E-Mortgages Will Speed Up Closings, Cut Costs
An electronic mortgage process could cut 30 days off the average 52 days it takes to close a loan, according to a team developed by Fannie Mae to study e-mortgages. What’s more, going paperless could save the mortgage industry an average of about $1,100 per mortgage—or about $1 billion a year.
Still, the industry has been slow to adopt electronic mortgage processes, facing several hurdles in transitioning to an all-electronic system. However, the process is expected to get a boost from the Consumer Financial Protection Bureau’s new mortgage disclosure forms that will be disseminated electronically.
“This will allow stakeholders much earlier in the origination chain to derive value from going electronic,” says Nancy Alley, vice president of strategic planning at Simplifile, a company that helps record mortgages electronically. “That should help adoption. Plus, an electronic process should drive a better consumer experience.”
The industry has been gradually progressing toward digital mortgage processes. About 25,000 mortgages had electronic promissory notes in 2013—but that only represents about 1 percent of all U.S. mortgages originated last year, according to Michael Cafferky, product development manager at Fannie Mae.
Mortgage backed securities (MBS) gained +49 basis points (BPS) from last Friday’s close which caused 30 year fixed mortgage rates to move to their lowest levels for 2014.
We also saw new record highs in the Dow and S&P 500.
It was a mixed-bag of economic data for our holiday-shortened week with better than expected economic readings for Durable Goods, Initial Weekly Jobless Claims and a block-buster reading in the Chicago PMI release. But we had weaker than expected readings in Personal Spending , Pending Home Sales and 1st QTR GDP.
We saw very strong demand for our 2, 5 and 7 year Treasury auctions.
The bond market (which sets your rates) continued to receive a tremendous amount of international demand (a.k.a “flight to safety”) as fighting in the Ukraine intensified and the market began to try to front-run the ECB this week. The market is expecting the European Central Bank to follow through on their statements that they would announce their version of QE on June 5th.
What to Watch Out For This Week:
Date Time (ET) Economic Release Actual Market Expects Prior 2-Jun 10:00 AM ISM Index – 55.6 54.9 2-Jun 10:00 AM Construction Spending – 0.70% 0.20% 3-Jun 10:00 AM Factory Orders – 0.50% 1.10% 3-Jun 2:00 PM Auto Sales – NA 5.3M 3-Jun 2:00 PM Truck Sales – NA 7.5M 4-Jun 7:00 AM MBA Mortgage Index – NA NA 4-Jun 8:15 AM ADP Employment Change – 200K 220K 4-Jun 8:30 AM Trade Balance – -$41.3B -$40.4B 4-Jun 8:30 AM Productivity-Rev. – -2.50% -1.70% 4-Jun 8:30 AM Unit Labor Costs – 4.80% 4.20% 4-Jun 10:00 AM ISM Services – 55.5 55.2 4-Jun 10:30 AM Crude Inventories – NA 1.657M 4-Jun 2:00 PM Fed’s Beige Book – – – 5-Jun 7:30 AM Challenger Job Cuts – NA 5.70% 5-Jun 8:30 AM Initial Claims – 310K 300K 5-Jun 8:30 AM Continuing Claims – 2650K 2631K 5-Jun 10:30 AM Natural Gas Inventories – NA 114 bcf 6-Jun 8:30 AM Nonfarm Payrolls – 220K 288K 6-Jun 8:30 AM Nonfarm Private Payrolls – 230K 273K 6-Jun 8:30 AM Unemployment Rate – 6.40% 6.30% 6-Jun 8:30 AM Hourly Earnings – 0.20% 0.00% 6-Jun 8:30 AM Average Workweek – 34.5 34.5 6-Jun 3:00 PM Consumer Credit – $15.0B $17.5B
I will be watching these reports closely for you and let you know if there are any big surprises: It is virtually impossible for you to keep track of what is going on with the economy and other events that can impact the housing and mortgage markets. Just leave it to me, I monitor the live trading of Mortgage Backed Securities which are the only thing government and conventional mortgage rates are based upon.