May 8: Mortgage jobs; F&F stress testing & Johnson-Crapo update; study on the impact of housing reform
All real estate is local. (Yes – that statement is original, and pithy.) For those of you about to give a presentation to your buyer, borrower, or local Realtor group, or just curious, here’s a study from a few weeks ago about value trends: http://www.trulia.com/trends/2014/04/where-homes-are-going-fastest-this-spring/. And don’t forget that Freddie Mac has its fancy, patent pending, market indicator: http://www.freddiemac.com/mimi/.
On the jobs side this morning, one Southern California Lender is rapidly growing and is looking for the right team to fuel its’ growth. Synergy One Lending, a mortgage lender based in San Diego, is searching for a Chief Operating Officer, VA Underwriter with SAR/LAPP/DE, and a Secondary Market specialist as they continue their expansion nationwide. It is aggressively recruiting established, well-run branches and qualified originators who will have the unique opportunity to earn equity and build long-term value. Please direct inquiries and resumes to Info@SynergyOneLending.com.
Three thousand miles away, Mortgage Financial is growing and searching for originators. “New England Loan Originators! – Do you want to love where you work again? Mortgage Financial has been a correspondent lender in New England for over 27 years, providing stability and a culture that is unique in today’s environment. A sense of urgency flows throughout the Mortgage Financial (www.mfsinc.com) that ensures dates are met and clients are always the number one priority. We do this while ensuring that regardless of the circumstances, the loan officer always looks like the hero. Our size is our strength. We are large enough to command the best pricing and investors available, but small enough to avoid the multiple levels of management that can sometimes delay important actions and/or decisions regarding your loan. Like most, our service levels are great today, but they will also be great tomorrow and beyond, because the process and technology have been designed to accommodate all market conditions. In addition, our Marketing solution is the best of breed, allowing you to maintain contact with all your borrowers and referral sources with minimal effort. The entire model was built around and for, successful Loan Officers.” If you are interested in a conversation, please contact Dan White at firstname.lastname@example.org.
These companies directly, or indirectly, are influenced by Freddie and Fannie the fate of which is determined by Congress (with hopefully some input from industry groups). After being delayed, it seems that the Senate Banking Committee will vote on the Crapo GSE reform bill next week. The measure is expected to pass out of the Committee but not the full Senate: http://www.reuters.com/article/2014/05/06/us-usa-housing-idUSBREA3N1T820140506.
Speaking of two of my favorite agencies, in late summer 2008 the Treasury Department initially pledged $200 billion of financial help for F&F in anticipation of future mortgage defaults, a pledge later doubled to $400 billion. Did they use all of it? Heck no: the companies actually received $188 billion of taxpayer aid, less than the $203 billion of dividends paid by Fannie and Freddie to the government since the 2008 bailout. After conducting stress testing, the FHFA said FNMA and FHLMC might need a bailout of up to $190B in the event of a severe economic downturn. (I don’t know why no one did a stress test on me in the event of an economic downtown, but I have told the dogs that the kibble ration may be cut back – they merely stared at me unwittingly.) A severe economic downturn would result in Fannie Mae and Freddie Mac requiring rescues ranging from $84 billion to $190 billion by the end of 2015, according to the worst-case, “stress-test” scenario under Federal Reserve stress-test assumptions, according to the Federal Housing Finance Agency. The FHFA used different economic models in its own stress tests, which showed that the mortgage giants wouldn’t need additional taxpayer money.
I’m not saying its easy being a member of the U.S. Congress, however, having the ability to delay work by commissioning “impact studies” is quite the perk. Try this next time your spouse asks you when you’re going to clean up the garage…”ah, ya, I’m just waiting on that impact study I ordered, and then I’ll get right on it.” As the Senate considers the Johnson-Crapo bill, policymakers are asking about the proposal’s potential impact on mortgage markets. In particular, some have expressed concern that the bill may exacerbate currently tight credit conditions for certain underserved or highly leveraged populations. This brings us to Zillow; right or wrong, depending on how you feel about the firm (as I know there are a lot of differing opinions) they have access to data. The Zillow Economics Research piece “Assessing the Impact of Housing Finance Reform (http://www.zillow.com/research/impact-of-housing-finance-reform-6733/), uses data from the Zillow Mortgage Marketplace (ZMM), an online platform that connects thousands of mortgage borrowers and lenders each day, as well as HMDA’s database and the U.S. Census Bureau’s American Community Survey (ACS) to profile populations that are currently underserved or face high levels of debt.
Speaking of research, Garth Graham at STRATMOR recently put out a white paper about ways to measure borrower satisfaction, and the approach that they take with their MortgageSAT product. It’s a serious piece of work, and much less jokes than his normal writing has, and certainly worth a read if you are considering ways to measure borrower’s satisfaction: CustomerRelationshipMeasurement.
Let’s take a look at some recent random state-level mortgage news.
Hawaii and Iowa have recently adopted provisions to help establish the Uniform Power of Attorney Act in Senate Bill 2229, and Senate File 2168, respectively. The new chapter is effective immediately, and makes the state the 15th in the union to pass such legislation. As many know, the Uniform Power of Attorney Act provides ways for people to deal with their property by providing a power of attorney in case of future incapacity. While chiefly a set of default rules, the act also contains safeguards for the protection of an incapacitated principal. Washington, Mississippi, Pennsylvania, and Connecticut all have introduced such bills this year.
Maryland has amended provisions regarding residential real property foreclosure with House Bill 595: http://mgaleg.maryland.gov/2014RS/bills/hb/hb0595f.pdf. The bill, which amends owner occupied foreclosure sales, states, “if a certified community development financial institution makes an offer to a secured party to purchase owner-occupied residential property, no person may require as a condition of the sale any limitation on ownership or occupancy of the property by the immediately preceding mortgagor. Any affidavit, statement, or agreement is unenforceable against any person named in such document if its purpose is to avoid a sale or transfer of property to a certified community development financial institution.
Kentucky has amended KRS 426.530 (http://www.lrc.ky.gov/statutes/statute.aspx?id=18489), which lays out the right of redemption of real property which has been sold in pursuance of a judgment, or order of a court. The revisions are effective on July 14, 2014, or 90 days after legislative adjournment.
Let’s continue catching up with some investor, lender, and agency updates to gain a sense of trends out there. As always, it is best to read the full bulletin from the issuer. So many lenders, so many guidelines…
First, a correction to a note yesterday regarding the Right Step Program. Dave B. writes, “I want to correct your general assessment of the Right Step Program from TD Bank (not TD Ameritrade); it is below market rates; currently available at less than 3.75% @ par, it does have a hard cap on the front ratio of 33% (41% on DTI), 660 FICO and it does require the consumer to contribute 3% into the transaction. Income caps as mentioned are waived if the property is in a LMICT area (low to moderate income census tract). We also will do a 90% 2-4 unit property with No M.I.. The Right Step Program is offered by TD Bank, TD Ameritrade is our ‘brokerage arm’ for investment products.” There is no PMI for up to a 97% LTV and the credit standards are “fairly reasonable” as well: 33/41 ratios and a 660 credit score minimum.
Kinecta Federal Credit Union alerted us that, “The Wholesale Rate Lock Policy is updated and reformatted. For more information, click on the link below, then click on Wholesale Lending Briefs/Announcements > Loan Programs: https://www.kinecta.org/Broker/wholesale_lending_manual.aspx.
Carrington Mortgage Services has announced the appointment of Industry Veteran Chad Ruggles as National Sales Director. Under Ruggles’ direction, Carrington’s retail sales operation will focus on substantially growing its geographic footprint, as well as providing a wide range of product offerings and faster turn times to effectively meet market demands – particularly with respect to serving the Nation’s sizeable population of “underserved” borrowers (typically those in the sub-640 FICO score range).
As a reminder, the FHA has made policy change for prospective Home Equity Conversion Mortgages related to due and payable status published in Mortgagee letter 2014-7 amends the Home Equity Conversion Mortgage (HECM) program policy to provide for a deferral of the due and payable status at the death of the last surviving mortgagor for an eligible Non-Borrowing Spouse. The policy is prospective only and changes will be effective only for case numbers assigned on or after August 4, 2014. FHA hosted an overview briefing conference call for HECM-approved originators, servicers, counselors and other industry participants to review the operational information last week.
The Collingwood Group reports, “At a recent VA Lenders’ Conference in Houston, VA announced that they will soon begin looking more closely at whether lenders are complying with the program’s requirement for a Quality Control Plan. All lenders who have been granted authority to process loans automatically (virtually all lenders) are required to maintain a plan and execute it in the course of making VA guaranteed loans. Lenders were advised to become familiar with VA’s quality control plan requirements and be prepared for VA to scrutinize this process in future Lender Monitoring Unit Audits. This initiative is consistent with VA auditing an increasing percentage of loans to refine its targeted sampling methodology.”
WesLend is now offering , a direct VA program which offers features and options that the standard VA program will not accommodate such as 600 minimum FICO, 620 minimum for cash out refinances with LTVs > 90%, and 640 Minimum FICO for IRRLS using AVM in lieu of appraisal for 1 unit properties. This program will not be available in Broker Connection, WesLend’s pricing engine, until the second week of May. Please refer to the published guidelines for complete program details. Enhancements have been made to their Direct ARMs to include high balance loan amounts, for complete information and guidelines, visit their website.
PHH revised the list of fees pertinent to finance charges in the APR calculation, effective immediately. Refer to the PHH Sales Manual section 2.1.8 for complete information. Conventional underwriting guidelines have also been updated including the following topics: trusts, contact/agreement of sale, reserve requirements as applicable to new home purchase and conversion of their former home to an investment property or second home, co-signed loans, Social Security, Supplemental Security Income and Other Benefits history requirements, condo/PUD project reviews and Co-Ops.
Overall interest rates continue to be range-bound. Lots of people don’t mind the lack of volatility, but LOs notice that mortgage rates have been improving – yesterday agency MBS prices improved over .250 in price. (Whether or not that was passed onto rate sheets remains to be seen.) Yet the 10-yr T-note was virtually unchanged. We’re really seeing the supply & demand dynamics play out with plenty of demand for MBS, and supply dropping. Deutsche Bank MBS analysts noted that as a result of the weak production, the Fed may be able to exit QE without putting too much pressure on MBS spreads (prices relative to Treasury securities).
Fed Chair Yellen, in her written testimony today before the Joint Economic Committee, suggested the longer term outlook may not be as worrisome as has been feared despite the Fed’s tapering. Although she didn’t say anything surprising, she noted that recent indicators pointed to a rebound in the economy from a weak first quarter that was adversely impacted by weather. Yellen did not give any clarity on what the Fed means by a “considerable time” when referring to how long rates will remain near zero after QE purchases end, or about when reinvestment of paydowns would stop and when the Fed’s portfolio would start to normalize.
Here we are on Thursday already. Besides a spate of government financial officials speaking, and a $16 billion 30-year bond auction, the only economic news is Jobless Claims, expected to drop slightly. For a gauge of rates, the 10-year T-note closed Wednesday at 2.59% and is sitting at 2.62%, and agency MBS are off slightly.
Groups of Americans were traveling by tour bus through Switzerland.
As they stopped at a cheese farm, a young guide led them through the process of cheese making, explaining that goat’s milk was used. She showed the group a lovely hillside where many goats were grazing.
“These,” she explained, “Are the older goats put out to pasture when they no longer produce.”
She then asked, “What do you do in America with your old goats?”
A spry old gentleman answered, “They send us on bus tours!”
(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.)