Fourth, Bank of America is facing a new securities-fraud lawsuit filed by former Countrywide investors(including BlackRock and the California Public Employee’s Retirement System) that opted out of a $624 million settlement last year. According to the suit Countrywide misled shareholders about its finances and lending practices. For more go to: BankofAmerica.

Returning to the debt crisis, and the apparent inability for our elected officials to send a budget to the president, the bond market seems focused on three developments: ”(1) A downgrade of Treasuries by at least one ratings agency.  (2) A more prolonged downdraft in economic activity, caused in no small part by the uncertainty raised by the debt issues.  (3) Clinging to the notion that a full-scale Treasury default will be avoided, mostly because it’s too painful to think otherwise.” Paul Jacob, with Banc of Manhattan, points out that although these issues would normally cause the yield curve to steepen (leading to higher mortgage rates), but there are a few reasons why rates have not done much of anything. “For one thing, markets are supposed to look past labels and truly assess risks – has the U.S. long-term deficit outlook really changed over the past 6 or 12 months?  Then there’s the state of the economy – things are slow, which would keep rates low. And lastly, China, a major world economic influence, continues to hold US dollars and securities, helping prices. Very good points.

Corporate earnings for mortgage-related companies took a turn for the worse in the last day or two. Old Republic International (RMIC) swung to a $66 million loss in the second quarter on worsening claims costs in its troubled mortgage guaranty business. The insurer said Thursday it would likely place the mortgage guaranty unit into run-off mode if it does not manage to transfer the unit to a separately capitalized subsidiary before the end of August. CEO Aldo Zucaro in January predicted the mortgage guaranty industry won’t be profitable until 2013.

PHH lost $41 million, in part due “fair value charges on mortgage servicing rights (MSR)” of $117 million. During the 2^nd quarter the investor saw interest rate lock commitments (IRLCs) of $7.5 billion, compared to $8.4 billion in the second quarter of 2010. Its mortgage loan servicing portfolio increased to $174 billion as of June 30, 2011, up from $156 billion at June 30, 2010. “While our servicing portfolio delinquencies rose slightly to 3.22% at quarter-end from 3.15% at the end of the first quarter, they are still approximately half those of most other large servicers. Foreclosure costs remain elevated at $24 million, compared to $20 million in the second quarter of 2010, driven by increased repurchase requests. As we expected, our mortgage origination market share declined from 4.3% in the first quarter of 2011 to 3.7% in the second quarter.”

Genworth Financial lost $96 million in the 2^nd quarter. The company said its U.S. mortgage insurance unit’s operating loss worsened to $253 million in the quarter, compared with a loss of $40 million in the same period last year. The wider loss came after the company set aside $300 million in reserves to cover bad loans. Genworth noted that the total flow of delinquencies declined 2 percent from the previous quarter, however.

One bright spot, if there is one, is that D.R. Horton, the largest U.S. homebuilder, reported a bigger-than-expected quarterly profit, helped by cost cuts. The company managed to cut its selling, general and administrative expenses to less than 12% of revenue.

One issue that seems to have quieted down is LO compensation. But it is in no way a dead issue as companies continue to adjust and fine tune the rules and regulations. National Mortgage News came out with a list of“Ongoing Reminders About Compensation Under the Dodd-Frank Wall Street Reform and Consumer Protection Act” worth noting. Lenders are encouraged to remember that payments made by creditors to loan originators are not payments made directly by the consumer, regardless of how they might be disclosed under HUD’s Regulation X, which implements the Real Estate Settlement Procedures Act. Because the long-term performance of the loans is not a term or condition of a loan it is permissible to go back and “ding,” or take back part or all of the commission on a particular loan from a loan originator, if the loan has an early default because that’s not a term or condition. “However, you should be certain you are not violating wage and hour laws of the Fair Labor Standards Act and not violating state wage and hour laws as set forth by the Division of Labor Standards Enforcement in California or for that matter, any other state.”

The third item on this list is a reminder that compensation to originators can vary based on how the loan application was produced, for example, commissions may be higher for leads generated by the originator versus the company. Federal Reserve Board staff states that as long as compensation is not based on loan terms or conditions, or a proxy, it is acceptable. If pricing of two loans differs, there may be a concern that channel is being used as a proxy for loan terms or conditions but other factors may justify differences. Be certain you can prove it in the event of an audit. Fourth, a mortgage loan originator is a person who arranges, negotiates or obtains a loan for a consumer and whose compensation is based on whether any particular loan is originated. Thus there are two sets of requirements to be a loan originator: (1) arranging, negotiating or obtaining a loan for a consumer and also (2) having compensation based on any particular loan. Both sets of requirements must be met for a person to be a loan originator, and this person may not pay some or all of the third party fees of a consumer or otherwise credit the consumer out of his own pocket. Lastly, it appears that for purposes of the Dodd-Frank rule affiliates are treated as a single person, so that when a lender acts as a mortgage broker and is thus, a loan originator for purposes of the rule where there is a party that is an affiliated settlement service provider, such as a title company, the bona fide and reasonable charges received by the affiliated settlement service provider are also considered part of the loan originator compensation.

At least rates are behaving. Thursday rate-sheet MBS prices (Fannie 4′s, which contain 4.25-4.625% mortgages) rallied nicely, resulting in some intra-day price improvements. Treasuries opened higher following a mixed session overnight on poor earnings and weak economic news, as well as, on the uncertainty regarding the U.S. debt ceiling. The 10-year note closed with a yield of 2.95%.

We opened this morning with the 10-yr at 2.92%: Spain’s credit rating (remember Europe? It isn’t going away.) was put on downgrade watch by Moody’s, and the PM announced they would dissolve the parliament and hold early elections in November. (Maybe the US should try that.) China may lend money to Greece. Over here, the Tea Party resistance sunk Boehner’s bill before it ever made it to a vote. Republican officials will try to push something through again this morning, but all I see in the press is more jawboning.

WIFE’S DIARY:

Tonight, I thought my husband was acting weird. We had made plans to meet at a nice restaurant for dinner. I was shopping with my friends all day long, so I thought he was upset at the fact that I was a bit late, but he made no comment on it. Conversation wasn’t flowing, so I suggested that we go somewhere quiet so we could talk. He agreed, but he didn’t say much. I asked him what was wrong; He said, ‘Nothing.’ I asked him if it was my fault that he was upset. He said he wasn’t upset, that it had nothing to do with me, and not to worry about it. On the way home, I told him that I loved him. He smiled slightly, and kept driving. I can’t explain his behavior I don’t know why he didn’t say, ‘I love you, too.’ When we got home, I felt as if I had lost him completely, as if he wanted nothing to do with me anymore. He just sat there quietly, and watched TV. He continued to seem distant and absent. Finally, with silence all around us, I decided to go to bed. About 15 minutes later, he came to bed. But I still felt that he was distracted, and his thoughts were somewhere else. He fell asleep – I cried. I don’t know what to do. I’m almost sure that his thoughts are with someone else. My life is a disaster.

HUSBAND’S DIARY:
Boat wouldn’t start, can’t figure it out.

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In addition to UBS America the defendants are UBS Real Estate Securities, Inc; UBS Securities, LLC; Mortgage Asset Securitization Transactions, Inc., and former UBS employees David Martin, Per Dyrvick, Hugh Corcoran, and Peter Slagowitz.

The lawsuit seeks specifically to recover damages from the GSEs investment in 16 separate pools of MBS sold by UBS between 2005 and 2007.  FHFA is claiming that the GSE’s had a total investment of $4.5 billion in the securities sold by UBS.

The suit alleges that the underwriters of the underlying mortgages systematically disregarded their respective underwriting guidelines in order to increase production and profits and that the Defendants failed to conduct adequate due diligence on the mortgage loan files and mortgaged properties prior to or during the securitization process.  A number of banks and mortgage companies originated the loans in question including Fremont Mortgage, Wells Fargo Bank, Countrywide Home Loans, IndyMac, and Provident Funding Associates.

A forensic review of a sample of 966 randomly selected loans from two of the pools at issue found that approximately 78 percent were not underwritten in conformance with guidelines. The underwriting guidelines that were violated were those designed to assess the likelihood that loans would be repaid.  The forensic review revealed the following types of breaches:

1. Failure to test the reasonableness of the borrowers’ stated income relative to their line of work, leading to material misrepresentation of income.  The forensic review found multiple instances in which income appeared unreasonable yet there was no indication the originator attempted to confirm that income.
2. Failure to investigate multiple submissions from the same borrower of applications showing increasing stated incomes.  In each instance the stated income on the original application did not meet underwriting guidelines, but subsequent applications at higher income levels did.  Forensic review confirmed that the later applications misrepresented that income and that underwriters did not investigate the discrepancies.
3. Failure to confirm the intended owner occupancy of the property despite indications that the property was intended as an investment.  In some cases the loans were underwritten as owner-occupied properties even though the borrower stated they intended the property to be as second home or investment.  Additionally, the Prospectus Supplements materially understated the proportions of the loans that were not owner occupied.
4. Failure to properly calculate the borrower’s outstanding debt, resulting in a debt-to-income (DTI) ratio that exceeded underwriting guidelines.  When properly calculated, 32 percent of the 996 loans in the random sample for forensic review contained DTI ratios that exceeded applicable guidelines.
5. Failure to investigate credit report information that indicated potential misrepresentation of borrower debt.  The forensic review revealed numerous instances where multiple credit inquiries on borrower credit reports should have put underwriters on notice for potential misrepresentations of debt obligations, but underwriters did not investigate

FHFA alleges that while securitization Prospectus Supplements state that there may be compensating factors to warrant exceptions to applicable underwriting guidelines, none of the 966 loan files reviewed evidenced compensating factors that would support such exceptions.  “A 78 percent breach rate, in any event, could not possibly be explained by the proper allocation of any such exemptions.”

In addition to the forensic review, a review of loan level data was conducted to evaluate the accuracy of information provided in the Prospectus Supplements.  At least 1000 loans were sampled in each securitization and a review confirmed that much of the information contained in the Supplements regarding owner occupancy and loan-to-value was materially false.

The suit contains a table showing the ratings by various agencies (S&P, Fitch, Moody’s) at the time of issuance and the ratings as of May 3, 2011.  Without exception every Tranche had a rating of at least Aaa at issuance.  Most are currently rated CCC or even D.

FHFA is asking for an award against all Defendants for all damages sustained as a result of their wrongdoing in an amount to include rescission and recovery of the consideration paid for the GSE Certificates with interest; the GSEs’ monetary losses including lost principal and interest payments’ attorneys’ fees and costs, pre-judgment interest and other relief as deemed proper by the Court.

Acting FHFA Director Edward J. DeMarco said of the suit, “FHFA is taking this action consistent with our responsibilities as conservator of each Enterprise. From the issuance of 64 subpoenas last year to the filing of this lawsuit and further actions to come, we continue to seek redress for the losses suffered by the Enterprises.”

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So the “40% of loans wouldn’t qualify under QRM and therefore require the risk retention trigger” makes a great headline but that’s a bit misleading – it’s maybe a half-truth.  The rule allows for all government or agency backed loans (Fannie/Freddie and FHA) to be exempt from the risk retention.  So at a time where 90% of loans are agency eligible, this 40% figure is incorrect – in the short-term, the QRM restrictions mean little. But in the longer term, should Congress ever fully address the future of Freddie and Fannie, the QRM restrictions will be felt by the industry, and by the currently fragile housing market.  Many in the industry wonder exactly why Fannie & Freddie must be dissolved, but if we’re to believe that they will be taken out of conservatorship or restructured, FHA will become the de facto program as it’ll be the only option to qualify for the exemption (>70 or 80 LTV and 28/36 ratios).   But unfortunately, HUD is continuing to shy away from increasing its market share (by increasing mortgage insurance premiums and lowering its loan limits). So mortgage originators may be left with either succumbing to the restrictions and setting aside 5% for risk retention purposes, or defining themselves as “non-securitizers.” The first alternative is grim, so the focus has turned to the second alternative. In the QRM rules currently open for public comment, the “banker” is the one who pools and securitized the mortgage loan.  This means that correspondent lenders who sell to aggregators will NOT have to abide by the 5% rule, but the investor or aggregator will. But if the investors have to retain the 5% capital for risk retention, they’ll have to pull funds from other uses and put them toward the mortgage.  They’ll be looking for similar returns in this capital and therefore it’s expected these non-QRM loans will have significant price adjustments, perhaps a 1-2% higher mortgage rate. And analysts suggest that aggregators will not absorb this, and that the cost will be passed down to the correspondent seller and/or the borrower. And is this good for the housing market?  In addition, many believe that the QRM rule promotes further growth of the larger “too big to fail” banks.  They gain a competitive advantage as they have a larger asset base to be leveraged when compared to the community banker or credit union.  The smaller lenders who have acted responsibly to serve their local markets over the years are negatively impacted as the 5% retention rule is enough to possibly change their business model and force them to move away from securitizing and servicing platforms toward the correspondent channel.   Fortunately, for these reasons and others, an incredibly wide range of special interest groups have come out with a united front against the existing QRM restrictions. Groups ranging from the American Securitization Forum, credit unions across the nation, and a diverse coalition of 44 consumer organizations, civil rights groups, lenders, real estate professionals and insurers, along with 44 Senators and 282 members of the House of Representatives have voiced their concern that such a requirement would hurt, rather than help, a housing recovery (per the Santa Ana Business News). So at this point, look for the QRM question to drag on well into the foreseeable future, much to the temporary relief of the mortgage and housing industry.

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HomePath offers some very attractive features for house-hunters on a limited budget. To begin with, your down payment can be as little as 3 percent of the purchase price – and there’s no mortgage insurance required. In addition, buyers can get up to 3.5 percent of the purchase price in closing cost assistance through a special incentive program Fannie Mae is offering through Oct. 31.

That’s not all. Since Fannie Mae is the one selling the property, it doesn’t require an appraisal in order for it to approve the new mortgage. Buyers can also borrow funds needed for modest renovations to the property and have them rolled into the mortgage.

Second homes, investment property eligible

Unlike many purchase incentive programs, you don’t have to intend to use the property as your primary residence to qualify for a HomePath purchase – it can be used to buy second homes and investment properties as well. However, the 3.5 percent closing cost assistance is only available on properties purchased as a primary residence.

Mortgage rates on HomePath purchases will tend to be a bit higher than those on a regular residential real estate transaction – usually about 1/8^th to 3/8^th of a percentage point higher. However, this is more than canceled out by the fact that you won’t need to carry mortgage insurance, which typically runs about half a percent of the mortgage balance per year.

Of course, you can also avoid mortgage insurance by putting at least 20 percent down on your home purchase. But if you have the funds available to do that, you already have a variety of options available for purchasing a home.

Freddie Mac, FHA alternatives

Freddie Mac, Fannie Mae’s sibling lender, is offering its own special promotions this summer on foreclosed properties through its HomeSteps program, though the incentives are different. Buyers purchasing a HomeSteps property can obtain up to 3.5 percent of the purchase price in closing cost assistance, same as with Fannie Mae, but also can get a two-year warranty on the property and get up to a 30 percent discount on major appliances purchased for the home.

If the down payment is your primary concern, you can also obtain an FHA mortgage with as little as 3.5 percent down. However, such a mortgage through FHA would require mortgage insurance at a rate of 1.15 percent a year and are subject to certain limitations on the maximum loan amount. Of course, with an FHA loan, your choice would not be limited to foreclosed properties, as you would be with the HomePath and HomeSteps programs.

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“Food, unfortunately, is going to remain relatively expensive and get a little more expensive in the coming months,” he said at a press conference after the release of the central bank’s latest quarterly forecast.

Rising food and energy costs have led to higher inflation in Canada than the central bank anticipated, with the consumer price index expected to remain above 3 per cent for some months.

Inflation will not recede to the central bank’s 2-per cent target until mid-2012, according to the July Monetary Policy Report.

The Bank cited growing global inflationary pressures on Tuesday when it warned that it would have to raise its trend-setting overnight interest rate fairly soon. By driving up borrowing costs, the Bank can slow economic activity, which in turns tends to slow prices increases.

However, Carney is for now keeping the Bank’s influential interest rate unchanged because of economic uncertainty arising from economic problems in the United States and the European debt crisis. On Tuesday, he left the key rate at 1 per cent.

“We are in an environment here in Canada where there are substantial external headwinds,” he explained.

Nonetheless, Carney is signaling that the Bank, which has to wait about 18 months before its rate-setting measures make a difference in higher or lower inflation, is growing concerned about price hikes.

Inflation in Canada could actually be higher than the central bank is currently forecasting because of the possibility of higher-than-projected global inflation from rising commodity prices, according to Wednesday’s forecast. Also there is a risk of bigger price increases if Canadian households go on a spending spree or the economy returns to full operating speed sooner than expected, the Bank said.

Balancing Carney’s worries about a burst of economically damaging inflation is the need to help sustain Canada’s economic rebound in the face of potential disruptions in the United States, which takes the bulk of Canadian exports, and Europe.

A failure of President Obama to reach a consensus with Congress to avoid a U.S. government default would have dire consequences, Carney told the media.

“If there were actually a default on U.S. debt, it would have profound implications in our view for financial markets. I don’t think anybody can tell you with certainty exactly what would happen, but it’s certainly our view it’s not something that should be tested.”

But he added, “Our expectation is that U.S. authorities will come to an arrangement that honors their obligations to debt holders.”

Carney also said the unusually slow rebound from the recession in the United States will have a long-term impact in Canada. “It will be a slower U.S. recovery, which has implications for Canadian businesses and Canadians in terms of how we orient our economy, how we develop new markets, the extent to which we have to build (economic) productivity.”

He also expressed concerns about the debt crisis that is now threatening Italy and Spain as well as smaller European economies.

“Global risks have intensified, most notably in Europe,” Carney declared. “We are in daily contact with our colleagues in Europe,” he added, noting he’s also trying to deal with the problem through the Washington, D.C.-based International Monetary Fund.

“So it certainly is a priority for the global economy that this situation is contained and ultimately solved,” he said of the European debt problem.

Carney reiterated his message that, as the Canadian economy continues to recover from the recession, the central bank will begin to raise its trend-setting interest rate above 1 per cent, which he pointed out is an “exceptionally stimulative” level. But he declined to tip his hand on exactly when that would happen.

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The authorities also claimed that employees of Wells Fargo Financial, a non-bank subsidiary closed last year, doctored income information on mortgage applications to push through borrowers that would not have qualified for based on income.

The fine is the largest the Fed has ever issued under its consumer-protection authority and is the first action taken against a bank for predatory lending practices related to the housing bubble.

The loans in question were made between 2004 and 2008 and are estimated to involved up to 10,000 borrowers.

The Fed also ordered Wells Fargo to compensate borrowers who were affected by the alleged activities.

Wells Fargo agreed to pay the fine without admitting any wrongdoing.

The Fed blamed compensation and sales quota policies at Wells Fargo Financial for encouraging employees to falsify documents. It also faulted the bank for having inadequate controls in place to manage risks.

In a statement, Wells Fargo said the allegations stem from a few former employees and pledged to increase loan oversight of its lending practices.

“The alleged actions committed by a relatively small group of team members are not what we stand for at Wells Fargo,” said chief executive John Stumpf. “Fair and responsible lending practices have been at the core of our culture, and they will continue to guide us as we work closely with the Federal Reserve to provide restitution to customers who may have been harmed.”

The loans in question were primarily made to home owners looking to refinance existing mortgages and often involved additional cash payments, according to the Fed.

Under the Fed’s order, Wells Fargo is required to review subprime loans made January 2006 and June 2008. In cases where borrowers were pushed into loans or had their income information altered, the bank is required to make restitution.

The Fed estimated that between up to 10,000 borrowers could be eligible for compensation ranging between $1,000 and $20,000.

Wells Fargo said it has already compensated 600 customers as part of an internal investigation.

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The NAHB HPI is a composite index of home builder sentiment about the new home market.  Builder members of the National Association of Home Builders (NAHB) are asked for their perceptions of both current single-family home sales and sales expectations for the next six months as “good,” “fair” or “poor”  and asks them to rate traffic of prospective buyers as “high to very high,” “average” or “low to very low.” Scores are used to calculate three component indices and the HPI, a seasonally adjusted index.  Any number over 50 for the HPI and each of the components indicates that more builders view sales conditions as good than poor.

The component indices also rose slightly from their terrible June levels.  The component gauging current sales conditions rose two points to 15 while the one measuring expectations for traffic over the next six months jumped seven points to 22.  The component assessing prospective buyer traffic was unchanged at 12.  On a regional basis, the Northeast declined two points to 15 but the Midwest was up one point to 12 and the South and West each gained three points to 17 and 14 respectively.

According to Bob Nielsen, chairman of NAHB, “The improvement in builder confidence in July is a positive sign that the outlook perhaps isn’t quite as bleak as was feared in June.  While builders continue to confront serious challenges with regard to competition from foreclosed properties that are priced below replacement cost, inaccurate appraisals of new homes, and a very restrictive lending environment for new home construction, select markets are showing gradual improvement as consumers begin to take advantage of very favorable buying conditions.”

At the same time, the BuildFax Remodeling Index (BFRI) which tracks building permits and construction starts indicated that May had the highest level of remodeling activity since the Index was first introduced in 2004.

The BFRI is derived from building and permitting information from 4,000 cities and counties throughout the country assembled by BuildFax, a division of BUILDERadius.  The BuildFax database currently covers over 60 percent of the US commercial and residential building stock.

The BFRI for May reveals that residential remodeling activity in May registered growth in every region of the country and signifies the 19^th consecutive month of industry growth. According to BuildFax, the data demonstrate that many Americans are remodeling their current homes rather than purchasing new ones.

The May 2011 index was 124.3, the highest number ever.  This was a 22 percent year-over-year increase.  Each region increased month-over-month with the Northeast up 9.8 points (12%), the South up 7.3 points (7%), the Midwest up 16.3 points (18%), and the West up 8.7 points (7%). Even though the Midwest was up month-over-month, it continues to lag the other regions (as it has for the past three months) in year-over-year performance, down 10.6 points (11%) year-over-year. All other regions were up year-over-year, with the Northeast up 7.2 points (9%), the South up 9.5 points (10%), and the West up 20.7 points (21%).

Joe Emison, Vice President of Research and Development at BuildFax said of the index, “Even with the continued struggles in the economy, the remodeling industry has been a bright spot, as consumers look to make upgrades to their current homes, rather than purchasing a new residence. Based on the trends from the first months of this year, we expect to continue seeing strong gains from coast to coast.”

So how does this have any bearing on housing policy?  Housing starts continue to lag – the Census Bureau reports they were up 3.5 percent in June from May figures but were down almost an identical amount from June 2010.  Builders are simply not going to build until the current inventories of new and existing homes return to more normal levels and the shadow inventory does not loom so ominously over the market.

If the emphasis were shifted from new construction to rehabilitating and improving existing housing stock it could provide a real jump start to the ailing construction industry.  Remodeling dilapidated houses lacks the sex appeal of building yet another subdivision or condo complex as well as the economies of scale; but it also lacks the infrastructure costs, conservation headaches, and permitting delays.  Returning some of the million plus “off market” vacant property to service as well as improving the stock of REO to useable/salable condition might, while creating construction jobs, also speed up the timeframe for reducing the inventory and returning the market to normal activity.

Adam Quinones, MND’s Managing Editor, notes that the Department of Housing and Urban Development has already announced initiatives to rebuild the distressed housing stock.  “With so many foreclosed properties sitting empty on the market we can expect remodeling and rehabbing to be a leading indicator of a bottom in the housing market.  We already know there is a dearth of affordable rental housing available to low income renters. From that perspective, FHA should open its 203(k) program to investors if they want to accomplish their affordable housing goals.”

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The current report draws all its strength from refinance applications.  MBA’s refinance index rose a whopping 23.1 pct, its largest jump since January 2010 (the fastest week over week change in 2011 was seen in February at just under 18%).  When looking closer at refinance activity, its 4-week moving average creates a more moderate picture. The previous four reports all showed decreasing demand. The uptick in activity reported today ended that losing streak.

The connection between this surge in refinance demand and the average reported interest rate is tenuous as rates only moved down from 4.55 pct to 4.54 pct on average.  Today’s report brings the 4 week moving average of reported contract interest rates from 4.5675 pct only marginally lower to 4.56 pct.

The chart below illustrates how the presence of lower rates has not brought with it extra refinance demand, not to the extent it has in the past.  Generally more stringent underwriting guidelines combined with generally decreasing home values and the fact that markets have had several opportunities at similar rates over the past few years suggest exhaustion in the refi market as the culprit.

The purchase index fell 0.1 pct to 183.7, effectively unchanged from last week’s reading of 183.9.  Although this is up from the 160-170′s levels during this time last year, those were the lowest index levels on record.

In the chart below, note that the index is historically quite low, and still stagnant.  Also of note is that with few exceptions, an index value of 200 is the dividing line between the current stagnation, representing the best levels since May 2010 and the worst levels from any time prior.  That then, seems like the inflection point needing to be decisively moved through before we could consider purchase demand to have turned any sort of corner.

—-

* ABOUT: The MBA’s loan application survey covers over 50% of all U.S. residential mortgage loan applications taken by mortgage bankers, commercial banks, and thrifts. The data gives economists a snapshot view of consumer demand for mortgage loans. In a falling mortgage rate environment, a trend of increasing refinance applications implies consumers are seeking out lower monthly payments. If consumers are able to reduce their monthly mortgage payment and increase disposable income through refinancing, it can be a positive for the economy as a whole (may boost consumer spending. It also allows debtors to pay down personal liabilities faster. A trend of declining purchase applications implies home buyer demand is shrinking.

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