PennyMac Mortgage Investment Trust

Initial jobless claims rose to an annualized rate of 360,000 for the week ended May 10th Initial jobless claims are one of the few labor market indicators that are released every week. Unemployment is a profound driver of economic growth, and persistent unemployment has been the Achille’s heel of this recovery. While it seems like […]

The Fed’s decision to reinvest QE assets in the markets affects REITs. It keeps a bid under TBAs, and it supports MBS values in general.

The FOMC didn’t change its characterization of the economy. The labor markets are improving, economic growth slowed, and household spending moderated.

Chimera’s core earnings grew to $116 million compared to $93 million in the year-ago period. Growth was mainly due to an increase in net interest income.

The 7.4% year-over-year (or YoY) gain resembles the gains we saw during the bubble years. On a month-over-month basis, the increase was only 1.2%. It was decent. The prices for ex-distressed sales increased 6.8%. Prices are still 11.9% below their peak in April 2006.

The Federal Housing Finance Agency (FHFA) House Price Index The FHFA House Price Index differs from the other house price indices like Case-Schiller and Radar Logic in that it only looks at houses with mortgages guaranteed by Fannie Mae and Freddie Mac. This means all the home prices are below the conforming threshold, which is $417,000. […]

At the March 2013 meeting, the Fed was forecasting that 2015 unemployment would be 6.7%–7%. Now, the Fed is forecasting that unemployment will be 5.2%–5.3%.

MFA Financial is a REIT that invests in both agency and non-agency mortgage-backed securities MFA Financial (MFA) is a mortgage real estate investment trust (REIT) that invests in both agency (government-guaranteed) and non-agency (non-guaranteed) mortgage-backed securities (MBS). Its portfolio is primarily invested in hybrids, adjustable-rate mortgages (ARM), and 15-year fixed-rate mortgages. It chooses to invest […]

The mortgage market is undergoing a massive transformation as the private label mortgage market returns.

Radar Logic futures can be used to forecast real estate prices Most people are unaware that there is a futures market for U.S. real estate prices.  The Radar Logic futures contract launched about a year ago on the CBOE Futures Exchange. While they are not especially liquid, they do provide an insight into what the market […]

Mortgage applications fall off a cliff on a short week The MBA Applications index rose 11% after falling 13% the week before, which was a holiday-shortened week. Refinances drove the increase, with an 18% jump in the index. Purchase activity also rose, although only slightly. The summer selling season is winding down, and we’re entering […]

Ninety-day mortgage delinquencies rebound to 6.7% after hitting 6.1% in May Mortgage delinquencies are falling as home prices rise and the foreclosure pipeline is clearing. While 6.7% seems low compared to the peak of 10%, the “normal” level prior to the housing bubble was in the 4%-to-5% range. This also reflects the mortgage modification push […]

Back to Part 5 Non-agency mortgage backed securities – interest rate risk and credit risk When we think of non-agency paper, we have both interest rate risk and credit risk. The interest rate risk borne by non-agency mortgage backed securities is more or less the same as agency paper. They have the same exact issues […]

The Federal Housing Finance Agency (FHFA) House Price Index The FHFA House Price Index differs from the other house price indices like Case-Shiller and Radar Logic in that it only looks at houses with mortgages guaranteed by Fannie Mae and Freddie Mac. This means all the home prices are below the conforming threshold, which is $417,000. It […]

Mortgage originators have had a difficult time over the past year, as rates have begun rising. The increase in interest rates pretty much stopped the refinance boom in its tracks.

Initial jobless claims increased to an annualized rate of 374,000 for the week ended October 4. Unemployment has been the Achilles’ heel of this recovery.

The CoreLogic Index is a widely followed index of real estate values. Unlike the other major indices—like Case-Shiller or Radar Logic—CoreLogic separates distressed sales from non-distressed sales.

Leverage and Mortgage REITs – Part 1 How a mortgage REIT typically does it Most mortgage REITs use repurchase agreements to fund their balance sheet. A repurchase agreement (repo) is basically a secured loan. The REIT will pledge the mortgage backed securities they just bought as collateral for a loan. It is actually an agreement […]

MFA Financial is a REIT that invests in both agency and non-agency mortgage backed securities MFA Financial (MFA) is a mortgage Real Estate Investment Trust (REIT) that invests in both agency (government guaranteed) and non-agency (non-guaranteed) mortgage backed securities. Their portfolio is primarily invested in hybrids, adjustable rate mortgages (ARM), and 15 year fixed rate […]

The Standard and Poor’s/Case-Shiller index of real estate prices increased 10.9% year-over-year in March, hinting that the real estate market bottomed around this time last year. The Case-Shiller index The Case-Shiller index is the most widely quoted index of real estate values. Real estate values are big drivers of consumer confidence and spending, and, therefore, […]

Over the past 12 months, MFA has paid a dividend yield of over 20% when you take into account two special dividends.

Continued from Primer on mortgage backed securities, Part 4. Prepayment risk Prepayment risk and interest rate risk go hand-in-hand. The main difference between a mortgage backed security and a government bond is that with a government bond, you know exactly when you will get your principal and interest payments. If you purchase a 7-year Treasury […]

What are mortgage backed securities? Mortgage backed securities are pools of individual mortgages that have similar characteristics. They allow a relatively illiquid asset (an individual home mortgage) to be converted into a very liquid asset that can be traded with relative ease. They also allow an issuer to divide up the cash flows in order […]

Back to Part 3 Interest rate risk and mortgage backed securities Mortgage backed securities have different interest rate risk than conventional Treasuries and corporate bonds. This is because of prepayment risk. When interest rates fall, borrowers will typically refinance their mortgages. To an investor, they will get their pro-rate allocation of principal early. They will not get […]

Mortgage applications, as reported by the Mortgage Bankers Association, rose 7% for the week ending May 3rd in spite of a five basis point increase in mortgage rates Mortgage applications are primarily interest-rate driven. Applications typically increase as rates fall because home owners take advantage of the drop in rates to refinance. Conversely, they fall […]

Risks of being a servicer Generally, servicing seems like an easy job. Collect the payment, give the government its take, pass the (smaller) payment to the bondholders, and keep the rest. What could go wrong? There’s just one catch. What happens if you miss your mortgage payment? The U.S. government guarantees Ginnie Mae securities. When […]

The Fed’s balance sheet rose to over $3 trillion in Q1 as quantitative easing goes into overdrive.

The 12% year-over-year gain resembles the gains we saw during the bubble years. Both distressed sales and non-distressed sales rose by similar amounts.

The increase in rates has basically put prepayment worries on the back burner for REITs. The lack of a reaction in the refinance index on the back of a drop in rates could mean we’re finally seeing prepayment burnout. This would be good news for REITs.

The rally in bonds has been an unexpected gift to cap off what was otherwise a dismal year in mortgage banking.

The Mortgage Bankers Association (or MBA) Refinance Index rose 66% from 1,349 to 2,245 as rates finally fell enough to allow refinances.

Better economic times are helping lower mortgage delinquencies, but we still have some work to do clearing the foreclosure pipeline.

The MBA Refinance Index is an important index to forecast mortgage activity and prepayments The Mortgage Bankers Association (MBA) Index of Refinance Activity measures application activity, not loans made. The Mortgage Bankers Association samples roughly 75% of all mortgage activity in the U.S., and its indices are key indicators for the real estate finance market […]

The use of leverage is how REITs provide a high yield from low-yielding instruments Mortgage REITs, particularly agency REITs, use leverage to enhance returns. Agency REITs invest solely in government mortgage backed securities – either Fannie Mae, Freddie Mac, or Ginnie Mae. These securities do not have credit risk – in other words, even if […]

Productivity is a measure of output per unit of labor  Productivity increases allow wage increases without increasing inflation. The sister index to productivity is unit labor costs, and, unsurprisingly, the Bureau of Labor Statistics releases them together. Non-farm productivity is calculated by dividing an index of output by an index of hours worked. Productivity growth […]

Initial jobless claims rose to an annualized rate of 324,000 for the week ended April 26th Initial jobless claims are one of the few labor market indicators that are released every week. Unemployment is a profound driver of economic growth, and persistent unemployment has been the Achilles heel of this recovery. While it seems like […]

The Standard and Poor’s/Case-Shiller index of real estate prices increased 9.3% year-over-year in February, hinting that the real estate market bottomed around this time last year. The Case-Shiller index The Case-Shiller index is the most widely quoted index of real estate values. Real estate values are big drivers of consumer confidence and spending, and, therefore, […]

Housing starts and building permits came in around 1.2 million—towards the top end of a narrow range over the past year.

There are two basic types of state foreclosure laws—judicial and non-judicial. In non-judicial states, foreclosures are handled through a streamlined process.

The federal government has taken numerous steps to reduce foreclosures. It started with loan modification programs.

Last week was pretty light in terms of economic data, but markets were concerned with adjusting to the Brexit vote. For all the worries about Brexit overseas, it simply won’t have much of an effect on US corporate earnings.

According to the April FOMC minutes, the staff believes that GDP growth has begun to decelerate. Industrial production and manufacturing output declined in February and March.

Non-QM loans would typically be useful for borrowers with sporadic income, but a large amount of assets. However, lenders will only consider low loan-to-value (or LTV) loans—like 80% maximum, which really is a ceiling. Most lenders are below that.

The average 30-year fixed-rate mortgage rose 10 basis points, from 4.38% to 4.48%, while the ten-year bond rose 11 basis points.

Initial jobless claims decreased to 339,000 for the week ended November 8. The financial industry is laying people off as the mortgage business dries up.

Mortgage applications fall slightly The MBA Applications Index rose 0.3% after rising 1.2% the week before. Mortgage applications have dropped off a cliff ever since rates began increasing last spring. Both purchases and refinances drove the increase. The summer selling season is winding down, and we’re entering a slow period that will last through the […]

Mortgage originators are in a tough environment After feasting on the refinance boom of 2012, mortgage originators are finding 2013 to be a much more inhospitable environment. Many banks had added little capacity and were able to make a fine living doing refinance activity, which is a technologically driven business led by price discovery. It’s […]

Next week is all about the FOMC (Federal Open Market Committee) meeting The FOMC meets on Tuesday and Wednesday, and we should have the announcement on Wednesday afternoon around 2:00 p.m. Taper? By how Much? Which securities? The Fed will also release its forecast of economic activity. The Fed has been consistently over-optimistic on economic growth, and […]

Invesco Mortgage Capital (IVR) is a mortgage REIT that focuses on agency and non-agency mortgage-backed securities Invesco invests in a wide range of products, from agency residential mortgage-backed securities, to non-agency mortgage-backed paper, to commercial mortgage-backed securities and residential and commercial mortgage loans. Invesco Mortgage Capital is externally managed by Invesco (IVZ). Its portfolio is […]