Published Date 2/26/2018
2017 was a year of natural disasters, and it will take a good, long time before those affected by it get their lives back to normal. This week the FHA expanded expanded mortgage relief for victims of hurricanes, wildfires and mudslides for disaster victims holding FHA-insured loans in Texas, Louisiana, Georgia, Florida, South Carolina, California, Puerto Rico and the U.S. Virgin Islands, allowing them to remain in their homes while reducing losses that would otherwise negatively impact FHA's Mutual Mortgage Insurance Fund.
The FHA "Disaster Standalone Partial Claim" option is designed to help struggling borrowers resume their pre-disaster mortgage payments without payment shock, covering up to 12-months of missed mortgage payments via an interest-free second loan on the mortgage. The loan is payable only when the borrower sells the home or refinances their mortgage, requires no trial period or balloon payment, and permits borrowers to keep their existing low interest rate and loan term as well as their existing monthly mortgage payment.
This program streamlines income documentation and other requirements to expedite relief to homeowners struggling to pay their mortgages while recovering from last year's disasters. "It's clear that FHA homeowners in these areas need more help to get back on their feet as they recover from these storms," said HUD Secretary Ben Carson. "Today, we offer immediate relief to these borrowers which will allow them to resume their mortgage payments without crippling payment shock and fees while protecting our insurance fund in the process.”
If you're wondering who is eligible for this relief, the new partial claim option is available to certain borrowers who live and work in Presidentially Declared Major Disaster Areas mentioned above and who became delinquent on their mortgage payments because of last year's disasters, and whose initial mortgage forbearance periods are ending. Other requirements include borrowers being current on their mortgage payments at the date of the disaster, income being equal to or more than their pre-disaster income, and it is available to owner-occupants only. But even those who do not meet these requirements may be eligible for a loan modification under the FHA-HAMP option.
Source: HUD.gov/TBWSConventional and Government (FHA and VA) lenders set their rates based on the pricing of Mortgage-Backed Securities (MBS) which are traded in real time, all day in the bond market. This means rates or loan fees (mortgage pricing) moves throughout the day, being affected by a variety of economic or political events. When MBS pricing goes up, mortgage rates or pricing generally goes down. When they fall, mortgage pricing goes up.
Mortgage rates are trending slightly lower so far today. Last week the MBS market worsened by -2bps. This wasn't enough to move mortgage rates. Mortgage rate volatility was relatively low last week.
Three Things: These are the three areas that have the greatest ability to impact mortgage rates this week. 1) Fed, 2) Domestic and 3) Across the Pond.
1) Fed: Fed Chair Jerome Powell will give his first live testimony in the semi-annual monetary policy hearing in front of the House Financial Services Committee on Tuesday and in front of the Senate Banking Committee on Thursday. We already have the Monetary Policy Report that will be used in this meeting. As a result, the bond market will focus on his response to the live questions.
2) Domestic: After last week's void of economic data, we get a lot of big name reports that certainly have the gravitas to move mortgage rates this week. PCE (the Fed's key measure of inflation) will take center stage, but there are many other reports that get a lot of attention. We get the first revision to the 4th QTR GDP, Chicago PMI, ISM Manufacturing, Consumer Confidence, Consumer Sentiment and Durable Goods.
3) Across the Pond: China is back after a long Chinese New Year celebration, and we will get their PMI data, and out of Japan, we get their manufacturing and Unemployment data. But it's Europe that is in the spotlight as we get the "Road to Brexit" speech from Great Britain that was delayed from last week and it supposed to give markets more understanding of the timing and structure.
Last week there wasn't much on the docket that was likely to move mortgage rates. This week is a different story. As denoted above, there's a lot of domestic data that has the ability to push us out of our new mortgage rate channel with a good deal of volatility.
If you are looking for the risks and benefits of locking your interest rate in today or floating your loan rate, contact your mortgage professional to discuss it with them.
Source: TBWSAll information furnished has been forwarded to you and is provided by thetbwsgroup only for informational purposes. Forecasting shall be considered as events which may be expected but not guaranteed. Neither the forwarding party and/or company nor thetbwsgroup assume any responsibility to any person who relies on information or forecasting contained in this report and disclaims all liability in respect to decisions or actions, or lack thereof based on any or all of the contents of this report.
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