Company News

Last Week in Review:
Rates were higher early in the week - but improved on the heels of a soft Consumer Inflation reading and rout in Stocks.

When following the direction of interest rates, one only has to follow the direction of inflation. If inflation is moving higher, rates are going higher. The opposite is also true.
Lately, there has been a growing fear that inflation is threatening to rise due to our tight labor market, strong economy and rising wages. It was this fear that pushed rates higher over the past month, culminating with rates hitting their highest level in over 7 years this past Tuesday.
But come Thursday - the bond market had reason to breathe a sigh of relief and rejoice when the September Consumer Price Index (CPI) was reported lower than expectations. Remember - low inflation is good for the bond market and home loan rates.
It was just last month that Fed Chairman Jerome Powell and the Fed forecasted consumer inflation to remain near current levels through 2021. If this comes to pass, long-term rates like home loan rates can't rise too much.
Also helping rates improve from the worst levels of the week was a 1,400+ point selloff in Stocks between Wednesday and Thursday. Generally speaking, when investors sell Stocks they park some of those investment dollars into Bonds.
Bottom line - home loan rates, while elevated since earlier this year, remain historically low...especially when you consider how well our economy is performing.

On Friday, October 12, 2018, Carrington Mortgage Services, LLC (CMS) resumed normal operations under the Disaster Policy. CMS will authorize funding in all five states (Alabama, Florida, Georgia, North Carolina, and South Carolina) that were previously placed on hold.
FEMA has declared the following counties in Florida for Individual Assistance.
Incident Period: October 7, 2018

Only those loans in these Florida counties are required to successfully pass re-inspection prior to funding.
Alabama, Georgia, North Carolina, and South Carolina have not declared any individual assistance counties at this time, so re-inspections are not required for properties in these states.
Action Required

• The only impacted loans are in the counties listed above in Florida. Any loans that already have appraisals in file will require a re-inspection.
• Any loans where appraisal inspections were dated prior to the disaster declaration date will require a re-inspection to be ordered.

Effective immediately, and until further notice, Carrington Mortgage Services, LLC (CMS) will temporarily suspend funding all loans with subject properties in the following Florida and Georgia counties:

This suspension is due to the potential impact of Hurricane Michael that continues to be a major Category 3 storm which is expected to arrive at the Gulf Coast (see path below) Tuesday evening/Wednesday morning.
Please inform your borrower(s) as soon as possible of the funding delay.  If there is a signing scheduled, please take steps to cancel those closings until further notice.

Last Week in Review:
August brought mixed results on new home construction and sales of existing homes.
August Housing Starts rose 9.2 percent from July to a seasonally adjusted annual rate of 1.282 million units, above the 1.229 million expected. Single-family starts, which make up the largest share of the residential housing market, were up 1.9 percent while multi-family starts surged 27.3 percent. Housing Starts were flat in the Northeast, but the Midwest, South and West all saw positive gains. Housing Starts were also 9.4 percent higher than August of last year.
Building Permits, a sign of future construction, didn't fare as well, an unfortunate development for would-be buyers struggling with limited inventory in many areas of the country. From July to August, Building Permits decreased 5.7 percent. They are also 5.5 percent lower than August 2017.
Existing Home Sales managed to stabilize in August after four straight months of declines, the National Association of REALTORS® reported. Existing Home Sales were unchanged in August from July at an annual rate of 5.34 million units, below the 5.37 million expected. Flat sales were due to a balance of gains in the Northeast and Midwest and losses in the South and West. Unsold inventory of existing homes was at a 4.3-month supply, still well below the 6-month supply considered normal. Sales were also down 1.5 percent when compared to August 2017.
Mortgage Bonds have struggled in the latest week due in part to positive gains in Stocks. Home loan rates have ticked higher but remain attractive.

Last Week in Review:
August Retail Sales rose at their smallest level in six months. Did inflation sizzle or fizzle?

Retail Sales disappointed in August, up just 0.1 percent from July. However, July's figure was revised higher from 0.5 percent to 0.7 percent. Sales were led by non-store retailers and from receipts at gasoline stations, while consumers cut back on spending for cars and clothing. On an annual basis, Retail Sales were up 6.6 percent from August 2017.
Consumer spending is crucial to the U.S. economy. It will be important to see if August's numbers are just a hiccup and if sales pick up as we approach the holiday shopping season this fall.
Inflation was also in the news, with wholesale inflation tame in August. The Producer Price Index fell 0.1 percent from July, below the 0.2 percent expected due in part to a decline in food prices and a range of services.
The more closely watched Consumer Price Index (CPI) rose 0.2 percent from July to August, as higher costs for gasoline and rents were offset by declining costs for healthcare and apparel. On an annual basis, CPI rose 2.7 percent for the 12 months ending in August, though this was down from the 2.9 percent annual increase in July. Annual Core CPI, which strips out volatile food and energy prices, rose 2.2 percent year over year in August, down from July's increase of 2.4 percent.
The key takeaway when it comes to inflation is that inflation reduces the value of fixed investments like Mortgage Bonds. Since home loan rates are tied to Mortgage Bonds, tame inflation can help keep Mortgage Bonds and home loan rates from worsening
For now, despite the tame inflation data, Mortgage Bonds fell in the latest week due in part to the strong Jobs Report for August. Home loan rates remain near historic lows.

Last Week in Review: Non-farm payrolls rose in August. So did home prices in July.

U.S. employers hired 201,000 new workers in August, above the 187,000 expected, the Bureau of Labor Statistics reported. However, June and July were revised lower by a total of 50,000 jobs. Job gains have averaged 185,000 per month over the last 3 months. The Unemployment Rate remained at 3.9 percent.
Perhaps the biggest news within the report was the 0.4 percent gain in wages from July to August, while year-over-year wages increased by 2.9 percent, the highest annual increase in nine years. Overall, this was a solid report as the labor sector is at or near what's considered full employment.
Home prices rose at a solid pace in July. Research firm CoreLogic reported that home prices, including distressed sales, were up 6.2 percent from July 2017 to July 2018 and 0.3 percent from June to July of this year. Frank Nothaft, CoreLogic's chief economist, noted that gains are beginning to moderate due in part to higher home loan rates and home prices. CoreLogic forecasts that home prices will rise 5.1 percent from July 2018 to July 2019.
Mortgage Bonds fell in the latest week, especially after the strong labor market news. Home loan rates remain historically attractive.

Last Week in Review:
Existing Home Sales fell for the fourth straight month in July. New Home Sales declined on a monthly basis but improved annually.
Existing Home Sales decreased 0.7 percent to a seasonally adjusted annual rate of 5.34 million in July from 5.38 million in June, the National Association of REALTORS® reported. This was their slowest pace in more than two years and 1.5 percent lower than July 2017. Sales have also declined on an annual basis for five straight months. Losses were seen in the Northeast, Midwest and South, with gains in the West. Unsold inventory is at a 4.3-month supply, well below the 6-month supply seen as normal.
Lawrence Yun, the NAR chief economist, said, "Too many would-be buyers are either being priced out, or are deciding to postpone their search until more homes in their price range come onto the market."
New Home Sales also fell from June to July, though inventory is closer to normal levels. July sales came in at an annual rate of 627,000, 1.7 percent below June's revised total of 638,000 (up from 631,000). While sales were down month over month, they were up 12.8 percent from July of last year. July sales plunged in the Northeast and fell slightly in the South, while the Midwest and West saw solid gains. There was a 5.9-month supply of new homes available on the market, nearer to the 6-month level considered normal.
In his speech at the Jackson Hole Economic Symposium, Fed Chair Jerome Powell noted that the Fed expects strong economic growth to continue and that there aren't any clear signs inflation will rise above the Fed's target range of 2 percent. Low inflation is typically good news for fixed investments like Mortgage Bonds and the home loan rates tied to them.
Mortgage Bonds have trended higher in recent weeks despite some reversals in the latest week. Home loan rates have reached some of their best levels of the year and remain near historic lows.

Last Week in Review: Retail Sales were stronger than expected in July. Housing Starts improved from June's nine-month low.
July Housing Starts rebounded slightly from the steep decreases seen in June. Housing Starts grew to a seasonally adjusted annual rate of 1.168 million units, which was a 0.9 percent increase from June's downwardly revised estimate of 1.158 million, the Commerce Department reported.

Housing Starts were down 1.4 percent from July 2017, however, likely due to higher construction costs for materials and land and labor shortages this year. Results were divided across the country with increases in the Midwest and South and declines in the West and Northeast. Single-family starts, which make up the bulk of the residential housing market, were up 0.9 percent from June.
There was a positive sign as Building Permits, a sign of future construction, increased 1.5 percent from June and are up 4.2 percent from a year ago. If this upward direction in permits continues, new home construction could get the boost it needs in the months to come.
Retail Sales data for July signaled that the U.S. economy is doing well. Retail Sales rose 0.5 percent from June, well above the 0.1 percent expected. However, June Retail Sales were revised lower to 0.2 percent from 0.5 percent, which took some of the luster from July's figures. On an annual basis, Retail Sales were up 6.4 percent from July of last year.
Both Stocks and Bonds saw seesaw trading in the latest week due to uncertainty overseas in Turkey and ongoing tariff issues with China. Home loan rates remain near historic lows.

Last Week in Review: Home price gains were strong in June. Did inflation heat up in July?
Research firm CoreLogic reported that home prices, including distressed sales, rose 6.8 percent from June 2017 to June 2018. Prices were up 0.7 percent from May to June. However, gains could slow over the next year if further increases in home prices and home loan rates erode affordability. CoreLogic forecasts a 5.1 percent increase in home prices from June 2018 to June 2019.
The National Association of Home Builders also reported that rising home prices and higher home loan rates caused housing affordability to hit its weakest level in a decade in the second quarter of this year.
There was news on consumer inflation, as the July Consumer Price Index (CPI) rose 0.2 percent from June, which was in line with estimates. Core CPI, which strips out volatile food and energy prices, also matched estimates with a 0.2 percent monthly increase. While these monthly numbers were tame, on an annual basis Core CPI rose 2.4 percent when compared to July 2017, which was the largest 12-month increase since the period ending September 2008.
Inflation at the wholesale level was tame in July, as the Producer Price Index was unchanged from June.
The bottom line when it comes to inflation is that fixed investments like Mortgage Bonds lose value when inflation rises. Home loan rates are tied to Mortgage Bonds, so rates can tick up when Mortgage Bonds worsen. That's why inflation reports are always some of the most important to monitor.
For now, home loan rates remain attractive and near historically low levels.

Overview
Effective Thursday, August 9, 2018, Carrington Mortgage Services, LLC (CMS) will introduce the Investor Advantage Program. The Investor Advantage Program is well suited for Investors with some credit challenges and is convenient without the need for income documentation and traditional debt ratios to qualify.  The borrower only needs to have positive cash flow for the subject property expressed as a Debt Coverage Ratio greater than 1.00.
Debt Coverage Ratio (DCR) is the expected Monthly Rents divided by the Total Monthly Payment. For example, if the expected gross rental amount for the property is $2000, then the total loan payment cannot exceed $2000. Other highlights are listed below.
General Highlights

• Recent Mortgage/Rental Lates up to 1x30x12
• Foreclosure, Short Sale, Deed in Lieu and Bankruptcy with 24 months seasoning
• Non-warrantable Condos and 2-4 Units Permitted (max 75% LTV)
• First Time Investors and Unleased Property (Refi Only) Permitted (max 70% LTV)
• No Reserves required
• No Income Documentation required
• No Mortgage Insurance required

Investor Advantage Program Terms

• Purchase, Rate/Term and Cash-Out Transactions (up to $750,000 cash-out)
• 5/1 and 10/1 LIBOR ARMs
• Maximum Loan Amount to $2.0MM
• Investment Properties Only
  • Max LTV/CLTV with Debt Coverage Ratio ≥ 1.15: Up to 80%
  • Max LTV/CLTV with Debt Coverage Ratio 1.00 - 1.14: Up to 75%
  • Min FICO: 620

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