Apr. 10, 2017: SVP Sales, consulting jobs; lender changes to fees & price caps; how is Agency risk-based pricing set?

In response to a note I had Friday about Domino’s Pizza being required to post all 34 million calorie combinations of its pizzas, ThomsonReuters’ Michael Ehrlich sent along Domino’s Nutrition Guide. And you think your pricing matrix is intricate! Just as complex is the U.S. budget. Even with Congress heading off on a two-week break, it is nice to hear that no one is talking about, or threatening, a government shutdown come April 28th.


Adding production through recruiting is top of mind with many, if not all, managers and leaders in our industry. Model Match launched in Q4 of 2015 as a solution to help individual managers and organizations unify how they go about recruiting and retaining production talent into their organizations. “We have learned that through our coaching and technology platforms we can significantly impact the short and long-term results of our clients and users. If Recruiting is on your mind, and you would like to know how we can help you be more efficient and effective with your production recruiting activities in 2017, we have some amazing success stories to share. Model Match has enterprise and single user offerings to support you. For more information, contact us via sales@modelmatch.com or 949-344-2780.”


In consulting hiring news, Buckley Advisors founded in 2007 by Michael Celenza and Roger Brown, mortgage banking professionals with an excess of 30 and 45 years of experience respectively. Exclusively focused on the mortgage banking industry, Buckley has provided consulting services and expert personnel to regional and national mortgage banking operations, banks as well as other national consulting companies. Buckley Advisors is sourcing Consultants with 10+ years of Mortgage Banking experience for a project beginning in mid-April. The Ideal candidates will have knowledge of the full life cycle of mortgage originations as well as the latest industry tools. Some travel is required and travel expenses will be reimbursed.  PMP, Lean Six Sigma experience desired but not mandatory.  If you have these qualifications and are interested in being considered for this project, please send your CV to Michael Celenza.


Finance of America Commercial LLC has an opening in its Northbrook, IL office for a Senior Vice President, Sales & Marketing. This person will play a pivotal role in revenue generation for the Company, overseeing the sales team and production and working with a team of FACo Business Development Directors to establish and execute a profitable and efficient sales, marketing, and business development strategy. The candidate must live in Chicago and demonstrate at least seven years of mortgage sales management, with exceptional success. The candidate must have a degree from a highly ranked four-year college, and an extremely strong work ethic. FACo is part of the Finance of America family of companies, which employs more than 4,000 professionals around the world. Submit a resume to Magdalena Pyclik.


In other company news…


In Washington, Academy Mortgage picked up a group of retail originators from Wells Fargo.


United Wholesale Mortgage introduced its ‘BLINK’ Mortgage Portal, (stands for “borrower link”) a consumer-facing web application that enables borrowers to combine the simplicity and flexibility of mobile technology with applying for a home loan while equipping Brokers with All-Inclusive Loan Technology. Borrowers are given the capability to start the loan application process, pull their credit, e-sign documents, verify assets, and track the status of their loans – from anywhere.


Changes in fees & expenses


Do regulatory hurdles add to the cost of loans, and therefore increase the cost to borrowers? Sure they do. Let’s see what various investors and lenders are doing about fees, expenses, and cost allocation.


A recent Pacific Union bulletin issued a reminder that the Real Estate Commission paid to Realtors engaged on the Buyer(s) side of the transaction (such as the Selling Buyer’s agent) must be disclosed on the Buyer’s Closing Disclosure.  The Closing Disclosure should be completed as follows: Real Estate Commissions paid to (Provide name – Realtor Company Name matching the contact page). Paid by Seller should be listed as indicated below. (Paid by Buyer should display in Section H; Column A).


Effective April 1st, 2017, the fee for 1004D_05 Appraisal Updates and 1004D_05 Certification of Completion will be $150.  The fee will be noted in Flagstar Bank’s Nationwide Flat Fees section of Appraisal Pricing Matrix, Doc. #4905 and will no longer be separated by state/county.


Ditech is clarifying its policy on the escrow of funds for the payment of property taxes, and insurance, including hazard, wind, earthquake, and HO-6 premiums.  Generally, an escrow of funds is required for the payment of these premiums but may be waived in some circumstances. An escrow of funds for the payment of flood insurance and mortgage insurance (unless single-premium or lender-paid) is always required.


Effective for all commitments taken on or after Thursday, April 6th, PennyMac is implementing updates to the Conventional LLPA for Best Efforts and AOT/DT.  No changes will be made to the rate sheet structure.  The LLPA value updates will specifically apply to the following section: FICO/LTV LLPAs for All Loans (Mortgage > 15 Year Terms)’ grid.


PennyMac announced the removal of price caps on Conventional and Government Best Effort loans, for new commitments taken on or after Monday, April 3.


For loans purchased on or after March 28th, Wells Fargo Funding is removing its interest rate set date documentation requirements for Higher-Priced Mortgage Loans (HPMLs). Follow Fannie Mae or Freddie Mac requirements. This change does not impact the Loan Submission Summary (LSS) form. The interest rate set date will remain a required field on the LSS.


Effective April 3rd, First Community Mortgage has updated its wholesale product and pricing guidelines.


After a recent review of Regulation Z and the definition of Loan Purpose under TRID, Plaza Home Mortgage, Inc. will be making a change to the “Loan Purpose” field on the Loan Estimate (LE) and Closing Disclosure (CD) for refinance transactions of property owned free and clear of any liens. Effective April 10, 2017, for refinance transactions of property that is owned free and clear of any liens, “Home Equity Loan” will print on the “Purpose” line on the LE and CD.


Not sure how to calculate Rental Income from the Schedule E of the Personal 1040s? Plaza’s April 10th class will help you to calculate rental income utilizing FNMAs Form 1037, Form 1038, and 1039 Rental Income Worksheets.


Through a partnership with WFG Lender Services, NYCB Mortgage Banking’s GemstoneSecured program offers “a special package of benefits designed to mitigate risk while closing loans efficiently. WFG benefits include reduced re-purchase risk, faster pre-closing reviews, CPL convenience and fewer missing document hassles and an excellent value with no hidden fees. Learn more about its platform, Contact your NYCB Account Executive or WFG contact, Bob Wohleber.


Capital Markets


“Rob, on conforming loans there is a risk-based pricing matrix. How are these numbers determined? They are probably based on some historical data but things change over time (e.g. less homes in foreclosure, etc.) so how is the risk translated into a fee to compensate for the risk (e.g. noo with 25% down, 2.125)? What especially puzzles me is the hit for 80-10-10. And who are these people that make this chart?” The answer is that, as capital markets folks know, it often is a result of past performance of loans with certain characteristics, but that Fannie Mae & Freddie Mac’s risk-based pricing framework is largely managed and controlled by FHFA. Here is the document that describes FHFA’s role in setting and monitoring risk-based pricing.


While we’re on pricing, it is good to remember that financial markets aren’t always perfect. The prices of bonds (which determine interest rates), stocks, and other assets can vary tremendously from where classical theory says they should be. The reasons stem largely from the overwhelming complexity of the real world of finance, where information is imperfect, human beings are sometimes irrational, and situations can change between the time an investment idea is hatched and when it is acted on. There are countless complications that make prices so unpredictable and financial markets hard to fathom. Why are markets subject to boom and busts? Why does gambling usually not pay off? The list of questions goes on, but a portion of reasoning comes back to how market participants are averse to risk, and how that distorts prices. Put another way, the fear of losing outweighs the benefit of winning.


Remember that rates are determined in great part to the demand by investors for certain products. Taken to an extreme, if every investor decided they no longer wanted to own Ginnie Mae securities, and lenders couldn’t sell their FHA & VA loans, what would that do to the market? And in turn, lenders offering that product? Conversely, if mortgage investors are searching for higher yielding investments, a likely source is non-QM loans.


ABA Community Bank Mortgage LLC, a subsidiary of the American Bankers Association, has selected PennyMac Financial Services, Inc. as a secondary market investor. This selection means that ABA Community Bank Mortgage LLC owner banks can sell agency-eligible loans on a servicing-released basis to PennyMac Financial and can access PennyMac’s full line of lending products.  “Our new partnership with PennyMac will provide participating banks with competitively priced conforming and jumbo products – enhanced by the power of ownership,” said Deborah Whiteside, president and COO of ABA Community Bank Mortgage LLC.


Turning to mortgage rates, the bond markets were jolted by Friday’s nonfarm payroll number, which was weaker than expected. And given that a weak economy would mean lower rates, bond prices rallied and rates dropped (the yield on the 10-year hit 2.27%). But that didn’t last too long, and everyone started pointing their finger at the inclement weather which hit the eastern seaboard during the survey period, and even the “weaker” number is probably enough to keep the Fed on its path of rate hikes. And thus, it seems that the market sense is for rate hikes in June and September with tapering beginning after that and before the end of the year.


Don’t forget that the bond markets will be closing early Thursday and are closed this Friday. We closed last week with the 10-year yielding 2.37%. And there weren’t any major economic data or monetary headlines out in the last 72 hours. In equity news for this week, Citigroup, JP Morgan Chase and Wells Fargo all reporting earnings on Thursday.


For thrills and chills this week, today we’ll have a $24 billion 3-year Treasury auction. Tomorrow is the February JOLTS (job openings) number and a $20 billion 10-year reopening. Wednesday, we have the MBA’s take on last week’s applications, along with March export prices and a $12 billion 30-year auction. Thursday are March PPI (Producer Price Index), Initial Jobless Claims, and April Michigan Sentiment. Friday there is no news, and the market is closed. We begin the week with rates nearly unchanged versus Friday’s close: the 10-year is yielding 2.38% and agency MBS prices are off ever so slightly.



(Thank you to Nick S. for this one.)

A man returns home a day early from a business trip. It’s after midnight. While in route home, he asks the cabby if he would be a witness, because the man suspects his wife is having an affair, and he wants to catch her in the act. For $100, the cabby agrees.

Quietly arriving home, the husband and cabby tip toe into the bedroom. The husband switches on the lights, yanks the blanket back and there is his wife, naked as a jay bird, with a man, totally nude also. The husband puts a gun to the naked man’s head.

The wife shouts, “Don’t do it!  I lied when I told you I inherited money. HE paid for the Porsche I gave you. HE paid for your new 25 ft. Ranger Fishing Boat. HE paid for your football season tickets. HE paid for our house at the lake. HE paid for your golf trip to St Andrews and your new 4 x 4. HE paid for our country club membership and he even pays the monthly dues. And because of HIM, I can put an extra $2,000 in our checking account each month.”

Shaking his head from side-to-side, the husband lowers the gun. He looks over at the cabby and asks, “What would you do?”

The cabby replies, “I’d cover him with that blanket before he catches a cold.”





(Copyright 2017 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.)


Rob Chrisman