While we’re talking about the FDIC, last Friday, while the heart rate of every small banker ratcheted higher, the FDIC regulators were busy as they shuttered six more banks. Georgia, Florida, Minnesota, California, and Washington all have fewer banks, but the FDIC was able to find buyers for them. (Remember in the old days, buyers would often have names like Chase, Bank of America, and Wells Fargo? No more…) First Regional Bank of Los Angeles, CA, Community Bank and Trust & First National Bank both of GA, Florida Community Bank, Marshall Bank of MN, and American Marine Bank (WA) will set the FDIC’s Deposit Insurance Fund back $1.86 billion. They went to First-Citizens Bank & Trust (NC), SCBT (SC), Community & Southern Bank (GA), Premier American Bank (FL), United Valley Bank (ND), and Columbia State Bank (WA), respectively.

And lastly, for FDIC fans, or if you want to check up on your bank, their FDIC Call Report is a good place to start. Check out http://www2.fdic.gov/idasp/main_bankfind.asp 

Behavioral economics is very interesting. Merrill Lynch just released an analysis of a credit-related study (from Equifax) discussing the contrast between auto and home loan delinquencies. Their report shows that 73% of prime borrowers have never been delinquent on their mortgage or auto loan, compared with 23% of subprime borrowers, although some types of borrowers are more likely to have been delinquent on their mortgage than on their auto loan. Many distressed borrowers who go delinquent on both types of debt do so around the same time, but the bulk of the population (almost two-to-one for prime borrowers) has gone delinquent on their mortgage before their auto loan. And the cure rate out of delinquency for auto loans tends to rise after the borrower mortgage delinquency, indicating that going delinquent on the mortgage acts as a form of relief for some borrowers, enabling them to cure on other delinquent debts.

Well, lots of mortgage-related companies had “rebound years” last year, although some just plain ol’ grew. This list included Lenders One, a cooperative, which saw $77 billion in volume pass through its members in 2009. It reported that the volume is more than twice its total production in 2008.

Wells Fargo wholesale, starting on GFE’s today, will no longer accept any that include signature lines. “GFEs that include only the borrower’s signature, and are without additional signature lines, are still acceptable.” Get those signature lines out!

GMAC Bank correspondents learned that “for conforming loans to be eligible for purchase by GMACB the loan must contain a DU or LP Findings Report directly from the appropriate agency's AU system.” Why accept second best, right? In addition, “the requirements for DU Refi Plus state all existing subordinate financing must be re-subordinated to maintain first lien priority of the new first mortgage originated in a DU Refi Plus product.” Fannie Mae is expanding the types of subordinate financing that can be re-subordinated in connection with a DU Refi Plus transaction to include mortgages with negative amortization, subordinate financing that does not fully amortize under a level monthly payment plan where the maturity or balloon payment date is less than five years, or subordinate financing with prepayment penalties. Last week GMAC also “tweaked” their funding exclusionary list, their Federally Declared Disaster Notification program, rental income, and VA acceptance of HUD/FHA condominium project approvals in lieu of VA project reviews.

US Bank Mortgage Wholesale Division addressed HUD’s flipping waiver from a few weeks ago, which allows issuance of FHA insurance on properties owned by the seller for 90 days or less. The transaction must be an “arm’s length” transaction with no identity of interest between Buyer and Seller or other parties participating in the sales transaction. “To make this determination the following applicable steps should be performed: verify that seller is in title as indicated on the appraisal and no apparent family or business relationship exists between the parties to the loan or sales agreement, LLCs, corporations or trusts as sellers must have been established and operated in accordance with applicable state and federal law. Lenders must document the validity of the seller.  Business licenses, State Department of Corporations status, and Attorney Opinions are examples of acceptable documentation. No pattern of previous flipping exists such as multiple transfers of title within a 12 month timeframe as indicated on the chain of title on the appraisal .The appraisal is required to show a 3 year history of ownership. Document that property was marketed openly and fairly through an MLS, an auction, For Sale by Owner or developer. There are some other criteria where it would be best to read their actual memo, but USB reminds its clients that “Waiver is limited to forward mortgages only and does not apply to Home Equity Conversion Mortgage (HECM) for purchase program. USBHM does not currently offer HECM financing.”

North State Bank, out of North Carolina, will be acquiring Affiliated Mortgage LLC, a mortgage company also based in NC, with the new name “North State Bank Mortgage”.

Caliber Funding told clients that it will begin accepting FHA and VA High Balance loan submissions. Brokers can sell them 30 & 15-yr FHA (for VA only 30-yr), primary residences, purchase, rate/term, or cash out, etc. Check their guidelines for more policies.

(Yes, there are still a few cash-out refinances, but only to the tune of $11 billion of equity in the fourth quarter. This is the lowest volume in nine years, according to Freddie Mac.)

Friday the markets saw another light origination day, pretty much soaked up by the Fed. Money managers are selling the higher coupon production – perhaps taking some profits and/or transferring positions to lower coupons in case of rising rates. And we had quite a bit of news even after the GDP showed that the economy is picking up steam in the fourth quarter. We found out that labor costs last year rose 1.5 percent, the smallest annual gain since record-keeping began in 1982, and that the Chicago Purchasing Managers Index hit its highest level since November 2005. Lastly, the University of Michigan Consumer Sentiment Index rose. Although it is arguably a “jobless recovery”, does anyone doubt that the economy is recovering some of the ground we’ve lost the last few years?

So why has the stock markets been down for three straight weeks? Despite some decent earnings reports, including those from large mortgage investors (i.e., banks), stocks appear to have run ahead of themselves toward the end of 2009. “Overdone on the upside.” In addition, we are still seeing strength from cost cutting and not from real growth, although it seems that the public “wants” to be bullish on stocks.

The hits just keep on comin’ this week, with arguably the most important news being employment statistics on Friday. (It usually comes out on the first Friday of the month.) We already have Personal Income & Consumption: U.S. consumer spending rose slightly less than expected in December, +.2% (although November was revised higher) and Personal income increased 0.4 percent last month after increasing 0.5 percent in November. With income going up, and spending going up less, the savings rate increased. Later this morning are the ISM Manufacturing Index and Construction Spending. Pending Home Sales, a leading indicator for the housing market, will come out tomorrow, followed by ISM Services, the ADP employment report, and the details of next week’s auction on Hump Day. Thursday is the usual Jobless Claims, but also Factory Orders and Productivity. Phew! With all of that ahead of us, the 10-yr is at 3.62% and the 5-yr and mortgages are worse by around .125 in price.


The wife and I were sitting around the breakfast table yesterday morning.
I said to her, "If I were to die suddenly, I want you to sell all my stuff immediately."
"Now why would you want me to do something like that?" she asked.
"I figure that you would eventually remarry, and I don't want some jerk using my stuff."
She looked at me and said, "What makes you think I'd marry another jerk?"

Rob

(Check out http://www.mortgagenewsdaily.com/channels/pipelinepress/default.aspx. For archived commentaries, check www.robchrisman.com, or to subscribe/unsubscibe write to rchrisman@robchrisman.com.)