Jun. 1, 2011: Mortgage jobs in the west; Ginnie issuance continues strong; investor underwriting & program changes; gotta like these rates
Rob Chrisman

The north Atlantic hurricane season begins today and lasts through Nov. 30. Per the U.S. Census Bureau nearly 37 million people in the US live in areas most threatened by Atlantic hurricanes: the coastal portion of states stretching from North Carolina to Texas. (Approximately 12%) of the nation's population live in these areas.) This compares to 14 million who lived in that hurricane path in 1960, a 163% increase.
 
Can anyone out there lend Ginnie Mae a hand in the IT department? Ginnie may want to put a few new quotes on its issuer page, and not lead off with a glowing recommendation from Countrywide: http://www.ginniemae.gov/issuers/issuers.asp?SectionIssuers. Regarding Fannie & Freddie's distant cousin, Ginnie Mae guaranteed more than $26.4 billion in mortgage-backed securities in April. That compares to about $24 billion in March and $26 in February. Remember that unlike F&F, Ginnie doesn't buy mortgages. Ginnie Mae, which raises capital from investors in the global credit markets, guarantees the P&I payments to investors of MBS's while the FHA or VA usually insure the underlying loans. And Ginnie's numbers, nearly $1.5 billion per day, include single-family pools, HECM MBS's, and multi-family.

A good portion of Pacific Union Financial’s focus is on FHA or VA loans, and it is expanding its wholesale footprint. Pacific Union is looking for new AE’s with an existing book of brokers in 7 Western states (AZ, CA, ID, NV, OR, WA, TX). It "believes the market is entering a 5 year purchase cycle" and offers to its brokers FHA, conforming, high balance, and jumbo products.  PUF is "unique in that it doesn't 'overlay' the programs extensively and take full advantage of the Ginnie Mae product allowing purchases to borrowers with a 560 mid score.  AEs can expect between 20 and 30 basis points depending on production." If you are interested, or know someone out looking, contact Joe Stretch at joe.stretch@loanpacific.com.

Someone who probably doesn’t care about jobs is Minnesota’s Troy David Chaika. A jury in federal court in St. Paul has convicted him of conspiring with others to bilk buyers and mortgage lenders out of more than $43 million. And once again it is easy to see how the public, and Congress, continues to view the real estate & mortgage business in the press: http://www.startribune.com/local/south/122544424.html.
 
Other personnel news of interest seems to be focused on Pennymac. The company, known for both buying older distressed loans and also for opening up a new conduit for jumbo loans, is rumored to have hired Doug Jones. Mr. Jones is a long-time Countrywide-Bank of America mortgage executive. But this is a rumor only...I am usually the last to hear these things.
 
Turning to the investor world, Wells Fargo spread the word to its correspondent clients that Wells Fargo Funding is now a division of Wells Fargo Bank. Effective last week, Wells Fargo recently executed assignments for each Loan Purchase Agreement from our former entity (Wells Fargo Funding, Inc.) to our new entity (Wells Fargo Bank, N.A.), and will require that contracts be re-executed under the new entity name, Wells Fargo Bank, N.A. starting today. Business card printers everywhere are thrilled... In addition, Wells has observed condominium interior hazard insurance policies with inadequate replacement coverage. "As a result, we are clarifying that walls-in or HO-6 replacement coverage must be sufficient to repair the interior of the condominium unit, including any additions, improvements and betterments, to its original condition in the event of a loss...when the HOA Master Policy does not provide sufficient coverage of the interiors of the project units, an HO-6 (or its equivalent) policy for the individual unit is required." "The Seller Represents, Warrants and Covenants the following to Wells Fargo as to each Loan offered for sale under the Program Documents: Pursuant to the terms of each Loan, hazard insurance policies meeting Wells Fargo’s and Agency’s minimum requirements insure all buildings or other improvements upon the Mortgaged Property..."

Wells, like other major lenders, continues to spread the word that sellers had better prepare for the changes contained in the Uniform Mortgage Data Program (UMDP) and its three components: Uniform Appraisal Dataset (UAD), Uniform Collateral Data Portal (UCDPSM), and Uniform Loan Delivery Dataset. (Fannie Mae recently published their May UMDP Yardstick to help lenders take the necessary steps for successful implementation of the UMDP initiatives.)

Chase recently issued a "Lending Suspension" for the ZIP codes affected by the Mississippi River flooding in Louisiana. The investor also told correspondents that starting last week it is allowing the assignment of odd lot AOT commitments in $1,000 increments above the minimum commitment amount. Over in the best efforts side, starting yesterday "Chase Correspondent Lending is revising the Verbal Verification of Employment (VVOE) policy for all Non-Agency loans and any Agency transaction submitted through ZiPPY. This change does not impact VVOE requirements for DU or FHA/VA transactions." And it is implementing "new derogatory credit policies for FHA, VA, and Conventional transactions. These policies will be Chase overlays to derogatory credit requirements detailed in FHA, VA, and Conventional guidelines."

Bank of America's correspondent group issued a disaster declaration and update for Missouri, as are other investors, but also retired several programs yesterday including Conforming Energy Efficient Mortgage (EEM) / Loan Prospector® A-minus Mortgage, DU Expanded Approval (EA) 1 Fixed 15, DU EA1 5/1 ARM, DU EA1 7/1 ARM, DU EA1 10/1 ARM, MyCommunityMortgage 5/1 ARM, MyCommunityMortgage 7/1 ARM, MyCommunityMortgage 10/1 ARM, and USDA Rural Housing Direct. (Clients should have been well aware of these cuts prior to yesterday.)

GMAC reminded its clients that the temporary high-cost loan limits are set to expire Sept 30, and that this will impact its suite of high balance conventional, FHA, and VA products. GMAC also announced the addition of a 7/1 Hybrid ARM to the FHA and VA standard and High Balance product offerings, along with the removal of numerous conforming loan underwriting guideline overlays. Lastly, due to Section 1100F of the Dodd-Frank Act, on 7/21 it will require that creditors disclose additional information on FCRA adverse action notices when the creditor uses a credit score in taking adverse action

SunTrust let clients know about an update on investment property transactions permitted outside of the borrowers primary state of residence, announced a first-time homebuyer tax credit language removed from FHA product description, and released an announcement on agency affordable HELOC requirements.

US Bank Home Mortgage and MGIC have teamed up to offer Webinar training on evaluating self-employed borrowers income. There will be two sessions on June 14, Webinars: 9:30-11:30AM or 1:30-3:30PM PST. RSVP: www.mgic.com/seb14, or contact: Necia Manchas at (206) 363-4009, necia.manchas@usbank.com.

Flagstar Bank now has a Jumbo Fixed Program open to brokers.  30-year fixed, loan amounts from $417,001 up to $2,000,000, manually underwritten, maximum 40% DTI, all assets listed on the 1003 must be verified, etc. As always, best see the actual bulletin for details. "Flag" also improved the price adjustments on Government loans with FICO greater than or equal to 740, changed the way its administrative fee will be assessed on delegated loans at new levels beginning 6/10, made price adjustment changes (improvements) to certain FICO/LTV and subordinate financing in its Freddie Mac Relief Refi and Open Access programs. And, as with other lenders, the 5/1 and 7/1 LIBOR ARMs are being suspended in the MyCommunityMortgage Program.
 
Few people are complaining about rates, although, given the low mortgage rates, there are some concerns about pull through and having too much MBS coverage on for mortgage banks. Yesterday we saw another improvement as the Case-Shiller index came in about as expected and then we had disappointing prints in the Chicago PMI and Consumer Confidence. It was a day where both stocks and bonds rallied, and traders reported seeing “solid domestic real money buying come through the desk, focused mostly in the front end of the curve for the month end trade.”
 
Today we’ve already had a fair amount of news. The MBA reported it sample of mortgage applications fell for the first time in five weeks as refinancing cooled, falling 4% last week. Purchases were unchanged, but refi’s were down almost 6% and now account for less than 66% of apps. We’ve also had the ADP Employment change, always of dubious predictive ability for Friday’s employment data. ADP numbers only showed a gain of 38,000 jobs, with an April revision downward. We also have ISM Manufacturing and Construction Spending at 7AM PST. Currently, given the poor ADP number and (now) the declining hope for a decent number Friday, we find the 10-yr yield at 3.02% (!) and MBS prices better by .250.


(Heavy Parental Discretion Advised. Heck, any joke with a first sentence like this one deserves a warning. And I apologize in advance...but the joke illustrates how first assumptions are not always correct.)

The testicles of a Texas midget hurt and ached almost all the time. The midget went to the doctor and told him about his problem. The doctor told him to drop his pants and he would have a look.
The midget dropped his pants. The doctor stood him up onto the examining table, and started to examine him. The doctor put one finger underneath one side and told the midget to turn his head and cough, the usual method to check for a hernia.
"Hmm..."mumbled the doctor, and as he put his finger under the other side he asked the midget to cough again.
"Aha!" said the doctor, and reached for his surgical scissors....
Snip-snip-snip-snip on the right side . . . then snip-snip-snip-snip on the left side.
The midget was so scared he was afraid to look, but noted with amazement that the snipping did not hurt. The doctor then told the midget to walk around the examining room to see if his testicles still hurt.
The midget was absolutely delighted as he walked around and discovered his testicles were no longer aching.
The doctor said, "How does that feel now?" The midget replied, "Perfect Doc, and I didn't even feel it. What did you do?"
The doctor replied, "I cut two inches off the top of your cowboy boots..."


If you’re interested, visit my twice-a-month blog at the STRATMOR Group web site located at www.stratmorgroup.com . The current blog takes a look at the QRM proposal’s impact on our industry. 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.