Morning Report: Non-QM is on hold

Vital Statistics:

 

Last Change
S&P futures 2328 104.4
Oil (WTI) 24.21 0.89
10 year government bond yield 0.85%
30 year fixed rate mortgage 3.84%

 

Stocks are higher this morning as the markets digest the actions by the Fed to stabilize markets. Bonds and MBS are up.

 

The actions from the Fed seemed to stabilize things yesterday. Lenders said that aggregators were bidding on tapes, although turn times were on the slow side. We did see some decent lock volume yesterday afternoon, so (fingers crossed) things are returning to normal for at least straightforward Fannie Mae loans.

 

Yesterday, Fannie Mae outlined some flexibility with employment verifications and appraisals. Fannie will now accept written verification of employment or bank statement confirmation. On appraisals, alternatives are permitted under certain circumstances, such as primary purchases, when the Fannie holds the previous mortgage.

 

With the Fed’s interventions in the TBA market, more bankers are getting margin calls. The fun never ends. The mortgage REIT sector has been wallopped and it looks like at least one (Invesco Mortgage) can’t make its margin calls.

 

Seeing announcements from Pingora and Mr. Cooper suspending MSR co-issuance  in the Ginnie Mae space. Can’t imagine where GN servicing is trading these days but it is probably awful.

 

The non-QM market is pretty much halted as Angel Oak and Citadel suspended non-QM lending for at least two weeks. The securitization markets are frozen at the moment so these firms don’t have much of an outlet. Citadel said that it has no liquidity issues at the moment and that its balance sheet is strong.

 

The Senate failed to pass a stimulus bill yesterday. Democrats think the bill is too “corporation centric” as opposed to “worker centric.” Of course if the employers are out of business, the workers are going to take a hit too.

 

Liquidity is drying up in the Treasury market.

Author: Brent Nyitray

Why do you need new bands? Everyone knows rock attained perfection in 1974. It's a scientific fact. - Homer Simpson

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