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Aug. 1, 2011: Fannie suspends RMIC; CFO & National Sales jobs; debt plan has little impact on great rates
Rob Chrisman
"I
had amnesia once--or maybe twice." One's mental health is
nothing to joke about, and long days can make folks pretty
sleepy (just ask any West Coast secondary marketing managers
called into a 3PM meeting with a CFO...). We don't listen as
attentively in the third hour of an endless meeting as we did
during the first. Apparently while we sleep we go through a
90-minute period for the five stages of sleep, and researchers
have found something similar during waking hours: moving from
higher to lower alertness every 90 minutes. But we override the
signals with sugar, coffee, and stress. Some employers have
begun providing fitness facilities, energy-rich food, and even
napping pods. See? The thought of a “napping pod” has taken your
mind entirely off of the debt crisis! But before we talk debt…
For those out there with financial & accounting backgrounds,
a Colorado bank is
looking for a CFO candidate with duties including
financial oversight of bank’s $550 million+ mortgage subsidiary.
The Chief Financial Officer will be responsible for all
financial management components of the Bank, including strategic
and regulatory, financial systems and controls, interest rate
risk, funds management, investment management, financial
forecasting/budgeting process, profitability analysis, and
regulatory reporting using GAAP. In addition to standard Bank
duties, candidates should have experience with and understanding
of Mandatory Delivery practices and well as Hedging Risk
Management. In addition to the Executive Committee, the CFO
will be responsible for participating in Bank Committees
including: Loan Committee, Executive Credit Committee, and
ALCO. Interested parties should contact Brendan Zahl at bzahl@EPEOPLES.com.
A few states over, a
well-capitalized mortgage bank in the San Francisco Bay Area
is looking for a National Sales Manager to run and grow
its wholesale division. This Mortgage Bank is licensed in 12
West Coast states and is currently funding approximately $100
million a month. This is an opportunity for a top level
executive to substantially grow a wholesale division, since the
mortgage bank has the IT infrastructure, operational talent and
funding capacity to double or even triple its volume today. The
ideal candidate has a strong network of Account Executives and
Sales Managers in the West Coast from which to recruit and hire.
If you are interested in this opportunity, please send your
resume to me at rchrisman@robchrisman.com
and I will forward them on.
Well,
there is an agreement
reached by congressional leaders and the White House that
raises the debt limit and has roughly $1 trillion in spending
cuts over 10 years. Another $1.5 trillion worth of deficit
reduction would be based on recommendations of a new bipartisan
committee. Under the
deal, the special bipartisan panel would recommend steps to
reduce the deficit. Any impasse by the panel or rejection of its
recommendations by Congress would automatically trigger a round
of spending cuts, like in defense or Medicare. Today will be
spent by the Senate and House of Representatives arguing and
then voting on it. The details have not been released, so
specifics that deal with the housing-related items such as the
mortgage interest rate deduction are not known. (More on market
reaction below.)
Fannie
Mae told the industry that, “As of September 30, 2010, Republic
Mortgage Insurance Company (RMIC) fell below the minimum
policyholders’ position required by its domiciliary state of
North Carolina. RMIC received waivers from this requirement from
its regulator, the North Carolina Department of Insurance (NC
DOI), and thereby was temporarily allowed to continue writing
new business. The recent extension of the waiver granted by NC
DOI expires August 31, 2011, with no indication that any further
extensions will be granted under RMIC’s current circumstances.
It is Fannie Mae’s understanding that NC DOI will prohibit RMIC
from writing any new mortgage insurance policies in North
Carolina on or after September 1, 2011. In response to NC DOI’s
action, Fannie Mae is
suspending nationwide both RMIC and its affiliate, Republic
Mortgage Insurance Company of North Carolina (RMIC-NC), as
approved mortgage insurers effective immediately” Here is
the announcement: https://www.efanniemae.com/sf/guides/ssg/annltrs/pdf/2011/sel1107.pdf.
Lenders
are following. For example, RMC Vanguard Mortgage
halted any new MI orders from RMIC. (RMC Vanguard still
uses MGIC and UG as providers.) Employees were told that
“without an agreement from its regulators and the secondary
market, that RMIC could stop writing new mortgage insurance
business at the end of August 2011.”
Working
through
the appropriate local administrators, Friday’s bank-closing FDIC
activity included closing Virginia Business Bank and
having Xenith Bank
assume all of the deposits in Virginia. In Indiana Integra Bank
was taken over by Old
National Bank in Evansville. And up in South Carolina,
BankMeridian was taken over by SCBT in Orangeburg.
Last
week the commentary mentioned news that Ocwen introduced a shared
appreciation plan for loan modifications. I received this
note: “I just have to send an ‘AT LAST!’ about the Ocwen news.
For years I have asked ‘Why don't we use shared appreciation as
a component of modification? Letting people walk away from
their responsibilities is un-American and unfair!’ In my
previous job, I was responsible for workouts. When the
circumstances warranted it, I would approve modifications that
included principal forgiveness and interest rate reductions.
But every modification that included principal forgiveness
included language that recaptured any forgiven principal upon
the sale of the property. Borrowers of course kept any profit
beyond the forgiven principal, but I saw no reason then or now
for the bank to write off a portion of the loan balance if
market conditions returned it to the borrower over time. I
didn't use deficiency judgments - we only recaptured whatever
was there - but the borrower had signed a note for the entire
balance and I felt I was honoring my commitment to the
shareholders of the bank by both maintaining a paying credit and
ultimately seeking to recapture what was owed…No borrower
complained when he borrowed $200,000 and sold his house 5 years
later for $400,000, but it's suddenly the lender's fault when he
bought his next house for $400,000 and 3 years later it's worth
only $300,000? I don't buy it.”
Another
note:
“Over the past couple of months I've been hearing from several
folks in my network about their difficulty in resolving title claims.
Recently, in speaking with one of the GSE's they say that they
too are having no better luck with a large title company. Has
consolidation and increased market share changed how large title
companies approach resolution of claims? It appears as though
claims are initially denied (regardless of validity) and that
resolution does not begin until legal action is initiated.
I was curious if your readers are finding the same experience or
is this just an example of a small non-random sample.” Shoot me
a note if you like.
Late
last week the commentary mentioned a customized amortization
mortgage rolled out by WEI. It turns out that other
lenders/investors offer similar programs. For example, GMAC wholesale offers
a "Clients Can Pick Their Amortization Period" plan with GMAC.
“On Conforming Fixed Rate Product up to $417,000 Owner Occupied
/ Investment Properties / 1- 4 units, Amortization Period ~ Min
of 5 years up to 40 years in annual increments. Don't qualify
for a 15 yr., but already paid down 8 yrs. on a 30/30? No
problem, offer a 22 yr. term! Or, OO / Cash Out for 27 Years, or
Investment Property / R&T for 17 Years Fixed.” At Quicken, QLMS rolled
out a custom term option earlier this year – “it’s called the
YOURgage program. Our lender partners not only have access to
this product, we offer a calculator on our portal that can whip
up a cost comparison within seconds.(attached) Lastly, if a
lender partner is serious about offering this to their clients,
we will provide marketing creative that they can customize and
use to get the word out to their network.”
The
markets are tentatively happy with the debt deal – not so much
the specifics, but more the belief that there has been at least
some progress. Looking back to Friday, Q2 GDP came in well below
expectations, and Q1 was revised from +1.9% to 0.4%. The US
economy now, and previously, was weaker than data had suggested
was the case. The 10-yr Treasury Note rallied 1.25 points down
to a yield of 2.81%, a new low for 2011
On
Friday 3.5% MBS's improved by about a point (1.0) - throw the
value of servicing in there, and suddenly 4 - 4.125% 30-yr
mortgages are back in style. Suddenly “R-E-F-I” is back
in vogue and small originators are checking early pay-off
penalties from investors while secondary marketing managers
are worried about pull through percentages and renegotiation
policies.
This week could be quite the week for volatile interest rates -
not that I am any good at forecasting things. After Friday's
rally we have mortgage rates at the lowest point they've been
all year. We still have the US debt passage vote, along with all
the troubles in Europe. And for weekly & monthly US economic
news, we have a full platter. Today we have one of the ISM
indexes, and Construction Spending, at 9AM CST. Tomorrow we have
Personal Income & Consumption, and some PCE price numbers.
Wednesday is the always-questionable ADP employment numbers,
along with Factory Orders and another ISM number. Thursday we
take a breather with "only" the weekly Jobless Claims number.
And then on Friday we have all the employment numbers -
remember, jobs and housing, jobs and housing are going to be the
cornerstones to push the economy. The market is roughly
unchanged from Friday’s levels, with the 10-yr at 2.81%.
(Warning - Parental Discretion Advised)
It was entertainment night at the Senior Citizens Center.
Claude the hypnotist explained: "I'm here to put you into a
trance; I intend to hypnotize each and every member of the
audience."
The excitement was almost electric as Claude withdrew a
beautiful antique pocket watch from his coat.
"I want you each to keep your eye on this antique watch. It's a
very special watch. It's been in my family for six generations"
He began to swing the watch gently back and forth while quietly
chanting, "Watch the watch, watch the watch, watch the watch…"
The crowd became mesmerized as the watch swayed back and forth,
light gleaming off its polished surface.
Hundreds of pairs eyes followed the swaying watch, until,
suddenly, the chain broke. It slipped from the hypnotist's
fingers and fell to the floor, breaking into a hundred pieces.
"S%&T!" said the Hypnotist.
It took three days to clean up the Senior Citizens Center.
Claude was never invited back.
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