Sep. 16: Retail opportunity, rental history product; trends in credit scores, non-QM, credit scoring, and subprime

You can now review every federal agency (even the CFPB) on Yelp. There is an agreement in place that allows agencies to claim pages and respond to reviewers. Thanks to a new agreement between the federal government and, anyone can now rate and post a review of any federal agency on the consumer review-driven website and app, and maybe even get a response too.


In Southern California a South Orange county lender specializing in purchase money business is looking for an experienced service orientated processor. The right candidate should enjoy the communication part of processing and have good organizational skills. “We have a very positive service based corporate culture and we are expanding with a new office in San Diego to go along with our Costa Mesa and Corporate office in Aliso Viejo. We currently process and close Agency, Non-Agency and Government loans and we are looking to expand into non-QM in 2016.” Interested parties should contact me at


And for new products, “Boost your client’s credit profile by adding their positive rental payment history as a traditional credit report tradeline! Advantage Credit, Inc. a leading provider of credit reporting and client retention tools is offering Rapid Rent Reporting, a unique product which allows the reporting of a consumer’s rental payment history as a traditional credit report tradeline to the credit bureaus within five business days. Desktop underwriting systems will have access to the data which displays capacity and capability to repay large debts. Rapid Rent Reporting is an invaluable tool for those with a thin credit file by accurately reporting their rental history up to 24 months. It is the industry’s only solution for adding rental payment history to a consumer credit report. For more information contact”


The Collingwood Group wants to know how the mortgage business is going and is conducting a short survey (9 questions) to find out how regulation is affecting the mortgage business, how the industry feels about internet-based mortgage lenders and your company’s priorities over the next year. This survey offers a unique opportunity to have your voice heard by the decision makers in Washington. As always, participants will have a “first look” at the report before it is made available to the public.


Every underwriter knows the 5 C’s. Right? Or is it the 3 C’s? Regardless, one of them, of course, is “credit.” Let’s see what is going on out there with regard to credit.


Patrick Reemts, VP of Credit Risk Solutions at ID Analytics, wrote to me saying, “There is a misconception that millennials have poor credit or do not apply for credit. However, according to ID Analytics’ study, Millennials: High Risk or Untapped Opportunity, millennials do apply but are denied at much higher rates compared to previous generations. In fact, our study shows that millennials outperform other demographics within the same credit score band and are unfairly turned down due to traditional scoring methods (i.e., credit card, mortgage, and auto lending records). Given millennials simply do not have a traditional credit history – in part due to the recent recession and tightening of lending policies (Credit CARD Act of 2009), this demographic has felt the impacts of coming up “credit invisible” with traditional credit scoring. This is why alternative credit data is so critical to both lenders and millennials moving forward. By leveraging alternative credit data (i.e., wireless, banking, peer-to-peer lending, checking and savings, and the sub-prime markets), it allows for a precise and unique view into a consumer’s actual credit worthiness.”


SunWest posted the 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.


Freedom Mortgage posted a helpful tip regarding FHA HUD new loan requirements. After a year-long effort, the new HUD Handbook 4000.1 will become effective for case numbers assigned on or after Monday, September 14th. The new handbook will combine mortgagee letters and the existing 4155.1 handbook, in addition to clarifying information and changing certain credit guidelines. To help highlight a few topics that are impacted by the new handbook, Freedom Mortgage is offering a New FHA HUD Matrix comparing the retiring handbook to the new 4000.1.


Effective for registrations on or after 09.14.15, NYCB is reducing the minimum credit score requirement to 620 with AU approval for all Conforming Fixed, Conforming Standard ARM (including High Balance), FHA and MyCommunityMortgage loans.


NewLeaf’s Bank Statement program guidelines have been enhanced to allow rate and term and cash-out refinance transactions. Also, investment properties are now an eligible occupancy type on purchase transactions only with 70% /70% LTV/CLTV up to $1,000,000 with 700 credit score.


FCMKC (First Community) guidelines were updated effective as of August 31st: Fannie Mae High Balance and Freddie Mac Super Conforming minimum credit score has been reduced to 620. On Conventional, VA, USDA and FHA loans; borrowers Not Yet Divorced/Divorce Not Final may purchase a primary residence prior to finalizing their divorce provided specific documentation is provided. Documentation is determined by state divorce proceedings. See full guides for additional details.


Angel Oak has high LTV/low FICO score product offerings. Click the link to learn more about Angel Oak.


Excelerate Capital is an Alt-A, Super Jumbo lender. (You don’t need a login to view rates and guidelines on Excelerate Capital’s website.) It’s Alt-A Diamond series product will take a credit score as low at 580, and provides loan options borrower’s 1 day out of Bankruptcy or Foreclosure.


Move forward with a New Breed of AltQM. Impac Mortgage highlights for its AltQM products include Max cash out $1,500,000, Credit scores as low as 680, Loan amounts up to $3 million, Minimum loan amount $100,000 and Multiple Options (5/1, 7/1, 10/1 ARM and 15 & NEW! 30 Year Fixed Available).


Non-QM 2nd mortgages are now available through Citadel Servicing. Borrowers can qualify with 1 day seasoning from Short Sale, 1 year seasoning from Foreclosure or BK, Up to 80% CLTV, up to $1million combined loan amount, loan amounts up to $350,000 and Bank Statements used for income self- employed.


In Nationstar’s Focus Flash for the month, it discusses the most Common Suspense Deficiencies (commonly known as stips).  These are potential errors that are noted and conditioned by Nationstar Mortgage during the pre-purchase review process, and they can affect the speed/timing of loan purchase. Click here to download the complete Focus Flash containing the more common errors, and tips to prevent them.


A new survey conducted by TransUnion indicated that homebuyers may not be as prepared to purchase a home as they thought. (Is this a shock?) The survey revealed that those looking to buy a home within the next 12 to 18 months are not cognizant of the actions that could help improve their credit score and the majority of respondents did not understand how their credit score affects their ability to obtain home financing. The survey found that almost 75 percent of potential home buyers believe it’s important to check the accuracy of their credit report but only 45 percent understand that their score quantifies debt, risk of not repaying back a loan of the financial resources to pay back loans. One in three believed that increasing their income (33 percent) or closing old accounts (28 percent) before applying for a mortgage could improve their credit score. Half of respondents correctly identified what a credit score affects and 22 percent correctly identified that they should check their score during the 3 months leading up to a mortgage application. To help consumers better understand how their credit score affects their ability to obtain a mortgage and protect against identity theft, TransUnion has created a credit monitoring tool.


And earlier this year Equifax has published its National Consumer Credit Trends Report exemplifying that mortgage origination growth has boomed this year. Total mortgage origination balances reached $466 billion in the first quarter which is a 74.4 percent increase from the same time last year. First mortgages led the growth, jumping 79.9 percent from the first quarter of 2014 to $430 billion and originations for HELOCs grew 30 percent to $30.9 billion. The amount of first mortgages that were originated within the first three months of the year was 1.78 million; a 54.9 percent increase over the same period a year earlier and the average loan amount for a first mortgage originated to a borrower with a subprime credit score in March 2015 was $152,260 up 9.9 percent from last March. To read the full article, click here.


For a short period I broke from my capital markets background and ran a subprime company, and am not afraid to admit it. “Subprime” became a dirty word but is not what it was in the old days, nor is it to be confused with non-QM. Tom Hutchens, a senior vice president at Angel Oak Mortgage Solutions, put out, “Is this nonprime? Subprime? Absolutely. Not due to credit score, but looking at credit history, they all have a blemish.


Traditional subprime involved high debt-to-income ratios, high loan-to-value ratios and low FICO scores, but the current batch of this type of mortgages have lower debt-to-income ratios, lower LTVs, and credit scores in the high 600’s. Total borrower fees may exceed 3%, which is the primary reason they are non-QM. Although we’re seeing lenders creep into various gray areas, as best I can tell borrowers comply with ability-to-repay guidelines.


Where should rates be for this product? I’d be tempted to say, “Whatever the market will bear.” There hasn’t been any active securitization of new subprime originations in several years, and without knowing what an investor thinks a loan is worth, it is difficult to put out a rate to borrowers. How investors handle the risk of defaults and the protections that specify their rights is critical, and most, if not all, of these loans are heading into nonbank-portfolios. So the comparison between these loans and jumbos are inevitable – they are non-agency loans, and jumbo mortgages to highly qualified borrowers have dominated the small, slowly recovering securitization market in recent years.


Investors are still very wary of rating agency ratings. Most of them are paid by the companies originating the loans and issuing the securities. The rating agencies are squarely blamed for too easily awarding top grades to bad deals leading up to the crisis. Stay tuned as this is slowly changing led by firms like Kroll.


Turning to interest rates, a third of the e-mails I received yesterday were investor rate changes for the worse. But remember that we’re smack dab in the middle of the rate range we’ve been in for the last 3 months (2.50-2.00% on the 10-year), and rates and prices are about where they were in mid-July. It isn’t blamed on China although news broke that the China Securities Regulatory Commission has found more than 3,000 accounts involved in illegal stock trading as part of a crackdown on market misconduct. Violations include use of platforms that circumvent margin-trading limits and failure to register accounts in users’ names.


What happened? Fixed income traders called it a “curve-steepening trade” on the back of a rallying stock market and core retail sales for August that showed continued growth. The data was not all positive, as headline retail sales, retail sales excluding automobiles, the Empire Manufacturing Index, and industrial production all missed estimates. But it pretty easy to attribute the move to “people selling instead of buying” and evening up positions ahead of the Fed news. But really…. Why didn’t this happen last week, or Monday? I guess China and Europe has quieted down to the point where investors and traders are actually looking at the economy here in the United States. And you know what? It isn’t doing too badly.


For data today we have the MBA Mortgage Application Index from last week (-7%, with purchase apps -4% and refis -9%), the August CPI and Core CPI (08:30 EDT), and the September NAHB Housing Market Index (10:00 EDT). On Tuesday we closed the 10-year at 2.28% (middle of the range for the last three months) and in the early, pre-CPI moments, we’re at 2.29% with agency MBS prices slightly worse.



(This week I am fortunate to be accompanying more than 100 folks from Utah-based Academy Mortgage on their public work project in the village of Amaru, Peru. Academy’s staff are helping villagers build an irrigation system and a production center where the villagers will make their local handicrafts; guiding the village school children with craft projects; bringing a doctor and nurse to provide much-needed healthcare services; and helping to paint a local church. I am sure the villagers are unconcerned about TRID, enforcement actions, or the price of a Fannie 3.50% security in October. I will do my best to respond to e-mails, but please excuse any delays in responding this week, and any potential delays in the daily commentary itself.)


Life in an office is sometimes trying, sometimes humorous – as demonstrated in this short well-known commercial worth another look.





(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