Last Week in Review: Canary in the coalmine.
The financial markets are sensing a government shutdown and protracted trade war with China will be averted. This is good news and a reason why Stocks have continued to push higher and home loan rates have capped for the past few weeks.
But last Thursday, Retail Sales was reported at a shocking 9-year low. Combing through the report, a 3.9% decline in internet purchases was a huge negative surprise. With consumer spending making up nearly 70% of GDP, there is fear in the markets that this very poor Retail Sales number is an early warning sign that both consumer spending and thus economic growth are indeed slowing.
One thing we know for sure — Bonds love uncertainty and bad news. This Retail Sales report brought both and, as a result, pushed prices and home loan rates near the best levels in a year.
We will be watching future Retail Sales reports to see if this is just one bad report or the start of a negative trend.
In any case, reports like these support the Fed to not raise rates in 2019.
As a reminder, effective for loan applications taken on or after February 15th, 2019 Lenders must provide a Comparison Disclosure within three (3) days of loan application for all VA Full Doc refinance loan transactions (even if the existing loan is NOT a VA loan).
Carrington Mortgage Services, LLC (CMS) has developed a new VA Guaranteed Home Loan Cash-Out Refinance Comparison Certification form to use to meet these requirements. The disclosure shows the refinancing loan passes NTB and provides a comparison of key loan characteristics for the existing and refinancing loan.
To comply with the three (3) day disclosure requirement:
Broker Disclosed loans: Brokers are required to meet the requirements and provide disclosure dated within three (3) days of application. CMS will ensure compliance at Submission Acceptance or reject the loan submission.
CMS Disclosed loans: CMS will complete NTB form. If any required data elements are missing, CMS will condition the broker and cannot accept the submission until the missing items are received.
The new form is available on BrokerIQ at Broker Center > Documents & Forms > VA Guaranteed Home Loan Cash-Out Refinance Comparison Certification
The Carrington Mortgage Services, LLC (CMS) Lock Desk will be closed on Monday, February 18, 2019 for Presidents Day, which is a Federal Holiday. Normal lock hours will resume on Tuesday, February 19, 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:
- Monday, February 18, 2019 cannot be included in the rescission period for refinance transactions.
- Monday February 18, 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, February 18, 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, February 18, 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 firstname.lastname@example.org.
Effective February 7, 2019, Carrington Mortgage Services, LLC (CMS) is pleased to announce the following guideline improvements for the Carrington Advantage products:
- Higher LTV’s for CFA Investment cash-out loans
- More lenient Non-Sufficient Funds (NSF) requirements on bank statement programs
Improved LTV’s for Investment Cash-out (CFA program only)
Improved the Investment Overlay LTV Reduction for Cash-Out refinance transactions by decreasing the LTV adjustment to 5% from 10%. This increases the maximum LTV by 5% for all investment cash-out loans using the Carrington Flexible Advantage program.
Improved Non-Sufficient Funds (NSF) Guidance – Bank Statement Programs
Current NSF guideline:
Up to 3 NSF checks in the most recent 12-month period are allowed with explanation from the borrower.
New NSF guideline:
NSF (non-sufficient funds) is a term used to indicate that a demand for payment can’t be honored due to insufficient funds available in the account. Overdraft protection transfers are not considered an NSF. Excessive NSFs will be highly scrutinized and may cause the loan to be deemed ineligible.
More than 3 NSF checks or overdrafts within the most recent 12 months require explanation, supporting documentation, and underwriter analysis for acceptability. Note: Overdraft Protection Transfers from a linked bank account or line of credit are not considered an NSF. Refer to the CMS Carrington Flexible Advantage Program Underwriting Guidelines available on carringtoncorrespondent.com for additional details.
Special February Promotion
We have a sweetheart of a deal for you!
Carrington Mortgage Services, Wholesale Lending Division is offering to waive the underwriting fee on ALL Non-QM* submissions in the month of February. Whether you submit 1 or 100 loans, the underwriting fee ($650 in most states) will be waived.
In by 10 and out by 5**
For any full submission*** received in underwriting by 10 a.m., we will commit to have a same day turnaround and have a response to you by 5 p.m. How’s that for fast?
February is a short month, but with lower costs and faster service, the Carrington Team is committed to making February very successful for all.
Already an approved broker?
*Carrington Flexible Advantage (Non-QM) product requirements vary depending on the consumer’s credit grade, LTV, DTI, and FICO scores and may require reserves from 3 to 6 months. Ask your Account Executive for additional details and requirements. Not available in MA and ND. No cash out in TX.
**Submissions to our Westfield office should be completed by 10am Eastern Time; submissions to our Anaheim office should be completed by 10am Pacific Time.
***Please see the Carrington Advantage Products Loan Submission Form.
Last Week in Review: Why home loan rates will stay low
The Fed met this past week. As expected, they didn’t hike rates and the Fed Statement was very dovish, suggesting that rate hikes will be off the table for most, if not all, of 2019.
The Fed looked to muted inflation and slowing economies abroad as reasons to show patience in hiking rates further.
In response, home loan rates revisited the best levels of 2019 this past week.
This new position by the Fed is a complete departure from where they were just a few months ago, when Fed Chair Powell was forecasting 3 rate hikes this year.
People owning Stocks are feeling wealthier as shares hit a multi-month high this week after rallying 14% since Christmas. This is good for housing.
Job creations and wage growth are also fundamental to a healthy housing market and last week’s terrific Jobs Report showed steady growth in both.
More good news — the Mortgage Bankers Association just released a forecast suggesting that 30-year mortgage rates will remain below 5.00% through 2020!!!
Last Week in Review: Rates touch 2019 highs this week
Despite bond friendly news with the unresolved US/China trade relations and the ongoing government shutdown, rates actually touched 2019 highs midweek…this as stocks continue to move higher.
Home loan rates have been on the rise ever since the last Jobs Report and Fed Speech back on Friday Jan 4th — next week we are seeing another Jobs Report and Fed Meeting…more on those big events below.
The Housing market showed a surprising decline in Existing Home Sales in December. Despite the poor reading to finish the year, 2019 is setting up to be a good year. Historically low home rates, a slowing rate of home price increases along with the highest wage gains in a decade will see to that.
Last Week in Review:
Stocks continue their winning ways.
Home loan rates finished this week near unchanged and remain near 9-month lows — so we have that going for us.
Most of the week’s news was pretty bond friendly, including Brexit uncertainty, ongoing Government shutdown, ongoing US/China trade dispute, low inflation and more.
So why haven’t rates improved further with these bond-friendly tailwinds?
The first Friday of 2019 was the day things changed for the Bond Market when a blockbuster Jobs Report and overly dovish Fed Chair Powell speech were delivered, which has helped Stocks move steadily higher at the expense of Bonds.
Here’s an important word to consider as we head into the Spring home buying season and that’s disinflation, which means a slowing growth rate of inflation. We are seeing signs of this today and if the trend continues, home loan rates will benefit as 2019 progresses.
You Asked … We Answered! With Expanded Carrington Flexible AdvantageSM Guidelines so you can expand your business!
Carrington Mortgage Services, LLC (CMS) is pleased to announce the below guideline changes for the Investor Advantage, Carrington Flexible Advantage and Carrington Flexible Advantage Plus products.
- Updated the Maximum DTI from 43% to 50% on 12-month bank statements and 1-Year Alt Doc types for Carrington Flexible Advantage and Carrington Flexible Advantage Plus
- Reduced the 6 month reserve requirement to 3 months for $1M+ on Carrington Flexible Advantage
- Reduced the 12 month reserve requirement to 6 months for $1.5M+ on Carrington Flexible Advantage Plus
- Increased the maximum loan size to $3M for Carrington Flexible Advantage Plus
- Reduced the minimum Debt Coverage Ratio (DCR) to 0.75 from 1.00 for Investor Advantage
- To coincide with the guideline changes described above we’ve also enacted the following pricing changes:
- Carrington Flexible Advantage and Carrington Flexible Advantage Plus: 12-month bank statement pricing adjustment is eliminated and there is no longer a separate add-on to 24-month pricing. 24-month bank statement gets a price improvement with a 12.5% price improvement!
- Carrington Flexible Advantage Plus: Loan size maximum increase to $3M with additional pricing adjustments for the $2-$3M range.
- Investor Advantage: Debt Coverage Ratio (DCR) pricing down to 0.75 DCR down from minimum DCR of 1.00 along with new pricing tiers that are more favorable.
NOTE: Loans already locked will not be impacted by these price changes.
The Lock Desk at Carrington Mortgage Services, LLC (CMS) will be closed on Monday, January 21, 2019 for Martin Luther King Day, which is a Federal Holiday. Normal lock hours will resume on Tuesday, January 22, 2019.
Rate 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 January 21, 2019 cannot be included in the rescission period for refinances.
- Monday January 21, 2019 cannot be included in the seven (7) business day waiting period between the 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 January 21, 2019 cannot be included in the three (3) day business 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 January 21, 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 email@example.com.