Company News

Last Week in Review: Recovering From the Coronavirus

This past week was a bit rough for the Bond market as home loan rates steadily ticked higher and off the best levels in three years.
The coronavirus has been a tailwind to the Bond market and home loan rates for the past few weeks, but this week the story seems to be less negative and less uncertain. As better news started to emerge in the coronavirus headlines, financial markets started paying attention back to the economic outlook or "future" of our economy.
The news has been solid across the board with better than expected readings in manufacturing, services, and jobs.
The end of the impeachment process also removed uncertainty and helped Stocks focus on the good economic news at the expense of Bonds and home loan rates.
Bottom line: while rates ticked up week over week, they remain within a whisker of the best levels in three years. If the coronavirus outbreak story becomes more positive, home loan rates could inch higher still, meaning now is a great time to refinance or purchase a home.

Overview

In the state of North Carolina, borrowers may be charged bona fide discount points for the purpose of reducing their interest rate. For Owner Occupied Loans with a balance of $300,000 or less, up to 2.25% (Agency products) or 0.25% (Non-agency products) may be charged as Discount Points under the North Carolina Max Fee Rule if the bona fide assessment is met.

Determining Maximum Discount Points

North Carolina does not use the Average Prime Offer Rate (APOR) like the QM Test does. They use the Fannie Mae Average Rate.
The Fannie Mae Average Rate can be accessed on the following website:
https://www.fanniemae.com/singlefamily/historical-daily-required-net-yields

In this example the Fannie Mae Rate is used for bona fide discount point assessment.
3.34 + 1 = 4.34
If the Starting Adjusted Rate does not exceed 4.34, you can exclude 2.00 points, and have a maximum of 2.25% in Discount Points charged.
3.34 + 2 = 5.34
If the Starting Adjusted Rate does not exceed 5.34, you can exclude 1.00 point, and have a maximum of 1.25% in Discount Points charged.
If the Starting Adjusted Rate is greater than the comparable rate +2.00, no points are eligible for exclusion, and the maximum Discount Points are 0.25%.
Starting Adjusted Rate is the Rate closest to PAR.

Compliance Fails

Locks with non-bona fide Discount Points will encounter Compliance Fails in BrokerIQ, and the interest rate will need to be raised in order to reduce the Discount Points to proceed. If a higher rate with lower Discount Points is not available, Brokers should contact their Account Executive to review.

Last Week in Review: Home Loan Rates Decline Again
The coronavirus outbreak in China continued to grip the financial markets this week. The total affected and number of deaths rose sharply throughout the week suggesting the virus is not yet contained.
Stocks hate uncertainty and Bonds love uncertainty. As a result, Bonds traded higher to their best levels since October, pushing home loan rates lower to the best levels in three years.
It wasn't all bad news this week though as economic readings here in the U.S. continue to show that our economy remains strong.
We also had a Fed meeting where the Fed left rates unchanged and did say the U.S. economy remains in a good place. Fed Chairman Powell also said the impact of the coronavirus on the global economy remains uncertain.
Over on Wall Street, corporate earnings overall have been very positive with Apple doing much better than expectations.
Bottom line: home loan rates will continue to be supported by the coronavirus uncertainty until they aren't -- meaning, the present quick decline in rates the past two weeks may prove fleeting should the coronavirus outbreak become more contained and less uncertain.

Overview

The Lock Desk at Carrington Mortgage Services, LLC (CMS) will be closed on Monday, January 20, 2020 for Martin Luther King Jr. Day, which is a Federal Holiday. Normal lock hours will resume on Tuesday, January 21, 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 January 20, 2020 cannot be included in the rescission period for refinance transactions.

• Monday January 20, 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 January 20, 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 January 20, 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.

Last Week in Review: The Good News Flow Continues

This past week, we watched home loan rates tick modestly higher and retreat from three-year lows.
Why?
There are three main reasons:

1. U.S and Iran. On Wednesday, the de-escalation of tensions between the U.S. and Iran brought an immediate sense of calm to the financial markets. As a result, Stocks traded to all-time highs at the expense of Bonds and home loan rates.
2. Jobs, jobs, jobs. Both the ADP and Jobs Report showed continued health in the labor market. The positive data is good news for the economy and good news for housing. Bonds hate good news, so rates ticked up.
3. Improvement in Europe. Germany reported surprisingly stronger economic data, suggesting their economy is on the mend. In response to the good news, German rates ticked higher this week while putting upward pressure on our rates.

Bottom line: home loan rates are within a whisker of the best in three years and near the lowest in the history of our country. Coupled with a strong consumer and housing backdrop, this makes it an incredible time to either purchase or refinance a home.

Last Week in Review: Nice Start to 2020

The new year and new decade started, and good news, some things don't change. Stocks picked up right where they left off in 2019 by touching all-time highs. And Bonds, which also performed well in 2019, continue to hover near three-year highs, keeping home loan rates near 3-year lows.
Many are wondering how the economy and markets will perform in 2020. So, for that reason, here are 3 trends to follow:

1. Don't fight the Fed. As the saying goes, there doesn't appear to be any chance of a Fed rate hike in 2020. The economy is strong, but not too strong. Plus, the Fed is fighting disinflation, so a rate hike would counter those efforts. Moreover, it's a presidential election year and the Fed has historically tried it's best to avoid any monetary policy moves in those years. Bottom line: good for Stocks and less good for Bonds.
2. Stock gains. Post-World War II, Stocks on average have gained 10.1% in presidential election years where the incumbent is up for re-election. It's tough to fight that trend, even with Stocks soaring in 2019. Bottom line: Stocks are set to finish 2020 higher.
3. $1,000,000,000,000. That was what the U.S. spent in holiday retail shopping in 2019. That massive record highlights the strength of the U.S. consumer who makes up 70% of the U.S. economy. Bottom line: there is no recession in sight, great news for housing and the overall economy.

Bottom line: absent of a Black Swan event or unforeseen negative surprise, 2020 is shaping up to be a great year for housing and the U.S. economy, with the labor market strong, wages rising, inflation muted, and interest rates low.

Last Week in Review: Global Improvement

2019 was an incredible year for Stocks, which finished the final trading week of the year at all-time highs. Generally speaking, when Stocks go higher, so do rates. And that was the case this past week as home loan rates ticked up to the highest levels in months.
So, what was the reason for higher Stocks and higher rates?
Global financial improvement! 2019 was a "tug of war" year between central banks around the globe cutting rates and adding monetary stimulus, and economies attempting to avoid recession.
We are finishing the year with economies winning and showing improved growth and confidence heading into 2020.
What does this mean for rates in the near-term?
If countries around the globe continue to improve, their rates will continue to creep higher. If rates around the globe creep higher, so will ours.
The good news is that because inflation remains extremely low, we should not expect home loan rates to move too high anytime soon.
Bottom line: the U.S. has been and continues to be the global economic leader and moves into 2020 with a Goldilocks backdrop which includes a strong labor market, rising wages, low inflation, and low rates.

Last Week in Review: Goldilocks 2.0

As we enter the final weeks of 2019, the housing and home lending sectors have enjoyed a good year thanks to a "Goldilocks" scenario of a tight labor market, rising wages, consumer confidence, and three-year low interest rates.
Many are asking "What should we expect for housing, and thus lending, as we enter 2020?" The answer: 2020 may even be better for both.
Tailwinds for Housing in 2020 include:

1. Housing starts of single-family homes are expected to hit the 1M mark for the first time in 12 years. This should help add to much-needed inventory in many parts of the country.
2. In the final Jobs Report for 2019, which was November, the unemployment rate ticked down to 3.5%, a 50+-year low, while we created a massive 266,000 new jobs. Jobs buy homes, not rates. This kind of labor market strength heading into 2020 should further boost the housing sector.
3. The Fed is not likely going to cut or hike rates in 2020, unless new economic threats emerge – meaning short-term interest rates are not likely to move much, if at all.
4. Inflation remains low. Inflation is the main driver of long-term rates like mortgage rates. In the absence of any unforeseen pickup in inflation, home loan rates should remain relatively close to current levels for the foreseeable future.

Bottom line: 2019 was a good year and the data suggests the good times should continue well into the spring of 2020 making it a historic opportunity to have both a strong economy and low rates.

Last Week in Review: Changes That Could Affect Rates

There are rumors that our Fed is considering an idea to abandon its present 2% target rate for inflation in favor of a floating target where inflation would be allowed to rise above 2% for some time before considering hiking rates.
This comes with two consequences that mortgage lenders, Realtors, and would-be borrowers need to understand:

1. If the Fed allows inflation to rise north of 2% before considering hiking rates, we are not likely to see a Fed rate hike anytime soon. This is because inflation is currently running at 1.6% and well beneath the Fed's current target.
2. If the Fed is successful in allowing inflation to rise, home loan rates will rise as well. Inflation is the main driver of long-term interest rates.

When the Fed says they want inflation to reach its 2% target, they are talking about the Core Personal Consumption Expenditure (PCE) year-over-year figure.
The Core PCE Index is typically delivered the third week of every month, and will be even more important to track should the Fed make changes to its current policy and decide to allow inflation to rise above its longstanding 2% target.
Bottom line: inflation currently remains tepid and is the major reason why long-term rates, like home loans, remain near three-year lows. If inflation rises, home loan rates will rise. The opposite is also true.

Overview

Carrington Mortgage Services, LLC (CMS) is pleased to announce effective Thursday, December 5, 2019, CMS will introduce the new Carrington Prime Advantage program with Fixed, ARM and Interest-only ARM options. Carrington Prime Advantage allows alternative income documentation along with competitive pricing and loan amounts up to $2,500,000 and is designed for higher-credit-quality, non-agency borrowers who fall between the Carrington Flexible Advantage Plus (CFA+) program and conventional or jumbo loans.
Prime Advantage has the following features:

• Improved Pricing: Pricing is 125-150 basis points more favorable than CFA+
• Higher LTVs: 75% - 90% LTV available depending upon loan amounts (see matrix for details)
• Maximum Cash-out: $1,000,000
• Debt Ratio: Standard 43% and expanded up to 50% (see guidelines for details)
• Occupancy: Primary residence and second homes
• Amortization Types: Fixed, ARM and Interest-only ARM options
• Loan Purpose: Purchase, Rate/Term Refinances and Cash-Out Refinances
• Terms Available: 30 Year Fixed, 5/1 ARM, 7/1 ARM, 10/1 ARM, 5/1 ARM-IO, 7/1 ARM-IO, and 10/1 ARM-IO
• Doc Types: Full Doc, 1-Year Alt Doc, 12 or 24 Month Bank Statements (Business or Personal) and Asset Depletion
• Rural Properties Eligible: 80% Max LTV

Not available in all states. Refer to the Carrington Prime Advantage Program underwriting matrix and guidelines for additional information.