Here is an interesting question for anyone
who
sells a loan to an investor/servicer: If the loan is modified, are
you, as
the seller, still “on the hook” for the reps and warranties you gave
when you
sold the original loan? Servicers use the Home Affordable
Modification
Program (HAMP) and other non-HAMP modification efforts to avoid
foreclosure
whenever possible and keep the borrowers in their homes. Some
servicers, such
as Wells Fargo, may have a policy that states “we consider loan
modification activities
intended to keep borrowers in their homes, and pursuit of remedies for
a breach
of Representations and Warranties under the Loan Purchase agreement, to
be
distinct and independent events.” So if a loan undergoes loss
mitigation (like
a modification of unpaid principal balance, interest rate, etc.), the
servicer
treats that process as a separate issue then when a defect is
identified in a
loan which results in a contract remedy. So check with your servicer –
you may
not be “off the hook” for your obligations.
One of the best statements that I have heard
regarding the RESPA changes in 9 days came from a top mortgage
banker,
who simply said, “We don’t know how much we don’t know.”
Broadly
speaking, on 1/1 companies should know about a new Good Faith Estimate,
new HUD-1/HUD-1A
Settlement Statement, tolerance limits, and changes to the disclosure
of Yield
Spread Premium. Franklin American Mortgage Company told clients that
they will
adhere to the new requirements and will purchase loans that are in
compliance
with the requirements of the RESPA Act, and will enforce the
requirements of
the new RESPA regulations effective with January 1st applications.
Who says deals aren't done during the week
leading up to Christmas? Mason Dixon Funding, out of Maryland,
was
purchased by Embrace Home Loans. Embrace Home Loans is a pretty
typical
mortgage banker who sells to Freddie & Fannie, is FHA & VA
approved,
and issues Ginnie Mae securities. Mason Dixon has nine retail branches
located
in Maryland, Virginia, the District of Columbia and Delaware, and more
than 150
employees, while Embrace Home Loans employs more than 550 mortgage
professionals, originated more than $3 billion in loans this year and
operates
16 retail branches.
Wells Wholesale channel
came out with an adjustment to their policy on Higher-Priced Mortgage
(HPM) loans
starting January 1st. “As part of the Home Ownership and
Equity
Protection Act (HOEPA), new compliance and HMDA reporting requirements
for
Higher-Priced Mortgages (HPM) took effect with new owner-occupied
registrations
taken on or after Oct. 1, 2009…Additionally, HOEPA will require
compliance on
all HPM loans with a close/fund date of Jan. 1, 2010, or after,
regardless of
registration date.” Wells also noted that 2-Unit second homes are no
longer allowed
with Freddie Mac Relief Refinance Mortgage after… yesterday.
Many compliance employees only have to deal
with one state. They are fortunate, in that many states have their own
nuances.
For example, the state of Indiana established regulations regarding
undue
appraiser influence that apply to the sale of real estate property
including the “making, refinancing or consolidation of a mortgage loan
effective for Indiana loan applications taken on or after Jan. 1, 2010.
In
order to promote the reporting of undue appraiser influence violations,
the
Homeowner Protection Unit has issued a “Notice to Borrower” for
creditors to
provide within three business days of receiving a real deal
application. The
Notice to Borrower also provides language that states the borrower has
the
right to review the HUD-1 document 24 hours before closing if
requested.
Closers should be aware of this requirement and ensure all fees are
verified
and present on the HUD-1 and provide a copy to the borrower if
requested.”
Brokers are responsible for providing the notice to the borrower.
What the heck happened to rates yesterday? Rates
are back to October levels, the yield on the 10-yr Treasury went up
above
3.60% (a technical support level), and the yield curve continued to
steepen
since overnight and short-term rates are still near 0%. (And many feel
a steep
curve indicates future growth.) Some traders blamed a rallying stock
market,
thin holiday trading done by “the B-team”, few buyers ahead of
year-end, or the
chance that next week’s auctions will be poorly received. Mortgage
servicers
were in doing some selling, and the Fed was in doing some buying.
Today we’ve already had some news out. The
final revision to the 3rd Quarter GDP numbers came out which
showed
that the U.S. economy grew at a much slower pace than initially
thought. The
final estimate showed GDP grew at a 2.2% annual rate instead of the
2.8% pace
it reported last month. It was still the fastest pace since the third
quarter
of 2007 and ended four straight quarters of decline in output. Is that
helping
bonds? Nope. The yield on the 10-yr is now above 3.70% and mortgage
prices
are worse by another .250-.375. At 10AM EST we’ll have Existing
Home Sales.
Let’s not get carried away on the upside here…
There was a man who worked for the Post
Office
whose job was to process all the mail that had illegible addresses. One
day, a
letter came addressed in a shaky handwriting to God with no actual
address. He
thought he should open it to see what it was about.
The letter read:
Dear God, I am an 83 year old widow, living on a very small pension.
Yesterday
someone stole my purse. It had $100 in it, which was all the money I
had until
my next pension payment.
Next Sunday is Christmas, and I had invited
two of my friends over for dinner. Without that money, I have nothing
to
buy food with, have no family to turn to, and you are my only hope. Can
you please help me? Sincerely, Edna.
The postal worker was touched. He showed the letter to all the other
workers.
Each one dug into his or her wallet and came up with a few dollars.
By the time he made the rounds, he had
collected $96, which they put into an envelope and sent to
the woman.
The rest of the day, all the workers felt a warm glow thinking of Edna
and
the dinner she would be able to share with her friends.
Christmas came and went.
A few days later, another letter came from the same old lady to
God. All the
workers gathered around while the letter was opened.
It read:
Dear God,
How can I ever thank you enough for what you did for me? Because of
your
gift of love, I was able to fix a glorious dinner for my friends. We
had a very
nice day and I told my friends of your wonderful gift. By the way,
there was $4
missing. I think it might have been those *&^%’s at the post
office. Sincerely,
Edna.
Rob
(Check
out http://www.mortgagenewsdaily.com/channels/pipelinepress/default.aspx.
For archived commentaries, check www.robchrisman.com,
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