The S&P CoreLogic Case-Shiller Indices showed that the rate of home-price increases across the U.S. had continued to slow in November.

[caption id="attachment_9470" align="alignleft" width="240"] Blitzer: Low inventories are supporting home prices.[/caption]

“Home prices are still rising, but more slowly than in recent months. The pace of price increases are being dampened by declining sales of existing homes and weaker affordability,” says David M. Blitzer, managing director and chairman of the index committee at S&P Dow Jones Indices.  “Sales peaked in November 2017 and drifted down through 2018. Affordability reflects higher prices and increased mortgage rates through much of last year. Following a shift in [Federal Reserve] policy in December, mortgage rates backed off to 4.45 percent, from 4.95 percent.”

The S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index, covering all nine U.S. census divisions, reported a 5.2 percent annual gain in November, down from 5.3 percent in the previous month. The 10-City Composite annual increase came in at 4.3 percent, down from 4.7 percent, in the previous month.

The 20-City Composite posted a 4.7 percent year-over-year gain as of November 2018, down from 5 percent in the previous month. Las Vegas, Phoenix and Seattle reported the highest year-over-year gains among the 20 cities.

In November, Las Vegas led the way with a 12 percent year-over-year price increase, followed by Phoenix with an 8.1 percent increase and Seattle with a 6.3 percent increase. Seven of the 20 cities reported greater price increases in the year ending November 2018, compared to the year ending October.

 Before seasonal adjustment, the National Index posted a month-over-month gain of 0.1 percent in November. The 10-City and 20-City Composites both reported a 0.1 percent decrease for the month. After seasonal adjustment, the National Index recorded a 0.4 percent month-over-month increase in November.

The 10-City Composite and the 20-City Composite posted 0.3 percent month-over-month increases. In November, eight of 20 cities reported increases before seasonal adjustment, while 15 of 20 cities reported increases after seasonal adjustment.

“Housing market conditions are mixed while analysts’ comments express concerns that housing is weakening and could affect the broader economy,” said Blitzer. “Current low inventories of homes for sale--about a four-month supply--are supporting home prices. Stable 2 percent inflation, continued employment growth, and rising wages are all favorable. Measures of consumer debt and debt service do not suggest any immediate problems.”

Angel Oak Capital Advisors has completed a $609 million securitization primarily composed of non-QM residential mortgages. The securitization was backed primarily by loans originated through sister companies, or affiliates, including Angel Oak Mortgage Solutions LLC, Angel Oak Home Loans LLC and Angel Oak Prime Bridge LLC. The transaction was rated by both Fitch and Dunn & Bradstreet.

The securitization is one of the largest non-QM transaction of affiliated originator loans completed since the 2008 financial crisis. The deal is Angel Oak’s ninth non-QM securitization, bringing the total issuance amount to $2.6 billion. All nine securitizations have been backed almost entirely by mortgages originated by Angel Oak’s affiliated lenders.

“The size of this deal reflects our strong investor following and leadership in the non-QM market. Angel Oak’s vertically integrated issuer model uniquely positions us in the marketplace because, through our securitizations, we are able to provide investors with direct exposure to non-QM loans originated by our affiliated mortgage lenders,” said Sreeni Prabhu, Angel Oak’s co-CEO and CIO.

The security includes 1,752 loans with an average weighted credit score of 710. The average loan amount is $348,000, with the majority of the loans were issued in California, Florida and Georgia.

“We believe our programmatic non-QM issuance further demonstrates the sector’s post-crisis growth, and we look forward to contributing to the continuation of that momentum,” said Lauren Hedvat, managing director of capital markets for Angel Oak.

Mortgage applications decreased 2.7 percent from one week earlier, according to the Mortgage Bankers Association's Weekly Mortgage Applications Survey for the week ending Jan. 18, 2019.

The Market Composite Index measures mortgage loan application volume on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the index decreased 0.3 percent compared with the previous week. The Refinance Index decreased 5 percent from the previous week.

The seasonally adjusted Purchase Index decreased 2 percent from one week earlier. The unadjusted Purchase Index increased 4 percent compared with the previous week and was 13 percent higher than the same week one year ago.

[caption id="attachment_9373" align="alignleft" width="144"] Joel Kan[/caption]

"Mortgage application activity cooled off last week after two consecutive weeks of sizeable increases. Both purchase and refinance applications saw declines but remained at healthy levels, with the purchase index remaining close to a nine-year high, and the refinance index hovering near its highest level since last spring," said Joel Kan, associate vice president of economic and industry forecasting for the MBA. "Reversing the recent downward trend, rates increased for most loan types last week, due to better-than-expected unemployment claims, easing-trade tensions and stabilization in the equity markets."

The refinance share of mortgage activity decreased to 44.5 percent of total applications from 46.8 percent the previous week. The adjustable-rate mortgage share of activity decreased to 8.3 percent of total applications.

The Federal Housing Administration share of total applications decreased to 10.5 percent from 10.9 percent the week prior. The Veterans Affairs share of applications decreased to 10.3 percent from 10.4 percent the week prior. The Department of Agriculture share of applications decreased to 0.4 percent from 0.5 percent the week prior.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances, $484,350 or less, increased to 4.75 percent from 4.74 percent, with points decreasing to 0.44 from 0.45, including the origination fee, for 80 percent loan-to-value loans. The effective rate remained unchanged from last week.

The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances, greater than $484,350, increased to 4.59 percent from 4.53 percent, with points decreasing to 0.25 from 0.31, including the origination fee, for 80 percent LTV loans. The effective rate decreased from last week.

The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA increased to 4.82 percent from 4.76 percent, with points increasing to 0.62 from 0.52, including the origination fee, for 80 percent loan-to-value loans. The effective rate increased from last week.

The average contract interest rate for 15-year fixed-rate mortgages decreased to 4.12 percent from 4.13 percent, with points increasing to 0.53 from 0.45, including the origination fee, for 80 percent loan-to-value loans. The effective rate increased from last week.

The average contract interest rate for 5/1 ARMs increased to 4.12 percent from 4.08 percent, with points increasing to 0.42 from 0.32, including the origination fee, for 80 percent loan-to-value loans. The effective rate increased from last week.

The ranking minority member of the Senate Committee on Banking, Housing, and Urban Affairs, Sen. Sherrod Brown, D-OH, has criticized the Consumer Financial Protection Bureau’s failure to monitor financial services institutions for violations of the Military Lending Act.

The MLA was passed in 2006 with broad bipartisan support and prevents predatory lenders from taking advantage of active-duty service members through a number of protections including interest rate cap on loans to service members and their families.

[caption id="attachment_9328" align="alignright" width="237"] Sen. Sherrod Brown[/caption]

“The CFPB is neglecting its duty to protect the women and men who serve and protect our country. The CFPB has broad authorities. Congress does not need to take action, the CFPB Director does,” said Brown.

The senator’s criticism of the CFPB, however, occurred on January 18. That was one day after Kathleen Kraninger, director of the CFPB, had asked Congress to grant the CFPB clear authority to supervise financial institutions for compliance with the Military Lending Act.

“The bureau is committed to the financial well-being of America’s service members. This commitment includes ensuring that lenders subject to our jurisdiction comply with the Military Lending Act so our service members and their families are provided with the protections of that law,” said Kraninger. “That’s why I have asked Congress to explicitly grant the bureau authority to conduct examinations specifically intended to review compliance with the MLA. That authority would complement the work the bureau currently does to enforce the MLA."

Kraninger thought legislation proposed in the House of Representatives, H.R. 442, that grants the bureau such authority was a good first step, though she would like to see bipartisan legislation advances as quickly as possible in the 116th Congress.

The CFPB transmitted a legislative proposal to the speaker of the House of Representatives and the vice president in his capacity as president of the Senate, and shared copies with the chairs and ranking members of the Senate Committee on Banking, Housing, and Urban Affairs and the House Committee on Financial Services. 

During former Director Richard Cordray’s tenure, the CFPB used its supervisory authority to proactively examine banks and non-bank lenders for violations of protections under the MLA, according to a statement from Brown.

Under Mick Mulvaney, the CFPB ended those examinations without the cooperation of the Department of Defense and said it would reconsider whether the CFPB has the authority to examine lenders for compliance with the MLA. Kraninger affirmed that plan, meaning the CFPB will only enforce for violations of the MLA if some other action brings the matter to the Bureau’s attention, according to the statement.