Arch Buys CMG MI; New Program From New Penn; Do the Agencies Assess Early Pay Off Penalties?
to splashdata the top five list of worst passwords is: 1) 123456, 2)
Password, 3) 12345678, 4) QWERTY, and 5) abc123. Hey, how do they know?
Since password cracking software usually rely on root dictionary words
as source, the best passwords are usually in a foreign language, contain
alpha-numerical sequences, or contain symbols such as £ or ¥. And
according to Janrain.com in an article titled, "Oh Man, I Have to Create
Another One?" (which sums up how I feel periodically), "Most consumers
know that it's important to create a variety of strong, original
passwords to protect their identity online. The problem however lies in
trying to come up with different logins for a myriad of different
sites...and actually remember them all. Nearly 3 in 5 (58%) of adults have
5 or more unique online passwords, 30% have 10 or more passwords, and
almost one in 10 people (8%) has a whopping 21 or more individual
passwords. Recalling their complicated passwords when needed is where
people seem to run into trouble. Nearly 2 in 5 (37%) have to ask for
assistance on their user name or password for at least one website per
Huh? SunTrust began offering super jumbo loans at nearly 89% LTV again? Well, I am sure there are extenuating circumstances.
I am in Las Vegas speaking to, and meeting with, a lender for their
annual sales conference. So this is probably the wrong time, since I
won't be looking at e-mails often, to "take a swipe at the hornet's
nest" on this subject, but here goes... Capital Markets love to talk to LOs about early payoff penalties.
One must wonder, in this environment, whether rates have really dropped
enough versus last autumn to call this into question, especially given
loan level price hits, the cost of appraisals and processing, and the
time required to complete a loan. Regardless... Do the LOs think that
investors don't charge them? That can't be it, because they sure do.
Maybe that the Capital Markets group uses the penalty to make money? No,
that can't be it either.
I bought a car that completely broke after 3 months, I'd want my money
back from whoever sold it to me, right? If I pay $103,000 for a $100,000
bond, and it pays off in two months and I receive a check for $100,000,
I just lost $3,000. Are LOs saying that I should know that risk, and
only have paid $100,000 for the bond? That's fine - but in mortgage
lending, do all the LOs want their price capped at 100 (par)? As an
investor, I am not going to pay an extra two points to earn .250% for a
couple months. And QM loans forbid prepayment penalties of any type. Ask
any correspondent lender, and they will tell you in certain rate
environments, the number of loans paying off within 30 days after their
EPO period ends spikes dramatically.
received plenty of stories from LOs who had loans pay off a few days
early, or were financed elsewhere, and were assessed the penalty, or
An LO wrote, "I read with interest your piece regarding EPOs and I
think that you missed the point. I think any of us LOs understand that
if we refinance a loan prior to the six-month deadline, we would incur a
penalty. The problem with the current EPO arrangement is that there are
a multitude of events outside our control which can trigger the
penalty. I personally had two this year, both from clients who had job
transfers out of town that were not on the horizon when we refinanced
their loans. The penalties on these loans were over $10,000 just to me,
and additional funds to my company. I have heard, but not experienced
personally, of an EPO being triggered when a client was solicited by
their new servicer. This is another case where the broker should not be
held accountable for the payoff. I believe the EPO contracts should have
exceptions for cases like this. The word 'Investment' implies that
there are risks to the proposition, and one of the risks in lending is
that the borrower's life could change in six months, and the loan could
pay off. As a loan officer, I can't control that, and I should not bear
the risk of the 'investment.'"
I received this note from the SVP of Investor Management at a major correspondent lender. "In regards to GSE EPOs, both charge.
See below for the appropriate section from their Seller / Servicer
guides accessible to the public on the internet. GSEs is only 120 days,
however it is from day of acquisition from the lender thus why a lender
would stretch out to their customers to 180 days so that it allows the
lender 60 days to deliver to the GSEs." "Freddie Mac 8.13: Recapture of premiums and reimbursement of buyup proceeds (07/23/12) For
any Mortgage that is paid off (whether because of a refinance, a prepay
or any other reason) within 120 days of the Freddie Mac Funding Date or
Settlement Date, Freddie Mac may at its sole discretion require the
Seller/Servicer to reimburse Freddie Mac for: With respect to a Mortgage
delivery through the Cash program, any premium paid for the Mortgage
calculated as the amount by which the purchase price exceeded the par
price, multiplied by the outstanding unpaid principal balance (UPB) of
the particular Mortgage on the Funding Date. With respect to a Mortgage
delivery through the Guarantor or MultiLender Swap program, any premium
(expressed as a percentage) that was or would have been applicable to
the PC Pool comprising the particular Mortgage, based on market
conditions existing on the Settlement Date of such Mortgage as
determined by Freddie Mac, multiplied by the outstanding UPB of the
particular Mortgage on the date of the pay off. Any buyup proceeds paid
by Freddie Mac to the Seller in connection with the delivery of a
Mortgage through the Guarantor or MultiLender Swap program, and/or any
loss, damage or expense, including court costs and reasonable attorney
fees, as incurred by Freddie Mac in connection with its purchase,
ownership and/or resale to the Seller of its participation interest in
the Mortgage. The amount of any such premiums and/or buyup proceeds will
appear on the Seller account activity statement described in Section
17.2(e) and will be drafted from the Seller's Automated Clearing House
Account (ACH) account in accordance with Section 17.2(g)."
Fannie Mae has a similar clause. "Fannie Mae Pricing Recapture. With
respect to any mortgage loan that pays off within 120 days from the
whole loan purchase date or the MBS issue date, Fannie Mae in its sole
discretion may require reimbursement by the lender for any premium paid
in connection with the purchase of the mortgage loan. For a whole loan,
the premium is the amount that the purchase price exceeded the par price
(100% of the face value) multiplied by the unpaid principal balance of
the mortgage loan at the time of purchase. In the case of a mortgage
delivered for MBS, the premium is the percentage amount above a par
price that would have been applicable to the related MBS on the actual
settlement date multiplied by the unpaid principal balance of the
mortgage loan on the issue date. For mortgage loans repurchased by a
lender, Fannie Mae in its sole discretion may require reimbursement by
the lender for any premium paid in connection with the purchase of the
related repurchased mortgage loan without regard to the 120-day
limitation. Note: Fannie Mae may require this reimbursement on a mortgage loan in an MBS regardless of the MBS investor." More on the EPO topic tomorrow!
Let's play catch up with some recent company news.
Hamilton, Bermuda, Arch Capital Group Ltd. announced that its
U.S.-based subsidiaries (Arch U.S. MI) have completed the acquisition of
CMG Mortgage Insurance Company (CMG MI) and the mortgage insurance
operating platform of PMI Mortgage Insurance Co. (PMI). As part of the
transaction, CMG MI, which will be renamed "Arch Mortgage Insurance
Company," has obtained approval as an eligible mortgage insurer from
Fannie Mae and Freddie Mac, subject to maintaining certain ongoing
requirements. The completion of the transaction enables Arch U.S. MI to
enter the U.S. mortgage insurance marketplace immediately and allows the
Company to serve all lenders nationwide, including CMG MI's existing
credit union customers. The acquisition provides Arch U.S. MI with
mortgage insurance licenses across the United States and a comprehensive
mortgage insurance operating platform.
Some LOs are very interested in non-warrantable condominium financing. There are options available.
Compliance is the name of the game, and here is yet another resource for folks: A compliance library from the privately held Lenders Compliance Group.
New Penn Financial launched its New FHA and VA Programs for mini-correspondent and correspondent partners. National
lender New Penn Financial LLC announced it has expanded its guidelines
to allow Mini Correspondent and Correspondent partners to accelerate
their government loan business. (New Penn already offers these programs
in their Wholesale Division, both standard and streamline, so for the
first time they are now accepting FHA and VA to meet the needs of their
third-party-originator partners, no matter how they choose to do
business.) Additionally, New Penn offers Agency and Jumbo portfolio
products which expand their client's capabilities. Mortgage bankers interested in becoming a correspondent with New Penn Financial can visit this page; those interested in becoming a Mini-Correspondent with New Penn Financial can visit this page.
did rates improve so much yesterday? For lack of a better reason,
analysts attributed the move to a weak ISM (Institute of Supply
Managers) number - normally a second, if not third tier economic number
in terms of moving the entire Treasury market. But traders reported
buying from banks and hedge funds, and we had the usual Fed activity
buying more than originators produced. Today in the U.S. we only have
10AM's December Factor Orders, which are expected lower from the prior
+1.8% increase. Things were relatively quiet overnight, and the
10-yr. (which closed at a yield of 2.58%) is opening around 2.61%.
Agency MBS prices are a smidge (technical term) lower/worse in price.
(Read More: Bond Markets Much Stronger after Manufacturing Data)