What are real-live brokers and loan agents saying about the current lending environment? “Things are both good and very challenging.  Our conforming conventional and FHA and VA lending business have never been so good, but for local builders construction and land is still an extremely challenging environment.  We're working through it.”
“Things are really going well for us. I am concerned like we all are about rising interest rates and how that will affect us but for now I cannot complain as we are having a great year.”
And lastly, "We are hanging in there."

You’re either “in” the new club, or “out” of the new club. In a story from the Wall Street Journal’s top mortgage reporter, Lenders One coop is trying to form the “Community Mortgage Lenders of America”. It will be made up of local mortgage banks and other lenders that aren't owned by large banking companies, but apparently this role is already being served by another new group, the Community Mortgage Banking Project. Both groups say that the MBAA is all well and good, but includes the large investors whose interests may not align with the smaller mortgage banks. Don’t ask me where the line is drawn.

Freddie and Fannie have their own club, with the two of them as members. And everyone else had better play by their rules in the current environment, or else… Freddie Mac, who came out with some changes in early July (Bulletin 2009-18) is “tweaking” those changes. Freddie's changes will now be effective for all mortgages with application dates on or after 11/1, and Freddie Mac settlement dates on or after 2/1 instead of with application dates on or after 10/1, and Freddie Mac settlement dates on or after 1/1. As a reminder, the July 10 Guide Bulletin 2009-18 revised their “underwriting requirements with respect to borrower income, capacity, assets, and required documentation in order to assist you with determining borrower creditworthiness.” Freddie was planned to update LP on 9/27, but this will not happen, thus prompting the push back.

CitiMortgage, who is probably not in the small mortgage bank club either, announced that they were changing their Attached PUD, Condominium and Cooperative Projects policy. Plans “must be reviewed within the three months immediately preceding the date of the note to ensure there have been no changes in circumstances that would make the project ineligible. They must also be purchased by CitiMortgage within four months of the project approval date.” Their correspondent clients should note that they must now provide a completed signed copy of the Certification of Project Eligibility and Approval form, and if the project appears on FHA’s, Fannie Mae’s or CitiMortgage’s Approved/Declined Condo, Co-op & PUD List, you must a copy of the list with the project name circled or highlighted.

Citi also clarified that “for projects approved using Fannie Mae’s CPM, attach a copy of the CPM Project Acceptance Certification… all loans must now indicate the name of the credit bureau associated with each credit score used.” Citi added a new field in the loan data entry screen. And lastly, Citi raised their DU fees slightly for loans submitted through DO, from $15 to $16 starting November 2.

GMAC, through their correspondent and warehouse lending division of Ally Bank, apparently has created a community bank team that will purchase closed residential mortgage loans from banks, thrifts and credit unions. And, in some good news for brokers, they will offer table funding. As you recall, TBW had a similar program for community financial institutions that outsource some or all of their mortgage origination process.

 
How would you like it if everyone knew your pay? The compensation of Freddie’s new CFO was made public last week. Freddie Mac said Ross Kari would be paid a base salary no less than $675,000 plus an added annual $1.66 million in installments and an annual target incentive of $1.16 million. He receives a $1.95 million cash sign-on bonus, "in recognition of the forfeited annual incentive opportunity and unvested equity at his current employer." FHFA approved the compensation, but it sure to raise some eyebrows since it is more than a Senator or Congressman makes…

Let’s move onto something interesting, like mortgage rates. 30-yr rates are back near 5%, depending on if the borrowers wants to pony up some discount points. But most economists feel that rates are not going to go much lower, or, if they do, it will be because the economy is in bad shape. So be careful what you wish for. In last week’s announcement the Fed made it clear that they would likely keep rates low until the economy starts to pick up some steam. And for now, credit, housing, and unemployment are still major issues – but they won’t always be. Not to sound grim here, but many borrowers who can refinance already have, the autumn and winter are not traditionally strong times for real estate transactions, and some companies are talking about lay-offs again. So until we see some loosening in credit and underwriting guidelines, or a pick-up in home equity…

This week we will see quite a bit of economic news that may end up moving rates. We start with today – where there is no news. The yield on the 10-yr is down to 3.33%, and mortgage prices are a shade better. Tomorrow, however, we have Consumer Confidence and the S&P/Case-Shiller Price Index. On Wednesday we have the Chicago Purchasing Manager’s Index, and on Thursday Jobless Claims, Pending Home Sales, the ISM number, and the Treasury’s announcement of next week’s auctions. On Friday we will have the Unemployment Data, always sure to grab headlines. Estimates are running around a loss to Nonfarm Payroll of about 200k, with the Unemployment Rate going from 9.7% to 9.9%. And for good measure this week we’ll also see Personal Income & Consumption, Final GDP, Construction Spending, and Factory Orders.

A nun, badly needing to use the restroom, walked into a local Hooters. The place was hopping with music and loud conversation, and every once in a while the lights would turn off. Each time the lights would go out, the place would erupt into cheers. However, when the revelers saw the nun, the room went dead silent.

She walked up to the bartender, and asked, "May I please use the restroom?"
The bartender replied, "OK, but I should warn you that there is a statue of a naked man in there wearing only a fig leaf."
"Well, in that case I'll just look the other way," said the nun.
So the bartender showed the nun to the back of the restaurant. After a few minutes, she came back out, and the whole place stopped just long enough to give the nun a loud round of applause.
She went to the bartender and said, "Sir, I don't understand. Why did they applaud for me just because I went to the restroom?"
"Well, now they know you're one of us," said the bartender. "Would you like a drink?"
"But, I still don't understand," said the puzzled nun.
"You see," laughed the bartender, "every time someone lifts the fig leaf on that statue, the lights go out."

Rob

(For archived commentaries, check www.robchrisman.com, or to subscribe/unsubscibe write to rchrisman@robchrisman.com. The commentary is produced every business day, but at times there are vague e-mail “issues”, so if you don’t receive it, let me know.)