Reverse Mortgage Basics

Market Information

Volatility yesterday after the FOMC statement kind of said rates will go higher, also kind of said the Fed will be “patient”, the Yellen said the FOMC will not increase rates in the4 next two FOMC meetings. The policy statement had something for everyone with the usual confusion left to markets to decide what the Fed will do and when. The reaction yesterday afternoon generated a lot of volatility in stock markets and in the MBS markets while treasures were a comparatively subdued but rates did increase. The DJIA finally ended up 288.00 after wide trading ranges as investors tried to handicap the Fed’s statement. This morning the US stock indexes at 8:00 were trading up 250 points on the DJIA and the other indexes also strong.

 

Weekly jobless claims at 8:30 were a little better than consensus, claims declined 6K to 289K, back to levels we had in early November. The consensus was for claims to be unchanged on the week. The 4 week average decreased to 298.750 from 299,500. In the last six weeks claims have held rather steady with not much change from week to week and mostly under 300K. No direct reaction to the slightly better report as markets were already well extended from yesterday’s closes. Claims were the lowest in six weeks.

 

Putin held a press conference to reassure Russians on Thursday that the country’s economic troubles will pass in no more than two years, saying at his annual news conference that the government and central bank are responding appropriately, though a bit belatedly. Putin blamed the US and the EU and accused the west of trying to disarm Russia and said the current economic troubles “are payment for our independence, our sovereignty.” The ruble has collapsed this week. Sanctions and the fall of crude oil is taking the Russian economy to its knees; it started with the Ukraine invasion and has become worse by the day.

 

The DJIA opened +139 at 9:30, NASDAQ +59, S&P +19. The 10 yr note yield up 6 bps to 2.20% testing its 20 day average. 30 yr MBS price at 9:30 -17 bps from yesterday’s close and -42 bps from 9:30 yesterday.

 

Two data points at 10:00; Dec Philadelphia Fed business index was expected at 25 from 40.8 in Nov. The index at 24.5 close enough; the 40.8 in Nov was an anomaly; the Oct index was 20.8. Nov leading economic indicators was expected +0.6%, as reported +0.6%; Oct LEI revised from +0.9% to +0.6%. Neither report had any impact on trading.

 

Another consumer confidence index out early this morning; the Bloomberg Consumer Comfort Index climbed to 41.7 in the period ended Dec. 14, the highest reading since mid-November 2007, from 41.3 the week before. Monthly views on economic expectations rose to match a two-year high.

 

Market volatility in most markets, including crude that is slightly higher this morning. All global markets improving today after the FOMC statement yesterday was more dovish than what was expected. The Fed will increase rates according to Yellen but she left a wide open door that the decision to increase rates is still dependent on economic performance and employment. Germany’s 10 yr bund this morning up 8 bps from yesterday at 0.63%. The increase in rates yesterday and this morning is denting our bullish models, the 10 at its 20 day average and momentum has ebbed quite a bit on the bullish outlook. All key markets will continue the high level of volatility, interday and intraday. Time to get on the sideline, let this uncertainty currently gripping markets subside.

Preparing for an Open House

After you’ve set the date and posted pictures of your house online, you need to get your house into tip-top shape for those up-close looks. Remember though pictures online are the first impression given to agents wanting show your house so make sure your house is presentable that way they will want to show your house.

2 Weeks Before

 

• Reserve a trusted cleaning service for the day before your open house.
• If you’ve never used one before, have a trial cleaning to make sure you get someone you really like; then request that same person to clean for your open house.
• Fix chipped paint spots (outside and inside).
• Plant flowers.
• Repaint bold walls with neutral colors.
• Unclutter closets and bookshelves.
• Secure a storage facility with an open unit (or your parents’ basement).
• Make plans for pets to be away starting 24 hours before open house.
• Have rugs cleaned and floors polished.

 

1 Week Before

 

• Trim hedges.
• Clean gutters.
• Move excess furniture, appliances, books, clothes, and canned goods to the storage unit (basically, you want to make the house, closets, and cabinets look as spacious as possible).
• Scrub the doors and deck.
• Create handouts (or make sure your Realtor does) so visitors can take information about your house with them for reference.

 

2 Days Before

• Hide cords (even if it means unplugging electronics).
• Hide traces of a pet or a smoker (air out your place as much as possible).
• Lock up your valuables.
• Verify cleaning service.

 

1 Day Before

 

• Check in on the cleaning service before they leave; make sure the house meets your standards.
• Place handouts by the door.
• Get a sign-in sheet ready so people can write down their names and contact info.

 

Morning-Of

 

• Open drapes and curtains to get maximum light.
• Turn on lights in dark rooms.
• Ensure temperature is comfortable throughout house.
• Straighten up bedrooms and bathrooms.
• Create a nice scent by grinding coffee beans or by baking cinnamon rolls in the oven on low.
• Turn on soothing music at a low volume.
• Leave the house (if you have a Realtor).

Agents and For Sell by Owners contact our office to see how we may help with your open house at no expense.


Credit to Nest.com

Reverse Mortgage Purchase

Reverse mortgage purchase pdf from Effective Mortgage Company

PRICES @ 10:00 AM

10 yr note:                    -5/32 (15 bp) 2.42% +1 bp

5 yr note:                      -2/32 (6 bp) 1.59% +1 bp

2 Yr note:                      -1/32 (3 bp) 0.44% +1 bp

30 yr bond:                    -12/32 (37 bp) 3.23% +2 bp

Libor Rates:                  1 mo 0.155%; 3 mo 0.234%; 6 mo 0.328%; 1 yr 0.552%

30 yr FNMA 3.5 Sept:   @9:30 102.42 -6 bp (-30 bp from 9:30 yesterday) 4.0 coupon 105.58 -3 bp (-27 bp from 9:30 yesterday)

15 yr FNMA 3.0:           @9:30 103.47 +1 bp (-16 bp from 9:30 yesterday)

30 yr GNMA 3.5 Sept:   @9:30 103.52 -11 bp (-24 bp from 9:30 yesterday) 4.0 coupon 106.27 -3 bp (-23 bp from 9:30 yesterday)

Dollar/Yen:                  103.33 +0.41 yen

Dollar/Euro:                $1.3287 -$0.0033

Gold:                           $1297.30 +$0.60

Crude Oil:                   $95.76 +$1.28

DJIA:                          16,916.93 -2.66

NASDAQ:                   4520.33 -7.18

S&P 500:                    1980.58 -1.02

Market Report

Market information:

Generally quiet start early this morning but no improvement in the MBS or treasury markets even with US stock indexes aiming at a lower opening at 9:30. At 9:00 the 10 yr -2/32 2.41%, 30 yr MBS prices -5 bps from yesterday’s closes. At 9:30 the DJIA opened -15, NASDAQ -7, S&P -3; 10 yr unchanged at 2.41% while 30 yr MBS prices -6 bps in price.

 

Mortgage applications increased 1.4% from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending August 15, 2014. The Refinance Index increased 3% from the previous week.  The seasonally adjusted Purchase Index decreased 0.4% from one week earlier.  The unadjusted Purchase Index decreased 2 percent compared with the previous week and was 11 percent lower than the same week one year ago. The refinance share of mortgage activity increased to 55% of total applications from 54% the previous week.  The adjustable-rate mortgage (ARM) share of activity increased to 7.8% of total applications. The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,000 or less) decreased to 4.29% from 4.35%, with points increasing to 0.26 from  0.22 (including the origination fee) for 80% loans.  The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $417,000) decreased to 4.18% from 4.24%, with points increasing to 0.23 from 0.19 (including the origination fee) for 80% loans.  The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA decreased to 3.99% from 4.04%, while points remained unchanged at 0.03 (including the origination fee) for 80% loans.  The average contract interest rate for 15-year fixed-rate mortgages decreased to 3.44% from 3.48%, while points remained unchanged at 0.30 (including the origination fee) for 80% loans.  The average contract interest rate for 5/1 ARMs decreased to 3.10% from 3.24%, with points decreasing to 0.44 from 0.45 (including the origination fee) for 80% loans. 

 

Yesterday and Monday we got better housing data with the NAHB index gaining 2 points and July housing starts and permits twice as strong as forecasts. Starts up 15.7%, permits +8.1%. The better data set off a run of experts declaring the housing market getting back on track with the outlook much better. The MBA data this morning didn’t co-operate with those more positive reports on purchase apps, down 0.4%. The re-finance sector was widely declared as dead by a few housing experts, saying all re-finances have now been achieved; this morning MBA data showed re-finances increased 3.0% from the previous week.

 

This afternoon (2:00 pm) the minutes of the 7/30 FOMC meeting will be released. Always something to chew on with more specifics than we get when the meeting concludes with the policy statement. Likely the minutes will get a little ink, but with Yellen speaking Friday at Jackson Hole, the minutes are somewhat dated given the title of her speech is “The Labor Market”, following her remarks Mario Draghi will also speak on the EU economy.

 

Not likely MBS prices will improve today with treasuries still unwinding huge long positions. No geo-political reasons for short term traders to buy now, the issues are still out there but this week there has been no fearful news from Ukraine, and Putin is scheduled to meet next week with Ukraine leaders and EU countries. Some relaxation occurring now in Ukraine, Israel and Iraq; nothing really has changed, just not worsening. The fear factor into treasuries has ebbed this week. The economy is back in the headlights. As we noted last Friday, the bond market had become overbought basis the near term; since then prices have slipped and interest rates have Increased a little; the 10 yield up 7 bps from Friday’s close while MBS prices -36 bps since Friday’s close. Trading volume though is the lowest we have seen this year in both stocks and bonds ahead of Jackson Hole on Friday. The wider outlook is still bullish, a close over 2.48% will change the pattern and turn the 10 bearish from a technical perspective.