Tucson Mortgages Home Loan News 5-1-2016

By Todd Abelson NMLS #180858 on .

Weekly Review: week of April 18, 2016
Mortgage Rate Forecast with Chart
Economic Calendar – week of April 25, 2016
Federal Reserve FOMC Meeting Schedule & Current Rate Hike Probability

Weekly Review

The major stock market indexes turned in a mixed performance for the week with the Dow Industrials gaining 0.59%, the S&P 500 Index advancing 0.52%, and the NASDAQ Composite Index losing 0.65%.  Crude oil reached its highest price level for 2016 during the week to provide a lift for energy sector stocks.  First quarter corporate earnings news and higher oil prices were the greatest influences on the stock market for the week.

Bond prices retreated and yields rose again this week as an overall positive tone in global equities sparked investor enthusiasm for higher-risk assets.  Housing reports were mixed with the National Association of Home Builders’ Housing Market Index missing its forecast while Housing Starts and Building Permits fell sharply in March.  However, March Existing Home Sales rebounded nicely.

The National Association of Home Builders’ Housing Market Index, a measure of homebuilder sentiment, was reported unchanged from March with a reading of 58 for April, just missing the forecast of 59.  It was the third straight month the Index recorded a reading of 58 showing consistent, steady expansion.

The Commerce Department reported Housing Starts and Building Permits both declined more than anticipated in March.  Housing Starts dropped 8.8% to a seasonally adjusted rate of 1.089 million while Building Permits declined 7.7% at an annualized rate of 1.086 million.  The consensus forecasts had called for 1.170 million Starts and 1.200 million Permits.  However, both Starts and Permits were revised higher for February with Housing Starts revised to 1.194 million from 1,178 million while Housing Permits were revised to 1.177 million from 1.167 million.

Starts on single-family homes fell 9.2% to a rate of 764,000, the lowest since October.  However, the prior month of February saw single-family starts reach their highest level since October 2007.  The weakness seen in Housing Starts may be due to accelerated home building as an outcome of a warmer than average winter.  However, homes under construction increased to 990,000 in March from 985,000 in February.


The National Association of Realtors reported Existing Home Sales rebounded in March, boosted by strong sales in the Midwest and Northeast regions.  Existing Home Sales jumped 5.1%, to a seasonally adjusted annualized rate of 5.33 million units from a downwardly revised 5.07 million in February.  The median existing-home price for all housing types in March increased 5.7% to $222,700 from $210,700 in March 2015.  The March home price increase resulted in the 49th consecutive month of year-over-year gains.  Housing inventory for March grew 5.9% to 1.98 million existing homes for sale, 1.5% lower than the 2.01 million available for sale a year ago.  At the current sales rate, unsold inventory is at a 4.5 month supply, an increase from the 4.4 month supply in February.


Additionally, the Federal Housing Finance Agency’s (FHFA) Housing Price Index increased 0.4% for February to match the consensus forecast.  Compared to the year ago monthly period, house prices have increased 5.6%.  The prior month’s reading for January was revised lower to 0.4% from 0.5%. The FHFA reported tight inventories and strong housing demand are helping to drive home prices higher.

In the world of mortgages, the Mortgage Bankers Association (MBA) released their latest Mortgage Application Data for the week ending April 16th showing the overall seasonally adjusted Market Composite Index increased 1.3%.  The seasonally adjusted Purchase Index fell 1.0%, while the Refinance Index increased 3.0%.  Overall, the refinance portion of mortgage activity increased to 55.4% of total applications from 54.9%.  The adjustable-rate mortgage share of activity was unchanged at 5.0%.  According to the MBA, the average contract interest rate for 30-year fixed-rate mortgages with conforming loan balance increased from 3.82% to 3.83% with 0.32 points paid.

For the week, the FNMA 3.0% coupon bond lost 59.4 basis points to end at $102.03 while the 10-year Treasury yield increased 13.8 basis points to end at 1.8913%.  Stocks ended the week with the Dow Jones Industrial Average gaining 106.29 points to end at 18,003.75.  The NASDAQ Composite Index lost 31.99 points to close at 4,906.23, and the S&P 500 Index advanced 10.85 points to close at 2,091.58.

Year to date, and exclusive of any dividends, the Dow Jones Industrial Average has gained 3.21%, the NASDAQ Composite Index has lost 2.06%, and the S&P 500 Index has gained 2.28%.  This past week, the national average 30-year mortgage rate rose to 3.75% from 3.64% while the 15-year mortgage rate increased to 3.02% from 2.94%.  The 5/1 ARM mortgage rate rose to 3.00% from 2.97%.  FHA 30-year rates edged higher to 3.35% from 3.25% and Jumbo 30-year rates increased to 3.66% from 3.58%.

Mortgage Rate Forecast with Chart

For the week, the FNMA 30-year 3.0% coupon bond ($102.03, -59.4 bp) traded within a wider 72 basis point range between a weekly intraday low of $102.00 and a weekly intraday high of 102.72 before closing at $102.03 on Friday.

The bond failed to respond to a bullish buy signal at the end of the prior week and resumed its downward trend during this past week while plunging below several key support levels on Wednesday as the stock market gained strength throughout the session.  Wednesday’s trading resulted in a two-day bearish engulfing lines candlestick pattern, a moderately strong sell signal.  This sell signal was confirmed with a strong negative stochastic crossover in the slow stochastic oscillator.  Furthermore, the bond also fell below its 25-day and 50-day moving averages.  These levels now serve as nearest resistance.

The bond continued lower on Thursday and Friday with small downward gaps or “falling windows.”  The slow stochastic oscillator continues to trend lower but has not yet reached “oversold” status indicating we could still see further price weakness in the near-term, and should this happen mortgage rates could worsen slightly.  Support is now found at the 38.2% Fibonacci retracement level at $101.78 while the 50-day moving average at $102.28 remains as overhead resistance.

If the stock market regains its positive footing in the coming week on more favorable than anticipated corporate earnings news, we could see bond prices slip a little lower with yields rising and mortgage rates worsening slightly.  However, there is also the potential for disappointing earnings and economic news and a Federal Reserve monetary policy statement that could provide a lift for bond prices and an improvement in mortgage rates.

Chart:  FNMA 30-Year 3.0% Coupon Bond


Economic Calendar – for the Week of April 25, 2016

The economic calendar this week features reports on Housing, Inflation, 1st Quarter GDP, and the Federal Reserve’s latest monetary policy decision.  Other reports of interest include weekly Initial Jobless Claims, Crude Oil Inventories, and Personal Income and Spending.  Economic reports having the greatest potential impact on the financial markets are highlighted in bold.

Date Time


Event /Report /Statistic For Market Expects Prior
Apr 25 10:00 New Home Sales Mar 521,000 512,000
Apr 26 08:30 Durable Goods Orders Mar 1.7% -2.8%
Apr 26 08:30 Durable Goods excluding transportation Mar 0.5% -1.0%
Apr 26 09:00 Case-Shiller 20-city Index Feb 5.6% 5.7%
Apr 26 10:00 Consumer Confidence Index Apr NA 96.2
Apr 27 07:00 MBA Mortgage Index 04/23 NA NA
Apr 27 10:00 Pending Home Sales Mar 0.3% 3.5%
Apr 27 10:30 Crude Oil Inventories 04/23 NA 2.08M
Apr 27 14:00 FOMC Interest Rate Decision Apr 0.5% 0.5%
Apr 28 08:30 Advance 1st Quarter GDP 1st Qtr. 0.9% 1.4%
Apr 28 08:30 Advance 1st Quarter Chain Deflator 1st Qtr. 0.6% 0.9%
Apr 28 08:30 Initial Jobless Claims 04/23 259,000 247,000
Apr 28 08:30 Continuing Jobless Claims 04/16 NA 2,137,000
Apr 29 08:30 Employment Cost Index 1st Qtr. 0.3% 0.2%
Apr 29 08:30 PCE Prices Mar 0.2% 0.1%
Apr 29 08:30 Personal Income Mar 0.1% 0.1%
Apr 29 08:30 Personal Spending Mar 0.6% 0.6%
Apr 29 09:45 Chicago PMI Apr 53.3 53.6
Apr 29 10:00 Final Univ. of Michigan Consumer Sentiment Apr 90.0 89.7




Upcoming Federal Reserve FOMC Meeting Schedule & Rate Hike Probability **

April 2016 26-27, (Tuesday-Wednesday) 2% Chance
June 2016 14-15, (Tuesday-Wednesday)* 21% Chance
July 2016 26-27, (Tuesday-Wednesday) 36% Chance
September 2016 20-21, (Tuesday-Wednesday) * 47% Chance
November 2016 1-2, (Tuesday-Wednesday) 52% Chance
December 2016 20-21 (Tuesday-Wednesday)* 66% Chance
February 2017 01/31-02/01 (Tuesday-Wednesday)* 68% Chance

* Meeting associated with a Summary of Economic Projections and a press conference by the Chairman.

** Probability generated from the CME Group FedWatch tool based on the 30-day Fed Funds futures prices.


How to use TRID to help you buy a home

By Todd Abelson NMLS #180858 on .



How to use TRID to help you buy a home

Now what?

First, what IS TRID? It stands for Truth-in-Lending RESPA Integrated Disclosure

What does is do? It provides two key features:

1) a newly designed, easy to understand pair of multi-page disclosures … called the “Loan Estimate” and the “Closing Disclosure” which replace the traditional HUD-1 (settlement statement), Good Faith Estimate, and Truth-in-Lending Disclosures.

2) provides the consumer with guaranteed time-frames in which to shop service providers AND have their fees guaranteed (within certain tolerances).

How does it work? Using the maximum time allowed, once a Buyer is under contract they have 10-days to shop for their Lender by formally applying for a loan. Each Lender then has up to 3-days to send a “Loan Estimate” thereby totaling 13-days which could be CONSUMED by shopping. At the conclusion of the loan process the Lender must submit a “Closing Disclosure” to the Buyers with final figures at least 3-days prior to when a Buyer can sign loan documents. Assuming no additional delays, this process CAN add up to a total of 16-days NOT INCLUDING SUNDAYS!!!

The question which has been posed to me by Buyer/Consumer & Realtor alike is “HOW THE HECK DO WE CLOSE A PURCHASE IN THE TRADITIONAL 30-DAY TIME-FRAME?” The answer below is EASY!

1. PLAN TO SHOP FOR LENDERS BEFORE SHOPPING FOR YOUR HOME. Select your finalists (if you end up with more than 1)

2. ELECT TO VOLUNTARILY PROVIDE YOUR SELECTED LENDERS WITH ALL FINANCIAL DOCUMENTS UP-FRONT. While Federal law prevents a Lender from REQUIRING documentation prior to issuing the up-front “Loan Estimate”, doing so will not only strengthen your Offer but will make the loan process proceed faster.

3. ACKNOWLEDGE RECEIPT OF ALL DISCLOSURES IMMEDIATELY. Remember that all of the “clocks” in TRID begin once the Borrower acknowledges receipt.

4. PICK A SOLID RECORDING DATE AND STICK WITH IT. With the new requirement for a 3-day waiting period prior-to-signing final loan documents after receipt of the “Closing Disclosure” has been acknowledged, any last minute changes moving up the recordation date could be problematic.

5. MAKE SURE YOUR LENDER HAS ALL ADDENDUM’S CONTAINING PRICE CHANGES AND/OR SELLER CONCESSIONS. Doing so will expedite issuing the final “Closing Disclosure” and eliminate the need for subsequent versions (which will reset the 3-day clock).

Remember – solid teamwork with your Knowledgeable Mortgage Professional will result is smooth closings and happy people. WE PROMISE!!

If you’re a Consumer check out the Consumer Financial Protection Bureau’s ‘know before your owe’ website for more info.

If you’re a Real Estate Professional check the Consumer Financial Protection Bureau’s Recommendations for more info.

New Loan Disclosures and Settlement Statement

By Todd Abelson NMLS #180858 on .

CFPB-LogoAs part of its continuing overhaul of residential mortgage rules, the Consumer Financial Protection Bureau (CFPB) is replacing the long standing HUD-1 Settlement Statement with a new Closing Disclosure. The new version, which goes into effect on August 1, 2015, is designed to provide disclosures to help consumers better understand all of the costs associated with their transaction. A sample of this document, to be provided to consumers three business days before they close on their mortgage loan, is particularly helpful in understanding what the Closing Disclosure will look like upon completion.

Additionally on August 1, 2015, the current Good Faith Estimate and Truth in Lending Disclosures will be replaced by a new Loan Estimate. This form, which will be provided to consumers within three days after they submit a mortgage loan application, is designed to provide disclosures that will help borrowers understand the key features, costs and risks of the mortgage loan for which they are applying. Click to see a sample of the PURCHASE version or the REFINANCE version. Click to see a COMPARISON of the existing forms vs. the forms that will take effect on August 1, 2015.

One of the more helpful & concise guides which is easy to understand is titled Final Rule on Simplified and Improved Mortgage Disclosures, can be found HERE. This 7-page guide, issued on November 20, 2013, provides a broad overview of the upcoming changes. A more detailed guide is the bureau’s TILA-RESPA Integrated Disclosure Rule Small Entity Compliance Guide found HERE (although more recent, it’s 91 pages long and addresses detailed and complex topics! Not for the faint-of-heart).

Call Todd Abelson at Sunstreet Mortgage, LLC (520) 331-LEND (5363) for all your mortgage needs!