Dec. 9: Mortgage jobs; what 97% LTV means for LOs and lenders; training events; eminent domain in San Francisco?

No one wants to see their companies and future employment batted around in the press, but perhaps our brethren and Freddie and Fannie are accustomed to it by now. Michael Stegman, the Treasury Department’s top housing policy official, said the responsibility lies with Congress to end government conservatorship of Fannie Mae and Freddie Mac. “The only way to responsibly end the conservatorship is through legislation,” Stegman said. Please note the article discusses “conservatorship” and not “eliminating”! And both announced their 97% LTV programs – see below.


On the jobs side, On Q Financial, one of the top 50 mortgage companies in the United States, is seeking a strong Operations Manager at its headquarters location in Scottsdale to lead the overall loan process for the Southwestern US. This position is responsible for ensuring that all service level agreements as set by the company are maintained, while efficiency, quality and productivity goals are met for processing, closing and underwriting. The individual in this position will also work to facilitate a positive, dependable, team-oriented environment among Operations and Sales staff. Requirements include a bachelor’s degree or equivalent work experience, a minimum 5 years of operations management and a proven track record in mentoring and leadership. On Q Financial has over 400 employees in nearly 50 branches in 10 states, and has increased closed loan volume every year from $70 million in 2005 to nearly $2 billion in 2013. Contact Betty Nay for a complete job description or confidential inquiries.


And out west Luther Burbank Mortgage, a division of Luther Burbank Savings, is hiring experienced retail loan officers in Northern and Southern CaliforniaLuther Burbank Mortgage “offers the best of all three: a $3.7 billion dollar asset bank with great Portfolio loan products (including Non-QM interest only loans), common sense underwriting, and 40 year amortizing loans and all are aggressively priced up to $5 million. LBM has a robust delegated mortgage banking unit as well as the ability to broker loans when needed, and a great operational support along with strong marketing campaigns for our loan originators.” Savings Branch locations also available in both Northern and Southern California. Please email Curtis Green for more information.


For folks who like keeping up on mortgage rules, or at least have to in order to earn a paycheck, The Collingwood Group released its “Mortgage Outlook Report” showing that mortgage and housing industry professionals are hopeful but cautious over relaxed mortgage rules. “A new survey finds close to 70% of mortgage and housing industry professional responding to the Collingwood Group’s Mortgage Outlook Report was hopeful that relaxed lending rules will help stimulate the industry. But, comments from respondents show that support for FHFA’s announcement of a low down payment mortgage option was fairly nuanced. Many industry participants felt the announcement was a positive sign because it reflects concern of policymakers with current market dynamics and indicates a willingness to ease standards. However, most respondents acknowledged that other high loan-to-value (LTV) products exist and that FHA offers the best option in this space. For example, one respondent wrote, ‘The announcement of a low down payment mortgage option may create more opportunities for buyers to afford housing; however, it falls short of appropriately loosening tightened credit standards for other LTV loans.  The 97% allows the GSEs to capture loans that would otherwise go to FHA.’ The real question with FHA is whether the insurance premiums will be reduced this year to attract new business and better balance the fund.” A full copy of the survey can be downloaded.


Just when investors thought it was safe to back into the markets, San Francisco is looking at using eminent domain. Jody Shenn with Bloomberg writes, “San Francisco may become the biggest U.S. city to use its development powers to help homeowners avoid foreclosure, partnering with another California community whose own plan has come under fire from investors. The proposal from a member of San Francisco’s Board of Supervisors would use eminent domain to take over loans on property with a market value below the mortgage amount. A lawmaker says it would help minorities in the city of about 837,000, while some officials see the move increasing borrowing costs and discouraging investors. If the proposal succeeds, the city would join nearby Richmond, which is seeking municipal partners in the effort. Lawmakers in California’s San Bernardino County, as well as in Chicago and North Las Vegas, Nevada, considered and abandoned the idea. Such a program in San Francisco would ‘likely be negatively perceived by financial markets, insurers, other financial intermediaries and potential investors in the city’s bonds,’ Sesay and Ben Rosenfield, the controller, said Oct. 6 in a memo to Mayor Ed Lee and the 11-seat Board of Supervisors.”


Moving on to something more constructive, the markets were abuzz from news via the FHFA regarding Fannie & Freddie’s programs. As Mortgage News Daily noted, “Each will permit loans with as high as a 97 percent loan to value ratio with certain compensating factors. Both Fannie Mae and Freddie Mac’s loans must be secured by a single family owner occupied property. Only fixed-rate loans are eligible and manufactured housing is not acceptable collateral. At least one borrower must be a first time homebuyer and median income eligibility levels apply. The GSEs are also requiring a form of homeowner education, the type and duration of which varies between them.”


“To help expand access to mortgage credit, we are introducing Freddie Mac Home Possible Advantage, a responsible mortgage option that offers more flexibility for maximum financing. Today’s Single-Family Seller/Servicer Guide (Guide) Bulletin 2014-22, provides the requirements for Home Possible Advantage mortgages. This new offering primarily adopts the responsible and affordable flexibilities of Freddie Mac Home Possible® mortgages, but with additional requirements that include, but are not limited to the following: Maximum loan-to-value (LTV) ratio of 97 percent and total LTV ratio of 105 percent, the mortgage must be a fixed-rate mortgage secured by a 1-unit property other than a manufactured home. Mortgage insurance coverage of at least 18 percent for mortgages with LTV ratios greater than 95 percent, and maximum debt payment-to-income ratio of 43 percent for manually underwritten mortgages. Home Possible Advantage will be available for mortgages with Freddie Mac settlement dates on or after March 23, 2015.”


And on Fannie part we saw, “In support of ongoing efforts to expand access to credit and support sustainable homeownership, Fannie Mae will offer up to 97% LTV/CLTV/HCLTV financing to help home buyers who would otherwise qualify for a mortgage but may not have the resources for a larger down payment, and to support refinance of existing Fannie Mae mortgage loans. Fannie Mae is providing multiple options to help lenders serve creditworthy borrowers and expand business opportunities. Selling Guide Announcement SEL-2014-15 details the requirements and policy changes. The 97% LTV ratio updates will be available for loan casefiles underwritten through Desktop Underwriter® (DU®) Version 9.2, which will be implemented the weekend of Dec. 13, 2014. Review the updated DU Version 9.2 Release Notes for more information. Additional details and resources are available on the 97% LTV Options page including a fact sheet, FAQs, and a video overview.”


To sum things up the new product is largely geared towards the first-time purchase borrower, although a non-cashout refinancing option exists as well. The announcement is certainly a shot across the bow of the FHA, particularly for borrowers with better credit, which should result in adverse selection for FHA loans. It should also have a positive impact on credit availability on the margins as it lowers the cost for a high LTV loan. Yes, only fixed rate loans with terms up to 30yr are eligible, the home must be the primary residence, at least one of the borrowers should be a first-time home buyer (only for Fannie Mae) while Freddie Mac stipulates that borrowers must not have any ownership interest in any other home, the loan balance must be lower than the area loan limit (only for Fannie Mae), borrowers’ annual qualifying income must not exceed 100% of the area median income or the income multipliers for designated high cost areas (only for Freddie Mac), they have a private mortgage insurance requirement of 18% coverage, and so on. And there is a cost in the form of loan level price adjustments: an additional 0.5% LLPA for Fannie over regular LLPA for 95-97 LTV and for Freddie Mac, the LLPA varies between 1% and 1.5% for 95-97 purchase mortgages and is set at 1.75% for refinance mortgages.


LOs were quick to send me notes that it is likely that a better credit borrower would most likely opt for a Fannie or Freddie loan over FHA loan given substantial savings in mortgage payments. (The product bears a striking resemblance to the former product of the same down payment.) This should lead to adverse selection and worsening credit quality for FHA loans. It should also have a positive effect on credit availability on the margins as it lowers the cost for a high LTV loan, especially for first time purchase borrowers. From an investor’s perspective the new program should have a limited effect on refi speeds of existing high LTV loans. These loans, even in the past, could always refinance with help of PMI once their current LTVs dropped below 95% LTV. Also the new 97% LTV program does not offer all-in rates that are significantly different from that. Also, it will affect loans that are currently in the very tight window of 95-97% LTV.


With Christmas a few weeks away there is no letting up on upcoming events and training!


Interested in a Web Seminar regarding CFPB’s First Mortgage Servicing Enforcement Action: What to Expect in 2015? This webinar on December 10th is hosted by National Mortgage News and American Banker. For information and registration, click here.


Tomorrow the 10th five of the nation’s top producing loan originators will be sharing their insights and best practices at the upcoming Top Producer Round Table in the Atlantic City Convention Center on Dec. 10th which conveniently coincides with the tri-state Triple Play Realtor Conference. Designed to inspire originators to finish strong in 2014 and kick off 2015 with a 60-day plan of action; topics include how to save time and create more efficiency in your loan process, how to grow Realtor relationships in light of the CFPB’s recent rulings on MSAs, and how to diversify your sources of business to include CPAs attorneys and financial advisors. You can visit CMPS Institute’s web site to learn more and register for its top producer round table.


Tomorrow (Wednesday, December 10) is the next webinar in Ellie Mae’s RESPA-TILA Integrated Mortgage Disclosures webinar series. Register now to hear Ellie Mae’s leading compliance experts: continued discussion on the new Closing Disclosure elements, review the changing timing requirements, and answer frequently asked questions: Register now; space is limited!


Compliance 4 All is providing a webinar that will provide an overview of the practical techniques coming from best practice that apply and reinforce bank operations whatever their size and complexity. Registration information can be found here.


BuckleySandler chairman Andrew Sandler will discuss the expansion of lender liability under the TRID rule, and partners Clint Rockwell, Joe Reilly, and Ben Olson will discuss the key implementation issues and the latest guidance provided by the CFPB. If you would like to register for the December 11th free webinar regarding update on the CFPB’s New Mortgage Disclosure Rule, click here.


And the Mortgage Bankers Association of the Carolinas is providing The Summit Broker Focused training on Dec 16. “This event will enable you to learn from other Brokers in the State, meet legislative leaders who will make a difference, share business challenges, and the opportunity to speak with your Banking Commission about the MARs report, register now.”


Turning to the markets, mortgage-backed securities (MBS) did pretty darned well Monday. Not only did Treasury rates drop and prices improve (the 10-yr was better by .375), but agency MBS prices improved relative to Treasuries by about .125. It was all supply (not very strong) and demand (investors want them). The 10-yr closed Monday at 2.26% and this morning, with no scheduled news, we’re down to 2.24% and agency MBS prices are better a smidge.



For humor today we have Jean Claude Van Damn vs. Chuck Norris Splits! (First, yes, you have a few minutes to spare to check out those two short videos. Second, there is a holiday-related theme. Third, I know the Chuck Norris scene is totally fake – Chuck Norris doesn’t need a jet to fly.)





(Copyright 2014 Chrisman LLC. All rights reserved. Occasional paid job listings do appear. This report or any portion hereof may not be reprinted, sold or redistributed without the written consent of Rob Chrisman.)

Rob Chrisman