Dec. 31: Bank M&A continues; Pending Home Sales primer; lender’s forms keep changing – who can keep track?

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...

Given my Resolutions from a year ago, and looking back at 2015, I’ve got today to get skinny, save money, learn French, and undrink 987 bottles of wine.

 

On a more serious note, plenty of people in the mortgage business are doing things towards lessening poverty and helping children. The U.S. Census Bureau has released findings from its Small Area Income and Poverty Estimates program which determines the number of people in poverty, the number of children younger than 5 in poverty, the number of children between 5 and 17 in families in poverty, and median household income. According to 2014 data, the median household income at the county level was between $21,658 and $125,635, with a median county level value of $45,229. Among the 3,140 counties that were assessed, 26 percent (820 counties) had a significant increase in poverty between 2007 and 2014, whereas 1 percent of counties had a significant decline. This data will be used to calculate 2016 fiscal year allocations for Title I and other education programs.

 

In banking news State Bank of Chilton ($171mm, WI) will acquire Calumet County Bank ($91mm, WI). And CNB Bank ($2.2B, PA) is sneaking across state lines and will acquire Lake National Bank ($152mm, OH) for about $24.8mm in cash. If you have a few shekels in your pocket, it is rumored that French bank BNP Paribas is considering “strategic alternatives” for its First Hawaiian Bank unit as it seeks to boost capital levels by mid-2017. Every time my cat Myrtle hears the tired term “strategic alternatives” she rolls her eyes.

 

Yesterday we learned that U.S. pending home sales fell 0.9% in November, the third decline in four months. The National Association of Realtors’ index declined to 106.9 in November. The index is still up 2.7% y/y.

 

But what the heck is, are, pending home sales? Said to indicate housing activity, the strict definition is that it “measures housing contract activity, and is based on signed real estate contracts for existing single-family homes, condos and co-ops. Because a home goes under contract a month or two before it is sold, the Pending Home Sales Index generally leads Existing Home Sales by a month or two.”

 

That sentiment was echoed by NAR chief economist Lawrence Yun following an unexpected 0.9% decline in the November Pending Home Sales Index to 106.9. He said “Home prices rising too sharply in several markets, mixed signs of an economy losing momentum and waning supply levels have acted as headwinds in recent months despite low mortgage rates and solid job gains. While feedback from Realtors® continues to suggest healthy levels of buyer interest, available listings that are move-in ready and in affordable price ranges remain hard to come by for many would-be buyers.”

 

It was a different story a few months ago. For example, Pending Home Sales rose 0.2% in October and at that point were up 2.1% year-over-year. Tight inventory and rising prices are crimping sales. Pending Home Sales rose the most in the Northeast, where we haven’t been seeing the torrid price appreciation we have been seeing on the West Coast.

 

The pattern for this year has been shaping up to be very similar to 2013, when the taper tantrum was followed by declining pending home sales, and subsequently by declining home price growth. Home price growth declined from a higher level in late 2013, 10.8% versus today’s 4.7%, but growth ended up roughly 6pp lower after the taper started. Some analysts anticipate that a similar decline in home price growth will occur over the next two years as the Fed goes ahead with its second phase of tightening monetary policy, interest rate hikes.

 

Lenders and vendors have been changing plenty of forms during the last month. Let’s play some catch-up on the minutiae of lending.

 

NYCB is reminding its clients to work with their title providers to ensure that the owner’s and lender’s title insurance premiums are disclosed properly on the Loan Estimate and Closing Disclosure.  CFPB’s webinar dated 5/26/15, addressed a question regarding how to disclose the owner’s and lender’s title insurance premiums on the Closing Disclosure form in a simultaneous issue situation. A recording of the webinar and a copy of the presentation is available.

 

As part of the Pre-Closing Review process, NYCB Mortgage Banking requires documentation evidencing the Borrowers’ intent to proceed with the loan. As a convenience, NYCB has created the Affirmation of Intent to Proceed [WSL:1256] form that may be used to document a Borrower’s intent to proceed. If you choose to use the NYCB form, it must be completed in its entirety and submitted with all other required Pre-Closing documentation.

 

The IRS has revised form 4506-T, used to request tax transcript to version (Rev. 9-2015). Effective Dec. 7, 2015, the IRS will only accept the newly revised form. To avoid delays in ordering transcripts, please make sure that when requesting transcripts you are using the updated version of the form. To help during this transition, Plaza has posted an updated version in its Resource Center.

 

Penny Mac has posted information regarding the new 4506T form and requirements for self-employed borrowers.

 

New Penn Financial has started using FormFree’s AccountChek Asset Verification Report. By eliminating the need for paper bank statements, AccountChek is said to significantly reduce buyback exposure and fraud, while also providing lenders with an easy solution for complying with new “ability-to-pay” rules. Jerry Schiano, president and chief executive officer of New Penn Financial,  stated “We are anxious to use FormFree’s AccountChek solution, we will now be able to verify our applicants’ bank statements digitally, rather than on paper, which will enable us to improve our customer service as well as get more accurate information faster.”

 

Stearns has revised its Wholesale Loan Submission Form, developed to improve the process. Additional information has been added to the form including the name and email for up to 4 borrowers and the contact information for the Settlement/Escrow and Title agents. Click Here to download and save the Loan Submission Form. It is also available in SNAP 2.0 – under SNAP Forms > Origination.

 

With the implementation of TRID in full swing, Stearns is working toward a complete transition of our workflow and processes to support the new TRID requirements. To facilitate this final move, Stearns will no longer accept Pre-TRID transactions after December 31, 2015. Any applications taken prior to 10/3 must be submitted prior to year-end. Beginning January 1, 2016, only TRID compliant applications taken on or after 10/3/15 will be accepted.

 

Yes, Stearns Wholesale will no longer accept Pre-TRID transactions after December 31, 2015. Any applications taken prior to 10/3 must be submitted prior to year-end. Beginning January 1, 2016, only TRID compliant applications taken on or after 10/3/15 will be accepted.

 

The nine AmeriHome forms available at SellerWeb > Resources > Doc and Forms have been updated to include barcodes. Using the barcoded forms will help expedite the processing of loans delivered for purchase.

 

Provident Funding’s Compliance Tracker is ready for use. Using this system allows you to track E-Disclosure status, monitor disclosure issuance and delivery dates, plus providing various confirmations and determinations. View Provident Funding website for details.

 

As required by current laws, NYCB clients must request and document the Borrower(s) Ethnicity, Race and Gender information. This information must be obtained at the time of application and accurately recorded in the Declaration Section of View/Edit 1003 in Gemstone prior to the loan being submitted to any Automated Underwriting (AU) system via Gemstone. It is not acceptable to use generic/invalid Customer identification information in the Declarations page of Gemstone in order to process loans. Please refer to the Seller’s Guide Section 15.12 for more details on obtaining and documenting this information.

 

Sun West accepts initial loan application and applicable disclosures executed prior to closing using electronic signature (“e-signature”) if in compliance with the requirements of the Federal E-Sign Act. You must utilize an E-Signature Vendor from Sun West’s list of Authorized E-Signature Vendors available in the HELP section of sunsoft.

 

IMPAC introduced its Conditional Loan Approval form that is more user friendly with simpler process, more consistent conditions and sorted into related groups. In addition, its CLA includes a coded system that is easier to understand and communicate. Note the following: The NEW Codes provide focused organization quickly for its team. Each reference code on each condition will remain the same (ex: condition A03 will remain A03) Internal conditions will no longer be visible to your client. Click here to view and example CLA.

 

Effective immediately, due to TRID requirements, MWF will now require pay off demands for refinance transactions to be current through the closing date of the loan prior to the issuance of the Closing Disclosure. Updated demands will no longer be conditioned as a prior to funding condition.

 

In addition, Beginning January 1, 2016, an escrow/impound account must be established for payment of flood insurance premiums for all loans where the property is located in a Special Flood Hazard Area (SFHA) flood zone beginning with A or V, regardless of LTV and/or federal exemptions. The escrow account for flood insurance is required for the life of the loan.

 

Log into Franklin American Mortgage (FAMC) to view its latest Bulletin 2015-28.  This most recent bulletin lists guideline updates regarding Agency Loan Limits and includes all lock, underwriting, delivery and purchase by dates, if required.

 

Freedom Mortgage will require completed NMLS License renewal by 12/31/2015. To avoid any interruptions in the processing loans, provide a copy of the renewed license or a screenshot of NMLS Renewal history and License Registration Status history page. Please send your copy to: Licenserenewals@FreedomMortgage.com.

 

Beginning Friday, December 18, 2015, the U.S. Bank Home Mortgage Correspondent Seller Guide displayed an enhanced layout and table of contents. New features include: numbered folders and documents for easy reference, fewer folders on the main page as well as straightforward and user friendly folder and document placement. You may continue to access the Correspondent Seller Guide the same way you do today.

 

 

Turning to the bond markets, rates didn’t move much Wednesday – there was little to move them. If you were picky you could say that the yield curve steepened somewhat. And mortgage prices actually improved slightly. Pending home sales for November unexpectedly declined and the $29 billion 7-year Treasury auction was poorly received, although low holiday week liquidity may be partly to blame.

 

For excitement today, besides the early bond market close and the holiday Friday, we’ve already had Initial Jobless Claims for the week ending 12/26 (287k, up 20k – but it was a holiday week); coming up is the December Chicago PMI at 9:45 EST. We closed the 10-year at 2.30% and today it’s hovering around 2.28% with agency MBS prices better by .125.

 

 

As we close the year 2015 let’s take a look back at 1915. The year is 1915 “One hundred years ago” – what a difference a century makes!

Life expectancy for men was 47 years.

Fuel for cars was sold in drug stores only.

Only 14 percent of the homes had a bathtub.

Only 8 percent of the homes had a telephone.

The maximum speed limit in most cities was 10 mph.

The tallest structure in the world was the Eiffel Tower.

The average US wage in 1910 was 22 cents per hour.

The average US worker made between $200 and $400 per year.

A competent accountant could expect to earn $2000 per year.

A dentist $2,500 per year.

A veterinarian between $1,500 and $4,000 per year.

And, a mechanical engineer about $5,000 per year.

More than 95 percent of all births took place at home.

Ninety percent of all Doctors had NO COLLEGE EDUCATION!

Instead, they attended so-called medical schools, many of which were condemned in the press AND the government as “substandard.”

Sugar cost four cents a pound.

Eggs were fourteen cents a dozen.

Coffee was fifteen cents a pound.

Most women only washed their hair once a month, and used Borax or egg yolks for shampoo.

Canada passed a law that prohibited poor people from entering into their country for any reason.

The Five leading causes of death were:

  1. Pneumonia and influenza
  2. Tuberculosis
  3. Diarrhea
  4. Heart disease
  5. Stroke

The American flag had 45 stars.

The population of Las Vegas, Nevada was only 30.

Crossword puzzles, canned beer, and iced tea hadn’t been invented yet.  

There was neither a Mother’s Day nor a Father’s Day.

Two out of every 10 adults couldn’t read or write.

And, only 6 percent of all Americans had graduated from high school.

Marijuana, heroin, and morphine were all available over the counter at local corner drugstores.

Back then pharmacists said, “Heroin clears the complexion, gives buoyancy to the mind, regulates the stomach, bowels, and is, in fact, a perfect guardian of health!” (Shocking?)

Eighteen percent of households had at least one full-time servant or domestic help…

There were about 230 reported murders in the ENTIRE U.S.A.!

I am forwarding this you without typing it myself.

From there, it can be sent to others all over the WORLD all in a matter of seconds!

It is impossible to imagine what it may be like in another 100 years.

 

 

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.)