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Black Knight – First Look: seasonal, calendar and hurricane-related pressures

Black Knight, Inc. reports the following “first look” at September 2018 month-end mortgage performance statistics derived from its loan-level database representing the majority of the national mortgage market.

–  Mortgage delinquencies rose more than 13% in September, the largest single-month rise since November 2008

–  16 of the last 19 Septembers have seen delinquencies increase, averaging a 5.2% rise over that time frame, the largest of any month during the calendar year

–  September 2018 also ended on a Sunday, which typically creates strong upward pressure on delinquencies

–  Hurricane Florence-related delinquencies spiked 38% month-over-month, with more than 6,000 borrowers already missing a payment as a direct result of the storm

–  Foreclosure starts posted a double-digit monthly decline, hitting a nearly 18-year low at just 40,000 for the month

–  Both the inventory of loans in active foreclosure and the foreclosure rate have now fallen below their pre-recession averages for the first time since the financial crisis

–  In the face of rising interest rates and affordability pressures, monthly prepayment activity – now primarily driven by housing turnover – fell by nearly 25% from August

Boeing shares surge after the company reports blowout results and raises 2018 forecast

–  The aerospace giant reports third-quarter adjusted earnings of $3.58 a share, topping Wall Street expectations by 11 cents.

–  Boeing raises its full year 2018 earnings forecast.

–  CEO Dennis Muilenberg notes that the company landed billions in military contracts this summer.

Shares of Dow component Boeing rose 3.8% in premarket trading Wednesday after the company reported strong third-quarter earnings on the back of a robust defense business and more efficient commercial aircraft production. The company also raised its 2018 earnings forecast, in what looks to be a record year for revenue. The aerospace giant reported adjusted earnings of $3.58 a share, topping expectations of 11 cents by analysts surveyed by Refinitiv. Third-quarter revenue came in a $25.15 billion, which was over $1 billion more than analysts forecast. Boeing raised its full year 2018 earnings forecast to a range of $14.90 to $15.10, up from its previous guidance of $14.30 to $14.50. Boeing may see its full year revenue top $100 billion for the first time, as well. Boeing landed billions in military contracts this summer which CEO Dennis Muilenberg highlighted and said was “important new defense business.” The Navy selected Boeing to develop the MQ-25 unmanned aircraft system and the Air Force awarded Boeing $9.2 billion to build the T-X trainer aircraft. Boeing also landed a $2.4 billion contract to build the MH-139 helicopter for the Air Force. Boeing is very in tune with the administration and customer base, says Jefferies analyst

“What really surprised us to the upside was aerospace margins in the 13% range and they’re raising their guidance for that,” Jefferies analyst Sheila Kahyaoglu said on CNBC’s “Squawk Box.”

For its its airplane-making business, Boeing delivered 190 commercial aircraft in the third quarter, bringing its total deliveries for the year to 568. The business had fallen short of delivery estimates in the second quarter but Boeing stuck to guidance in the latest report, saying the company would deliver at least 810 airplanes this year. Boeing continues to ramp up production, especially on its core 737 aircraft, and aims to get to a key production rate of 52 aircraft each month. “They maintained their delivery guidance, which means they could get to that 52 a month by the end of the year,” Kahyaoglu added. The trade war between President Donald Trump’s administration and China is a key theme Kahyaoglu is watching. She said China is “a big customer of Boeing,” representing about a third of the company’s orders for 737 aircraft. While it’s important for Boeing shareholders to pay attention to the company’s business in China, the analyst did not raise concern about Boeing possibly getting caught in the middle of the trade war. “I think Boeing’s very in tune with the administration but also with its customers,” Kahyaoglu said. Boeing shares slipped 2.3% over the last three months but the stock is still up 18.7% for the year as of Tuesday’s close of $350.05 a share.

Fannie Mae identifies new fake employers being used on mortgages

The number of fake employers showing up on borrowers’ mortgages is growing. Earlier this year, Fannie Mae issued a warning to lenders after identifying more than 30 companies that appeared to be fake that were showing up on borrowers’ mortgage documentation as their place of employment. The 30 companies were generally located in the Southern California and Los Angeles County areas. But the wave of fake employers spread throughout California, as Fannie Mae later called out 10 more potentially fake companies located in Northern California, including some in Silicon Valley. Now, Fannie Mae is issuing another warning, telling lenders that it has found five more potentially fake employers in the state of California. The newly identified potentially fake employers are:

–  BTR International, located on S. Olive in Los Angeles, CA

–  Building Blocks Learning Center, located on Calabasas Rd. in Calabasas, CA

–  Digicox Printing Material, located on Sherman Way in North Hollywood, CA

–  Volt Temp Distributors, located on Gladys Avenue in Los Angeles, CA

–  Western Law Group, located on W. Glenoaks Blvd. in Glendale, CA

According to Fannie Mae, there are a series of red flags that lenders should be on the lookout for on loans that could include a fake employer or other potential mortgage fraud issues, including:

–  TPO / broker loans

–  Originated 2015–2018 (present)

–  Employment (occupation) does not “sensibly” coincide with borrower’s profile (age or experience)

–  Borrower on current job for short period of time

–  Prior borrower employment shows “Student”

–  Starting salary appears high

–  Purported employer does not exist

–  Employer’s purported location cannot be ascertained

–  Paystub templates are similar for various employers across other (involved) loan files

–  Paystubs sometimes lack typical withholdings (health, medical, 401(k), etc.)

–  Gift letters are substantial and are not (or cannot be) supported through re-verification

Oil extends drop, falling toward $75, on demand worries

Published October 24, 2018MarketsReuters

Oil fell towards $75 a barrel to its lowest since late August on Wednesday, pressured by concern that demand is weakening and supply ample even as US sanctions loom on oil exporter Iran. In a sign supply is plentiful, industry group the American Petroleum Institute said on Tuesday US crude stocks had risen by 9.9 million barrels – more than forecast. The US government’s supply report is due at 1430 GMT. Brent crude, the global benchmark, was down $1.28 to $75.16 a barrel at 0855 GMT. It fell earlier to $75.11, the lowest since Aug. 24. US crude dropped 30 cents to $66.13. “Demand worries have been around for a while,” said analyst Olivier Jakob of Petromatrix, adding that as long as refining margins for gasoline and inter-month spreads for crude remained weak, “it’s going to be difficult to rebound.” Crude fell sharply in the previous session, with Brent closing down 4.3%. “This price movement comes as little surprise with attention now clearly being focused on the weakening economic situation and gloomy demand outlook,” said analysts at JBC in a report. A sell-off in equities due to concern about the economic outlook also weighed on crude on Tuesday. Forecasters such as the International Energy Agency already expect slower oil-demand growth for 2019 due to a slowing economy.

Wells Fargo commits $1.6 billion to help revitalize Washington, D.C.

Aiming to aid in the revitalization of the nation’s capital, Wells Fargo announced Tuesday that it is committing more than $1.6 billion in lending and philanthropy in Washington, D.C., over five years. The financial commitment is part of a new program being launched by the bank in coordination with the National Community Reinvestment Coalition called the “Where We Live” program. Through the program, Wells Fargo will triple its community giving and “concentrate resources on the biggest needs identified by community leaders,” including affordable housing, small businesses, and job skills. According to Wells Fargo, the effort will primarily be focused on Ward 7 and Ward 8, two of the city’s most economically challenged areas. Included among the effort is a five-year, $16 million philanthropic commitment that includes $4 million for Community Development Financial Institutions to help grow the small business community and $6 million for nonprofit housing initiatives, including down payment assistance and development of affordable rental properties. But the bulk of the financial effort will come in the form of more than $1.5 billion for loans and equity investments in mortgage lending, small business lending and community lending and investment.

Part of that push has already begun. According to the bank, one of the early Where We Live projects utilized $90 million in lending and equity investments from Wells Fargo to convert an abandoned housing complex into 220 affordable rental units. “Communities succeed when we all work together,” Wells Fargo CEO Tim Sloan said. “The Where We Live program is rooted in two things: investments that help people live, work and thrive, and a deep understanding that neighborhoods need long-term partners,” Sloan added. “It builds on Wells Fargo’s legacy of empowering residents and small businesses in our nation’s capital for the past 100 years, and our desire to create a compelling community investment model in Washington, D.C.” Wells Fargo isn’t the first bank to commit financial muscle to the D.C. area in this year alone. Back in April, JPMorgan Chase announced that it was committing $4 billion over five years for home and small business lending in the area as part of an expansion into the region. And now, it’s Wells Fargo’s turn to help D.C., especially in areas that are sorely in need of help. “This is an important step by Wells Fargo to expand its investment in the District, and to listen and work more closely with community groups,” John Taylor, president and founder of NCRC, said. “Expanding access to mortgage and small business loans is essential to closing the wealth gap,” Taylor continued. “Lenders need to listen and focus on the needs of the communities where they do business. It’s heartening to see Wells Fargo strengthen its commitment to do just that.”

Posted by: pharbuck on October 24, 2018
Posted in: Uncategorized