Where R Rates / MBS Market Update

JOBS IN OUR FAVOR

As expected, yesterday was a non-event with little global or economic reports rolled out.

As a reminder. My main goal for you in this article is talking points with your clients and your referral partners. Simply insert some of these items into your conversations to show you are in the know. It makes a difference when they know you have a pulse on what is happening in the market.

The housing price index came in this morning. Month over month we saw a decline of .2% in home values and year over year we are at a positive 2.8%. This data is based on all loans guaranteed by Fannie and Freddie. This is a national statistic as different regions have different results. Overall, this is what I am seeing in our area. Not much selling so it is a buyers’ market causing slight declines in value.

Our Goods Trade Balance continues to be all over the place. The trade balance is when you compare all of the goods we export to all of the goods we import. We are running at a deficit which is normal and one of the many reasons tariffs is such a hot topic. We imported 86 billion more than we exported. That is a good number comparatively while also understanding a lot of folks pre-ordered especially in March to try and beat tariffs on imports and we were at a 162-billion-dollar deficit in March. We are importing less now as companies filled their inventories prior to potential tariff hits. This will level out over the coming months.

We have an important 44-billion-dollar 7 year note treasury auction today at noon which will gauge demand for fixed treasuries and our MBS. That could impact markets a little this afternoon depending on the results.

JOLTS came out this morning which is Job Openings, Quits and Layoffs. What is good for jobs is bad for mortgage bonds and vice versa. Today it went in our favor. The markets liked what they saw from a job’s perspective, and we got all of our gains this morning from this report.

Job openings fell month over month as well as folks quitting wnet down as well. In case you are curious the sectors that saw declines were food services, health care, social assistance, finance and insurance. Areas that saw job opening gains were retail, information (IT), state and local govt education.

As always, let’s see where the day brings us.

GREEN is GOOD for Rates – RED is BAD for Rates

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Product & Guideline Highlights Ad Mortgage Products

LARGE LAND PARCELS

When a borrower brings you a property with land—maybe a lot of it—you need to know how each loan type handles acreage and land use. This is what the agencies say how to handle them.

FANNIE MAE
Fannie does not set a specific limit on the number of acres a property can have. However, the entire parcel must be included in the appraisal. You can’t just appraise a portion of the land, like five acres of a forty-acre parcel. What matters most is that the property is residential in nature. If the land size is larger than what’s typical for the neighborhood, you’ll need to confirm through zoning, land use, and the appraiser’s commentary that it still qualifies as residential. The appraiser must also support this with comparable sales of similar residential properties.

FREDDIE MAC
Freddie Mac also doesn’t impose a maximum acreage restriction. Like Fannie, the full site must be appraised. If the site is much larger than the comparables, the appraiser must explain any adjustments—or lack thereof—and describe how the site size affects value and marketability. As long as the home is clearly residential and the appraisal supports the value with appropriate comparables, the acreage itself won’t disqualify the loan.

FHA
FHA takes a similar approach with no official acreage limit. The entire site must be valued, and any excess or surplus land must be clearly identified. This is important. If the excess or surplus land is on a separate lot adjoining the main residence it is likely it cannot be included in the value of the property. Excess land refers to land that isn’t needed for the home but might be legally split off and sold separately. Surplus land can’t be sold off and may or may not add value. The focus remains on whether the property is primarily residential and that the land value is appropriate for the market.

VA
VA loans also come with no acreage limits. VA allows veterans to purchase properties with significant land, even farm residences, but there are some boundaries. The loan cannot include value from farm buildings, equipment, or livestock. The property must be primarily for residential use, and the appraisal must support this by showing similar properties in the area were sold as homes, not as farms. Even if barns or stables are present, the appraiser can only include them in the value if they contribute to the residential appeal of the property—not its use as a working farm.

USDA
USDA, likewise, does not place a specific limit on acreage. The key is that the property must be primarily residential in both use and appearance. If the property is being used as an active farm or commercial enterprise, it will not qualify. Income-producing buildings like working barns or commercial greenhouses make it ineligible, but if those buildings are no longer in commercial use and are being used for storage or hobby purposes, the property may still qualify. Minimal income-producing activities like a garden or home-based craft business are acceptable. USDA also allows properties that span multiple parcels, as long as all parcels are conveyed together, share the same zoning, and are covered by the mortgage. Only one residence is allowed, even if the land is divided by a road.

So, when a borrower asks if they can finance a home on acreage, start by asking how the land is used, what kind of structures are on it, and which loan program they’re applying for. That quick conversation will help you spot the right path and save time—because when it comes to land, it’s less about how much and more about how it’s used.

Jackism of the Day

MAKE OR BREAK

I just love learning things as life happens. I learned a valuable lesson in this transition from Flagstar to A&D Mortgage. I am sure you have experienced this in your life as well.

There is no doubt that the people in a company can and will make or break a company’s success. We hear that a lot from management, industry and the world. The people are what make a company great.

On the flip side of that is the fact that a company can and will make or break their people. The same as you cannot have a great company without great people. You also cannot build up great people without a great company.

In my travels visiting clients I was able to ask the question who are they using and why are they using them? The answers were heavily influenced by the people like AE’s, Underwriters and Closing teams. Just as important were the company systems, processes and products.

I hear it all the time. I really liked so and so. Too bad they went to that company. Or I really loved working with this company until I got a new rep and it has really made me not want to send the company business.

This made me realize what I had at Flagstar and what I need to do to rebuild here at A&D. This goes for you as well in all areas of your life.

The reason I did so well at Flagstar is I worked for a great company, and we surrounded ourselves with great people. I did not realize how good I had it until I no longer had it. On the flip side many times you do not realize how bad you have it until you try something new and realize what you did not have before.

This has given me a newfound appreciation for what I do and do not have at A&D as I begin to rebuild. It also shows me that in order for A&D to be a great company it needs great people supporting what they are trying to accomplish.

The only way this can happen is if my mission is the same as their mission. My mindset is the same as their mindset. Their systems, processes and disciplines align with mine. Both A&D and I can make or break one another. It takes the employees and the corporate vision to align and to support and to build something great.

That is what I believe we are doing here at A&D. A&D is not Flagstar and nor does A&D want to be Flagstar. They have a different mission and a different vision. I have now aligned with that mission and vision, and it is changing how I do business.

My question for you today is what is your mission and vision of where you work and what is the mission and vision of the company you work for? Are you making each other great or are you breaking each other apart?

You can look at a company as a whole and see all people and all company to see if they are aligned. You can also look at each individual to see if it is one bad or good apple that is making or breaking a company one bit at a time.

If you cannot align with what the company you are working for is trying to accomplish. I promise you that you will never be great at what you do. It is almost impossible to be the best in your role if the company you work for does not align with your mission and your talents. The same goes for realizing that if you tweak your mission to align with the company’s mission then there may be no stopping what you can accomplish in your role.

Ask yourself today. Do you want to make or break your company and do you want your company to make or break you. It’s your choice.