Where R Rates / MBS Market Update
INFLATION TOMORROW?
We had another good day in the conforming loan side of things yesterday. Now I am starting to get really hesitant with this many good days in a row. It is going to top out at some point.
The market is likely waiting for tomorrow mornings big index of the week. PCE (Personal Consumption Expenditures) which is a big inflation number.
If it comes in high we could sink like a ship and if it comes in better than expected it could give us everything we needed to keep this train going and break through in to a higher trading window. Even if it comes in as expected we may see a little volatility tomorrow.
This morning jobless claims came in 22K higher than expected but not overly high. GDP came in exactly as expected so no real market volatility on that one which it could have been.
Durable good orders came in quite a bit higher than expected. That is one of the reasons we are getting mixed results this morning with some red and some green.
Higher jobless claims is bad for the economy which is good for mortgage rates. Durable Goods which is new orders for manufactured durable goods which are just items that are meant to last for 3 or more years. Think washers, dryers, frigs, airplanes, cars, furniture etc.
With those orders up that is good for the economy as it produces jobs and income which is bad for mortgage rates. When you mix the two you get mixed results.
Today we still have 3 Fed Speakers, Pending home sales, throw in a little Kansas Fed Manufacturing Index and the Fed Balance Sheet we should have a fairly unvolatile day barring global or domestic news which as we know can happen at any time.
Prepare your borrowers for what may or may not happen tomorrow or get em locked and move on with your day.
| YESTERDAY CONV 5.5% – UP 15 CONV 6.0% – UP 12 GOVT 6.0% – UP 3 10 YR NOTE – DOWN 5 DOW JONES – DOWN 202 |
| SO FAR TODAY CONV 5.5% – UP 6 CONV 6.0% – DOWN 9 GOVT 5.5% – DOWN 4 GOVT 6.0% – UP 13 10 YR NOTE – UP 5 TO 4.30 DOW JONES – UP 197 |
GREEN is GOOD for Rates – RED is BAD for Rates
Product & Guideline Highlights
FUTURE INCOME
I do a lot of loans with employment offers where we close loans before they start their job. Honestly, it is far easier to close before they start than waiting til after and dealing with no stubs and written voe’s etc.
The complicated part comes when you have an hourly employee contract. The agencies are not big fans of the hourly offers vs salary due to there is uncertainty on hours that will be worked.
The guides are somewhat hazy. Here is a screenshot of the requirements.
As you can see Freddie Mac allows future salary increases where Fannie does not. That was just a side note benefit.
The part I want to go over is on Fannie it states income must be fixed base income only. Freddie states it must be non-fluctuating and salaried for example hourly earnings are not permitted. They are crystal clear.
Now, looking at this you would think it is salary or no go with Fannie and that is exactly how many underwriters, managers and companies look at that. Including my manager when I brought it up.
My point was on Fannie it USED TO say salary only. Now it says fixed base income. I asked if you get an offer letter that guarantees 40 hours per week or whatever number then that is a fixed BASE INCOME. Not to be confused with extra hours or OT or bonus.
So, we went to Fannie and this is what was found on the Fannie website. Note option 2.
Now you know. You can do hourly offer letters only IF you have verbiage with guaranteed hours.
Jackism of the Day
SHADOWED VALLEY
How many times have you laid there in bed in the morning thinking things you are asking yourself why you are thinking them. Or sometimes you just wake up and do not feel as great as when you went to bed. Things are weighing on your mind. Sometimes things that have not even happened yet.
I was at the gym working out this morning and going through my normal routine of praying through the Lords Prayer and Psalm 23. Don’t worry, this will make sense no matter what you believe. It’s just where I get my stuff.
My process is I just start each one and then go word by word and see what comes to my mind. I got to the part which everyone in the world has heard before many times.
Yea though I walk through the valley of the shadow of death I will fear no evil for thine is with me, they rod and they staff they comfort me.
Ok, the easy and standard concept to that line is no matter what we are going through in life we can always come to Him or whomever you go to and we will find comfort in His rod which means discipline and staff which means Him being a guide.
The valley of the shadow of death is the crud we go through in life in general. All the stresses, the anxiety, fear, tribulation, hardships and just dealing with stuff that is not going our way.
Then as I was thinking about that I began to laugh. I tend to laugh at myself and then tell the Big Dawg upstairs thanks for that one and give Him a little high five. We talk a lot : )
I asked myself what my valley was this morning? The funny part is that it was 100% me. Nothing from others or the outside world. I was my own valley of the shadow of death. I was my own stress, anxiety, fear and hardship. I was the one keeping me down from making it a great day.
I was just sort of in a blah mood from last night when I said something to my bride and I didn’t do a good job of explaining it. She took a bit of offense to it and I was just asking myself why I put it that way. We were already fine and worked through it but I kept thinking about why I presented my idea the way I did. The only person not ok was me. My wife was just fine.
Then I began to think about some stuff that I need to do for my HOA community. Some conversations I need to have. Not difficult ones but just ones I really do not feel like doing. Then I began to create a larger deal out of something that was not even there. And this was during prayer time mind you! Geez.
That is when I realized a huge portion of our problems, stresses, anxieties and fears are created by and continue to impact us from our own thoughts, actions and our own minds when they are completely unnecessary to be there.
My point today is if you feel like you are walking through the valley of the shadow of death and that you do not want to fear any evil. Then take a minute and see who is creating that evil. Much of that valley is likely your own doing and your own mind doing it.
Forgive yourself for whatever you have done. Forgive others for anything and everything they have done to you. You have likely done things just as bad to others as others are doing unto you.
Take a moment to cleanse all that is self induced and get up off the ground and let it go. I did just that and what an amazing morning I have had since then.
Sometimes when you feel in a rut you just need to go outside, get on your knees and smell the grass. It’s a great thing to do. Every single one of us has the ability to realize that from this very moment where you are sitting as your read this everything that has happened is the past. It is absolutely 100% up to you how you decide to live from this second moving forward.
You can have whatever kind of day you decide to have from this moment on. I do find my comfort in His Rod and His Staff and I do decide whether I will reside in the valley or the green pastures and still waters.
If your feeling down or beating yourself up. Decide to get up and look up and start patting yourself on the back for the things that you are doing well and make your day a day worth living well.
