Company News

Non-QM Update

Carrington Mortgage Services remains committed to the Non-QM market as one of the key leaders in the industry. Unfortunately, we have to temporarily discontinue offering Non-QM loans due to current secondary market conditions. We’re happy to say that any approved loans that are locked will be honored through the remaining locked term. Unfortunately, we will not be accepting any new Non-QM submissions for our Carrington Flexible Advantage, Flexible Advantage Plus, Investor Advantage, and Prime Advantage products.
Non-QM Loans that have been submitted or approved without rate lock cannot proceed under this program. For locked loans, we are not offering lock extensions at this time.
As the market stabilizes, Carrington will be at the forefront and will re-introduce our Non-QM product line.
We sincerely apologize for the temporary inconvenience this may cause and look forward to serving your Non-QM borrowers in the near future.

On the Brighter Side

Carrington continues to offer its full suite of government loans including FHA, VA & USDA loans full doc and streamlines. And don’t forget about our conventional Fannie/Freddie loan products.

• FICOs down to 500
• Manual underwriting (for those out of the box borrowers)
• Expanded DTI on FHA loans available
• So much more...

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Last Week in Review: Home Loan Rates Rising

This past week, home loan rates ticked up again despite the Fed recently cutting rates by a full point and the 10-year Note remaining just above 1%.
Why?
Mortgage backed securities (MBS) are Bonds that price home loan rates. This week, the spread or difference in yield between the 10-year Note and MBS spiked to the highest level in decades. This means that despite the record low yield in Treasuries, home loan rates continue to rise.
This has to do with MBS investors having less of an appetite for MBS, given the uncertainty of the current economic environment. The only way you can attract investors to buy MBS is by increasing the interest rate or yield to the investor. We are seeing this today.
Also, there is a reality that $1T in Bonds will be coming to the Bond market in the near future to pay for the economic stimulus package in order to help the economy during and after this coronavirus crisis. That huge amount of new Bond supply dilutes the Bond market and pressures prices lower and rates higher.
We may not see a more natural interest rate spread between Treasuries and MBS until we get past the worst of the coronavirus and its economic impact. Until then, expect more price and rate volatility.
Bottom line: home loan rates remain very close to the best levels ever, and with the Fed buying MBS for the foreseeable future, we are not expecting home loan rates to go too high any time soon.

Overview

Due to current market conditions, effective March 20, 2020 and until further notice, Carrington Mortgage Services, LLC (CMS) will temporarily no longer permit a lock until the loan is Approved and the appraisal (where applicable) has been received by CMS.  Please see revised lock policy below.

Lock Extensions:

• Maximum of up to two extensions
• Maximum extension period of 15 days in the aggregate
• Current extension fee charges remain in place (see rate sheet)

Contacts

Please contact your Account Executive or Account Manager with any questions.
Carrington thanks you for your business.

Last Week in Review: Rate Movements Explained

This past week was a head-scratcher as home loan ticked up slightly week over week despite the 10-year Note yield hitting a historic low of 0.31% and Stocks enduring heavy losses. Typically, when Stocks drop, so do rates -- especially after historic Stock losses like those this past week.
So, what happened?
Home loan rates are determined on the pricing of mortgage backed securities. Due to all of the recent refinance activity as a result of the low rates, the Bond market was flooded with an enormous supply of Mortgage Bonds.
When additional supply comes into any market, prices can move lower, and that is what we saw last Monday as mortgage backed securities touched a six-year price high and started to reverse lower.
Once Mortgage Bonds started to drop in price, thereby increasing rates, something very interesting happened. The sell-off in Mortgage Bonds really gained steam causing a further bump up in rates.
Why did mortgage backed securities drop so fast?
Mortgage backed securities carry prepayment or refinance risk, which limits how fast rates drop when they are dropping. The opposite is also true. This means when rates start to rise, the prepayment or refinance risk goes away causing a sharp move lower in prices and higher in rate.
Bottom line: home loan rates remain within a whisker of the best levels seen earlier in the week. And there is an old saying, "the cure for higher rates, is higher rates," meaning at some point as prices drop and interest rates tick up, investors will buy Mortgage Bonds and stabilize interest rates.

Overview

Due to current market conditions, effective March 13, 2020 and until further notice, Carrington Mortgage Services, LLC (CMS) will temporarily suspend offering 30-day locks. CMS will still offer 15-day, 45-day, and 60-day lock terms in accordance with the revised guidelines for available lock terms outlined below.

Contacts

Please contact your Account Executive or Account Manager with any questions. Carrington thanks you for your business.

Last Week in Review: How Low Can Rates Go?

Home loan rates touched all-time lows this past week, fueling refinance activity and creating a sense of urgency for homebuyers to lock in purchase loans.
The question many people are asking is, "how low can rates go?"
The short answer -- no one knows. A lot will be determined by the economic impact of the coronavirus and that is impossible to handicap at the moment.
What we do know:

• The coronavirus outbreak is improving in China and the outbreak numbers here in the U.S. have not exploded, as of yet. This is good news, and should it continue, it is unlikely we will see much lower home loan rates in the near future.
• Home loan rates have not improved in lockstep with the 10-year Note yield, which has also declined, though much more sharply, to a historic low of .66%. The reason -- mortgage backed securities (MBS), where home loans are priced, carry a different risk profile than that of Treasuries. Investors in MBS are subject to refinance risk when rates go lower. To offset that risk, investors demand a premium within MBS which creates a higher price to both the lender and ultimately the homeowner.
• Mortgage lenders are so busy they can hardly keep up with the business. What is one thing you don't do when business is so busy? Lower price.

Bottom line: today represents a golden opportunity to lock in the best rates in the history of the U.S. and should be taken by those who can benefit.

Last Week in Review: The Lowest Rates EVER
Bonds love bad news, uncertainty, and fear, which is causing rates to move lower.
This past week, the escalation of the coronavirus fears caused enough anxiety to push rates down to the lowest levels in U.S. history.
Here's what we know: Mortgage Bonds, which determine loan pricing, ticked to the best levels ever on Thursday, and the 10-year Note yield hit 1.25%, the lowest EVER!
Here's what we don't know: what is next for the coronavirus or its impact on the global economy.
With that said, if the coronavirus story brightens at all and becomes less uncertain or better, we could easily see rates move up just as quickly as they moved lower. On the other hand, should the coronavirus story worsen deeply, we should expect rates to fall further.
Bottom line: with rates at the lowest level in our history and hinging on the status of the coronavirus outbreak, now may present the opportunity of a lifetime to either refinance or purchase a home.

Last Week in Review: A Great 2020 Housing Story
Here's some good news... the continued strength of the labor market, along with historically low mortgage rates, will keep positive housing momentum alive in 2020.
The Unemployment Rate is currently at a 50-year low of 3.6% with expectations for the index to push even lower to 3.25% by year's end, matching lows last seen in 1953.
Freddie Mac recently reported that 30-year fixed rate mortgages are at three-year lows while mortgage activity continues to increase.
Low rates, a solid economy, and a strong labor market have also cut mortgage delinquency rates. The Mortgage Bankers Association recently reported that the mortgage delinquency rate in Q4 2019 fell to its lowest level since the current survey series began in 1979.
In addition, the Census Bureau announced that the U.S. homeownership rate rose to 65.1% at the end of Q4 2019, the highest since the end of 2013.
The Fannie Mae Home Purchase Sentiment Index is near all-time highs reflecting that it is a good time to both buy and sell a home.
Finally, the New York Fed reports that $750B in new mortgages were originated in Q4 2019, more than any quarter since Q4 2005.
Bottom line: jobs buy houses, not low rates. But as we move into 2020, we have both a robust labor market and historically low rates -- a true Goldilocks situation -- fueling housing.

Last Week in Review: What the Market Is Saying
Home loan rates continue to hover right near three-year lows. There are many "smart" folks on Wall Street who say rates are going to push even lower at some point...and they may be right. But what if they're wrong? What if rates have bottomed for the foreseeable future?
Yes, locking a home loan right here would be wise.
Here are three reasons why rates may have bottomed -- at least for now:

1. Solid economic numbers continue to be reported. We are seeing a historically strong labor market, rising wages, high consumer and business confidence, and an overall boost in housing. Bonds hate good news and there is simply too much good news to go around at the moment.
2. Signs of improvement around the globe. One of the main tailwinds to our low rates is the relative underperformance of countries around the globe. It appears that many parts of the world are doing a bit better thanks to central bank monetary stimulus. If this trend continues, it's tough to see much better rates anytime soon.
3. The trading action in the Treasury market. This may be signaling that further rate improvement from here may be tough to achieve. In recent weeks, in the face of heightened fear and uncertainty surrounding the coronavirus (which usually lowers rates), the 10-year Note yield was unable to move beneath 1.50%, which is also close to a historically low yield seen just a few times in the last decade. If the 10-year Note can't improve in the face of very uncertain news, a near-term bottom might be in place.

So, what would push rates to historically low levels? It would likely take some very bad news like an escalation of the coronavirus outbreak or possibly something worse.
Bottom line: the U.S. economy is performing very well. Rates are near historic lows and the markets are telling us this may be about as good as things get -- for now. So, if you, your family, friends, or clients are considering a home loan, now is a terrific time to lock in at incredible rates.

Overview

The Lock Desk at Carrington Mortgage Services, LLC (CMS) will be closed on Monday, February 17, 2020 for Presidents Day, which is a Federal Holiday. Normal lock hours will resume on Tuesday, February 18, 2020.
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 February 17, 2020 cannot be included in the rescission period for refinance transactions.
• Monday February 17, 2020 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 February 17, 2020 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 February 17, 2020 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 lockdesk@carringtonms.com