July 7: Mortgage jobs; financing options increase; mortgage banker M&A; question on QM rental income underwriting

What is the job market like? I am still receiving comments like this: “My office has had a ton of LOs leave. Only two were still producing, the other dozen were on the verge of being fired for lack of production. They were approaching 4-6 months negative on their drawers, so an offer from a lesser competitor with a 3-month sign-on bonus was a no brainier for them. In one move they went from being -$8 to -$12k in the hole to positive $5k a month. For those of us producing we always hear the grass is greener on the other side until we find out it really is not. It’s a tough environment as you know and some recruiters are thriving.”


But on the operations side, in Colorado Springs Peoples National Bank is looking for a Vice President, Director of Secondary Marketing & Capital Markets. The position is primarily responsible for prudently managing net income from the sale of mortgage loans, managing the risk associated with Secondary Marketing, including pipeline and interest rate risk management, pricing, hedging, trading and loan sales. Candidates should have experience in issuing agency MBS securities, and creating and managing investor relationships in order to improve sound and profitable operation of its Mortgage Department. Peoples offers a solid national bank platform & an aggressive mortgage sales operation that has been in the business more than 30 years, and did more than $1 billion in residential production in the past two years.  E-mail CFO Dean Christensen for confidential inquires or to submit resumes visit PeoplesCareers.


Southwest Funding is hiring branch managers and loan originators in multiple states. This opportunity is for branch managers and licensed mortgage originators in 13 states at new branch office locations. For example, the company just entered Colorado and is expanding. “Its mortgage banking branch platform offers the autonomy of running an office with a competitive compensation structure, an open door communication policy to talk with underwriters, purchase business expertise to close on time, and products including FHA, VA, USDA, Conforming, Jumbo and HECM loans as a direct lender.” Southwest Funding recently celebrated its 20th year in business. Contact Michael Taylor for more information. “Limited Time $25,000 Sign On Bonus Available!”


Congrats to the Wisconsin Mortgage Bankers Association’s newest board members: Betty Feierstein, Julio Rios, and Peter Wilder. (Executive Board Members, President Marcia Howe, Secretary/Treasurer Mike Kellman, and President-Elect John Inzeo took their oath of office as well.)


Here’s a survey for LOs – maybe it will have an impact on being able to contribute closing costs to borrowers. “Last year, the Government Affairs team at NAMB conducted a survey of mortgage professionals to determine the amount closing cost credits given back to consumers at closing. The data overwhelmingly showed that in 2012, mortgage brokerages gave millions of dollars to consumers to help cover closing costs. Our data helped the mortgage industry get some very positive press and turn some heads in DC. We are now conducting the same survey for 2013. Please fill out the short 5 question survey and help NAMB help you.


Non-bank servicers are garnering their share of press in the last several months, with the conversation as of late focused on government regulators telling them how much capital to have. Some, like NationStar, Freedom, Quicken or Stearns, have well-known production divisions. Others, like Ocwen or Walter Investment, not so much. Walter Investment Management announced its initial Walter Capital transaction. WAC announced that it has completed its initial funding of Walter Capital Opportunity (WCO) and the first transfer of excess servicing spread. The acquisition by WCO was of 70% of the excess servicing spread relating to MSRs with a UPB of approximately $25 billion related to a Green Tree deal. The sale price was roughly $75 million. Analysts say that the transaction is likely to be seen as a positive for Walter and other non-bank servicers as this structure provides a way for Walter to grow its MSR book without increasing balance sheet leverage. The transaction announced today will also moderately reduce leverage. What will Walter do with the 75 million ducats? Stay tuned…


And for other ways to fund various mortgage operations, Home Loan Servicing Solutions (HLSS) announced entry into a repurchase agreement with Wells Fargo with a maximum aggregate purchase price of $290 million. The agreement will terminate the day after Christmas. This appears to be a loan funding facility, and the language of the agreement also makes it appear that it will be used to fund loans on a flow basis as opposed to funding delinquent loans repurchased out of Ginnie Mae pools. This suggests that this facility could be part of one of the company’s new initiatives.


Speaking of big bucks, here’s another settlement for you folks who follow the legal maneuvers out there. This time it is SunTrust.


Here’s a quick QM underwriting issue that seems to be causing some confusion out there. The question is, “What is required to prove rental income in order for a loan to be a Qualified Mortgage?” The CFPB is in charge of underwriting criteria now for QM loans, of course, and Appendix Q is under its jurisdiction. Look for the sections II. Non-Employment Related Consumer Income


4. Documentation Required to Verify Rental Income.

“Analysis of the following required documentation is necessary to verify all consumer rental income: a. IRS Form 1040 Schedule E; and b. Current leases/rental agreements.”


To my uneducated eye, it seems pretty clear that if a borrower has rental income, in order for the lender to make a QM loan they’d better have both the Schedule E and the lease agreements IF the borrower needs it to qualify. If you feel that the “and” should be changed to an “or”, or if you have other questions & comments, they should be addressed to the CFPB.


Lenders continue to strive for every basis point. It is a real challenge, given the mounting compliance and regulatory costs tacked on to every loan and in turn passed on to borrowers. Beware to any lender who tries to scrimp on compliance costs. Many companies are finding the uphill battle not worth the fight, and are looking for buyers or at least partners. Yet other companies are continuing to earn decent profits. So what are cash-rich companies doing with their hard-won dough? MutualBank announced that it has signed a definitive agreement to acquire Summit Mortgage, Inc., a mortgage banking company headquartered in Fort Wayne, Indiana (home of Major Frank Burns). The transaction has received all regulatory approvals and is expected to close in August 2014.


Phoenix’s CFS Mortgage Corporation announced that it has joined the Comstock Mortgage team.  Founded in 1989, Comstock is a Fannie Mae seller/servicer and direct lender. “The addition of the CFS management and production team will help Comstock expand its origination platform in the Arizona and Southern California Markets as part of its ongoing western US expansion strategy.”


Greystone, a national provider of multifamily and healthcare mortgage loans, announced it provided $8,994,500 in HUD financing for two multifamily affordable housing properties in the greater Houston, TX region: Lexington Square, an 80-unit Section 8 property in Angleton was refinanced with 30-year HUD 223(f) loan terms, and Countryside Village, a 182-unit Section 8 property in Humble was refinanced with 35-year HUD 223(f) loan terms.


Let’s see what lenders, agencies, and investors have been up to in recent weeks in order to gain a sense of the residential lending trends…


M&T Bank Correspondent has made several updates as of June 11th, to its Agency Underwriting Eligibility Standards. The new guide will be posted to the MEME and Empower Info Centers. Effective immediately, M&T Bank is discontinuing HARP Arm Products from its product offerings. Also, M&T’s referenced change regarding definition of large deposits increase to 50% of gross income in its bulletin 2014-06; this definition has not yet been announced by FHLMC.  The noted large deposit definition policy is currently under consideration by M&T and additional guidance will be provided in the near future.


New Penn Financial announced the launch of Conforming Fixed Rate Custom Loan Terms, customizing loan terms to your borrower(s) individual needs. On May 27, 2014, Fannie Mae published SEL-2014-06 which included updated policies as it pertains to Large Deposits and Other Assets. Effective immediately, New Penn Financial will be adapting FNMA’s revised policies. Also, moving forward, when a borrower is relying on the sales proceeds from another property to pay for the down payment or closing costs, the lender must simply obtain a copy of the final HUD-1 from the sale. It no longer needs to be executed as a source of funds per New Penn UW guidelines.


Mountain West Wholesale has provided detailed information regarding its policy on Termite Report Review and Clearance Policy. Contact your Account Representative for the specific guidelines.


Cole Taylor Mortgage Wholesale is enhancing its procedures for providing the Maryland Financing Agreement and Commitment to applicants to ensure compliance with Maryland state law applicable to all first lien mortgages secured by owner-occupied primary residence. Contact your Area Manager for the details on this enhanced procedure.


U.S. Bank Home Mortgage has eliminated the restrictions on first and second lien transactions in the states of Florida and Nevada. It has no remaining restricted markets. Product Guides are being updated for both first and second lien products.


Franklin American Correspondent has retracted the updated requirement for the New York prevailing interest rate commitment disclosure. The disclosure will not be required on all loans in the State of New York but will be required where applicable under state regulations. See the bulletin 2014-20 for specific requirement information.


Illinois Association of Mortgage Professionals new June 2014 video newsletter has been published. All its video newsletters will now be exclusively published on its website. View the news website:  IAMP News & Video Page. Additionally, IAMP is offering 100% FREE membership for all licensed or registered Mortgage Loan Originators. Click Here To Find Out More About FREE MLO 2014 Membership .


FHA‘s Policies on Arm’s Length Transactions and Compliance with State Laws: FHA is aware of concerns that the laws in certain states may conflict with its arm’s length transaction requirements for preforeclosure/short sales. FHA is in the process of issuing guidance to specifically address the intersection between its policies and applicable state laws on this requirement. Until such guidance is issued, mortgagees are reminded of their ability to seek guidance and assistance in complying with both FHA requirements and any applicable state laws from FHA’s National Servicing Center.


FHA has published two Mortgagee Letters on Home Equity Conversion Mortgages: “Limit on Insurability of Fixed Interest Rate Products Under the HECM Program” and

“Prohibition on Misleading or Deceptive Program Descriptions or Advertising and Prohibition on Restriction of Mortgagor’s Freedom of Choice”. To view these documents, both mortgagee letters are published on HUD.gov at: Mortgagee Letters


Citi Bank Correspondent has recently updated a plethora of information including, DU approved loans in reference to other non-employed income, hazard insurance effective date and reserve requirements on multiple properties. Underwriting guideline updates including: Secured Funds for Down Payment and Closing Costs, Definition of Full Monthly Payment Amount, and Income Derived from Marijuana Related Businesses.


Turning to the markets, think all the way back to Thursday…and remember that housing and jobs are the lynchpins of the economy…we had a very strong Non-farm Payroll number. Traders reported that soon after the number “things got off to a naturally choppy bias as price action was swift yet erratic after a robust NFP print rattled the markets a bit. 10yr support first established at 2.70% while MBS buyers came out with a quick burst on half billion in purchases. The going became less cumbersome up around 4s and 4.5s as Originators put on some extra pipeline coverage on mainly 30yr 3.5s and 4s, as upwards of $900 million was seen. These sales came as rates rose and locks supposedly were more likely executed on underlying mortgages.”


And now, in spite of yesterday seeming like Monday, today is Monday! Through the Fed’s website we already know that it plans on buying a maximum of $8.2 billion over five business days – no surprises there. For scheduled news there is zipola today, and not much tomorrow. Wednesday things pick up a little with the MBA apps numbers (bound to disappoint, even after being adjusted for the holiday) and the release of the Fed’s minutes from its June 17-18 FOMC meeting. Thursday is jobless claims – and that is about it for substance. The 10-yr closed Thursday with a yield of 2.65%.



Okay, it is the Monday after plenty of 4th of July BBQs, and the recycling bins are full of empty beer bottles. But before you send them off, check out this short, very entertaining video. (And don’t blame me if the tune is stuck in your head for the day.)





(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