Category Archives: Investing

[Video] Mnuchin voices support for decreasing Fed balance sheet

During an interview with CNBC on Tuesday, Department of the Treasury Secretary Steven Mnuchin voiced his support for the Federal Reserve‘s recently announced plan to decrease its balance sheet.

Mnuchin explained that he believed increasing the balance sheet was something the Federal Reserve needed to do in the wake of the financial crisis, but said now the time has come to reverse that, according to an article by Berkeley Lovelace Jr. for CNBC.

“We think it’s the right thing for them to get out of their large portfolio,” Mnuchin said. “It was something that they did in a unique period of time and obviously, it has to be reversed.”

However, he also clarified that, regardless of his opinion, the Fed operates independently of political parties and their viewpoints.

Here is the interview:

Tucked into the May Federal Open Market Committee meeting minutes, the Fed revealed its plan to start to unwind the $4.5 trillion portfolio of bonds, which the June announcement expanded on.

“The Fed will begin to reduce the securities held on its balance sheet later this year, limiting the amount of securities that will be allowed to run-off each month. With lower caps for mortgage-backed securities compared to Treasuries, it is possible that there will be less widening in mortgage spreads than previously estimated,” said Mike Fratantoni, Mortgage Bankers Association chief economist.

Article source:

Lennar bullish after new home demand reaches 10-year high

The most recent data on housing starts and new home sales painted a decidedly gloomy picture about the state of the nation’s housing economy.

The latest report from the Department of Housing and Urban Development and the U.S. Census Bureau showed that housing starts sank to an eight-month low in May, and the most recent data from those same agencies showed that new home sales fell by 11.4% in April.

And while some observers are suggesting that the lack of housing supply is nearing “emergency” status, one prominent homebuilder is seeing just the opposite.

Lennar Corporation said Tuesday that it saw double-digit increases in revenue from home sales, deliveries of new homes, and orders for new homes in the second quarter.

In fact, Lennar said that the demand for new homes just hit a 10-year high, as the second quarter saw the homebuilder receive more new home orders in any quarter in the last 10 years.

Lennar shared the stats as part of the release of its second quarter financial results.

“The overall market improvement was supported by our highest quarterly new orders in the last ten years of 8,898 homes, a 12% increase year over year,” Lennar CEO Stuart Miller said on Tuesday. “Home deliveries and revenues from home sales increased 15% and 18%, respectively, year over year, while our backlog dollar value increased 20% to $4 billion.”

Overall, Lennar reported second quarter net earnings of $213.6 million, or $0.91 per diluted share, compared to net earnings of $218.5 million, or $0.95 per diluted share, in the same time period last year.

Lennar cited expenses related to its $643 million acquisition of WCI Communities, a “lifestyle community developer and luxury homebuilder” headquartered in Florida, as a drag on its earnings results.

Lennar reported that its revenue from home sales increased 18% in the second quarter of 2017 to $2.9 billion from $2.4 billion in the second quarter of 2016.

The homebuilder said that the revenue rose primarily because of a 15% increase in the number of home deliveries, excluding unconsolidated entities, and a 3% increase in the average sales price of homes delivered.

Lennar’s new home deliveries, excluding unconsolidated entities, increased to 7,687 homes in the second quarter of 2017 from 6,711 homes in the second quarter of 2016, while the average sales price of homes delivered was $374,000 in the second quarter of 2017, compared to $362,000 in the second quarter of 2016.

Those results have Miller feeling bullish on the state of the housing economy overall, suggesting that the recent market-wide housing data is not as dire as it appears.

“These strong results were supported by an improved macroeconomic environment, renewed optimism, wage and job growth, and increased consumer confidence,” Miller said. “We are now seeing, contrary to recent reports on housing starts and building permits, more of a reversion to normal in the housing market than the slow and steady recovery pace of the last several years.”

Article source:

PHH finalizes sale of Freddie Mac mortgage servicing rights portfolio to New Residential

At the end of last year, PHH announced that it planned to sell off its entire mortgage servicing rights portfolio in a massive deal with New Residential Investment.

Now, that process is moving closer to being complete, as PHH disclosed Monday that it recently completed the sale of “substantially all” of its Freddie Mac MSR portfolio to New Residential.

PHH made the disclosure in filing with the Securities and Exchange Commission.

In the filing, PHH said that the closing of this sale constituted the initial sale of MSRs under its agreement with New Residential. 

When PHH initially announced the deal in December, it said it planned to sell the servicing rights on 480,000 mortgages with a total unpaid principal balance of $72 billion to New Residential.

Based on the “MSR portfolio composition” and market conditions, PHH said that it expects the proceeds of the deal to be approximately $912 million.

Of that $912 million, approximately $612 million is from the sale of the MSRs themselves and approximately $300 million is related to the sale of servicing advances.

In this deal, PHH said that it sold the servicing rights on approximately 81,500 mortgages to New Residential.

Additionally, the SEC filing states the following:

The Company sold the Freddie Mac MSR Portfolio, together with all servicing advances related to the Freddie Mac MSR Portfolio, for total proceeds of approximately $110 million, of which approximately $101.5 million was attributable to the purchase price for the Freddie Mac MSR Portfolio and approximately $8.5 million was attributable to the related servicing advances.

As part of the deal, PHH will be subservicing the MSRs for New Residential for an initial period of three years.  The SEC filing also states that in order to facilitate New Residential’s financing of servicing advances as part of the subservicer agreement, New Residential will reimburse PHH on a weekly basis for any servicing advances that PHH makes.

PHH also notes that the closing of the Fannie Mae portion of the MSR sale is expected to take place in the third quarter.

Article source:

Bunk Beds