Apr. 19: LO jobs, business opportunities; non-QM, corresp. products; FHA addresses DPAs, Chenoa responds

Saturday my commentary raised the question about whether lenders would rather see a recession, with its typically lower rates, or a burgeoning U.S. economy with its higher associated rates. From out in California, Dick Lepre quipped, “People in the mortgage business are as happy with recessions as the undertakers in Clint Eastwood westerns are when he come to town.”

Employment & business opportunities

A national originator/marketer of consumer installment home improvement loans is looking to diversify and add an investor to its existing base of funding partners. “In this increasingly competitive, low margin mortgage market, our rapidly growing platform would be a natural fit and extremely complimentary to any portfolio investor (bank, credit union, hedge fund, servicer, etc.) that is currently purchasing and/or servicing real estate loans. Further, additional opportunities are available to market and cross sell homeowners with historically high FICO, low default ratios. The majority of our business is sourced through a national network of home improvement dealers/contractors, is 100% tied to home improvement projects, and underwritten with full income, credit verifications and documentation. Recent production/performance highlights are as follows: 9.4% WAC; 738 Avg. FICO; 31% DTI; $58,000 Loan Amount; Avg Term. 11 years; Less than .025% Default Ratio, full credit/income required on all loans.” Confidential inquiries from Lending Officers, and/or Principal please send to Anjelica Nixt.

Spring EQ Wholesale, the nation’s premier wholesale second mortgage lender, offering 95% CLTV combos (purchase or refinance) and 100% CLTV standalone fixed rate second mortgages, and who pays 1.5% in LPC on every loan, is GROWING. Joining the team are the following Senior Account Executives: Lauri Preedge (Orange County/Southeast) and Tony Raia (LA/Northwest) in California, Tracy Pyeatt in Oregon/Washington, Dori Boxberger in Arizona, Coleman in Illinois/Indiana/Iowa/Wisconsin, Tara Marcordes covering the entire country, Becky Ricketts in Kentucky/Tennessee/Ohio, and Shannon Miller in Pennsylvania/New Jersey. Spring EQ Wholesale continues to hire Inside Account Executives in Philadelphia, and Outside Account Executives in Northern California, the Northeast, and the Southeast regions and interested applicants should apply here. In addition, any brokers, banks and credit unions looking to partner should apply here.

Final Deadline for consideration: Attention FinTech Investors and Investment Bankers, mature, profitable and well adopted Mortgage technology (Sales Automation/CRM) firm,

seeking to raise $10M+ for rapid expansion purposes across banking and mortgage verticals to enhance the sales and prospecting capabilities of mortgage loan officers. Serious and interested investors may inquire by contacting Anjelica Nixt for a confidential discussion. Mortgage Technology Document Management firms, Mortgage Insurance, institutional or private sources of capital are encouraged. We will engage with those firms who inquired by April 30th for discussion and engagement.

GSF Mortgage Corporation is excited to offer FNMA’s new initiative, MH Advantage® Loans, a great alternative for aspiring homebuyers. MH Advantage® is a new homeownership option that offers innovative and affordable financing on specially designated manufactured homes that feature site-built characteristics. GSF Mortgage Corporation is one of the few lenders offering this product as a Single Close Construction to Permanent loan up to 95% LTV. Single Close Construction loan programs offered are FHA-96.5% LTV, USDA-100% LTV, VA-100% LTV, and Conventional to 95% LTV. All programs are single settlement without the need to requalify the borrower after initial closing. GSF Mortgage Corporation offers more choices to our customers than most other lenders, to buy or build their dream home. If you are an Originator with construction experience, please contact our VP of Retail, Frank Papaleo, for information on the opportunity.

Lender products & services 

National MI has partnered with NAMB+ as part of its continuing effort to work more effectively with mortgage professionals in the third-party originator/wholesale space, including mortgage brokers. NAMB+ connects NAMB members with an array of endorsed providers aimed at helping mortgage professionals gain a competitive advantage in today’s marketplace. “National MI is pleased to work with NAMB+ to provide mortgage brokers with educational content and other tools so they can learn more about mortgage insurance solutions,” said Mike Dirrane, senior managing director and chief sales officer with National MI. “We see the broker segment increasing their market share in 2019. By partnering with NAMB+, we are looking to foster our relationships with brokers, as well as help them increase their business.” The mortgage broker share of new residential mortgage production rose to 11.6 percent in 2018, which was the highest level since 2010, according to IMF, and is expected by many to increase further in 2019. “NAMB+ is delighted to welcome National MI as an endorsed provider,” said NAMB+ President Mike DeSantis. “Our NAMB members will truly benefit from the array of mortgage insurance products and services they provide.”

Merchants Bank of Indiana is once again expanding its Product Offering and has added Agency Non-Delegated to its menu of products. In sync with its Non-Delegated launch, it joined Optimal Blue’s extensive investor network and are now offering their Best Effort pricing through Optimal Blue. In addition, they announced that Dan Hastings, CMB has joined their team as AVP, Correspondent and Warehouse Sales Executive.  Dan brings 35+ years of Mortgage Lending experience to his new role. Rob Wilson, Vice President commented, “We are very excited Dan has joined our Merchants Team. His sharp customer focus and extensive mortgage finance experience fits our customer driven strategy and brings added experience to our team.” Merchants offers Warehouse Financing; Correspondent Lending, Agency and Premium Program; and Enotes, Warehouse & Investor takeout.

NewRez recently announced the expansion of its SMART Series line of Non-QM, non-agency loan products in all of its business channels. “With more than a year of successfully originating SMART Series loans, we found that there were opportunities to make adjustments in the programs that would allow us to reach an even larger number of borrowers,” said Kevin Harrigan, NewRez President and CEO. NewRez has now expanded many terms and features, including loan amounts, FICO and LTV combinations. For example, SmartEdge, designed for borrowers qualifying full doc with Non-Agency/Non-QM features, has expanded LTV to 95%. Many SMART Series products are now available as 40-year interest-only loans. Program requirements have been adjusted as well, including the elimination of site and 2-4-unit condo project reviews. Speak to your NewRez rep or learn more on our Wholesale and Correspondent websites.

Floify now provides even more flexibility to customize the look and feel of your digital mortgage origination solution to match your company’s unique brand with their new URL Whitelisting functionality – currently available to all users of Floify. What’s most impressive about Floify’s URL Whitelisting is lenders can embed and customize their lending portal and accompanying 1003 on any page of their website, complete with their company’s uniquely-branded URLs, to help create a seamless visual experience for borrowers, agents, referral partners, and more. Additionally, marketing teams will rejoice in having the ability to modify brand styles with Floify’s built-in CSS, JavaScript, and visual editors. Floify’s URL Whitelisting and growing suite of customizations were designed to put the power back in the hands of lenders. Experience the positive impact these brand customizations will have on your lending operation – request a live demo of Floify!

HUD & FHA address down payment programs

In September Bloomberg published an expose titled, “American Indian Tribe Becomes a Player in the No-Money Mortgage Business.” “Chenoa Fund, which is owned by American Indians, Utah’s Cedar Band of Paiutes (257 members). “’Chenoa’ is thought to be a native American word for peace, but operations like Ferguson’s are raising concerns in the industry and in Washington. That’s because he’s running a company with a dual role, not only providing the down payments for borrowers across the country but also profiting from making the loans by charging above-market rates and fees. Some members of the tribe say they’ve seen little or no benefit from the business and question where the money is going.”

Critics of Chenoa believe that it is merely a high-priced YSP funded DAP from a private company, and up until yesterday the industry wondered if HUD would address any ambiguity. The new FHA Mortgagee Letter 19-06, titled, “Down payment Assistance and Operating in a Governmental Capacity,” certainly does. “It has come to FHA’s attention that certain Governmental Entities may be acting beyond the scope of any inherent or granted governmental authority in providing funds towards the Borrower’s MRI in circumstances that would violate Handbook 4000.1, the National Housing Act, and is contrary to established law.”

One note I received observed, “HUD is really cracking down in two ways. It shuts down the YSP DAP since it can no longer come from ‘any other person or Entity who financial benefits from the transaction (directly or indirectly).’ But then it keeps the tribes on their own land with, “…the Governmental Entity is a federally recognized Indian Tribe operating on tribal land in which the Property is located or to enrolled members of the tribe.”

“At first glance, this appears to say that Chenoa can only provide down payment assistance for properties on tribal land or for borrowers who are enrolled members of the tribe. Put another way, HUD’s letter specifies that the Governmental Entity must be providing the funds ‘in its governmental capacity.’ In the case of an Indian tribe, the lender must obtain a legal opinion by attorneys for the Governmental Entity stating that, ‘the Governmental Entity is a federally recognized Indian Tribe operating on tribal land in which the Property is located or to enrolled members of the tribe’ and that funds must be, ‘provided in the Governmental Entity’s governmental capacity in the jurisdiction in which the Property is located or for the federally recognized Indian Tribe’s enrolled member…’”

HUD’s letter raises questions about whether or not the organization is a Federally recognized tribe, so therefore its “jurisdiction” is all of the United States? Because it is Federally recognized as a sovereign government, does that mean that the tribe has governmental authority outside of their tribal lands, or for non-tribal members? And what about financially benefitting from the down payment grant or second lien? Chenoa is a for profit enterprise, compared to a nonprofit HFA (Housing Finance Authority), and receives the interest and/or principal from scheduled payments or payoffs of these grants or second trust deeds, depending on the program and if the borrower meets certain requirements like zero delinquencies in 36 months. There is also a question about funding the second until the loan is sold to Chenoa, several days after origination. This may not comply with the requirement that the second is a liability or deduction from their bank account on or prior to loan closing.

Richard Ferguson, President of CBC Mortgage Agency which offers the Chenoa Fund, responded with, “FHA just published Mortgagee Letter 19-06, which creates a new policy on the provision of down payment assistance. The Mortgagee Letter appears to be an attempt by HUD to put Native American programs back on the reservation.

“We recognize that HUD’s issuance of the Mortgagee Letter 19-06 has caused confusion and concern with how this mortgagee letter may affect the Chenoa Fund. HUD’s attempt to implement new policy restricting governmental entities to operating within a specific jurisdiction violates federal law, including the Administrative Procedure Act, and restricts government DPA programs in an arbitrary and capricious manner. And HUD failed to comply with an Executive Order requiring tribal consultation. CBC Mortgage agency is reviewing all of its options, including litigation.

“We are deeply concerned with the manner in which FHA is promulgating new policies without adequate notice or explanation given to regulated parties. These unconstitutional changes in agency policy have caused significant disruption to the ability of lenders to make commitments to borrowers. Hundreds, if not thousands, of buyers are being adversely impacted by sudden changes in rules, with no regard to existing pipelines.

“This new Mortgagee Letter imposes unexplained new requirements. Effective immediately, HUD is requiring that all 1500+ government DPA programs have an attorney opinion in the file for new FHA loans. This will wreak havoc on the closings of thousands of borrowers while governmental agencies scramble to obtain these opinions. CBC Mortgage Agency is looking to industry participants for support in getting this unconstitutional and unlawful Mortgagee Letter withdrawn. Contact us for more information.”

Capital markets

U.S. Treasuries across the curve ended the trading week rallying to their best levels since Tax Day, including the 10-year closing yielding 2.56%. Agency MBS underperformed benchmarks on cautious risk sentiment in response to another weak set of Manufacturing PMI readings from Japan, France, and, Germany, which posted the fourth consecutive month of contraction; and stronger than expected retail sales for March that showed broad-based strength with gains across discretionary spending categories that will certainly aid in the calculation of the goods component for personal consumption expenditures in the Q1 GDP report. Mortgage rates were up slightly for the week, though they remain well off the 2018 highs from November. Rate levels remain attractive which should continue to support purchases, especially given the strong jobs markets. Dallas Fed President Robert Kaplan said his confidence in the growth outlook for 2019 is increasing. Internationally, the Bank of Korea left its repurchase rate and cut its expectations for South Korea’s 2019 growth while the inflation forecast was lowered. The European Parliament voted in favor of setting up a European Defense Fund for 2021-2027. And finally, the Bank of England’s Credit Conditions Survey for Q1 showed that availability of unsecured credit to households decreased as default rates of unsecured credit increased significantly due to higher defaults on credit card loans and corporate loans.

While the U.S. bond and equity markets are closed today for Good Friday, housing starts and buildings permits for March will still be released at 8:30am. Markets open back up Monday and will receive the Chicago Fed National Activity Index for March and existing home sales for March. The remainder of the week includes February FHFA HPI and March new home sales on Tuesday; March durable goods on Thursday, and the first look at Q1 GDP and the final consumer sentiment read for April on Friday. There are no Fed appearances scheduled as they are in their blackout period ahead of the April 30-May 1 FOMC meeting. The BoJ, however, will release its updated monetary policy decision on April 25. Rate sheets today tend to be conservative with no U.S. bond market prices or MBS prices to direct them.

As we head toward Easter, these supposedly appeared in real church bulletins (part 5 of 5):

26. The pastor would appreciate it if the ladies of the congregation would lend him their electric girdles for the pancake breakfast next Sunday.

27. Low Self Esteem Support Group will meet Thursday at 7 PM. Please use the back door.

28. The eighth-graders will be presenting Shakespeare’s Hamlet in the Church basement Friday at 7 PM. The congregation is invited to attend this tragedy.

29. Weight Watchers will meet at 7 PM at the First Presbyterian Church. Please use large double door at the side entrance.

30. The Associate Minister unveiled the church’s new tithing campaign slogan last Sunday: “I Upped My Pledge – Up Yours.”

Visit www.robchrisman.com for more information on our industry partners, access archived commentaries, or to subscribe to the Daily Mortgage News and Commentary. If you’re interested, visit my periodic blog at the STRATMOR Group web site. The current blog is, “MBS Liquidity: A Real Trooper.” If you have both the time and inclination, make a comment on what I have written, or on other comments so that folks can learn what’s going on out there from the other readers.


(Market data provided in partnership with MBS Live. For free job postings and to view candidate resumes visit LenderNews. Currently there are hundreds of mortgage professionals looking for operations, secondary and management roles. For up-to-date mortgage news visit Mortgage News Daily. For archived commentaries, or to subscribe, go to www.robchrisman.com. Copyright 2019 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