Apr. 14: Correspondent opportunities; owning stock in the Agencies; FHA’s HAWK program; ABA Lending Survey results

Certainly many statistics are showing us that things continue to pick up. But is the economy doing as well as the Fed thinks it is? If it is, the improvement is certainly not evident in the traditional sense, and the gap between the haves and the have-nots continues to widen. Family Dollar Stores announced that it will close 370 stores. Two weeks ago Brookstone filed for bankruptcy protection. There were similar moves by retailers Dots, Ashley Stewart, Sbarro and Quiznos. And last week Sandpoint Idaho retailer Coldwater Creek, faced with declining sales, annual losses, and mounting debt, filed for Chapter 11 bankruptcy protection. Yet LVMH’s stock is trading near its all-time highs. What is LVMH? It is the company that owns Luis Vuitton, Dom Pérignon, Domaine Chandon California, Hennessy, Moët & Chandon, Veuve Clicquot, Dior, Donna Karan, Givenchy, Bulgari, Hublot, TAG Heuer, and so on – luxury goods.


On the jobs and promotions front, the Freedom Mortgage Mini-Correspondent lending initiative has experienced remarkable growth over the last 2 years.  The Freedom program can not only service lenders with existing warehouse lines, but can also help lenders facilitate new lines. New lines are available from independent warehouse lenders designed to serve the needs from the emerging broker to banker, up to the banker that needs additional line capacity or simply better advance terms. To meet the growing  demand, Freedom Mortgage has expanded the functions of  Allen Middleman to VP, Regional Mini Correspondent Lending Manager for the Florida Region, Anne Broederdorf in the Western Region, Stacey Faul in the Midwest, and Jake Wilson covering the East coast. “Freedom’s Mini-C Regional Lending Managers work with the local Freedom AEs, Regional Wholesale Managers and Regional Ops Mangers to provide the very best Mini Correspondent service in the market.” To contact a representative in your region, email Allen.Middleman@FreedomMortgage.com , Anne.Broederdorf@FreedomMortgage.com , Stacey.Faul@FreedomMortgage.com, or Jake.Wilson@FreedomMortgage.com.


And Citibank, N.A. is strategically adding new correspondent sellers for delegated and non-delegated delivery. “Citi offers competitive pricing with additional incentives for CRA eligible loans. It also offers a thorough pre-purchase review process to help improve quality manufacturing and delivery to Investors and Agencies. A relationship-centric organization, all clients benefit from the expertise, support and resources that Citi offers.” For consideration please complete the Prospective Mortgage Correspondent Questionnaire here:



Whether or not you’re hiring, of interest to anyone skipping through this newsletter were the Fed’s comments on housing. “Housing activity remained slow over the intermeeting period. Although unfavorable weather had contributed to the recent disappointing performance of housing, a few participants suggested that last year’s rise in mortgage interest rates might have produced a larger-than-expected reduction in home sales. In addition, it was noted that the return of house prices to more-normal levels could be damping the pace of the housing recovery, and that home affordability has been reduced for some prospective buyers. Slackening demand from institutional investors was cited as another factor behind the decline in home sales. Nonetheless, the underlying fundamentals, including population growth and household formation, were viewed as pointing to a continuing recovery of the housing market.


Does anyone remember Lehman Brothers? I do, they had some of the best conference freebies out there. I think of them fondly every time I head for the store and use my canvass LB tote bag to haul my groceries. Unwinding the positions of Lehman has been a monumental challenge, and it is only now that analysts have started to quantify the total losses. The bankruptcy of Lehman Brothers and its 209 registered subsidiaries was one of the largest and most complex in history, with more than $1 trillion of creditor claims in the United States alone, four bodies of applicable U.S. laws, and insolvency proceedings that involved over eighty international legal jurisdictions. The New York Federal Reserve writes in Liberty Street Economics, “We estimate the payout ratio to Lehman’s creditors thus far to be about 28 percent on estimated allowable claims of more than $300 billion, implying a loss to creditors and counterparties of more than $200 billion…We find that the recovery rate for LBHI creditors has been below average so far—about 27 percent versus more than 55 percent historically.” The article, written by Michael Fleming and Asani Sarkar, concludes that the difficulties associated with Lehman’s resolution under Chapter 11 resulted in part from Lehman’s lack of bankruptcy planning and in part from the inherent complexity of Lehman’s business and organizational structure.


I was recently doing a little mortgage related research and came across an online article written in early 2007 by an equities analyst who placed a “buy” on FNMA and FHLMC (along with Sears). I wonder if he ever found his true calling in life. It’s important to realize that markets, and by extension the people who trade within its perimeters, are almost as wrong, as they are right. I read a recent BAML article, A Mortgage Misunderstanding: GSE Moving Markets, in which they address a common concern; market timers, and people attempting to front run “what may” happen with respect to Fannie and Freddie, are creating volatility. They write, “In our view, the Fannie and Freddie situation, which encompasses not only the agency debt, MBS, equity and preferred markets but also the housing market and the overall economy, is now generating more headline risk and spread volatility as markets oscillate between opposing possible outcomes. Our bottom-line outlook is that the markets have overreacted recently to the possibility of passing a new GSE bill this year.”


Before we plunge into some agency and investor updates, it is important to keep in mind that the American Bankers Association released its 21st annual Real Estate Lending Survey. “More than 80 percent of banks expect new mortgage regulations to reduce mortgage credit availability – more than one-third of respondents will only make qualified mortgage loans, while another one-third will also make non-qualified mortgage loans but only to targeted markets or products. ‘The new mortgage rules are a serious challenge, especially in the near term, for mortgage lending,’ said Robert Davis, executive vice president at the American Bankers Association. ‘The problem will last at least as long as bankers calibrate their compliance systems, and perhaps much longer.’” (On the commercial side, things are okay: commercial real estate loan demand is trending higher for 26 percent of respondents, but remains stagnant for 51 percent. The delinquency rate for commercial real estate loans remained little changed at 3.3 percent in 2013.) And this will stun you: according to the survey, bankers are most concerned about the increasing regulatory burden and compliance cost. Click here for a complete report: 2014 ABA Real Estate Lending Survey.


Is the FHA going to bring back “spot loans”? Perhaps, much to the joy of many lenders out there. Here is the latest: http://www.inman.com/2014/04/08/fha-facing-political-pressure-to-bring-back-spot-condo-loans/?utm_source=20140408&utm_medium=email&utm_campaign=dailyheadlinesam.


But under the title of “oh well,” Commissioner Galante made it clear that the FHA will not be lowering the MIP in the near future, and that they have included a lender paid fee in the 2014 budget that would raise up to $30mm to help offset increased QC fees on FHA loans. She did say they will be rolling out the Homeowners Armed With Knowledge (HAWK) program that will use consumer education to lower a borrower’s MIP: https://mninews.marketnews.com/index.php/fha-commissioner-now-not-time-roll-back-premiums?q=content/fha-commissioner-now-not-time-roll-back-premiums.


Congrats to Sharon Bitz who was recently appointed by Primary Capital Mortgage (PCM) as its new VP, Western Region supporting Wholesale AEs as well as broker and correspondent business partners. “An advocate of growth and technology, Sharon joins PCM with more than 25 years of experience in Wholesale Mortgage Lending and Sales Management. Most recently she held the position of Senior Vice President, Wholesale Lending for California’s Western Bancorp.


And NFM Lending announced that Jason Ponsonby will be NFM’s Director of Sales and will be a member of the Executive Team. As the Director of Sales, Jason will be working with NFM branches throughout the country to increase production and ensure branches are receiving the best service they can from corporate. In addition, Jason will be assisting with branch recruitment and development. With over 12 years of mortgage and leadership experience, Jason brings a fresh look at helping NFM branches perform at their highest level while providing excellent service to our borrowers. If you’d like to reach Jason his e-mail is jponsonby@nfmlending.com.


360 Mortgage Group, LLC announced the formal introduction of its Reverse Mortgage Division. “The foundation of 360 Mortgage Reverse is an end-to-end reverse mortgage processing platform for mortgage brokers, third party originators, community banks and credit unions to originate reverse mortgage loans.”


The USA is apparently big enough for Carrington Holding Company LLC. It recently announced its entry into the United Kingdom with the purchase of Clear Financial Solutions Limited, a residential mortgage brokerage firm in Scotland. Carrington will re-brand and operate the company under the name Carrington Mortgage UK Limited.


Accurate Group Holdings, Inc. announced that the Archer vendor management and compliance software platform is now fully integrated with Ellie Mae’s Encompass mortgage management solution, allowing Ellie Mae’s Encompass users access to Accurate’s full suite of national valuation and title solutions. “As a proprietary platform, Archer drives the core of Accurate’s technology service business model by managing 25,000 third party vendors, streamlining workflow and efficiently delivering data through the integration with Ellie Mae’s Encompass system.”


Nationstar has updated its Power of Attorney policies to prohibit the use of POAs on cash-out refinances or where the Attorney-in-Fact is an employee of the lender, broker, title company, or realtor.  Loans that use the Statutory Form POA must have a copy of the Addendum for Statutory Form Power of Attorney included in the file; this should also be provided to the doc custodian.  The initial application for FHA and VA loans may not be executed using a POA, and lenders are reminded that the VA requires the veteran’s signature on the sales contract.


For correspondents out there, Ditech Mortgage Corp. announced that the minimum Borrower Investment requirement of 3% for a Conforming one-unit primary residence with an LTV/CLTV greater than 80% has been removed. All funds needed to complete the transaction can come from a gift. This does not apply to High Balance or LP loans which still require a minimum of 5% investment from borrowers own funds.


Radian Guaranty Inc. announced the availability of additional training and resources to help customers get familiar with its new Master Policy, anticipated to become effective on July 1, 2014. Radian’s 45-minute interactive webinars will discuss what’s new in the Master Policy including Radian’s new rescission relief offerings, and revised reporting requirements. Participants will be able to get answers to their questions in real time from Radian experts. To register for the webinars and view Radian’s training schedule, visit: http://bit.ly/radianwebinars. Customers can also learn more about the new policy by visiting Radian’s dedicated Master Policy webpage: http://www.radian.biz/page?name=MasterPolicy.

Turning to the markets, as opposed to last week with little scheduled news to move bond prices (and therefore rates), this week we have an abundance of titillating numbers. We start off with today’s Retail Sales. On Tuesday, April 15th (why does that date ring a bell?) we’ll have Empire Manufacturing, the Consumer Price Index (CPI) to measure the level of change in the average price of a fixed basket of goods and services purchased by consumers, and the NAHB Housing Market Index. On Wednesday we have Housing Starts and Building Permits duo along with the Industrial Production and Capacity Utilization couplet, with the Fed’s Beige Book thrown in for good measure. Every Thursday we have Initial Jobless Claims, and this Thursday is no exception. We’ll also have the Philadelphia Fed Index. Friday is Leading Economic Indicators.


For numbers, our pal the risk-free 10-year T-note closed at a yield of 2.62%. In the very early going it is unchanged from Friday’s close as are agency MBS prices.



UNCHANGING  LAWS (Part 1 of 3)

1. Law of Mechanical Repair – After your hands become coated with grease, your nose will begin to itch and you’ll have to piddle.

2. Law of Gravity – Any tool, nut, bolt, screw, when dropped, will roll to the least accessible corner.

3. Law of Probability – The probability of being watched is directly proportional to the stupidity of your act.

4. Law of Random Numbers – If you dial a wrong number, you never get a busy signal and someone always answers.

5. Variation Law – If you change lines (or traffic lanes), the one you were in will always move faster than the one you are in now (works every time).

6. Law of the Bath – When the body is fully immersed in water, the telephone rings.

7. Law of Close Encounters – The probability of meeting someone you know increases dramatically when you are with someone you don’t want to be seen with.




(Copyright 2014 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