purchase guidelines have notbeen fully met.

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  • Earlier this year the Mortgage Bankers Association (MBA) began releasing its Mortgage Credit Availability Index, a measure of how "loose" or "tight" mortgage credit is when compared to the previous month or year.  In an article on CoreLogic's Insights blog, titled "Goldilocks and the Three Credit Bears," senior economist Mark Fleming describes his company's similar index.

    The Housing Credit Index (HCI) measures the range and variation of mortgage credit over time and over various underwriting criteriaincluding credit scores, debt-to-income and loan-to-value ratios and loan attributes such as whether the loan is a fixed or adjustable rate, the amount of documentation, and the loan origination channel.  CoreLogic then uses what Fleming calls "mathematical techniques popularized in the economic inflation forecasting literature to handle multiple correlated attributes."

     

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  • One has to hope that foreclosure data reported on Thursday by RealtyTrac is a sign that states are wrapping up the foreclosure crisis that has been ongoing since 2008, notthat it signals further trouble in the housing sector.  The company's U.S. Foreclosure Market Report for both September and the third quarter of 2014 indicate that both defaults and scheduled auctions increased in the third quarter driving overall foreclosure activity to its first quarterly increase in three years. 

    The increase was small; overall foreclosure filings including default notices, scheduled auctions, and completed foreclosures or bank repossessions increased 0.42 percent form the second quarter to a total of 317,171 and were down 16 percent from the same quarter in 2013.  However the increases were at the front end of the foreclosure process.  Default notices increased 2 percent from the second quarter and scheduled foreclosure auctions were up 7 percent.  These were partially offset by a 12 percent drop in completed foreclosures.

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  • Over the last year or so mortgage servicers have transferred a number of large mortgage portfolios to other servicers.  Beyond the selling of mortgage servicing rights (MSR), many of the transfers have been from large traditional servicers to "specialty servicers" most of whom are supposedly better equipped for handling delinquent mortgages.  These increased transfers were prompted in part by servicing rules promulgated by the Consumer Financial Protection Agency (CFPB) which went into effect in January 2014.

    The high volumeof these transfers has led to concern and increased scrutiny on the part of regulators regarding potential risks to consumers.  This regulatory attention and lack of clarity attending it was problematic for servicers, many of which are non-depository institutions which have used bulk MSR transfers and corporat

     

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  • The Department of Housing and Urban Development has released the first wave of data from the 2013 American Housing Survey (AHS).  It is a massive treasure trove of virtually everything virtually anyone might want to know about the nation's housing.

    The Survey is conducted biennially and, as in past years, provides current national-level information on a wide range of housing subjects.  A verywide range.

    Survey participants were asked questions about their homes and the ways they live in it, ranging from the units size along various parameters, to the type of plumbing, heating, and other systems employed; amenities, the occupant's opinion of the home's condition, from what type of housing the occupant migrated, if the size of the household had grown or shrunk, and characteristics that indicate the state of emergency preparedness of the occupants.

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  • Increases in construction permits, starts, and completions for multifamily housing stand out from an otherwise lackluster batch of construction data issued on Friday by the U.S. Census Bureau and the Department of Housing and Urban Development.  Overall tallies of permits were relatively flat compared to August data.  Housing starts and completions were higher than in the previous month but both were driven by the multi-family sector. 

    Permits for construction of privately owned residences were issued in September at a seasonally adjusted annual rate of 1,018,000, 1.5 percent above the revised (from 998,000) August rate of 1,003,000 units.  The August rate was 2.5 percent higher than a year earlier.

     

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  • The share of home purchased with all-cash is continuing to drop, but even with a -3.0 percentage point change between July 2013 and July 2014 they still make up nearly a third of all sales.  CoreLogic said today that 32.9 percent of home sales during the month were all-cash, the lowest share since August 2008.  Prior to the housing crisis cash sales typically comprised about a quarter of all home sales. 

    The percentage of cash sales has fallen on an annual basis every month since January 2013 and is now down over 10 percentage points from the peak of 46.3 percent in January 2011.  On a month-over-month basis the share of cash sales was down .10 percent.

     

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  • Federal regulators may finally produce the long anticipated market standards for Qualified Residential Mortgages (QRM), perhaps even as early as next week. The new rules are designed to ensure the quality of mortgages that are pooled and packaged into securities for sale to investors on the secondary market.  Insiders expect that the final regulations will be more relaxed than those originally proposed, largely in response to demands by real estate and mortgage industry groups.

    The 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act required that lenders who made loans without government backing with the intent to sell them on the secondary market be required to "keep skin in the game."  That is to retain a portion of each loan's risk as an incentive to more closely monitor the quality of the loans they planned to securitize. 

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  • The National Association of Home Builders (NAHB) said on Thursday that sentiment among its new home builder members reversed course in October, with few of those responding to its monthly survey viewing the current market for new homes as a good one.  The NAHB/Wells Fargo Housing Market Index (HMI) declined four points from September, falling to a score of 54.  The change came after four straight months of improvement during which the HMI passed the milestone 50 level for the first time since January.

    "While there was a dip this month, builders are still positive about the housing market," David Crowe, NAHB Chief Economist said.  "After the HMI posted a nine-year high in September, it's not surprising to see the number drop in October.  However, historically low mortgage interest rates, steady job gains, and significant pent up demand all point to...

     

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  • The Consumer Financial Protection Bureau (CFPB) has proposed further changes to the new consolidated Loan Estimate and Closing Disclosure Mortgage forms that are scheduled to go into effect on August 15, 2015. The proposed forms were unveiled by CFPB last November as part of the TILA-RESPA Integrated Disclosure Rule combining certain disclosure forms that consumers receive in connection with applying for and closing on a mortgage loan.   CFPB has nicknamed this the "Know Before You Owe Rule."

    The Bureau called the proposed changes "technical amendments" to the rule and said it was proposing them now so there is plenty of time to consider them while implementation decisions are being made.  A statement released by CFPB said they do not think the changes will affect the industry's ability to implement the rules on time.

    The Bureau is also proposing several corrections, updates, and wording changes both to the TILA-RESPA Final rule and to the 2013 Loan Originator Final Rule for clarification purposes.  These changes, CFPA says, are non-substantive in nature.

    The Bureau will said it believes these proposed changes are...

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