In June 2017, cybercriminals stole more than $14 million from unsuspecting people. Real estate transactions are especially vulnerable to these wily larcenists.

Real estate purchases routinely involve sending large sums of money by wire. This method is convenient, fast, and generally secure. Still, sophisticated criminals have been able to exploit people’s lack of familiarity with the real estate and escrow process.

One of the most common scams has been to convince an unwary buyer that the instructions for wiring funds have changed at the last minute “for security reasons.” The email, which appears to come from the title company or other settlement service provider, asks the buyer to wire their funds to a different link than previously agreed. The unsuspecting buyer who falls for this deception will discover, too late, that their money has been diverted to the scammer’s offshore account and is gone forever, along with the scammer.

The obvious advice is to avoid getting taken in by this kind of chicanery. Never wire funds without personally verifying with the title company or real estate closing lawyer that any change is genuine. For those unfortunates who may fall prey to the scam, there are some immediate actions that may offer a slim chance to recover the misdirected funds.

  • Contact the bank or other financial institution the funds were sent from. They may be able to stop the transfer.
  • Contact all parties involved in the real estate transaction, including the title and escrow people, the seller and the agents.
  • Inform the FBI immediately. You can file a complaint at www.ic3.gov. This should be done as quickly as possible. Even waiting just 72 hours could be too late for any recovery.

There are few experiences in life that are more stressful, emotional and confusing as buying a home. Criminals are well aware of this and will do their utmost to leverage those aspects to separate unsuspecting people from their money.

Knowledge is key.

Source: TBWS

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Home equity hits record high, and here’s how homeowners are spending it – CNBC

Home equity hits record high from CNBC.

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Since the development of the FICO credit scoring model in 1989, lenders—including mortgage lenders—have relied on that method for assessing the creditworthiness of people applying for mortgages and other types of loans. The FICO Classic score, developed by Fair, Isaacs & Co., ranges between 300 and 850. Lenders require a minimum of 620 for conventional loans (those that will ultimately sell to Fannie Mae or Freddie Mac), while borrowers with scores as low as 580 may qualify for a loan insured by the Federal Housing Administration (FHA) with as little as 3.5% down.

The FICO Classic does have some drawbacks for consumers. The three credit reporting agencies, Experian, Equifax and TransUnion, have collaborated to develop a new scoring system, called VantageScore, which also generates scores between 300 and 850. The Federal Housing Finance Agency (FHFA), which oversees Fannie Mae and Freddie Mac, is considering the use of this model. It has begun a comment period, which will be open until February 2018. Interested consumers can go to the FHFA’s Request for Information page.

Mortgage giants Fannie Mae and Freddie Mac currently own or guarantee half the mortgages in the United States.

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VantageScore claims that the use of the new model will open the credit window to 7.6 million potential borrowers who do not qualify under the current FICO model. While the specific number may be debatable, there are enough differences between the two scoring systems to allow more people to qualify.

Both scoring systems use the same criteria to generate their scores:

  1. Payment history
  2. Length of credit
  3. Types of credit
  4. Credit usage
  5. Recent inquiries

The differences have to do with how the information from the borrowers’ credit files is processed. Some of the differences may benefit consumers whose credit files are comparatively unseasoned or “thin” (few active accounts).

Both methods consider “hard” inquiries for credit in generating their scores. Too many of them may lower a borrower’s score considerably. Because a consumer often shops around for financing, whether for consumer financing or a mortgage, FICO and Vantage perform “deduplication” of inquiries. This means that they consider multiple inquiries for the same purpose over a certain period to be the same as just one. For FICO, the deduplication period is 45 days. For Vantage, the time is shortened to just 14 days.

FICO requires at least six months’ history before issuing a score. Vantage would shorten that period to just one month. This is of particular interest to younger borrowers just beginning to establish credit.

FICO judges delinquent payments on all types of credit in essentially the same manner, while Vantage treats late payments on mortgages more harshly.

It is unlikely that there will be any changes to credit scoring in the immediate future, but it is important for consumers to be aware of the mechanism for any credit scoring system so that they can adjust their financial behavior accordingly.

Source: TBWS

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The stock market began the New Year with a bang, with all of the major stock indexes reaching new all-time highs.  Although the Dow Jones Industrial Average is narrowly focused, containing just 30 large-cap stocks, it attracted considerable investor attention as it passed above the 25,000 mark on Thursday, less than a year after breaking above 20,000 for the first time.  The euphoria generated in the stock market resulted in some selling pressure in the bond market on Thursday and Friday.

 

However, this was not before bonds underwent a small rally on Wednesday following the release of minutes from the Federal Reserve’s December 12-13 policy meeting.  The minutes revealed some dissenting views from the vote to raise rates with two members concerned the December rate hike could slow economic growth and further inhibit inflation growth.  The minutes also showed the Fed remains committed to its objectives of maximum employment and a sustained return to two percent inflation.  Nevertheless, the probability for the next 25 basis point rate hike at the Fed’s policy meeting scheduled for March 21 is currently 68.1%, up from 51.7% last week.

 

The week’s most significant economic news was the December employment report.  Nonfarm payroll growth for December was reported well below the consensus forecast of 188,000, coming in at 148,000 while the two prior months were downwardly revised by 9,000.  The unemployment rate held steady at 4.1% while the labor participation rate remained at 62.7%. Hours worked were unchanged at 34.5.  Average hourly earnings gained .3% month-over-month, after increasing a downwardly revised 0.1% (from 0.2%) in November.  Over the last 12 months, average hourly earnings have gained 2.5% to match the 2.5% for the 12 months ending in November.

 

For a two week period ending December 29, 2017, the Mortgage Bankers Association (MBA) reported their overall seasonally adjusted Market Composite Index (application volume) fell by 2.8%.  The seasonally adjusted Purchase Index decreased 1.0% from two weeks prior while the Refinance Index declined 7.0%.

 

Overall, the refinance portion of mortgage activity increased to 52.0% of total applications from 51.8% in the prior week.  The adjustable-rate mortgage share of activity decreased to 5.3% from 5.6% of total applications.  According to the MBA, the average contract interest rate for 30-year fixed-rate mortgages with a conforming loan balance was unchanged at 4.25% with points increasing to 0.36 from 0.35.

 

For the week, the FNMA 3.5% coupon bond lost 23.5 basis points to close at $102.484.  The 10-year Treasury yield increased 6.53 basis points to end at 2.4763%.  The major stock indexes continued to trend higher during the week.

 

The Dow Jones Industrial Average soared 576.65 points to close at 25,295.87.  The NASDAQ Composite Index jumped 233.17 points to close at 7,136.56 and the S&P 500 Index gained 69.54 points to close at 2,743.15.  Year to date on a total return basis, the Dow Jones Industrial Average has gained 2.33%, the NASDAQ Composite Index has advanced 3.38%, and the S&P 500 Index has added 2.60%.

 

This past week, the national average 30-year mortgage rate rose from 4.04% to 4.06%; the 15-year mortgage rate increased to 3.41% from 3.37%; the 5/1 ARM mortgage rate increased to 3.21% from 3.20% and the FHA 30-year rate was unchanged at 3.75%.  Jumbo 30-year rates increased to 4.21% from 4.19%.

 

Economic Calendar – for the Week of January 8, 2018

Economic reports having the greatest potential impact on the financial markets are highlighted in bold.

 

Mortgage Rate Forecast with Chart – FNMA 30-Year 3.5% Coupon Bond

 

The FNMA 30-year 3.5% coupon bond ($102.484, -23.5 bp) traded within a 28.1 basis point range between a weekly intraday high of $102.734 on Wednesday and a weekly intraday low of $102.453 on Tuesday and Friday before closing the week at $102.484 on Friday.

 

In another holiday-shortened week, bonds opened Tuesday below the 25-day and 50-day moving averages from a closing position above these levels on Friday, December 29.  The bond then popped back above these moving averages on Wednesday before moving back below them on Thursday and Friday as stocks surged higher.  The 25 and 50-day moving averages have not held up very well as support levels since the end of last September, and once again they serve as short-term resistance levels.  The bond is currently neither “overbought” nor “oversold” and remains trading from a sell signal generated last Thursday, so we could easily see a continuation lower for a test of support at 102.42.  A decline through the 102.42 level could result in a further decline toward the next support level at 102.17.  Should this scenario take place it would result in a slight rise in mortgage rates.

 

 

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Jobs Report

Jan 5, 2018

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New home sales up 17.5% in November from CNBC.

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Buying a first home can be a daunting process. Apart from the somewhat complex issue of financing, there is the matter of finding the “perfect home.” Here are some things buyers should maybe not sweat—and some surprising facts about what they should be concerned about.

Your furniture doesn’t fit

As you look at all those houses on the market, you may be visualizing how your favorite chair and dining room table will fit in the space. Unless your furniture has some special significance to you—it came over on the Mayflower with your great-great-great grandma—it’s probably not something you should let guide your decision. You may decide that the other features of the home are just what you want, even if your furniture doesn’t fit. You may want to use the new home as an excuse to upgrade your furniture.

The décor is hideous

Let’s face it: some people have horrible taste in wall colors. A seller may have had a fondness for deep purple paint on the living room walls and other deeply saturated primary colors in every other room. These colors will influence your impression of the home. Try to resist these kinds of negative impressions; painting is cheap, even if you hire a contractor to do the work for you.

What you can’t change

Although you can change many attributes of a home, like décor, furnishings and even appliances, there are those that you can’t change, such as the view, construction, and location.

The most important feature

An important aspect of the location, and one that most buyers pay attention to, is the school districts. Realtor.com conducted a survey of 1,000 home buyers in 2013 to explore the importance of schools to their buying decision. Even though the survey is from four years ago, there is every reason to believe they are relevant today.

The survey found that 3 out of 5 home buyers surveyed said that school boundaries would drive their home purchasing decisions.

When asked about school districts:

  • 90.53 percent said school boundaries are “important” and “somewhat important.”
  • 2.04 percent were “neutral” around importance of school boundaries
  • 7.43 percent said school boundaries are “unimportant” and “very unimportant”

School districts also affected what they were willing to pay for a home:

  • 23.59 percent would pay 1 percent to 5 percent above budget
  • 20.70 percent would pay 6 percent to 10 percent above budget
  • 8.98 percent would pay 11 percent to 20 percent above budget
  • 40.33 percent would not go above budget

School districts were also more important than a pool or spa—two generally popular amenities:

  • 62.39 percent would do without a pool or spa
  • 50.60 percent would give up accessibility to shopping

Even for the young home buyer who does not plan to start a family soon—or ever—these findings are important. A home is the largest investment most people will ever make, and keeping the market appeal in mind for that time in the distant future when they may be ready to sell can make that first home an even better investment.

 

Source: TBWS

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The stock market advanced to new highs in anticipation both houses of Congress would reach an agreement on a tax cut bill.  It appeared on Friday the reconciliation process had run its course as House Ways and Means Chairman Kevin Brady stated the conference committee had completed its negotiations.  It now appears the Republican controlled congress has enough support to pass their tax reform bill with a final vote taking place sometime this coming week.

 

Bond yields were largely unchanged for the week although 10-year Treasury yields slipped a little lower on softer than expected inflation numbers from the release of November’s Consumer Price Index (CPI).  The November CPI came in at 0.4% as forecast but the Core CPI, which excludes volatile food and energy prices, was reported to have increased just 0.1% versus a consensus forecast of a 0.2% increase.  Elsewhere, the Federal Reserve voted to raise the fed funds target range by 25 basis points to 1.25%-1.50% on Wednesday, as widely expected.  While the Fed admitted overall inflation and core inflation have declined this year and are running below 2.0%, Fed members still anticipate three additional rate hikes in 2018 and two in 2019.

 

In housing, mortgage application volume decreased during the week ending December 8.  The Mortgage Bankers Association (MBA) reported their overall seasonally adjusted Market Composite Index (application volume) decreased 2.3%.  The seasonally adjusted Purchase Index decreased 1.0% from the prior week while the Refinance Index fell by 3.0%.

 

Overall, the refinance portion of mortgage activity increased to 52.4% of total applications from 51.6% in the prior week.  The adjustable-rate mortgage share of activity decreased to 5.6% of total applications from 5.7%.  According to the MBA, the average contract interest rate for 30-year fixed-rate mortgages with a conforming loan balance increased to 4.20% from 4.19% with points decreasing to 0.39 from 0.40.

 

For the week, the FNMA 3.5% coupon bond lost 1.6 basis points to close at $102.797.  The 10-year Treasury yield decreased 2.66 basis points to end at 2.3512%.  The major stock indexes ended the week higher.

 

The Dow Jones Industrial Average gained 322.58 points to close at 24,651.74.  The NASDAQ Composite Index advanced 96.50 points to close at 6,936.58 and the S&P 500 Index added 24.31 points to close at 2,675.81.  Year to date on a total return basis, the Dow Jones Industrial Average has gained 23.11%, the NASDAQ Composite Index has advanced 27.07%, and the S&P 500 Index has added 18.43%.

 

This past week, the national average 30-year mortgage rate fell to 3.96% from 3.97%; the 15-year mortgage rate decreased to 3.30% from 3.31%; the 5/1 ARM mortgage rate dropped to 3.20% from 3.21% and the FHA 30-year rate fell to 3.55% from 3.60%.  Jumbo 30-year rates decreased to 4.12% from 4.14%.

 

Economic Calendar – for the Week of December 18, 2017

Economic reports having the greatest potential impact on the financial markets are highlighted in bold. Mortgage Rate Forecast with Chart – FNMA 30-Year 3.5% Coupon Bond

 

The FNMA 30-year 3.5% coupon bond ($102.80, -1.60 bp) traded within a 59.4 basis point range between a weekly intraday high of $102.875 on Monday and a weekly intraday low of $102.281 on Wednesday before closing the week at $102.797 on Friday.

 

There was an increase in volatility early in the week centered on tax reform news and the Federal Reserve’s Federal Open Market Committee meeting on Tuesday and Wednesday.  However, when it was all said and done, mortgage bonds ended the week very close to where they began.  Stubborn resistance continues to be found at the 38.2% Fibonacci retracement level at $102.806 while a band of support is found just below at converging 25-day and 50-day moving averages highlighted in the chart below.

 

There was a new buy signal on Thursday from a positive stochastic crossover and the bond is not yet “overbought” so we should see the bond challenge resistance at 102.806 once more early this week.  A successful break above this level could propel the bond toward the next level of resistance at the 100-day moving average at $103.02 resulting in a slight improvement in mortgage rates.  However, if the bond fails and is turned away from resistance it would likely result in sideways to lower movement with rates remaining largely unchanged to slightly worse than they are currently.

 

 

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The song remains the same.  The stock market again ended “mixed” this past week with the Dow Jones Industrial Average and S&P 500 Index setting new all-time highs.   Meanwhile, the NASDAQ Composite Index stumbled very slightly to close the week seven and a half points lower.  The optimism seen in the equity markets began when the markets opened on Monday after the U.S. Senate passed their version of a tax reform bill over the weekend.  The final bill is presently undergoing a reconciliation process between the House and Senate with expectations for passage on or before December 22.

 

Economic news was generally supportive for the financial markets with the Employment Situation Summary (Jobs Report) for November showing there were 228,000 new jobs created during the month.  While this was higher than the consensus forecast of 190,000 jobs, a smaller-than-expected increase in average hourly earnings (+0.2% vs. forecast of +0.3%) helped to support the bond market.  The key takeaway here is job growth remains strong while wages, which are positively correlated with inflation, continue to be checked.  This scenario can be beneficial for both stocks and bonds as it suggests there can be stable economic growth without the inflationary fears that normally go along with such growth.

 

In housing, mortgage application volume increased during the week ending December 1.  The Mortgage Bankers Association (MBA) reported their overall seasonally adjusted Market Composite Index (application volume) increased 4.7%.  The seasonally adjusted Purchase Index increased 2.0% from the prior week while the Refinance Index increased by 9.0%.

 

Overall, the refinance portion of mortgage activity increased to 51.6% of total applications from 48.7% in the prior week.  The adjustable-rate mortgage share of activity decreased to 5.7% of total applications from 6.2%.  According to the MBA, the average contract interest rate for 30-year fixed-rate mortgages with a conforming loan balance fell to 4.19% from 4.20% with points increasing to 0.40 from 0.34.

 

For the week, the FNMA 3.5% coupon bond gained 15.7 basis points to close at $102.813.  The 10-year Treasury yield increased 1.45 basis points to end at 2.3778%.  The major stock indexes ended the week “mixed” with the Dow and S&P 500 both moving higher while the NASADQ Composite Index slightly declined.

 

The Dow Jones Industrial Average added 97.57 points to close at 24,329.16.  The NASDAQ Composite Index lost 7.51 points to close at 6,840.08 and the S&P 500 Index gained 9.28 points to close at 2,651.50.  Year to date on a total return basis, the Dow Jones Industrial Average has gained 23.1%, the NASDAQ Composite Index has advanced 27.1%, and the S&P 500 Index has added 18.4%.

 

This past week, the national average 30-year mortgage rate fell to 3.97% from 3.98%; the 15-year mortgage rate decreased to 3.31% from 3.32%; the 5/1 ARM mortgage rate increased to 3.21% from 3.20% and the FHA 30-year rate remained unchanged at 3.60%.  Jumbo 30-year rates decreased to 4.14% from 4.16%.

 

Economic Calendar – for the Week of December 11, 2017

 

Economic reports having the greatest potential impact on the financial markets are highlighted in bold.­­

 

 

Mortgage Rate Forecast with Chart – FNMA 30-Year 3.5% Coupon Bond

 

The FNMA 30-year 3.5% coupon bond ($102.81, +15.70 bp) traded within a 51.5 basis point range between a weekly intraday high of $102.984 on Thursday and a weekly intraday low of $102.469 on Monday before closing the week at $102.813 on Friday.

 

After opening -18.7 basis points lower on Monday as stocks rallied, the bond strongly recovered to post a 3.2 basis point gain on the day.  Positive movement continued on Tuesday and Wednesday as the bond powered above multiple resistance levels, closing above the 25-day and 50-day moving averages.  These levels now become a zone of support.  Although the bond then slipped lower on Thursday and Friday, it remains at support.  There was a new buy signal last Tuesday and with the bond trading at support but not “overbought,” we could see a bounce higher off of support toward resistance located at $103.03.  Should this occur as the chart suggests it could result in slightly lower mortgage rates.

 

 

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The stock market ended “mixed” this past week while showing greater volatility although the major indexes once again set new all-time highs during the week.  The Dow Jones Industrial Average and S&P 500 rallied almost 1% on both Tuesday and Thursday on increasing investor sentiment optimism that the Senate will soon pass their version of a tax-reform bill.

 

However, an increase in volatility showed up on Friday to trim weekly market gains when it was reported that President Trump’s former national security advisor, Mike Flynn, made a plea bargain to testify about possible Russian interference in the 2016 election.  This news should be “taken with a grain of salt” as much of the news reporting on supposed collusion by the Trump campaign with Russia has so far been disingenuous.

 

Economic news for the week was encouraging.  Third-quarter GDP was upwardly revised to 3.3% showing the strongest period of economic growth in three years.  Personal Income increased 0.4% in October as wages and salaries increased by 0.3%.  Personal Spending also increased by 0.3%, as forecast.  On a year-over-year basis, real disposable personal income was up 1.6%.  Inflation remained tame with the PCE Price Index up 0.1%, as expected, leaving it 1.6% higher year-over-year, versus up 1.7% in September.  The core PCE Price Index, which excludes food and energy, increased 0.2%, as expected.  Housing data continued to show strong growth.

 

The Commerce Department reported New Home Sales in October rose 6.2% for the month to a seasonally adjusted annual rate of 685,000, the fastest pace in a decade.  This was significantly greater than the economic consensus forecast of 629,000, and easily surpassed September’s downwardly revised rate of 645,000.  The median sales price increased 3.3% year-over-year to $312,800 while the average sales price jumped 13.6% to $400,200.  Based on the current sales rate, the inventory of new homes for sale dropped to a 4.9-months’ supply versus 5.2 months in September and the year-ago period.  Regionally, large increases in the Northeast (+30.2%) and Midwest (+17.9%) led the sharp increase in overall sales.

 

Furthermore, the National Association of Realtors (NAR) reported Pending Home Sales in October rose by 3.5%, the most in eight months, led by a rebound in Southern regions affected by hurricanes.  The consensus forecast had called for only a 0.6% increase.  The NAR’s chief economist, Lawrence Yun, stated “Home shoppers had better luck finding a home to buy in October, but slim pickings and consistently fast price gains continue to frustrate and prevent too many would-be buyers from reaching the market.  Until new home construction climbs even higher and more investors and homeowners put their home on the market, sales will continue to severely trail underlying demand.”

 

As for mortgages, mortgage application volume decreased during the week ending November 24.  The Mortgage Bankers Association (MBA) reported their overall seasonally adjusted Market Composite Index (application volume) decreased 3.1%.  The seasonally adjusted Purchase Index increased 2.0% from the prior week while the Refinance Index decreased by 8.0%.

 

Overall, the refinance portion of mortgage activity decreased to 48.7% of total applications from 49.9% in the prior week.  The adjustable-rate mortgage share of activity decreased to 6.2% of total applications from 6.5%.  According to the MBA, the average contract interest rate for 30-year fixed-rate mortgages with a conforming loan balance held steady at 4.20% with points decreasing to 0.34 from 0.42.

 

For the week, the FNMA 3.5% coupon bond lost 12.5 basis points to close at $102.656.  The 10-year Treasury yield increased 2.32 basis points to end at 2.3633%.  The major stock indexes ended the week “mixed” with the Dow and S&P 500 both moving higher while the NASADQ Composite Index retreated.

 

The Dow Jones Industrial Average rose 673.60 points to close at 24,231.59.  The NASDAQ Composite Index lost 41.57 points to close at 6,847.59 and the S&P 500 Index gained 39.80 points to close at 2,642.22.  Year to date on a total return basis, the Dow Jones Industrial Average has gained 22.6%, the NASDAQ Composite Index has advanced 27.2%, and the S&P 500 Index has added 18.0%.

 

This past week, the national average 30-year mortgage rate rose to 3.98% from 3.96%; the 15-year mortgage rate increased to 3.32% from 3.30%; the 5/1 ARM mortgage rate increased to 3.20% from 3.17% and the FHA 30-year rate remained unchanged at 3.60%.  Jumbo 30-year rates increased to 4.16% from 4.15%.

 

Economic Calendar – for the Week of December 4, 2017

 

Economic reports having the greatest potential impact on the financial markets are highlighted in bold.

 

Mortgage Rate Forecast with Chart – FNMA 30-Year 3.5% Coupon Bond

 

The FNMA 30-year 3.5% coupon bond ($102.656, -12.5 bp) traded within a 53.1 basis point range between a weekly intraday high of $102.953 on Tuesday and a weekly intraday low of $102.422 on Thursday and Friday before closing the week at $102.656 on Friday.

 

After moving higher on Monday and Tuesday just above a couple of nearby resistance levels, the bond pulled back below several of these levels while displaying an increase in volatility on Thursday and Friday.  The bond is now beneath four resistance levels shown as a Resistance Zone between 102.73 and 102.86 on the chart.  This zone could prove to be a formidable area of resistance for the bond to overcome, and it appears the path of least resistance is a move lower toward support.  A new sell signal formed last Wednesday, and the bond is not yet “oversold” so we could see a continuing move lower to test support levels.  Such a move would result in slightly worse mortgage rates.

 

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