July 27: New products; Capital One layoffs; flood insurance news; VA changes; jumbo trends

The MBA’s “Chart of the Week” earlier this month noted that the ARM share of mortgage applications had increased to 7 percent. This is the highest level since December of 2014, with the highest ARM share reaching 36.6 percent in March of 2005. The historical average for the ARM share is 14.4 percent. The ATR/QM rule implemented last year has also reduced the practicability of short term reset ARM products since it requires loans to be underwritten to the highest rate over the first five years of a loan. The share of ARMs has decreased among the low interest rate environment but as rates are expected to rise in the near future, the ARM share should rise as well.

 

In “product news,” Roadrunner Solutions is offering “a free service to help you connect your pre-approved borrowers with local Real Estate professionals that will reinforce your relationship with the borrower. Roadrunner has a large network of Realtors that will respect the relationship between the LO and their borrower. This service will improve your closure rate and help deliver the high level of customer service required for the purchase money borrower. If you are a Call Center LO, run a Call Center Platform, originate loans outside of your local area, or just struggle to find quality Realtors, Roadrunner offers this for you to try with no fees or any cost to the borrower.  Roadrunner has also added website design and support to their product offering. If you would like to find out more e-mail us.”

 

And appraisal firm ValueQuest AMC reported that May and June both saw new volume records for the company. “ValueQuest AMC’s customer-centric approach to business has led to great success in recent times, and management simply sees it as a culmination of the diligence put into costumer service, adapting to new compliance regulations and working only with the best experienced appraisers. In the past three years, ValueQuest has seen 500% growth and has increased its presence to 19 states, reaching customers throughout the east coast. Chief Appraiser, Eli Pascon, cites communication as another key to ValueQuest’s success, saying, ‘Appraisers face new demands every day in this ever changing environment. Through my experience, I’ve been able to bridge the gap between appraisers and underwriters, facilitating the communication process and ensuring the timely delivery of quality appraisal reports.’”

 

In personnel news, Salt Lake’s Primary Residential Mortgage, Inc. has named Burton Embry the company’s new Chief Compliance Officer. In his new capacity, Embry will continue to oversee and manage the company’s Enterprise Risk Management Group and represent PRMI’s interests with industry and trade groups as well as provide significant consultative direction in the company’s day-to-day and long range business activities.

 

On the flip side, however, McLean, Virginia-based Capital One Financial Corp. announced a series of layoffs across the country as the company seeks to revamp its tech operations. Call centers in South Dakota and Oregon will be shut down, resulting in job losses well over 1,000.

“Capital One is shifting our call-center strategy to allow us to become nimble, flexible and scalable to meet our customer needs,” spokeswoman Julie Rakes stated. She also said Capital One will actually be growing its overall workforce in the area, and pointed to more than 500 open positions in areas including technology. (Speaking of large manpower changes, don’t forget the announcement last month from Discover Financial Services regarding the decision to exist the mortgage origination business and will consequently close the Irvine, CA office impacting nearly 400 people although many in Kentucky are heading to a new AmeriSave office.) As a reminder, mortgage folks can post their resumes for free, and employers can seem them, at www.LenderNews.com.

 

 

H.R. 2918, the Flood Insurance Fairness Act of 2015 has been introduced in Congress and expands upon last year’s act by providing relief for policies on non-primary residences and rental properties. The sponsors believe that the bill will guarantee that all non-primary residences and business properties receive the same rates provided to primary homes under HFIAA. A companion bill, the Flood Insurance Market Parity and Modernization Act, has also been reintroduced. NAMB has been working with Congress on these bills and is looking forward to the passage of them so affordable flood insurance can be provided to everyone in the U.S.

 

The new regulations provide for an exemption to mandatory flood insurance when a structure is detached from a primary residential structure and does not serve as a residence. The rule clarifies that a structure is “detached” from the primary residential structure if it is not joined by any structural connection to that structure; and “serve as a residence” is based upon the

institution’s good faith determination that the structure is intended for use or actually used as a residence, which generally includes sleeping, bathroom, or kitchen facilities. Further, it defines “a structure that is part of a residential property” is a structure used primarily for personal, family, or household purposes, and not used primarily for agricultural, commercial, industrial, or other business purposes.

 

M&T Bank noted its $100 penalty to the Funding Fee for loans that are not uploaded to MEME has been removed.  With the exception of SONYMA Plus, the Funding Fees are now as follows:

Conventional loans $415 and Government loans $225. For the SONYMA products, the following applies: FHA Plus $225 and Conventional Plus $350. In addition, any references to Flood Certification Transfers are being removed from both the Daily Rate Sheet and the Seller Guide.  The $6 fee no longer applies.

 

What do I know about jumbo loans? Apparently the market is fine – although brokers continue to lament the reduced number of wholesalers offering the product. But frankly, most jumbo borrowers think of the local bank first.

 

Zillow recently published an analysis on how differing state regulation impacts borrowing costs and have released a follow up report that estimate state-level borrower protection laws have minimal impact on the APR. Zillow found that a borrower with a FICO score between 640 and 719 could expect to receive quotes with an APR 27 basis points lower than a borrower with a credit score below 640. With a credit score in the range of 720 to 850 a borrower could expect to receive quotes with an APR an additional 65 basis points lower than a “good” borrower. The down payment amount also affects the APR. For example, a borrower putting down 10 percent can expect to be quoted an APR 20 basis points higher than a borrower putting down 20 percent. For those putting down 5 percent, the APR is on average, 46 basis points higher. Borrowers seeking financing for a jumbo loan could also expect to receive quotes with an APR 60 basis points higher than a conforming loan. Zillow’s report suggests that having good credit results in more quotes and lower borrowing costs and that differing state-level borrower protection laws have more of an impact on the ability to get a mortgage rather than the cost of the mortgage.

 

Effective Wednesday July 13 Kinecta Federal Credit Union increased its admin fee for non-California non-Jumbo first lien products (Agency and Government loans) from $695 to $745 for all new loan applications.

 

Mountain West Financial announced the addition of a NEW Jumbo program to its product offerings, effective July 10th.

 

Wholesale Non-Prime Lending is available via Citadel Servicing Corporation. Citadel is featuring Jumbo loans up to $2,000,000.

 

Let’s catch up with some recent changes in the VA channel.

 

LDWholesale has updated the following: anti-steering policy, VA IRRRL matrix regarding credit qualifying, IRRRL checklist, VA residual income guidelines – even as far back as its March 27 announcement. Updates include changes to VA appraisal process and using REALEC to order 4506 transcripts.

 

Wells Fargo Funding has updated its overlays regarding Payoff of Revolving Debt on Conventional Conforming Automated Underwritten Loans; Refinancing Loans Seasoned Less than One Year on Conventional Conforming Automated Underwritten Loans and Overlay Removal and Policy Update regarding Discount Point Fee Disclosure Requirement. Also updated, Policy expansions regarding High Balance VA Loan Program Requirements; Payoff of Revolving Debt on Conventional Conforming Manually Underwritten Loans, and no Usable Credit Score on Conventional Conforming Manually Underwritten Loan.

 

Speaking of Wells, it has removed its purchase restriction on Guaranteed Rural Housing (GRH) Loans secured by properties with individual water purification systems on loans purchased on and after July 20, 2015.

 

Sun West has updated its underwriting guidelines for VA IRRLs effective for loans submitted starting back in late April. Sun West will not accept loans with recoupment periods exceeding 120 months. Loan submission packages must include a Uniform Residential Loan Application (Form 1003) with at least two years of employment details and a tri-merged credit report. Additional conditions and/or documentation may be required based on the complexity of the loan package. Also noteworthy, Automated Valuation Model (AVM) requirement on VA IRRRLs with qualifying credit score equal to or greater than 580 has been eliminated for locks / commitments made on or after September 16, 2014.

 

Sun West will not accept loans with recoupment periods exceeding 120 months. Loan submission packages must include a Uniform Residential Loan Application (Form 1003) with at least two years of employment details and a tri-merged credit report. Additional conditions and/or documentation may be required based on the complexity of the loan package. For more information click the link for Sun West Underwriting Guidelines for VA IRRLs.

 

PennyMac Correspondent Group has posted a new announcement titled PennyMac changes to VA IRRL maximum LTV and valuation.

 

Mountain West Financial posted Multiple UW Guideline Additions and Changes, including VA changes, in its April bulletin.

 

Turning to the economy and markets, we had some negative housing news Friday, but the focus continues to be on existing home sales. They continued to climb in June, going up 9.8% to a 1.2 million unit pace. Inflation readings show that prices have begun to firm (the producer price index (PPI) rose 0.4 percent for the month with prices firming for both goods and services) and the industrial sector had a 0.3% rise in output. On the flip side, retail sales fell 0.3% showing a slowing in consumer spending in Q2. Taking all this into account, Wells Fargo found that GDP growth for Q2 will be around 1.9%, which is higher the Q1. The 10- year treasury for June was 2.16% on average, which is on target and better than the consensus estimate. Greece is still in the spotlight: the Eurozone approved a 7 Billion (euro) bridge loan for Greece to help keep the country afloat while the details of a third bailout program are coming out. The debt-to-GDP ratio of the Greek government is 180%. Overall, Wells Fargo is gratified by the results in the U.S. showing a positive outlook for the future.

 

This week’s calendar will be highlighted by two events. On Wednesday, the FOMC will release its post-meeting statement. Everyone seems sure that the FOMC will begin to hike short term rates in September, but the press will yammer on about this announcement. Where are rates going? A pretty safe bet is “up”, although here we sit with the 10-year yield still in the 2.20% range. Certainly short term rates are expected to move higher in September – and if they do, absolutely no one should be surprised. And on Thursday, the BEA will release the first estimate of Q2 GDP along with benchmark revisions. Look for a gain of around 2.8% annualized for Q2. Anything in the 2½% to 3% range, as generally expected, would presumably be sufficient to convince the Fed that Q1 was merely a hiccup.

 

I don’t know how we arrived at the last week of July so soon, but here we are – and it is chock-full of news (“choke-full” coming out of “to choke”). Today we’ve had Durable Goods (May was revised lower but they were +3.4% in June, higher than expected, +.8% ex-transportation), and tomorrow will be the series of S&P/Case-Shiller numbers for May and Consumer Confidence. Wednesday we can look forward to Pending Home Sales and the Federal Open Market Committee’s rate decision (no change is expected). On Thursday the 30th we’ll have the first look at Gross Domestic Product (GDP), Personal Consumption Expenditures (a favorite Fed measure of inflation), and Jobless Claims. We wrap up the week, and the month, with the Employment Cost Index, the Chicago Purchasing Manager’s Survey, and a series of University of Michigan numbers.

 

After the Durable Goods figures, and disastrous Chinese stock market performance, we find the 10-year at 2.23% after closing at 2.27% Friday, and agency MBS prices are better by .125.

 

 

These are from a book called Disorder in the American Courts, and are things people actually said in court, word for word, taken down and now published by court reporters that had the torment of staying calm while these exchanges were actually taking place. (Part 1 of 5.)

 

ATTORNEY: What was the first thing your husband said to you that morning?

WITNESS: He asked, “Where am I, Cathy?”

ATTORNEY: And why did that upset you?

WITNESS: My name is Susan!

 

ATTORNEY: What gear were you in at the moment of the impact?

WITNESS: Gucci sweats and Reeboks.

 

ATTORNEY: Are you sexually active?

WITNESS: No, I just lie there.

 

 

Rob

 

(Copyright 2015 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