Welcome to national White Chocolate Cheesecake Day, and Oreo Cookie Day, both of which usually have gluten. Like gluten, most people don’t precisely know what blockchain is, or even if it should be capitalized. Blockchain (a distributed database that maintains a continuously growing list of ordered records, called “blocks”) technology is being discussed around the lending & vendor industries, and thank you to Candace S. for sending in the history of blockchain.

Capital markets

A Fed exit from buying $1-2 billion a day of agency MBS is becoming increasingly priced into MBS prices, masked by tightening credit spreads. The Fed outlook gives rise to distinct tail risks in MBS which we detail as an alternative to the more cheerful market consensus.

Due to their duration, 30-year mortgage prices generally follow 5 or 7-year Treasury securities. If you knew, for sure, that rates were going to go up, why would you buy a long-term fixed-income security, like a 30-year T-bond? Certainly not to guarantee that the value of your asset would decline, or lock in a lower rate of return than you could earn later in the year. Investors in 30-year risk-free bond issues by the U.S. Treasury can look forward to a steady income stream. The long-end of the Treasury market, like securities backed by mortgages, has become a bit of a commodity and it's driven by a scarcity and liquidity valuation.

What moves the supply is pretty simple: issuance by the U.S. Treasury, determined by its need for funds, as well as sales by investors and traders of existing securities. The demand side, however, is more complicated. For example, a few years ago, signs of uneven economic growth and escalating tensions between Russia and Ukraine pushed investors into the safety of U.S. debt. Pension plans, which oversee $16.3 trillion, have shifted into longer-term Treasuries to lock-in stock gains by matching assets with their future liabilities as funding deficits narrow.

Pensions that have seen their financial positions improve in recent years often put money into longer-dated Treasuries to reduce volatility after a provision in the Budget Act of 2013 raised the amount underfunded plans are required to pay in insurance premiums over the next two years. It also imposed stiffer fees on those with shortfalls.

And don't forget the New York Fed. The central bank bought nearly $5 billion a day in Treasuries and mortgage bonds during Quantitative Easing (QE). It is now down considerably from that level, investing whatever pays off in its asset holdings. But foreign investors and pension funds have stepped in. Overseas investors own trillions of dollars of U.S. Treasury debt, and foreigners (China & Japan come to mind) have increased holdings of Treasuries every year since at least 2000.

Foreign central banks are choosing to park their currency reserves in Treasuries because they offer higher returns relative to other nations - especially if other countries offer negative returns.

So, what makes up long term rates, especially the 30-year Treasury bond? It is made up of three components. The first is the real long term interest rate, which is influenced by longer run forces such as population, demographics, real force riskless, and demand. The second is inflation expectations: where do you think inflation is heading? And the third is cyclical risk premium. Investors require compensation for the risk of a bond's price falling, which tends to happen if rates go up while the Fed fights inflation. The last recession we had was induced by financial instability, not inflation or lack of inflation, and investors demand a premium for this risk.

Looking at actual rates from last week, U.S. Treasuries and agency MBS prices ended Friday's session little-changed as the FOMC completed its mission to guide markets into pricing in a March 15 Fed rate hike. Both Fed Chair Yellen and Fed Vice Chair Fischer came as close as they ever do to explicitly supporting a rate hike at the next FOMC meeting, which complemented various other Fed speakers last week saying similar things. (The only piece of U.S. economic data Friday was the ISM Services Index, which beat expectations and touched its best level in 16 months.) And thus we find the Federal Reserve's officials generally supportive regarding a 25bp rate hike at the upcoming March FOMC meeting.

This is already built into the market. Going in to Friday a rate hike was already largely priced in with odds near 80% ahead of the speeches for the March 15 meeting. Fed Chair Yellen's commented, "At our meeting later this month, the Committee will evaluate whether employment and inflation are continuing to evolve in line with our expectations, in which case a further adjustment of the federal funds rate would likely be appropriate."

We wrapped up the week with the 10-year at 2.49% - we've been there before. Unlike last week, however, we have a lot of scheduled news. Today at 10AM ET we have Factory Orders. Tomorrow are the January Trade Balance. Wednesday is the usual MBA Mortgage Index for last week, February ADP Employment Change, Q4 Productivity and Unit Labor Costs, and a $20 billion 10-year Treasury auction. Thursday things keep going with February's Export Prices ex-ag and Import Prices ex-oil, Initial Jobless Claims, and a $10 billion 30-year Treasury auction. Friday we'll have the entire February employment situation with hourly earnings, nonfarm payroll, and the unemployment rate. To start the week rates this morning are a shade better with the 10-year yielding 2.47% and agency MBS prices better by a couple ticks.

Upcoming events and training...

If you need more high quality purchase leads then you need to make sure you and your team attend the complimentary webinar titled 5 High Impact Purchase Business Generators this Thursday, March 9th at 2 p.m. EST. This success webinar, part of the National Mortgage Professional Magazine Webinar Series, is presented by nmpU's President and Head Coach, Ron Vaimberg and is sponsored by REMN Wholesale. Ron will teach you simple highly effective strategies for generating purchase leads and referral relationships without spending a dime on marketing.  When you attend, you will learn exactly how to leverage existing lead generation opportunities right in front of you. He will also provide you with the exact steps to implement lead generators that bring highly qualified prospects. To register for this complimentary webinar please click here.

Wednesday March 15th, FHA's National Servicing Center will provide a free online overview of FHA-Approved Servicer requirements including: early delinquency activity, timelines, general loss mitigation, and collection best practices.

Wednesday March 22nd, join FHA's free online webinar on FHA's option priority waterfall and the process steps to be followed when evaluating owner-occupant borrowers for home retention options.

Wednesday March 29th, The Federal Housing Administration's (FHA) National Servicing Center will provide guidance on HUD's FHA-HAMP Loss Mitigation Home Retention Option.

Valuation Management Group is pleased to announce a co-hosted educational event.  Fannie Mae is presenting a free webinar for residential real estate appraisers on Wednesday, March 29 at 11 am EST.  This webinar will cover collateral policy, technology guidance for appraisers, and the latest information on Fannie Mae's appraisal policies.

Are you looking for something more than the typical mortgage conference to attend this year? I recommend checking out Todd Duncan's Sales Mastery Event. I attended Sales Mastery last year and can tell you first hand that it is head and shoulders above the typical conference experience. This year is the 25th anniversary of this industry changing conference and will be in San Diego California October 3-6. I'll be there, how about you?

Jobs and Announcements

In job news, Xceed Financial Credit Union, a full service, nationwide financial institution, is seeking to increase its retail mortgage sales and operations teams. Positions for experienced MLOs are available in upstate New York, New Jersey, Pennsylvania, and North Carolina, as well as San Jose and Los Angeles, California. We are also seeking a talented mortgage processor in Rochester, New York and an experienced operations supervisor in our Los Angeles area headquarters. Named a "Best Credit Union to Work For" for three years running, Xceed offers competitive compensation, excellent benefits, and a great work environment. Learn more at xfcu.org or contact Steve Fligg, Director of Operations, for questions. To contact HR, email Sky Sangduan. To submit a resume by email use careers@xfcu.org or click this link to apply.

For brokers, "Great news to get your business kick started in March. Carrington Mortgage Services, Wholesale Lending has made the process easier and the experience better for its brokers with the following changes: First, management is removing automatic appraisal review for conventional loans, and eliminating automatic VOD requirements for purchase and refi loans. All 4506T requirements are being revised based on AUS. Finally, pre-closing VVOE on Streamline & VA IRRRL loans were removed. These are just a few of the changes made recently in Carrington's ongoing effort to become easier to use and with a commitment to their 'under-served' strategy!"  Brokers new to Carrington should contact Matt Evans, VP Sales West, (949-517-6033) or Sam Bjelac, VP Sales East, (410-603-8053).

Freedom Mortgage, named the #1FHA/VA Lender by Inside Mortgage Finance (3Q2016), is actively recruiting experienced top-producing Wholesale Account Executives nationwide, with a specific focus in the Pacific Northwest markets of AK, CO, IA, ID, MN, MT, ND, NE, NM, OR, SD, UT, WA, WY, and in OH, NV, and Northern CA. The Northwest Regional Sales Manager, Steve Hamerski, who has been successfully heading the region for 12 years, is excited to speak with you about joining the Freedom Mortgage team. To learn more, contact Steve (802-203-3333). If you are interested in markets outside the Northwest, including OH, NV, and Northern CA, please contact Keith Bilodeau, Senior Vice President, Freedom Mortgage Wholesale Lending Division.

In personnel & job news...

Steve Majerus has joined Synergy One Lending to run national production. Steve has a long and successful track record of growing production channels for brands within the mortgage space, and will serve as Executive Vice President, running both Retail and TPO for Synergy One. Steve has also acquired an equity interest in the Firm. Synergy One Lending is licensed in 42 States. "I selected Synergy One Lending for several reasons, but it all started with the alignment between the firm's corporate culture and my personal values. Synergy One's relentless focus on the Originator and the customer experience is what brought me to this exciting position at this stage of my career," stated Majerus. "The fact that Synergy One is privately held, has a large balance sheet, and has 'smart capital' behind it, allows me to grow the production side of this business with the right strategic origination teams." Synergy One Lending is hiring LOs & Retail Production Teams. Please go to www.joinsynergy1.com and select "Contact Us" to begin a confidential conversation.

Congrats to Donald J. Frommeyer who has joined Agility Resources Group LLC to help oversee and guide the company's growth in mortgage-related conferences and media. Mr. Frommeyer is the longest-serving president of the National Association of Mortgage Brokers and its immediate past CEO, and will serve as National Mortgage Chair for Agility. "Don Frommeyer saved the association when the mortgage brokerage industry was being crushed by regulators and public misperception," said Agility CEO Vincent Valvo. "Don is an originator himself, and a very good one. He took the helm of NAMB, and he made sure it held to the highest ethical standards. He put the organization back on a strong financial foundation. And he did it while making friends with lawmakers, with regulators, with the press and with the mortgage community - all to the better of this profession."

And in Tennessee comes news that First Community Mortgage recently announced the appointment of Christy Long Hoskins as SVP of Strategy and Chief Marketing Officer. In the newly created role, Hoskins will contribute to the development of FCM's overall strategic vision and lead all marketing, branding, and advertising activities, with a focus on the customer experience-based Human Mortgage brand. She will report to EVP and Director of Lending Andy Voyles.

Wells Fargo is pledging $60 billion to growing the number of African American homeowners.