Empire Home Loan Corporation

Mortgage Rates Steady At All-Time Lows Thanks To Europe And The Fed - 1 hour ago
Posted To: Mortgage Rate WatchMortgage Rates are steady to slightly improved today following as Europe's fiscal woes continue providing downward pressure on US interest rates. The forces at work keeping rates low were joined today by "minutes" from the most recent FOMC meeting. All told, several notable lenders are offering their all-time lowest interest rates while others remain close. Markets actually got off to a shaky start as far as rates were concerned. Had it not been for the European headlines and the FOMC Minutes , we'd likely be looking at slightly higher rates today. Mortgage-backed-securities (aka "MBS," the most direct influence on mortgage rates) and US Treasuries began the day in weaker territory until news that the European Central Bank had ceased it's normal interactions with several Greek banks, and the...(read more)Forward this article via email: Send a copy of this story to someone you know that may want to read it.

Concerns Grow Over Freddie/Fannie Price Dislocations - 2 hours ago
Posted To: Secondary MarketsOne of the themes discussed at the MBA’s recent conference in New York was the idea of “a merger” of the mortgage-backed securities issued by Fannie Mae and Freddie Mac. The FHFA itself now lists one of its goals to "build a single securitization platform" in the Strategic Plan for 2013-2017 this morning. MBA President David Stevens recently addressed the concept, expressing concerns about the growing price and economic disparity between Fannie Mae and Freddie Mac securities. Before continuing, it will be helpful to discuss the differences between the Fannie and Freddie securitization programs. Since it takes time for cash to be passed from servicers to the GSEs to and then to investors, both types of securities (as well as Ginnie Maes) pay investors after a “delay.” This is fairly simple in concept. All securities have a “record day” which determines who is the “holder of record” at any point in time. For agency MBS, the record day is always the 30th of the month. The actual cash (principal and interest) owed to the investor is then remitted to investors in the following month. Fannie Mae always pays bondholders on the 25th day of the month following the record date; Freddie Golds pay on the 15th day of the following month. (Freddie Mac pools originally paid on the 15th day of the second month after the record date. In the late 80s/early 90s Freddie Mac created the Gold program, which moved the payment date up a month for fixed-rate pools; note that Freddie ARMs are still issued under the “green” program and have the old payment structure and delay.) Because time has value, the shorter delay for Gold pools means that they should trade at a higher price than Fannies, assuming they are priced to the same yield and prepayment speed. At current levels, the constant-yield price of 30-year Gold 3.5s is roughly 2+ ticks higher than Fannie 3.5s. (The economic value of the delay difference is a function of a number of factors, including the pool’s coupon and yield.)Despite the shorter payment delay, however, Gold pools have almost always traded at a concession to Fannies rather than at a premium. The differential is largely due to the liquidity difference between the two agencies’ securities. According to the MBA, daily trading volumes for Fannie MBS are 20 times larger than those for Freddie Golds. The relatively impaired liquidity of Golds implies wider bid/ask spreads, making trading in the securities more expensive; it also means that prices are more apt to be impacted by heavy trading volumes and/or increases in market volatility. As a result, it is significantly more expensive for investors and issuers to trade in Golds, meaning that they need to trade at a concession to Fannies in order to compensate for their reduced liquidity and higher trading costs. The price differential between the two programs is also growing, as illustrated by the following chart showing the pricing difference between Freddie Mac Gold and Fannie Mae 3.5s over the last few years. The 60-day moving average of the concession has widened from 2-3 ticks in the fall of 2011 to its current level of 9-10 ticks; as of the close on Monday 5/14 the spread was 9/32s. Keep in mind that this shows only the actual price difference; the economic difference (i.e., including the delay difference) is roughly another 2+ ticks wider over time.There is an unfortunate circularity to the price/liquidity issue. The lower prices paid for Gold securities means that originators pricing to Gold execution are at a significant disadvantage relative to those using Fannies as their benchmarks; in order to offer comparable rates, they must factor lower profit margins into their pricing. As a result, fewer originators create Gold securities, which results in reduced float for the securities, which serves to further impair liquidity. Interestingly, Stevens’ comments included one questionable statement. He was quoted following the speech as saying “…(A)nd the taxpayer subsidizes the lender for the difference between the two. Taxpayers will be saved hundreds of millions of dollars because the execution will no longer be subsidized." In the current market, with comparable g-fees for Fannie and Freddie, the cost of the price concession and inefficient execution is borne by the originators creating Freddie Mac pools. However, without action to either combine the securities of Fannie and Freddie or somehow eliminate the price concession, the price and liquidity disparity is likely to grow worse, and issuance of Freddie pools will continue to shrink. The true cost to taxpayers will come in the future; over a longer horizon, it’s easy to imagine that the government will be forced to continue supporting an increasingly uncompetitive enterprise....(read more)Forward this article via email: Send a copy of this story to someone you know that may want to read it.

"Mega-Lenders" Lagging Smaller Ones in Processing Time - 2 hours ago
Posted To: MND NewsWireSmall and medium-sized lenders and community banks appear to be closing loans for refinancing faster than their "mega-lender" counterparts according to the Origination Insight Report for April released Wednesday by Ellie Mae. The company, which samples loan applications that are processed through its loan management software, reported that, "While the average refinance going through our platform took five days longer in April than in March, it still only took 47 days." Ellie Mae contrasted this to a report from The Wall Street Journal which recently said that the largest retail lenders are now quoting timelines as long as 60 to 90 days for refinancing. Insight , which covers approximately 20 percent of U.S. loan originations, reported that the share of refinance applications actually dropped...(read more)Forward this article via email: Send a copy of this story to someone you know that may want to read it.

Stats Point to a Decent Housing Market; Nationstar and ResCap; Europe Continues to Move Rates - 4 hours ago
Posted To: Pipeline PressObama played golf with Joe Biden last weekend. They were kicked off the course because every time Obama yelled "Fore", Biden screamed - "More Years!" But the mortgage industry is more concerned with another Biden: Joe's son Beau, who is Delaware's Attorney General. Officials wonder why banks aren't excited about residential lending, yet the industry faces Biden's comments that the states' attorneys general need to make it clear that the recent $25 billion settlement with five major banks is the beginning not the end of their enforcement actions . "This crisis, which was man made," he said, "cost the economy trillions and I can't really find anyone who has been held accountable." And apparently he and his ilk will their attention to mortgage securities: "whether or not there were false securities...(read more)Forward this article via email: Send a copy of this story to someone you know that may want to read it.