May 19: Ops & retail jobs; FHA & VA updates and related investor guideline changes – the new handbook dissected

Rob Chrisman

Rob Chrisman began his career in mortgage banking – primarily capital markets – 31 years ago in 1985 with First California Mortgage, assisting in Secondary Marketing until 1988, when he joined Tuttle & Co., a leading mortgage pipeline risk management firm. He was an account manager and partner at Tuttle & Co. until 1996, when he moved to Scotland with his family for 9 months. Read more...

There are 1,700 capital markets folks wandering around Manhattan, and one of the topics is that one week Janet Yellen and other Fed officials are warning of an overblown stock market and a couple weeks later we’re still setting highs. Where else are people going to park their money? How ‘bout housing? Pro Teck Valuation Services released its monthly Home Value Forecast examining markets in the Villages in Florida, as well as Midland and Austin Texas, as these cities experienced the strongest population growth percentage and are benefiting from a stronger housing market. The HFV found that the Villages in Florida has an average age of 69 years old. It’s where LOs go to feel young! Home prices in this area are anticipated to rise from $220,000 to $300,000 within the next five years. In stark comparison, Austin, Texas has an average age of 31.1 years old. Home prices are expected to increase within the next five years in Austin from $250,000 to $300,000. Midland, Texas has grown over the past four years due to the energy business, with 14% of the population involved in the mining, quarrying, and oil and gas extraction businesses. It’s expected that home prices should increase from $220,000 to $300,000. The HFV also highlights the 10 best and 10 worst performing metros, with Bellingham, WA and Denver, CO ranking among the top performing cities, whereas Fort Lauderdale, FL and Jacksonville, NC rank among the lowest performing metros.

 

For job news of expanding companies, Stearns Lending, LLC is expanding nationwide and actively pursuing seasoned Retail Area Managers, Branch Managers and Mortgage Loan Originators!  “Stearns is currently seeking all levels of sales leadership and Mortgage Loan Originators in major metropolitan areas around the country. Stearns offers in-house processing, outstanding Operations and Fulfillment support, a large product portfolio, competitive pricing and an aggressive compensation plan. Stearns has been around for over 25 years and is one of the more progressive, technology based mortgage companies in the industry with branches nationwide. Stearns is the second largest privately held mortgage company in the US and has funded $6.46 Billion in loans in Q1 2015.  At Stearns, our mission is simple: “We Can Help You!” We’re confident that you’ll benefit significantly from the opportunities that we have to offer.  More importantly, our corporate support allows you to concentrate on what’s important – expansion of your business and closing loans!”  Please contact Brad Hoke, SVP – Talent Acquisition at 855.799.1599 or visit JoinStearns.

 

On the operations side, HomeStreet Bank is “one of the largest community banks in the Pacific Northwest, with mortgage operations in Washington, Oregon, Idaho, Arizona, California and Hawaii. Since we began in 1921, we’ve stayed focused on what we believe is most important: building long-term relationships with our customers and providing ongoing support to our communities. We are seeking to hire seasoned Sr. Underwriters in our Seattle market with strong experience in Construction-Perm and Portfolio underwriting.  We also highly value candidates with government experience and their DE certifications and are currently hiring in most of our WA and CA locations.  In addition, we are hiring for an Underwriting Manager in our new market of Phoenix, AZ.  Successful candidates will have a minimum of 5 years underwriting management experience, with a strong track record of mentoring and developing their employees.  The successful candidate will have the opportunity to build her or his own local team.” Check out HomeStreet Bank Careers. HomeStreet Bank is an Equal Opportunity/Affirmative Action Employer. Minorities, females, protected veterans and individuals with disabilities are encouraged to apply.

 

Lastly, yesterday had a job posting for Network Funding’s search for a CFO. The phone number for Gary Davis is actually 832-252-0433.

 

 

 

When Compliance Gets Tough, the Tough Get Automated? Many believe that technology can help make compliance processes more painless for heavily regulated firms in the financial services sector.

 

Speaking of compliance, Helene Payton from Texas One Mortgage writes, “Hey Rob, do you think the CFPB realizes we cannot pull credit without birthdates and a 2 year address history on the borrowers? Under the new application definition, we do not need that information – … should make for some nightmare credit reports.”

 

Let’s plunge into some FHA & VA news from around the globe. Okay, around the U.S…

 

FHA is extending the SF Handbook effective date by 90 days with the expectation that this additional time will enable mortgagees and others to be fully compliant with the new effective date as there are currently a number of competing initiatives occurring simultaneously in the mortgage industry that may be challenging mortgagee and other industry partner resources  extended the effective date for the policies contained within its new SF Handbook policy extension from June 15, 2015 to September 14, 2015.

 

Brian Chappelle with Potomac Partners has some observations about the new handbook. The new handbook is delayed until Sept. 14th. The goal is to be equivalent to Fannie/Freddie guides, and there will be some key underwriting changes. The origination docs (new & existing) will equal the 120 days old max. All deferred obligations must be included in ratios. For student loans, if “0” or unknown, use 2% of the balance. Installment debt with 10 payments remaining must be included if they are more than 5% of monthly income. There will be a new definition of satisfactory credit: the borrower has made all housing & installment debts for last 12 months.

 

Karen Deis writes, “So what’s the dealio with FHA delaying the implementation of their new 4000.1 handbook? One of the first problems with the new handbook is that FHA provides no comparison between the old rules and the new. Mortgage Currentcy FHA experts have spent over 50 hours making those comparisons.  So far we have found 56 significant rule changes, and have listed them all on the website.  So, why did FHA delay the implementation of the changes from June 15 to September 14? Deputy Assistant Secretary for Single Family Housing, Kathleen Zadareky, made this statement on the Decision to Extend the Implementation Date of the FHA Handbook Dated April, 30th, 2015: ‘In response to concerns expressed by some of our stakeholders, FHA is extending the effective date of the Single Family Housing Policy Handbook to September 14, 2015.  It’s become clear over the last few months that some of our industry partners require additional time to prepare to implement the Handbook.  We want to accommodate these requests as we believe everyone benefits from having the necessary time to thoughtfully integrate this new handbook into their business operations.’

 

“We think there are several reasons for the delay. First, the Total Scorecard Guide has NOT been updated to be consistent with the 4000.1 Handbook. Second, DU for Government Loans needs to be updated. Third, the Reverse Mortgage Section has not been updated. The majority of the changes affect the policies and documentation requirements applied manually during underwriting even with a DU approval, such as income calculation, documentation requirements, term definitions, property eligibility, etc.  However these multiple policy changes have to be ‘trained and integrated’ into the underwriting and internal quality assurance processes. And how do you do that when FHA won’t provide a complete list of the changes?  And while MortgageCurrentcy.com focuses on the changes that directly affect the underwriting process, there are other changes going on as well.  And again, no list of those changes is provided. Lenders are not happy about being held accountable to new standards that FHA has refused to present in an easily identifiable manner.”

 

Karen’s note went on. “But beyond all that, you’ll notice that none of the Reverse Mortgage Sections have been published yet.  And in the wake of all the upheaval and recent court cases going on in that arena, I’m guessing that this situation didn’t help either. While the comment period to question the rule updates has closed, what we know for sure is that several months ago, when we began comparing the two manuals, we found 36 changes.  As of last week, there were 56 of them—with more to come. With the trifecta of no reverse mortgage rule updates, DU and Total Scorecard, there is a good possibility to expect another delay.” Thank you Karen!

 

“Hey, Rob, Eileen O’Grady here.  I’m delighted to say that my FHA DOJ webinar, reviewing the background and FHA practice issues brought up in the DOJ’s lawsuit against FHA DE Lenders, reached quite a few people last week.  For those who missed it, here is the link:  https://loanscorecard.com/fha-webinar-info.htm.  Happy to share for those who have a spare 30 minutes!”

 

Mountain West Financial recent guideline updates include verbiage regarding Loan Officers acting as RE Agent under Identity of Interest for conventional loans. NSF and Overdraft updates on FHA guidelines as well as tax lien requirements on FHA.

 

Ditech announced it has added Multi Bank Securities as approved counterparty for its AOT program. Additional news from ditech is its announcement that non-owner occupied properties are now permitted for FHA Non-Credit Qualifying Streamline Refinance without Appraisal transactions. FHA ARM products are not permitted, only fixed rate loans are eligible.  Also announced is the expansion of ditech’s VA products to permit manufactured housing as an eligible property type.

 

SunWest has updated guidelines in response to CFPB’s 2013 TILA Servicing Rule, Federal Housing Administration (FHA) and the Department of Veterans Affairs (VA) announcement regarding the implementation of a 45-day look-back period for all Adjustable Rate Mortgages (ARMs). These updates require that an interest rate adjustment resulting in a change to the borrower’s monthly payment on their FHA or VA ARM be based on the most recent index value available 45 days (instead of 30 days) before the date of the interest rate adjustment.

 

Sunwest post the Automated Valuation Model (AVM) requirement on VA IRRRLs with qualifying credit score equal to or greater than 580 has been eliminated for locks / commitments made on or after September 16.

 

NYCB Mortgage posted information for its table funding clients regarding flood insurance. NYCB now requires flood insurance if any part of a principal and/or residential detached structure is located within a Special Flood Hazard Areas (SFHA). Please review the updated Flood Insurance Coverage Requirements related to Special Flood Hazard Areas (SFHA) in its Seller’s Guide Section 14.5. Additionally, Effective Friday, March 13th, 2015, NYCB Clients were able to select from any of its approved AMCs when placing a new appraisal order.

 

FHA announced on April 30, 2015 that it is immediately rescinding Mortgagee Letter 2015-03.  For any HECM with a case number issued prior to August 4, 2014 with a non-borrowing spouse, HUD is providing HECM mortgagees with an additional 60-day extension of time in which to take first legal action to commence foreclosure, and to comply with reasonable diligence timeframes for such HECMs.  During this period debenture interest will not be curtailed.  Mortgagees may immediately elect to begin using this extension.  Mortgagees have full discretion to elect this extension. The request for an extension is not conditioned on the continued pursuit of foreclosure or the marketing of the property. The mortgagee’s request for an extension is effective when made and FHA will not be providing any specific approval for this extension.

 

First Community Mortgage has updated some policies regarding conventional property evaluation, FHA Assets and Reserves, and Non-conforming jumbo underwriting. Details can be found in FCMKC April Guideline Bulletin Changes.

 

We wrapped up Monday with the 10-year sitting at 2.23%. So most of Friday’s relief rally in the Treasury complex evaporated on little data but a bullish stock market – and that is never a real reason for bonds to sell off. The yield curve steepened, as it has been doing in most of the April/May sell-off, perhaps reflecting stronger economic growth or a Fed that’s behind the curve in the face of higher energy prices rather than the expectation of sooner and faster rate hikes from the FOMC

 

For scheduled data out Tuesday we’ll have April Housing Starts & Building Permits at 8:30 EDT. That’s it. We closed the 10-yr at 2.23% on Monday, so rates have moved higher since Friday afternoon. This morning we’re back to 2.20% with agency MBS prices slightly improved in the very early going.

 

 

As we get older we sometimes begin to doubt our ability to “make a difference” in the world.  It is at these times that our hopes are boosted by the remarkable achievements of other “seniors” who have found the courage to take on challenges that would make many of us wither.

Harold Schlumberg is such a person:

THIS IS QUOTED FROM HAROLD:

“I’ve often been asked, ‘What do you do now that you’re retired?’

Well, I’m fortunate to have a chemical engineering background and one of the things I enjoy most is converting beer, wine, and rum into urine. It’s rewarding, uplifting, satisfying and fulfilling. I do it every day and I really enjoy it.”

Harold is an inspiration to us all.

 

 

Rob

 

(Copyright 2015 Chrisman LLC. All rights reserved. Occasional paid job listings do appear. This report or any portion hereof may not be reprinted, sold or redistributed without the written consent of Rob Chrisman.)