Nov. 25: IT risk management; Quicken’s online mortgage; Lenda’s seed funding; how much is a tiny house in Pittsburgh?

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...

As a reminder, the FFIEC has released a new version of the IT Management Booklet, available here. The Federal Financial Institutions Examination Council (FFIEC)’s booklet highlights information regarding information technology governance and how IT risk management relates to enterprise-wide risk management. The updated examination procedures will help examiners evaluate IT governance as part of overall governance in financial institutions and IT risk management. Other revisions include incorporating cybersecurity concepts as a part of information security and incorporating management-related concepts from other booklets of the IT handbook. And SIFMA released a summary of the key findings derived from its Quantum Dawn 3 cybersecurity exercise.

 

How much would you pay for a 330-square-foot tiny house in Pittsburgh? How about $109,500, or about $330 per square foot? And it took two years to build. Tiny houses in the Rust Belt: catch the wave! And in San Francisco, 2,500 miles away, the area is seeing its biggest building boom in history – and why not with condos going for $1,200 per square foot.

 

How much would you pay to fully do a loan on line? Quicken Loans will find out as it launched the “first fully online mortgage process.” (One industry vet reminded me of ELoan’s work 20 years ago, but that was different.) “With Rocket Mortgage, homebuyers and refinancers can submit or import all their financial information, fully customize their mortgage solution and lock their interest rate completely online in as few as eight minutes.”

 

The program notes say that “Rocket Mortgage users will experience the cleanest, easiest and quickest mortgage application ever created, complete with e-signature, visually compare and customize interest rate, mortgage term, monthly payment and fees based on individualized financial information and goals and current underwriting guidelines for numerous products with real-time pricing, view their individualized three-bureau credit report, analysis and score in a format that is concise, understandable and digestible, import and verify asset, property and income information – all online via proprietary interfaces designed by QL Labs with numerous partners and databases throughout the country, eliminating the need for consumers to provide supporting loan documents manually, receive full approval in minutes on conventional, FHA or VA mortgage products with the click of a button from Quicken Loans’ proprietary interface to agency underwriting engines, lock their interest rate, and conveniently view all loan documentation and details online, anytime, anywhere. Users no longer need to rely on information relayed over the telephone, email, face-to-face or through the mail.”

 

And in other news Lenda announced the close of $2 million in seed funding led by Lakestar and existing investors Rubicon Ventures and 500 Startups. Lenda’s announcement stated it is the first platform that allows homeowners to refinance their mortgage completely online, and has a “business model of bringing the antiquated mortgage loan process online and removing the redundancies of paperwork and loan aggregators — all of which allow the company to offer loans faster and at a fraction of the cost.”

 

“Lenda has grown 20 percent month over month to surpass $60 million in loans processed for homeowners in California, Washington and Oregon, with additional states launching early next year. Lenda’s software enables homeowners to transparently compare loan options, receive a free credit report, securely upload documentation, and check loan status in real time. This reduces the traditional time to close from 2 months to 2.5 weeks, saving an average of $20,000 in fees per borrower.” (“By bringing the entire process online, Lenda has the ability to close loans nearly three times faster — and is saving consumers between .125 to .25 percent less on interest and APR when compared to the mortgage interest and fees from legacy banks… Looking at total savings, Lenda’s clients have collectively saved over $450,000 in fees and over $3M in interest over the lives of their loans.”)

 

Yes, I know this note is a little overdue, but early last month Parkside Lending announced its insurance subsidiary (PSL Insurance Company, LLC) was approved to become a member of the Federal Home Loan Bank (FHLB) of Cincinnati. “Through its FHLB membership, Parkside Lending will provide leverage to its affiliate, Parkside Mortgage Trust, a Real Estate Investment Trust (REIT). With this membership, Parkside Lending has access to a stable financing source to enhance Parkside’s short-term and long-term value propositions. ‘We’re honored to be joining the ranks of this small group of distinguished financial organizations that comprise this well-regarded and important lending institution and look forward to a mutually beneficial relationship with the FHLB, said Matt Ostrander, Chairman and CEO of Parkside Lending.

 

Some lender & investor updates fit nicely into buckets, like FHA & VA changes, jumbo, conventional, lock desk hour changes, whatever. Some don’t… let’s take a random look at some.

 

U.S. Bank Home Mortgage discontinued its Jumbo Fixed Interest Only Program.

 

ditech announced as of November 24, it will stop accepting loan registrations and locks on the Jumbo AA High LTV Fixed Rate product.

 

A while back ditech removed its requirements for converting a primary residence to a second home or investment property. Therefore, standard rental income and reserve requirements should be met when converting a primary residence to a second home or investment property. Additional guideline requirements being clarified or updated include: subordinate financing (prepayment penalties, requirements and unacceptable terms), Community Seconds mortgages, stocks, stock options, bonds, and mutual funds, use of IRS W-2 transcripts in lieu of W-2s, unreimbursed employee business expenses, tip income and deferred maintenance.

 

Due to recent changes by several Investors, Peoples Bank is now requiring that all North Carolina mortgage loans must be closed by a North Carolina licensed attorney. For additional information, visit Peoples Bank website.

 

Have you been missing NINA? OakTree Funding “has resuscitated her”!

 

As of November 30th, AmeriHome is implementing a new process for net funding and remitting monthly PMI/MIP payments for loans purchased on or after the 14th calendar day of any month.

 

Bayview Loan Servicing now permits Delayed Financing in its Early Access Product. Borrowers who purchased their primary residence less than 12 months ago with cash may be eligible to recoup their initial cash investment. Refer to the Product Matrix for full details.

The Bayview Loan Servicing and Lakeview Loan Servicing Portfolio enhancement has impacted its Early Access product. 10% LTV reduction has been removed for borrowers who have not had a hardship. As a result there will be no requirement to document a hardship. Borrowers will now be eligible for maximum LTV based on FICO score regardless if there was, or was not a hardship that caused the significant derogatory event. The maximum loan amount has been increased to $1,000,000.

 

Huh? Declining markets? M&T Bank (in its Exh.  #03‐031, M&T Property Valuation Watchlist) came out with a list of counties that warrant concern. It measures the Housing Price Index (HPI) ‐ 6 trailing months on an annualized basis. There were 1-4 counties in many states including NJ, NY, PA, VA, AL, CO, GA, IL, IN, KS, LA, MI, MS, MO, NC, ND, OH, OK, TN, TX, and WA.

 

Effective with M&T’s pipeline and new registrations, Repair Escrow Holdbacks will be considered eligible in the correspondent lending channel, in all products other than renovation loans on an exception basis. M&T encourages lenders to submit a repair escrow holdback prior to closing their loan. The M&T Seller Guide has been updated accordingly.

 

Nationstar Mortgage Correspondent has updated its seller guide to include early payoff language.

 

Click the link to view June’s publication of important changes to FCMKC underwriting guidelines.

 

Sun West updated information on its HECM Life Expectancy Set-Aside and HECM Financial Assessment and Property Charge Guide. Updates include manner in which changes to the balance of the Life Expectancy Set-Aside are dealt with; a discrepancy between Section 3.98 of the HECM Financial Assessment and Property Charge Guide (Guide) and the HECM Financial Assessment Worksheet (Worksheet) in Appendix 1 of the Guide has been resolved by HUD; and an updated model HECM financial was released.

 

PennyMac has posted, effective immediately, borrowers with housing choice voucher homeownership program paid to the servicer are ineligible.

 

FBC Mortgage LLC announced that it has enhanced its risk management policies and procedures governing its mortgage lending business by requiring independent screening and risk monitoring for all settlement agents having access to a borrower’s loan documents and mortgage proceeds. This is especially important given the Consumer Protection Bureau’s Know Before You Owe Integrated Disclosure rule effective October 3rd, 2015.  The process will be managed for FBC by Secure Settlements Inc.  The company will use both the SSI ClosingGuard and QuickCheck tools to evaluate the backgrounds, licensing, insurance, and trust accounts of agents as a method to identify potential threats before a closing takes place. Discover more information about FBC Mortgage by visiting its website.

 

Earlier this year, to eliminate confusion and speed up processing, the Homeowner’s Certification Review form for Kinecta Federal was split into two new forms. Full review and limited review forms are available on its website under Miscellaneous Forms Category.

 

Citi Correspondent has published its newest bulletin. Updates include Liabilities: Recurring Debt Policy Changes, short Sale Transactions: Loan Prospector Loans and Non-Incidental Business Arrangements: Ineligible Projects.

 

Mountain West Financial updated its requirements to its submission disclosures. MWF will require the LE to be signed by the borrower(s). Therefore, the MLDS form will not be required. MWF will accept any anti-steering form that meets regulatory compliance, and the Attestation form will no longer be required to be submitted with the loan file. In addition, MWF has removed 30% Equity Requirements for Conversion of Principal Residence.

 

Mountain West Financial has enhanced selected Jumbo R Products. Some highlights include: Primary Purchase & Rate/Term LTV to 85%, minimum FICO 760 and Investment Properties to $1,000,000 Purchase & Rate/Term Refinance, minimum FICO 740.

 

 

Taking a look at rates, remember all the volatility caused by China? That has disappeared as the China devaluation worries are receding as Beijing pursues a policy of gradual depreciation versus the sharp and sudden move witnessed this summer. And it is pretty quiet in Europe aside from countries shooting down each other’s airplanes. And thus we find ourselves looking at news in this country like the S&P Case Shiller increasing 0.61% in September, Consumer Confidence Index dropping to 90.4 in November.

 

Price-wise we’re definitely in a holiday pattern, although one might see a lot of pricing minutia about different coupons, security types, and swap prices moving a little up and down. Using the yield on the 10-year T-Note as a proxy, we closed it Monday at 2.25%, began Tuesday with it at 2.22%, ended at 2.25%.

 

But that was yesterday, and with tomorrow’s holiday and Friday’s early close today we’ve had so much economic news the fixed-income markets don’t know which way to turn. We’ve had the MBA application figures for last week (-3.2%), Initial Jobless Claims & Continuing Jobless Claims (260k, lower than expected), October Personal Income and Personal Spending (+.4% and +.1% respectively), October PCE Prices – Core (showing some disinflation), and October Durables Goods Orders (+3.0% following a decline the prior month; ex-transportation +.5%). Coming up are the FHFA House Price Index, October New Home Sales, and November Michigan Sentiment. Let’s not forget the $29 billion 7-year note auction this afternoon.

 

There won’t be a lot of rate locking today, but for those interested in rates we closed the 10-year Tuesday at 2.25% and this morning, after the initial spate of numbers, it is at 2.23% with agency MBS prices, depending on coupon, slightly better.

 

 

HOLIDAY EATING TIPS (Part 2 of 2)

  1. If you come across something really good at a buffet table, like frosted Christmas cookies in the shape and size of Santa, position yourself near them and don’t budge. Have as many as you can before becoming the center of attention. They’re like a beautiful pair of shoes. If you leave them behind, you’re never going to see them again.
  2. Same for pies. Apple, Pumpkin, Mincemeat. Have a slice of each. Or if you don’t like mincemeat, have two apples and one pumpkin. Always have three. When else do you get to have more than one dessert? Labor Day?
  3. Did someone mention fruitcake? Granted, it’s loaded with the mandatory celebratory calories, but avoid it at all cost. I mean, please, have some standards!
  4. One final tip: Wear sweatpants/loose fitting clothing. If you are leaving the party and you can walk without help from a construction forklift, you haven’t been paying attention. Re-read tips; start over, but hurry, January is just around the corner.

Remember this motto to live by: “Life should NOT be a journey to the grave with the intention of arriving safely in an attractive and well preserved body, but rather to skid in sideways, chocolate and wine in one hand, body thoroughly used up, totally worn out and screaming “WOO HOO what a ride!”

Have a great holiday season!! 

 

 

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.)