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Apr. 18, 2011: Mortgage employment info & jobs; FDIC activity; FHA changes du jour; lots of investor news - much positive
Rob Chrisman
This
Friday is Good Friday. But today is not so "good for our
government, as S&P cut its US debt rating to a "negative
outlook" given the debt & debt ceiling debate, pushing
markets this morning. Religious sentiment aside, Good Friday
falls into one of those "pseudo-holiday" categories, since the
markets are closed, but many originators are open. Most are
taking locks, but can't hedge them, or they sell the loans to
investors at what could be termed “conservative” prices.
How many co-workers do you have? "Less than I had five years
ago," is the answer for mortgage personnel. According to data
from the Bureau of Labor Statistics, sliced and diced by the
MBA, the mortgage industry hit a peak in early 2006 at 505,000, but is now at 248,000.
Granted, many who shouldn't have been in the business have left,
and there was excess manpower 5 years ago, but still it is
really a sign of the times. The story can be found at http://latimesblogs.latimes.com/money_co/2011/04/data-affirm-huge-downturn-in-mortgage-jobs.html.
Some may want to move
to Northern California - MetLife Home Loans is
growing its footprint in that area. (MetLife itself is #51 in
the Fortune 500 companies, and in 2008 MetLife Bank acquired
First Horizon Home Loans. Although First Tennessee Bank retained
most of the servicing portfolio in a holding company, MetLife
has continued to expand and is now in the top ten retail
mortgage banks with plans to increase market share.) “They are a
sales and customer centric culture offering top notch local
fulfillment and a jumbo portfolio product with 80% to
$2,000,000.” In the Bay Area MetLife is actively
looking for loan officers/consultants for its various
branches - interested parties should contact branch managers
April Balthaser (abalthaser@metlife.com)
or Joanne Berson (jberson@metlife.com).
On the banking side,
leaving out the usual verbiage of "X Bank was closed by the
appropriate state banking organization, which appointed the FDIC
as receiver, who then entered into a purchase and assumption
agreement with Y Bank...” let's go through Friday's FDIC
activity (which had been somewhat quiet for the last few weeks).
In Georgia, Bartow County Bank is now part of Hamilton
State Bank and New Horizons Bank is now part of Citizens South Bank (NC). Over in Alabama, Nexity
Bank is now using AloStar Bank of Commerce's
letterhead and Superior Bank wasn't so superior and is now part
of Community Bancorp LLC (TX). Up in Minnesota,
Rosemount National Bank is now a branch of Central
Bank. In M-i-s-s-i-s-s-i-p-p-i Heritage Banking Group now
belongs to Trustmark National Bank.
The FDIC recently
updated its loss, income, and reserve ratio projections for the Deposit
Insurance Fund (DIF) over the next several years. The projected
cost of FDIC-insured institution failures for the five-year
period from 2011 through 2015 is $21 billion, compared to
estimated losses of $24 billion for banks that failed in 2010
alone. The future is never certain, but most believe that the
fund should become positive this year (it has increased for four
consecutive quarters) and reach 1.15 percent of estimated
insured deposits in 2018. The Dodd-Frank Wall Street Reform and
Consumer Protection Act requires that the fund reserve ratio
reach 1.35 percent by September 30, 2020.
Last October the FHA increased its MIP’s from 55
basis points to 90 basis points, and today is increasing the
monthly fee to 115 basis points for higher LTV loans. The FHA
insurance premiums are not "grandfathered in," so a borrower who
is currently paying low MIPs will have to pay higher MIPs if
he/she were to refinance. This is a pretty clear example of what is bad for one group (originators, borrowers) is
good for another (investors in existing Ginne Mae securities).
(Also note that starting today FHA systems will require
mortgagees to certify at the time of requesting a case number
that they have an active application for the borrower and
property, and provide the borrower's name and social security
number for all new construction. And FHA systems will automatically cancel any uninsured case number
where there has been no activity for 6 months since the last
action except for loans where an appraisal update has been
entered and/or loans where the UFMIP has been received.)
An LO wrote, "I have
always wondered why it is so difficult for my clients that have
money in the bank and perfect credit to be approved, while an
FHA buyer that has a gift of 3.5% down payment and no cash
reserves zips right through the system. I lost one last month.
My borrowers had $2.5 million verified in the bank, looking for
35% down on a $200k loan. But they are retired and have little
income. Part of it is their choice - they don't take more than
they need from the accounts for tax reasons. So, the debt ratio
was over 45 (it was 47) and loan was denied. After I told them,
“Sorry, we were denied due to lack of income,” they paid cash
the next day.
CitiBank released some
financial information this morning: earnings came in slightly
higher than expected, although earnings were slightly below. Net
credit losses were down 25% in the first quarter, and analysts
are hoping for more good news ahead. It had a 10% loan growth in
the first quarter, but repurchase requests are expected to take
a toll on future earnings.
River City Mortgage, one of the larger
residential lenders in Minnesota, has agreed to be taken over by
Wintrust Financial Corp (Illinois). River City
has been around for 17 years, but president Louis Olsen said
tighter federal regulations played a key role in his decision to
sell, basically saying that new rules have created an "uneven
playing field" between non-bank mortgage firms like River City
and large banks that are exempt from the regulations. The new
regulations, “… will cost consumers in the long run because it
will reduce competition and banks will be able to charge
whatever they can" for mortgages. River City Mortgage originated
$500 million in 2010, making it one of the five largest nonbank
mortgage lenders in Minnesota.
"Fannie
Mae told mortgage servicers to halt a practice that could
help them avoid repurchasing flawed home loans. In a notice to
banks today, the company said servicers are prohibited from
entering into loss-sharing or indemnification agreements with
mortgage insurers. The deals help servicers avoid having their
policies revoked."
http://www.bloomberg.com/news/2011-04-15/fannie-mae-warns-servicers-on-mortgage-insurance-agreements.html
Licensing is on the mind of every LO, and on every mortgage
company. The NMLS Mortgage Call Report is a
quarterly report of mortgage activity and company information
created by state regulators and administered electronically
through NMLS. “The NMLS Mortgage Call Report is intended to be
completed by all state-licensed companies and all
state-registered companies that employ licensed mortgage loan
originators” and will be functionally rolled out May 2. The
first NMLS Mortgage Call Report filing is due May 15th.
A practice worksheet has been set up, and training is being
held. Visit http://mortgage.nationwidelicensingsystem.org/news/events/Pages/MCRWorkshop.aspx.
Speaking of training,
REMN is offering a webinar for more information
on GFE standards. The session is tomorrow at 2PM EST. http://event.onlineseminarsolutions.com/r.htm?e06420&s1&kÃDEAD332A25CA90C16F92B990FEA6CC
Investor news continues. Wells Fargo's wholesale
group sent out news on "Compensation and Anti-Steering:
GFE Review on Lender-Paid Transactions, Clarification: Specify
USDA in Notes When Ordering an Appraisal, Reminder: Appraisal
Required on FHA Loans with Case Numbers Six or More Months Old –
Effective April 18, TPO Brokers: Requesting an FHA Case Number
on the Broker’s First Website."
Union Bank's
wholesale group has developed guidelines to allow borrowers
who meet certain criteria to utilize their assets as an income
stream. The information
below details the criteria that must be met and how to calculate
the income stream. It is a step in the right direction.
Borrowers must have a minimum of $250,000 in liquid assets plus
certain reserve requirements based on loan size, and eligible
assets include a range of instruments such as checking accounts,
CD’s, a percentage of stocks or bonds, and so forth. Check with
your Union Bank rep or the announcement for specifics.
On Friday Kinecta Federal Credit Union rolled out its Jumbo
30 Year Fixed Portfolio product to its Platinum Business
Partners. The program includes loan amounts up to $2,000,000,
LTV/CLTV up to 70/70%, primary residence only, and on purchase
or R&T refinance transactions.
Pricing engines
released M&T’s intermediate term hybrid ARM
product line-up, along with a series of Affiliated
Mortgage's FHA products (10-yr, 15-yr, etc.)
Looking back to
Friday, agency mortgage-backed securities had a nice little
improvement: .5-.625 depending on coupon. Volume picked up a
little, which is nice to see in a rally, although for the week
volumes were below normal. (We’ll probably see this in
Wednesday’s MBA app index.) The 10-yr notes rallied by more than
.5 in price, closing around 3.41%. Interestingly, this happened
in spite of inflation coming in about as expected, Industrial
Production increasing .8% in March and Capacity Utilization
hitting 77.4% (the highest since August 2008), and the
University of Michigan’s preliminary index of consumer sentiment
moving up to 69.6, higher than forecast.
Unlike last week,
this week will be shortened by a holiday and will be a light
week for economic data. We have some type of housing index data
today, unlikely to move rates. But tomorrow we'll have the
excitement of Housing Starts and Building Permits. Existing Home
Sales will come out on Wednesday, and the Philly Fed numbers,
Leading Economic Indicators, and another house price index are
scheduled for Thursday. Mortgage markets will close early on
Thursday and will be closed on Friday in observance of Good
Friday. The 10-yr is down to 3.38%, and agency MBS
prices are better by about .125.
Several men are in the locker room of a golf club. A cellular
phone on a bench rings and a man engages the hands-free speaker
function and begins to talk. Everyone else in the room stops to
listen.
MAN: "Hello.”
WOMAN: "Hi Honey, it's me. Are you at the club?"
MAN: "Yes."
WOMAN: "I'm at the shops now and found this beautiful leather
coat. It's only $2,000. Is it OK if I buy it?"
MAN: "Sure, go ahead if you like it that much."
WOMAN: "I also stopped by the Lexus dealership and saw the new
models. I saw one I really liked."
MAN: "How much?"
WOMAN: "$90,000."
MAN: "OK, but for that price I want it with all the options."
WOMAN: "Great! Oh, and one more thing. I was just talking to
Janie and found out that the house I wanted last year is back on
the market. They're asking $980,000 for it."
MAN: "Well, then go ahead and make an offer of $900,000. They'll
probably take it. If not, we can go the extra eighty-thousand if
it's what you really want."
WOMAN: "OK. I'll see you later! I love you so much!"
MAN: "Bye! I love you, too."
The man hangs up. The other men in the locker room are staring
at him in astonishment, mouths wide open.
He turns and asks, "Anyone know whose phone this is?"
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