Good Tuesday AM,

 

T -7 days for the election. Stocks are under some pressure today, although they seem to be clawing back out of the early hole. Bonds are doing better for the second day. The 10-yr Treasury is at .78%. Mortgage bonds are up a dozen bps as well. I am not yet convinced this is a shift towards lower rates, it may be just a rebound from last week’s selloff. I am keeping my fingers crossed though that this is a more defined move lower in yield, we will know soon. Lots of news today which is not bond-friendly: Durable Orders, Case Schiller and FHFA housing, all beat expectations by large margins. Consumer Confidence missed expectations, which could offset the some of the news items that came in stronger than expected. Markets seem to be holding on waiting for the next move (and the election).

 

November of every year brings with it news of the conventional loan amounts. Matt Graham did a good job assessing the prospects below:

 

Today’s FHFA home price data was the 2nd to last month needed to calculate the annual change in home prices (which FHFA relies on to determine new loan limits).  But it’s not quite as easy as just looking at the headline 8.0% annual growth.  Loan limits are based on FHFA’s expanded data set that is only released quarterly.  Fortunately, that expanded data set tends to fall very close to the Home Price Index headlines.  We’ll get September’s data (and thus the quarterly number) next month.  We got August today, and it was very strong.

 

But do you really care about the nitty gritty, or do you just want to know what the range of possibilities looks like?!  So without further ado, from worst case to best:

 

$537,450 – If prices mysteriously tanked in September and there was no home price growth for the entire quarter.

$545,975 – If prices mysteriously stopped improving in September, and Q3’s gains were solely in Jul/Aug

$546,435 – If price growth cooled off massively in Sept, and Q3 was in line with average growth over the past year

$549,190 – If price gains cool a bit in September

$551,232 – If annual price gains remain at 8.0% (as was reported today)

$552k+   – To whatever extent September price gains cause annual appreciation to increase beyond the 8.0% seen through the end of August, new conforming loan limits will be $552k or higher.

 

Talk forbearances for a moment, as a reminder, under current rules, servicers can begin the foreclosure process when a borrower becomes 120 days delinquent. While the CARES Act provides that servicers are not to report borrowers as delinquent to credit reporting agencies if the loan was current before entering forbearance, servicers and agencies backing federally-backed loans still consider borrowers delinquent for servicing purposes during forbearance under the CFPB’s servicing rules. As a result, at the end of the first 180-day forbearance period, a borrower could immediately be considered eligible for and a servicer could pursue foreclosure if the forbearance is not renewed

 

A few other fascinating news notes to overflow todays blog…

 

• Amy Coney Barrett was sworn in. Justice Barrett took the first of two oaths to be sworn in to the Supreme Court, establishing a broad conservative majority for the first time since the 1930s. She took the judicial oath today.
• Antibodies don’t last, study shows. A large English survey showed the proportion of people testing positive for Covid-19 antibodies declined by 26.5% over the summer, suggesting that getting the virus might not confer long-lasting immunity from future infection.
• 28 — The number of states—out of the 29 that require mail-in ballots to arrive on or before Election Day—that have seen delays in first-class mail delivery since late July. The average delivery time exceeded six days in these states, more than the one to three days expected for first-class mail.

 

Please remain safe and healthy, make today great!