Category Archives: Lending

LenderLive names Sherry Valladares regional account manager

Sherry Valladares joined LenderLive as a correspondent lending regional account manager.

Valladares will cover the Northeast region and work with current and prospective clients participating in, or considering, LenderLive’s correspondent program. She will report to Senior Vice President and National Sales Manager Bob Kallio.

Valladares has more than 15 years of mortgage industry experience, with a background in secondary, operations, origination and underwriting. Previously, she served as an account executive at CMG Financial and a customer account manager for Fannie Mae, responsible for managing sales and strategic relationships including day-to-day business activities with banks, credit unions and mortgage banks.

“We’re committed to helping our clients not only improve their businesses’ efficiencies, but also provide reliable customer experience that protects their relationships, making it critical for us to invest in expert talent,” said David Vida, president of LenderLive Network. “I’m confident that Sherry’s client relations skills and track record of success will translate into superior customer service and, ultimately, better results for our clients.”


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Urban Institute: Here’s how rising interest rates will impact the mortgage market

Interest rates have fallen not just since 2007, but consistently over the past 35 years, according to a new report from Laurie Goodman, Urban Institute co-director of the Housing Finance Policy Center.

The 10-year Treasury note peaked at more than 15% in 1981, but fell to just 1.83% in November 2016. Primary mortgage rates followed this pattern, falling from more than 18% in 1981 to 3.54% in November.

Now, mortgage rates are increasing once more as the Treasury yield and the 30-year fixed-rate mortgage are up 44 basis points and 49 basis points consecutively as of July this year.

The chart below, which uses data from Freddie Mac and the Federal Reserve, demonstrates the falling interest rates from the early 1980s until 2016.

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Rising rates

(Source: Urban Institute, Freddie Mac, Federal Reserve)

In June, the Fed voted to raise interest rates for the second time this year. The first rate hike occurred in its March meeting, just after deciding to raise rates three months before in December 2016.

Now, the Urban Institute predicted the impact of these rising interest rates on the mortgage market in its latest report. It states mortgage origination volumes will decline as interest rates rise.

As interest rates rise, the percentage of the population where it would benefit homeowners to refinance will drop, pulling overall originations down with it. The chart below reflects the estimated share of refinanceable mortgages.

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Rising rates

(Source: Urban Institute, Freddie Mac, eMBS)

Fannie Mae, Freddie Mac and the Mortgage Bankers Association all predicted a decrease in mortgage origination volume in 2017 and 2018. Here are the predictions from each company:

Fannie Mae: 20% drop in 2017 followed by 7% drop in 2018

Freddie Mac: 27% drop in 2017 followed by 3% drop in 2018

MBA: 15% drop in 2017 followed by 1.5% drop in 2018

But a decrease in originations is not the only effect rising interest rates will bring. The Urban Institute explains profitability will decline, and mergers and acquisitions will continue to increase.

Mergers and acquisitions in the mortgage market increased over the past year, and earlier this year, the MBA predicted this increase in activity will not die down anytime soon. In fact, it explained mergers and acquisitions will heat up over the next two years.

The Urban Institute’s report shows that because lenders are more profitable during refinancing waves, profitability will drop as interest rates increase and lenders are forced to raise rates as little as possible to maintain their market share.

Click to Enlarge

Rising rates

(Source: Urban Institute, Federal Reserve Bank of New York)

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Home Depot reports record sales numbers

It’s turning out to be a strong year for Home Depot, as it records solid earnings for the second quarter of fiscal 2017.

According to the home improvement store’s latest earnings release, sales surged to $28.1 billion for the second quarter of fiscal 2017, a 6.2% increase from the second quarter of fiscal 2016.

The sales beat Street estimates as homeowners continued to invest in their homes that are appreciating in value, an article in Reuters by Sruthi Ramakrishnan stated.

In addition, net earnings for the second quarter of fiscal 2017 increased to $2.7 billion, or $2.25 per diluted share, compared with net earnings of $2.4 billion, or $1.97 per diluted share, in the same period of fiscal 2016.

“We were pleased with our results this quarter as our customers rewarded us with the highest quarterly sales in company history,” said Craig Menear, chairman, CEO and president.

“We also achieved the highest quarterly net earnings in company history,” said Menear.

The Reuters article attributed the increase in profit to two main factors. From the article:

Americans have been spending more on their homes as property prices are on the rise in a subdued U.S. housing market, which is facing a supply crunch.

Home Depot had previously called out price appreciation as one of the primary motivators for people to invest in their homes.

“We also believe an extended Spring season was positive for Home Depot’s outdoor business in 2Q, including outdoor garden,” BTIG Research analyst Alan Rifkin said in a pre-earnings note.

The strong quarter was enough for Home Depot to up its forecast for the rest of the year. Looking ahead, based on its year-to-date performance, Home Depot now expects sales to be up approximately 5.3%. The Company also raised its diluted earnings-per-share growth guidance for the year and now expects diluted earnings-per-share growth of approximately 13% from fiscal 2016 to $7.29. 

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