Dec. 24, 2012: Youth in lending & real estate; Congress adjourns as we near the cliff - but is lack of action better in the long run?
Rob Chrisman
A
few weeks back we had the "Circle the cat" puzzle. Given that
this is kind of a wasted day anyway for many,
work-productivity-wise, here is another time wasting puzzle
site: http://members.iinet.net.au/~pontipak/redsquare.html.
Here is another time-wasting exercise: wringing our hands over
the fiscal cliff. Despite concerns about the "fiscal cliff," Congress
adjourned for the holidays. Why are our elected
officials comfortable with taking a little "vacay"? There are
three possible reasons: One, all is well and a resolution will
be forged between Christmas and New Year's, two, an agreement
won't be reached but a stopgap measure will be passed -
kicking the can down the road. Or, three, the nation will go
off the cliff and Congress will busy itself in 2013 to try to
clean up the mess. And there
is another entire group that is becoming more comfortable
with having the automatic tax increases and spending cuts go
into effect, saying that in the long run we're better off.
It's Christmas Eve, and few folks are thinking about robbing a
bank. Speaking of which, for those financial trivia buffs out
there, the FBI has released the latest robbery statistics
and report that in 2011: there were 5,086 bank robberies,
burglaries, and larcenies (4% were violent and 1% involved the
discharge of a firearm); perpetrators walked away with $38mm
in cash; demand notes were used 44% of the time, firearms were
used 19%, weapons were threatened 35%, and explosives were
threatened 2% of the time. (Imagine a teller yelling, "Whoa!
This is really rare!") For a sample, here you go: http://www.fbi.gov/stats-services/publications/bank-crime-statistics-2011/bank-crime-statistics-2011-q2.
The
aging populations of Realtors and mortgage bankers and the
apparent lack of new blood is a concern to many, and I
recently received this note (from someone in their 50’s):
“Rob, you have brought up what is in reality is the issue
of ‘Succession Planning’ in the mortgage and real estate
sectors. The numbers and facts are clear: ~78MM boomers
retiring or reaching retirement and only 56MM individuals in
the cohort behind them (Generation X) to replace them. When
combined with the fact that the mortgage and real estate
businesses are so entrepreneurial that many times the idea of
succession planning is a foreign concept, you have a problem
that will only get worse if it is not addressed. In my
opinion, a huge challenge for our space right now and going
forward, yet very few firms are doing anything to address the
issue.”
It
is interesting to note where folks in their 20’s are settling
- where are graduates taking their underwater
basket-weaving degrees? Though they're in deeper debt
than ever before, new college graduates still need to live
somewhere, right? Conventional wisdom holds that these bright
young minds flock to centers of influence like New York,
Boston, and San Francisco, all known for being "cool" cities
with high concentrations of "smart" people. Census data from
2000-2010 suggests otherwise, however: Las Vegas, of all
places, recorded growth of 122,304 recent graduates, which
represents a staggering 78% increase. Rounding out the top
five metropolitan areas playing host to new graduates were
Riverside-San Bernardino, CA; Raleigh-Durham, NC; Austin, TX;
and Charlotte, NC-hardly perceived to be hotbeds of commerce
and culture. In contrast, New York ranked 38th in terms of
new graduate growth, while San Francisco ranked 48th, just
above Detroit.
But
one factor to remember, as Marilyn L. points out, is that,
“Perhaps the reason the smaller cities (re: college grads) are
seeing massively larger rates of population growth of grads is
that their base numbers
of grads on which the growth rates are calculated were
probably fairly small to start with. A fairly small
influx into Vegas or Durham can produce a big growth rate.
With huge existing populations of young people in SF or NYC,
it's much harder to move the needle of percent growth, even
with large numbers of incoming grads."
And for a bit of a sales pitch we have, “As we speak to
lenders, many agree that there is a train wreck coming as many
loan officers left the business, many are soon to retire, and
many are not suited to obtain purchase business after the
refinance market is finished. Our program helps companies
recruit, train, and assimilate loan officers focused on
purchase production. We’ve been doing this for over 10 years,
and at one time 40% of rookie superstars in MOM Magazine came
out of our program.” So wrote Jack Karaszewski with XINNIX
(www.XINNIX.com).
On
to the agency & investor updates that never stop.
Read the full bulletin for nitty-gritty details!
Fannie
has made several updates to its servicing guidelines and now
requires servicers to send a payment reminder notice and a
copy of the Borrower Solicitation Letter—31 Days Delinquent to
borrowers of community lending mortgage loans. The first
sentence of this letter should be amended as necessary to
disclose the number of days the loan is delinquent. In cases
where a Cancellation of Debt is filed and over $600 of debt
has been cancelled, Fannie has made stipulations as to which
accounts servicers are required to send the IRS Form 1099-C
and has issued a reminder that 1099-C forms must be filed on
or before February 28th of the year following that in which
the discharge of the debt. Failure to submit the form on time
results in the IRS levying penalties on Fannie, for which the
servicer is ultimately responsible for paying.
New guidance has been released for loans in federally declared
disaster areas affected by Hurricane Sandy that had been
performing on a Trial Period Plan but were placed on a
forbearance plan following the storm. The updated guidelines
are available on www.efanniemae.com and
outline what course of action servicers are obligated to take
with regards to converting an existing forbearance, evaluating
loans on a HAMP or Standard Modification Trial Period Plan,
property inspections, and reporting requirements, both for
borrowers whose financial situations have worsened because of
Hurricane Sandy and for those whose financial situations have
not changed.
In more servicing news, Fannie has updated its policies on
property maintenance and management for preserving vacant
properties for mortgage loans in default. All work undertaken
to maintain the property’s condition must fall within the
allowable reimbursement amounts; if not, the servicer must
submit a bad to HomeTracker with a detailed description and
photos to support the bid. Guidelines state that servicers
are responsible for confirming the vacancy, securing the
property, maintaining the grounds, winterization, health and
safety, damaged properties, code violations, and completion of
work.
Flagstar has implemented new pricing adjusters of
+0.250 and +0.375 for Fannie and Freddie 10- and 20-year
fixed-rate loans, respectively. This applies to all loans
locked on and after December 10th.
In compliance with the FHA’s recent announcement about the
additional data field on its insurance application, Flagstar
will be giving DE Delegated Correspondents the option of
identifying FHA Streamline refinances as either credit
qualifying or non-credit qualifying. Lenders will be required
to disclose this information beginning on April 1, 2013.
Flagstar has also issued a reminder that lenders are permitted
to include closing costs and prepaid expenses in the maximum
mortgage calculation for Streamline refinances with appraisals
only. Though the FHA system has been upgraded, Flagstar’s
isn’t scheduled to be updated until March 2013 and doesn’t
allow FHA permit costs to be rolled into non-credit qualifying
Streamlines or credit qualifying Streamlines without
appraisals. As such Flagstar is unable to underwrite, fund,
or purchase credit qualifying where those costs are factored
into the maximum loan calculation, but look for that to change
with the system upgrade in the coming months. Lenders are
also reminded that as per FHA guidance the maximum loan
calculation for Streamlines without appraisals may not exceed
the lesser of the original principal balance or the
outstanding principal balance plus two months’ interest minus
the UFMIP refund and that all loans are subject to the
relevant county loan limit.
As per VA policy, Flagstar reminds all VA Authorized Agents
that they are required to pay an annual $100 recertification
fee to the lenders with whom they plan to engage with in the
coming year. This should be paid to Flagstar by December 31st
at the latest.
Really, does anyone out there care where rates are today?
Let's just say that U.S. economic data at the end of 2012 has
been generally favorable, with a "double however." We can
still expect to see a weak GDP report, however, for the fourth
quarter of 2012. And any favorable economic data at year end,
however, is already eclipsed by the breakdown of the fiscal
policy discussions in Washington. As the economics group
at Wells Fargo noted, "As the year winds down, data this
week pointed toward soft economic growth in the fourth quarter
of this year than in the previous quarter. Third quarter GDP
growth was revised higher, likely setting us up for a much
weaker fourth quarter. This view was reinforced with the
release of the leading indicators this week, which signaled
slower growth in the months ahead. In addition, durable goods
orders showed that capital spending has yet to recover from
its earlier year highs. Consumer spending remains modest,
although income growth looked better in November. Indicators
on the housing market reinforced our view that housing remains
a bright spot."
Not much for scheduled news this week: on Thursday Consumer
Confidence will update the results of a monthly survey of
5,000 households to ascertain the level of consumer
confidence, and we'll have yet another housing measure: New
Home Sales. Friday we have the Chicago PMI. But it all pales
in comparison to the darned fiscal cliff - which is not really
the end of the world. In fact, many are starting to root for
it: if there is no deal before the New Year, taxes will
increase on nearly all Americans and government will be forced
to scale back on domestic and military programs. Yes, it will
hurt the U.S. economy in the short run, but could we be better
off in the long run? Many say "yes." Until then, our
10-yr, which closed Friday at 1.75%, is at 1.77% in the
early going, and MBS prices are worse a shade on this “early
close for the markets” day.
We have just received notice from the North Pole that all
those in the lending industry will not be receiving presents
this year. Apparently Santa IS UPSET!!!
He is currently working on a refinance that was set to close
yesterday and the lender added conditions…
As he stated to us, He has had it up to his red cherry nose
with conditions.
1. The ELVES have refused to return phone calls to verify
employment as they expressed this is just too busy of a time
to call anyone.
2. He can’t sign his loan documents in time to make his lock
as he will be leaving on an extended vacation starting 12/24.
3. The lender is asking for proof that Santa has not taken out
any new loans on his sleigh.
4. The lender is requiring proof that Mrs. Clause has been in
the cookie business for more than 2 years.
5. When the Social Security Verification form was sent off the
information came back stating “Santa Did not Exist.”
6. Due to a lack of comps in the area and the rural property
the lender is requiring a second appraisal.
7. The copy of Santa’s photo ID cannot be verified as there
are too many imposters around to prove it is him.
8. The lender has required us to count the expense for
reindeer food and maintenance in Santa’s DTI ratio calling it
“cost of doing business”.
9. Santa has refused to sign the AKA statement as it is about
4 pages long listing this such as Kris Cringle, Father of
Christmas, Jolly old man, Mr. Clause, Old Saint Nick, etc…..
10. Apparently the lender is trying to call Mr. Clause’s work
“SEASONAL” and they want to verify if he collects unemployment
on the off season.
11. The underwriter is questioning the large number of
dependents on his 1040.
12. The underwriter is also questioning the amount of business
expenses on his Schedule C, especially his travel expenses.
So all of you out there in the mortgage industry please plan
accordingly as we only today left as a shopping day and you
are only getting COAL.
Merry Christmas!
If
you're interested, visit my twice-a-month blog at the STRATMOR
Group web site located at www.stratmorgroup.com.
The current blog discusses the role of the IRS and REMIC’s in
the current credit crisis. 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.
