Where R Rates / MBS Market Update
BESSENT SPEAKS
We had a good day yesterday folks. Lots of small bond friendly news going our way. Lower ISM (Supply Management for Manufacturing) came in which helped a bit. ADP came in lower than expected. The tariff uncertainty of how that is going to play out. Oil is down a little which helps inflation.
All of that equals our best pricing since December 12th (yesterday).
Last night Scott Bessent spoke for the first time. He is our new Secretary of the Treasury under Trump. He is giving a bit of a different approach. Their focus is going to bring the 10 Yr Note down and not necessarily Fed Fund Rates cuts. In other words not using Fed Rate cuts to lower mortgage rates and 10 Year yields but other triggers they can use.
If they produce more energy, lower heat and other energy prices going down helps inflation and it allows people to spend more in the economy and feel good about what is happening which will help the economy and help lower mortgage rates by reducing inflation.
This is going to be a storyline that can impact the markets in how the Fed and the markets react. Tomorrow is a big day with the jobs report as well.
We are being hit a little bit this morning and hopefully we can get back some of our earlier losses today.
We have a couple Fed Speakers this afternoon so stay tuned to see what happens next!
| YESTERDAY CONV 5.5% – UP 34 CONV 6.0% – UP 25 GOVT 5.5% – UP 16 GOVT 6.0% – UP 3 10 YR NOTE – DOWN 9 TO 4.42 DOW JONES – UP 317 |
| SO FAR TODAY CONV 5.5% – DOWN 6 CONV 6.0% – DOWN 9 GOVT 5.5% – DOWN 12 GOVT 6.0% – DOWN 13 10 YR NOTE – UP 2 TO 4.44 DOW JONES – UP 69 |
GREEN is GOOD for Rates – RED is BAD for Rates
Product & Guideline Highlights
SECTION 8 VOUCHERS
Whether or not you come across this on a frequent basis or not this may be good information to know as well as to share with your referral partners and potential clients.
Section 8 which is now called Housing Voucher Program managed by the Federal Govt Public Housing Agencies.
Typically these vouchers are given for rental properties that the borrower qualifies for and the landlord is willing to accept the Housing Voucher Program. This is not just for govt subsidized housing. Most Section 8 tenants are in regular homes or apartments or townhomes.
It is designed for the very low income individual. It is also for elderly and disabled individuals to afford decent, safe, and sanitary housing in the private market place.
To be eligible you must be at or below 50% of the area median income. This may put you on a waiting list. By law the housing agency must provide 75% of it’s vouchers to those at 30% or less median income.
The housing agency reviews the adjusted gross income and the borrower makes the rent payment up to 30% of the income that is calculated. Then the agency pays the remaining amount directly to the landlord. It is a pretty good deal actually and something you should monitor when you see a 50% AMI borrower or less.
It is possible to do on purchasing a home as well. All the agencies allow you to use the income the housing agency offers which must be fully documented towards the qualifying income of the borrower.
As you will see below sometimes you need a history of receipt. This usually happens when they go from renting a home using Section 8 to buying a home.
A good marketing piece would involve asking if you use Section 8 housing to rent then educate them on how to use Section 8 housing vouchers to buy a home. This also eliminates the waiting list as they already receive the vouchers.
CHECK OUT THE AGENCY DIFFERENCES
Fannie Mae allows you to gross the income up. Freddie does not.
No history of receipt required for Fannie and Freddie but you must have the documentation of what it will be. They like to see a 3 year continuance of the income showing frequency, payment amount and duration of the term or limit. You add the income to your total income. It is not used to offset the mortgage payment.
FHA states you must currently receive the vouchers. It does not mention for how long. If continuance is not shown FHA will assume 3 years. FHA will use the current subsidy rate to calculate the income.
VA does not reference anything on Section 8 so it will likely follow FHA.
USDA does not require a history of receipt but must document the borrower is currently receiving the income and the amount they are receiving with the benefits or awards letter. USDA is unique in that they take the Section 8 income amount and they reduce the PITI by that amount to use it for qualifying DTI.
Now you know my friends! Go do something with it : )
Jackism of the Day
TRUE NOBILITY
I love movies and I especially love the small truths that we can find from all areas of our lives.
I went to bed last night and my wife had The Kingsman on as she was dozing off to sleep so naturally I stayed up and watched it : )
I was watching a specific scene where he was mentoring his protege on what it means to be a true gentleman.
He was explaining that there is nothing gentlemanly or noble about growing in who you are to compare and to be superior to someone else. True nobility comes from growing in who you are to be superior to your old self.
Oh man, I just loved that. It warmed my heart how such a simple truth can change your outlook on who you are trying to be.
We spend so much of our time unconsciously comparing ourselves to other people. How we look physically, how we dress, how we talk, our personalities, our integrity and character, our finances, what we drive and live in, our numbers on the leaderboard, our role within a company, who we are in the community, the influence we have on social media and other platforms. The list is endless in how everything we are is able to be compared to everyone around us.
Just imagine though when you do what you do because you are growing in who YOU are and comparing your results to who YOU were. No comparison to others but only to your own self.
There is no shame, there is no fear, there is no agenda, there is no objective to prove yourself to other people. Your only objective is to prove yourself to you.
If you are doing better today in your life than you were yesterday, last week, last month or last year then hold your head high and be proud of who you are becoming.
It is impossible to leap instantly in to the perfect being you have created in your mind to be. It is possible to take a single step each day to become better every day. That is a worthwhile mission and a mission you do not have to prove to anyone else. Only yourself.
So, how are you doing when you take every other human being out of the picture and you are only left with yourself? Are you better than you were yesterday? If so, great job.
Today, you have an opportunity to be the best version of you that you can be. Then tomorrow maybe you can be a little bit better version and then on and on.
Always be content with who you are. Just never be content with who you can become.
