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 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.


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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