Over the weekend my daughter and a friend had a lemonade
stand on the street. They weren’t selling much lemonade for 50 cents a
cup, so they decided to increase the price to 75 cents a cup. I told them that
is not how economics works. My daughter replied, “The price of a postage
stamp went up to 44 cents a few weeks ago, and the Postal Service said they had
to raise the price because fewer and fewer people are using the mail these
days. Dad, that's government thinking: ‘Hey, nobody's buying our product.
Let's raise the price.’”
When is the best time to add insult to injury? When
you're signing someone's cast. What some may feel is along the same lines, do
you remember how the former Countrywide Financial president formed PennyMac Mortgage
last year to buy troubled home loans and related securities? And how people
in the business cried foul: “First they originate the stuff, then give
the mortgage business a bad name, and now they’re buying their loans back
at 10 cents on the dollar?” Well, soon you may be able to buy stock
in them. On Friday they filed with the SEC to sell as much as $750 million in
stock to the public. PennyMac Mortgage Investment Trust would make some of its
investments under a federal plan to offer financing to buyers of toxic mortgage
assets from banks, the filing says.
Flagstar reminded their customers that
“FHA has extended the temporary property flipping waiver that allows
lenders and the property disposition firms they hire (or with whom they are
affiliated) to sell properties on which they’ve foreclosed without regard
to FHA’s 90-day seasoning requirement. The waiver is in effect for loans
with purchase agreements signed by the borrower and seller on or before May 10,
2010. Individuals or entities that purchase foreclosed homes are not exempt
from the 90-day seasoning requirement. When the property seller is not exempt
from FHA’s seasoning requirement, the borrowers may not execute the
purchase agreement before the 91st day after the seller acquired the property.
FHA requires a second appraisal when a property is being sold within 180 days
of the seller’s
acquisition date and the sales price is more than 100%
greater than the seller’s acquisition cost. This applies to all FHA
purchases, including transactions where the seller is permanently or
temporarily exempt from FHA’s 90-day seasoning requirement.” For
additional information, refer to the FHA Mortgage Letter 2006-14 –
Property Flipping Prohibition Amendment.
Flagstar also changed the pricing on all
table-funded government loans with properties located in North or South Carolina to
reflect a hit of 10 basis points.
Lastly, on June 5th Flagstar will limit
eligible manufactured home transactions to rate and term refinances of
loans currently serviced by Flagstar Bank. Purchase, cash-out refinance
transactions; or rate/term refinances of non-Flagstar serviced loans will be
ineligible. This change applies to all products where a manufactured home is an
eligible property type. Pipeline loans outside of these guidelines must be
locked prior to Friday, June 5th.
AgFirst announced that they will not be able to purchase
loans originated under the DU ReFi Plus program when the previous
loan has active Mortgage Insurance (MI) and is NOT currently being serviced by
AgFirst. Per AgFirst, “The MI companies have not yet clearly defined
operational procedures for the transfer of the MI from one servicer to another.
The servicer that originates the refinance (AgFirst) would be held
responsible for the transfer of the MI to the new loan. With the
uncertainty in procedure and the absence of uniformity, the risk is too
great.”
Union Bank of California, where many
brokers have turned for jumbo product, reminded their brokers that their
investment property financing, for purchase or no cash out refinance, has no
restrictions on the number of properties owned or financed. “Union Bank
will finance up to 3 investment properties for the same borrower Loan
amounts up to: 1 unit $750,000, 2 units $1,100,000, 3 and 4 units $1,500,000.
Available on all programs, Interest Only or amortizing, including the Two Step
Mortgage.”
Franklin American came out with their High Balance
conforming loan limits originated under Fannie Mae’s Temporary High-Cost
Area Loan Limits. An Addendum to the Conforming
Fixed Rate provides underwriting criteria and loan parameters as allowed by
FAMC. As with other investors, the list can be seen at http://www.fhfa.gov/webfiles/2082/HighCostLoanLimits2009_ARRA.xls
Underwriting by FAMC is required on loans for lenders with delegated
underwriting authority less than $650,000, and on all loans having loan amounts
> $650,000 regardless of lenders delegated authority. Lenders should refer
to their most recent FAMC approval letter to confirm their delegated
underwriting loan limits.
So here we are, on a Tuesday that every year feels like a
Monday. We have Treasury auctions today, tomorrow, and Thursday. Today we also
have a series of “soft” economic releases: S&P/Case-Shiller
housing index, Consumer Confidence, Richmond Fed, and so forth. Tomorrow and
Thursday we’ll see Existing Home Sales and New Home Sales. Durable Good
comes out Thursday, and on Friday we finish the week with GDP and the Chicago
Purchasing Managers Index. Prior to this we find the 10-yr at 3.41% and
mortgage security prices better by a shade.
Let’s ease into the week with some puns:
The butcher backed into the meat grinder and got a little
behind in his work….
No matter how much you push the envelope, it'll still be
stationery….
A dog gave birth to puppies near the road and was cited for
littering….
A grenade thrown into a kitchen in France would
result in Linoleum Blownapart….
Two silk worms had a race. They ended up in a tie.
Rob
(For archived commentaries, check www.robchrisman.com,
or to subscribe write to rchrisman@robchrisman.com)
