“A new study has found that women with large backsides live longer than men who mention it.” I couldn’t resist that one, given today being February 14th. I don’t know what Melissa Burch looks like, but she represents the pain in the backside that our business has in improving public relations. Just when you think title folks are all as “pure as the driven snow”, along comes this story: “Melissa Burch, a real estate closing agent at a Fort Lauderdale title company, pocketed more than $1 million from her employer’s escrow accounts, police said.” Andrew Liput, president of Secure Settlements, observed, “This unfortunate incident demonstrates the need to marry industry best practices with independent risk evaluation, ongoing monitoring and rapid real time reporting. Motive and opportunity can often lead to fraud, but independent oversight is a strong deterrent to bad actors. (It is rumored that Secure Settlements is in discussions with large settlement firms and title agencies exploring the best ways to combine best practice guidelines with data intelligence and risk metrics to reduce these types of criminal acts.) Here’s the story: http://touch.sun-sentinel.com/#section/1098/article/p2p-79117878/.
On the jobs front, PMAC Lending Services in Boca Raton, FL is expanding their USDA inside sales department. “As a well-qualified USDA Account Executive, you will have the benefit of marketing the USDA program across Rural America to wholesale, non-delegated correspondent and full correspondent clients. PMAC offers all forms of loan delivery from flow to bulk purchases, as well as many different pricing options.” For immediate, confidential consideration, please apply online at https://careers-pmac.icims.com/jobs/1336/inside-account-executive—usda/job. PMAC is also looking for experienced Outside Account Executives throughout the country. “As an Outside AE, you will enjoy multiple origination channel opportunities (Wholesale, Non-Delegated Correspondent & Warehousing), jumbos to $2.5 million with market leading fixed rate pricing, being a direct seller to all agencies and delegated underwriting on our jumbo product, and so on.” Please apply online at https://careers-pmac.icims.com/jobs/search?ss=1&searchKeyword=&searchCategory=&searchLocation=&latitude=&longitude=.
Maybe PMAC will pick up some employees from Bank of America. It just announced layoffs on the mortgage side: http://www.charlotteobserver.com/2014/02/13/4692044/bank-of-america-cuts-mortgage.html#.Uv4KvbmYbIU.
And AIG, the parent company of UG, also announced a 3% cut in its workforce: http://www.reuters.com/article/2014/02/13/us-aig-results-idUSBREA1C1VR20140213. But the earnings announcement highlighted the performance of UG. “United Guaranty Corporation (UGC), AIG’s residential mortgage guaranty operations, reported pre-tax operating income of $48 million compared to an operating loss of $45 million in the fourth quarter of 2012. Results reflected increased earned premiums from business written after 2008 using UGC’s risk-based pricing strategy along with lower incurred losses in its first-lien book of business due to declining newly reported delinquencies and increasing cure rates in its delinquent inventory. In the fourth quarter of 2013, 59 percent of net premiums earned were from business written after 2008. First-lien new insurance written totaled $10.9 billion in principal of loans insured for the quarter, down from $11.6 billion for the same period in 2012, driven by decreased origination activity, due primarily to a 71 percent decline in mortgage refinancing activity which was partially offset by a 43 percent increase in originations for home purchases. Quality remained high, with an average FICO score of 753 and an average loan-to-value of 91 percent on new business.”
As Wells Fargo goes, so goes the residential lending biz? Wells Fargo has cut its retail staff by 50%, volume is down 60% versus a year ago, but its purchase volume percentage is above 65% and it is pursuing non-QM IO loans for its own portfolio. How the heck did all that happen? Here you go: http://blogs.marketwatch.com/thetell/2014/02/12/how-will-wells-fargo-handle-mortgages-now-that-the-refi-boom-is-over/.
And now a story that Wells is creeping back into subprime mortgages due to declining volumes and revenues: http://www.reuters.com/article/2014/02/14/banks-subprime-idUSL2N0LI2DU20140214. Didn’t we all hear this story ten years ago? But seriously, this is truly indicative of current events. I see depository institutions using the advantages that they have (low cost of funds, deposit bases to match assets to and create portfolio products, being accustomed to a heavily regulated environment, and existing staff of trained mortgage employees) to press their advantage over other companies – and probably not through the wholesale or correspondent channels – at least initially.
Yes, videos are being used by Fannie & Freddie for training, the US Government for education, and by individual companies to stay in front of their client base. In this instance Rick McKinley with Crescent Mortgage, who sends out a regular video to his clients, brings on an oddball guest: http://rickmckinley.info/2014/02/14/ricks-picks-4-weve-got-the-big-time/. That guy needs to smile more! (Rick puts out a good product on current lending – you should subscribe.)
I am in Los Angeles today, and head to Alabama next week to speak at a lunch for the Mortgage Bankers Association of Alabama (http://www.mbaal.org/). But in the state of Washington LOs and Real Estate Agents should know that Genworth MI & WSHFC are hosting a FREE Marketing Seminar, “GROWING PURCHASE BUSINESS In 2014.” The speaker is Steve Richman from Genworth MI (he does a great job) and the date is Thursday, February 20th at 8:30-11AM and 1-3:30PM. To RSVP for one of the sessions, email your name, phone number, company name & state, and AM or PM session to [email protected] or for more details contact Seth Sherwood at (206)287-4457.
Let’s keep playing catch up on some relatively recent vendor, agency, and investor news.
Wells is now accepting the Doc Magic Loan Detail Report and the fee details forms from Byte Software and PPDocs in place of the Wells Fargo Fee Details Form. The ComplianceEase full ComplianceAnalyzer report will also be accepted in lieu if all individual fees paid outside of closing by the borrower are clearly identified on the Final HUD-1.
New Penn has expanded its Government guidelines to allow FICOs down to 580, higher DTIs, and previously modified mortgages. For FHA products, condos, down payment assistance, and flipped properties are now permitted, while FHA Streamline transactions allow up to 55% DTI and LTVs/CLTVs up to 97.5% and 125%, respectively. Standard VA borrowers (10-, 15-, 20-, and 30-year Fixed and 3/1 and 5/1 ARMs) may have a DTI up to 60% and take cash out with LTVs/CLTVs up to 100%. For VA IRRRLs, borrowers may have a FICO score as low as 620, subject to a maximum DTI of 50% and maximum LTV/CLTV of 95%, and transactions with FICO scores of 700 and over do not require an appraisal or AVM.
New Penn is now offering a 100% cash-out option as part of its VA program, which is available for 15- and 30-year fixed transactions; requires no down payment on purchase; permits condos and PUDs; and allows borrowers to combine mortgage liens, pay off debt, or collect cash in hand. The minimum FICO is 620, but high balance loans will be permitted for borrowers with FICOs of 660 and over.
Citi has implemented temporary price adjustors of 15bps for Conforming 30-year fixed transactions in NY and NJ, 10bps for Conforming 15-year fixed transactions in CA, and loan amounts up to $90,000. Conforming 30-year fixed transactions in MA will incur a hit of -20bps, while Conforming 15-year fixed transactions in TX will incur a hit of -10bps.
PennyMac has changed the maximum base loan amount for VA transactions to the greater of $1m or the county loan limit and reminds lenders that, in the wake of the changed county loan limits, it will honor the previous higher limit on purchases provided that the sales contract was ratified by all parties and the URLA signed by both parties prior the January 1st. VA IRRRL transactions are not affected.
PennyMac reminds lenders that 1-unit purchase transactions in high-cost metropolitan areas with loan amounts exceeding the new FHA maximum loan limits that are re-run through an AUS will still be accepted for purchase, even if the decision returned is “Ineligible.” Sellers, however, will need to provide documentation confirming that the case number was assigned before the lower limits became effective (January 1st). These changes do not impact FHA Streamline refinances, as the maximum loan amount calculation with an appraisal remains in effect.
PennyMac has revised its Conventional LLPAs to improve pricing for cash-out refinances with FICO scores below 740, investment properties with LTVs above 75%, and three of the FICO/LTV buckets for loans underwritten by DU.
Franklin American is now accepting Fee Details documentation in the form of Calyx’s LoanScoreCard, Ellie May’s Mavent Compliance Record with Expanded Fee Details, Mortgage Builder, Docutech, Doc Magic, Byte Software, PP Docs, and the Wells Fargo Fee Details Form. Alternative vendor forms have not been approved for use in lieu of the Income and Debt Worksheet; however, lenders may use their own alternative forms so long as all it discloses all of the required data points.
Mountain West Financial has updated its income guidelines for both Conventional and Government loans to require borrowers with less than two consecutive years of employment history to provide documentation showing a prior immediate history of school attendance or enrollment in a training program relevant to the current position. In addition, borrowers re-entering the workforce must have been in their current job for a minimum of six months and provide evidence of a two-year work history before the absence. The policies on changes in employment, self-employed borrowers, gaps in employment, and employment by relatives or transaction participants have also been updated, as have those on income analysis, income sources, and variable income.
With regard to mortgage insurance premiums as they pertain to the QM Points and Fees rules, MWF has clarified that lenders should exclude borrower-paid Monthly Premiums, monthly portions of borrower-paid Split Premiums, and lender-paid Upfront or Monthly Premiums in the calculation. Premiums paid by the borrower at closing, such as borrower-paid Single Upfront (both refundable and non-refundable) and the upfront portion of the borrower-paid Split Upfront Premiums, are to be included in the calculation.
MWF has rolled out its full 203k product, which is available for both purchases and refinances for rehab amounts of $5,000 and over, allows FICOs down to 620 and LTVs up to 100%, and permits up to 100% of the loan amount to be used for rehabilitation. The program is available for 30-year Fixed loans on owner-occupied 1-unit, PUD, and REO properties in AZ, CA, CO, OR, and WA.
MWF has provided all of the forms necessary for disclosures, 2014 CFPB disclosures, loan submission, FHA and VA requirements, and niche products in one convenient location at http://mwfwholesale.com/index.php/forms.
Lastly, MWF has added guidance on the subordination of existing second liens, specifically HELOCs, stating that in addition the CLTV, the HCLTV must be accurately calculated when there is an existing HELOC that is to be subordinated through the refinance. This should be calculated by dividing the sum of the new first mortgage loan amount, the full amount of any HELOCs, and the UPD of all closed-end subordinate financing by the lesser of the appraisal value or sales price. In instances where the HELOC has been frozen but not permanently modified, the total amount, not just the outstanding balanced, must be used in the HCLTV ratio, while the greater o the modified HELOC amount and the outstanding UPB should be used in cases where the HELOC has been permanently modified.
Rate are hanging tough, and improved yesterday on a weaker-than-expected Retail Sales number for January, which is expected to result in downward revisions to Q1 growth outlook, and on an unexpected increase in Initial Claims. The 10-year note improved .5 in price, closing at 2.74%, and agency MBS prices improved .250-.375 on lower-than-recent-average volumes.
Thomson Reuters reported on the latest supply & demand situation: “The latest report from the NYFRB on the Fed’s MBS buying continued to demonstrate the favorable technical environment currently. Net purchases totaled $12.3 billion for the week ending February 12, which equated to a daily pace of just under $2.5 billion. Over this same period, supply from mortgage bankers averaged $1.1 billion per day. The supply/Fed-demand dynamic is deteriorating, however. For the rest of February, daily purchases are anticipated to average about $2.4 billion as a result of lower paydowns received in January and available for reinvestment over the mid-February to mid-March period.”
Today we’ve had January Import & Export Prices (expected flat, they came in +.1% & +.2%). We’ll also have Industrial Production and Capacity Utilization and the preliminary February read on Consumer Sentiment. But with the snow (49 states received some yesterday) many are into day #2 of a five-day weekend. The 10-yr is nearly unchanged at 2.74% and agency MBS prices are a shade better.
In a dark and hazy room, peering into a crystal ball, the fortune teller delivered grave news:
“There’s no easy way to tell you this, so I’ll just be blunt. Prepare yourself to be a widow. Your husband will die a violent and horrible death this year.”
Visibly shaken, Laura stared at the fortune tellers lined face, and then at the single flickering candle, and then down at her hands.
She took a few deep breaths to compose herself and to stop her mind racing.
She simply had to know…
She met the fortune teller’s gaze, steadied her voice and asked…”Will I be acquitted?”
(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.)