SGN, Rates Horizontal, Forbearance Update

Overwhelmed with bad news? Check out SGN!

Rates – moved sideways this week as the Fed closely monitors the amount of Mortgage Backed Securities they are purchasing in an effort to stabilize the mortgage rate environment.

Jobs – the number of people that filed for unemployment this week was 800K less than last week. IN 4 weeks over 23M people have claimed unemployment.

Forbearance – Black Knight reported that as of April 23rd, 6.4% of all mortgages are in forbearance representing 3.4 Million homeowners. The FHFA came out with guidance that they would purchase loans that miss their first payment due to forbearance but they will charge a whopping 7% fee to the lender (5% if first time home-buyers). Typically lenders make roughly 0.5% profit on a loan so for a $300,000 lenders make $1,500. If the borrower went into forbearance for their first payment (which has no requirements to show hardship) FHFA can charge lenders a whopping $21,000. Expect companies to rapidly change compensation agreements and disclosures (Loan officer will get commission yanked, buyer will have to sign disclosure saying they won’t go into forbearance) until this mess is sorted out.

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Home Sales – were down only 9.5% on a year-over-year basis in March which is fairly encouraging. We’ll see what the numbers for April Show.

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