"How much does it cost to buy sixty female pigs and forty male deer?  One hundred sows and bucks!" Money? I continue to be amazed at this stat: last year the 3.5 billion people that made up the bottom 50 percent of the world held the same amount of wealth as the richest 62 people in the world, down from 2010's 388 people. The top 1 percent of the world's population controls more wealth than the rest of the world, and the average wealth of each of the 72 million adults who are considered the wealthiest 1 percent was $1.7 million. The 6.48 billion that make up the bottom 90 percent have an average wealth of about $5,000. The gap between the haves and have-nots widens...let's ask Bernie Sanders if increased global inequality a stable system?

It appears that in mid-2016 PennyMac is going to throw its hat into the ring and compete with Stearns, United, Caliber, Flagstar, Quicken, etc., catering to brokers. Regulators love non-banks increasing their market share, don't they! The publicly traded nonbank - the fastest growing originator among the top 10 - announced the move along with a $68.9 million profit for the fourth quarter. During the company's 4Q earnings call, company CEO and founder Stan Kurland said he expected PennyMac will increase market share further this year (isn't everyone?) and that wholesale will play a role. The correspondent channel accounted for 91% percent of PennyMac's $11.1 billion in fourth quarter originations, with consumer-direct activity accounting for the rest. Unfortunately the production of last quarter was down almost 29% from the previous quarter. David Spector, PennyMac's president and COO, said the lower volume was primarily driven by a seasonally smaller origination market, higher interest rates and delays caused by the Consumer Financial Protection Bureau's TRID disclosure rule.

Channels and loan types are created, but are programs ever discontinued? You bet. Just this week we learned that...

Mountain West Financial spread the word that The National Homebuyer Fund, Inc. (NHF) Sapphire Down Payment Assistance Grant Programs will be suspended in Nevada. "All lock requests for the affected programs in Nevada must be submitted no later than 3PM PST on February 10. At this time, the suspension does not impact the NHF Sapphire FHA, VA & USDA loans in the state of California."

And the NHF Platinum is being suspended by US Bank.  This program offers a non-repayable grant of up to 5% (FHA/VA) or 3% (conventional) for eligible borrowers. The program is very popular as the down payment assistance was a grant rather than a loan like many DAP programs. "The NHF Platinum Down Payment Assistance Program with US Bank as servicer will be suspended as of February 29. All reservations for NHF Platinum must be locked in on the portal by February 29...We are working diligently during this transition period to restructure, enhance and expand the NHF Platinum Program which, in the past few years, thanks to our mortgage lending partners, has already helped over 16,000 families purchase a home and has provided down payment assistance gifts of more than $134 million."

With lots of people paying lots of rent in lots of places, down payment assistance programs are garnering a lot of interest. And so is shopping for loans that don't cost much. Unfortunately it is becoming more expensive to originate and service loans. And lenders are reacting - why would anyone think they're going to eat the increased costs?

U.S. Bank posted a reminder that its new fee structure is effective for all loans that are registered and or locked on or after Monday, February 8, 2016.

"Due to regulatory changes in our industry," Land Home Financial Services (LHFS) will be increasing the Admin fee by $50, for all states. The new Admin Fee will be effective with Forward Locks or the Loan Estimate (LE) dated on or after Tuesday February 16.

Effective March 1 all Conventional and FHA appraisal fees will be increased by $25 in California to ensure that Mortgage Works AMC continues to offer a more competitive turn time and service level. Please view Mountain West Financial revised fee sheet posted on its website for details.  Also, The Fannie Mae HomeReady Mortgage (HomeReady) is now available for loan reservation. Mountain West Financial (MWF) has implemented minimal overlays to the HomeReady program which are incorporated into the published Product Matrix found on the intranet.

Also, NYCB fees are changing. The NYCB Origination Fee (for Table Funding transactions) will be $905 effective for loans registered on or after 01.04.16. The increased NYCB Origination Fee expressed as an LLPA (fee buy-out) will be reflected on its rate sheet beginning 1/4/16.

Nationstar Mortgage updated its price adjusters effective with locks on and after January 4th per its recent announcement. To download a print version of this announcement, please click here.

I received this note about fees. "The new VA IRRL rule - issued last May 2014 - still not the final - requires a 36 month recoupment of all fees and charges to the evaluation so it's not just about the lower rate. You MUST show that the client earns back the cost of the refinance within that 36 month period. What we are asking is how most lenders are addressing this? The MBA sent a letter last June asking the VA to provide guidance on what is included in the 'charges and fees' as the Rule is ambiguous. To date according to Pete Mills the VA has yet to provide that guidance. Therefore we have been including ALL fees and charges collected. This includes prepaid escrows. Our sales guys claim 'everyone else' is excluding these from the calculation and therefore my guys say they are losing deals to other lenders b/c we are including something that no one else is. My question was/is: What are other lenders doing?"

How about jumbo & agency jumbo chatter and lender changes?

I received this note of frustration from a broker on the East Coast. "I just priced out an Agency Jumbo as a fixed and a 5-1 ARM. The fixed had 1.25 in LLPA the ARM was 2.54! This seems like a disconnect at F&F: the LLPA varying between fixed and ARMs is disparate. This guy has a mid-700 credit score and less than 70% LTV. There is no YSP to speak of on the ARMs so at the end the ARM cost almost the same as the fixed! Why?"

The last headline of note was in December. Recall that Angel Oak Capital Advisors ($6B+ in AUM) announced that they closed the biggest subprime securitization since the housing crisis: a $150.4 million in residential mortgages that fall outside of the government's QM safe harbor.

$17 Billion in non-agency securitizations in 2016? I receive many versions of the question "Hey Rob, when is the Jumbo/Alt market going to find legs?" The short answer is when legacy issues have been resolved, and demand outstrips supply. Helping this market is the Structured Finance Industry Group (SFIG), who late last year released the third version of its proposed standards for private label RMBS transactions. The document is intended to help re-start the private label market by providing standardized best practices for deals. For the uninitiated, SFIG represents around 300 firms, in all sectors of the securitization markets, including issuers, investors, financial intermediaries, law firms, accounting firms, technology firms, rating agencies, servicers and trustees. Goldman Sachs writes, "The report includes proposed representations and warranty frameworks, and a clarification of transaction parties' roles and functions. Standardizing deal terms will be a positive for the industry, but the headwinds for a return to RMBS securitization remain significant. In 2015, there has been $12B of prime non-agency RMBS issued, vs. $8B in 2014 year-to-date. We anticipate only a modest pickup of deal flow in 2016, with an expected $17B of securitizations."

Wells is expanding its policy for court-ordered debt on Non-Conforming Loans by limiting the late payment evaluation to 12 months, effective for loans purchased on or after February 15th. Any late payment in the last 12 months associated with the debt must be evaluated. Potential impacts to the capacity to repay (should the financial institution holding the note pursue repayment from the borrower) must be taken into account, as well as potential impacts to the borrower's credit profile if the account is significantly delinquent. In addition, Wells is updating its requirements for construction-to-permanent financing for Non-Conforming rate/term Loans to provide additional detail for acceptable use of loan proceeds and required documentation for loans purchased on or after February 15th.

Citadel Wholesale features non-prime Jumbo loan amounts up to $3,000,000. Programs and details are available at sales@citadelservicing. com.

CMG Financial spread the word about changes to its 6200 Series Jumbo program after 2/1. "Ineligible Borrowers: added Non-Occupant Co-Borrowers as an ineligible borrower. Non-occupant co-borrowers were not previously allowed; guidelines deferred to Fannie Mae which did not allow non-occupant co-borrowers with blended ratios. Fannie Mae recently updated the Fannie Mae Selling Guide to allow blended ratios with non-occupant co-borrowers therefore it is necessary to add as an ineligible borrower to the guidelines. There were other changes - read the bulletin for full details.

Aside from some intra-day chopping around in Thursday's bond markets, not much happened after the initial salvo of economic news. The 10-year note ended slightly higher and closed Thursday at 1.86% and most current coupon MBS prices were roughly unchanged.

As is standard for the first Friday of the month we've had the payroll numbers. January Non-Farm Payrolls were expected at +190k and came in weaker at +151k. The unemployment is expected to remain steady at 5% with average hourly earnings growing 0.2% m/m (2.1% y/y) but came in at 4.9% (lowest since early 2008) and +.5% respectively. We've also had International Trade for December which came in at $43.4 billion. In the early going the 10-year is hovering around 1.86% and agency MBS prices are roughly unchanged.

Jobs and Announcements 

In job news Nations Direct Mortgage is pleased to announce the promotion of Martin Warren to SVP of Wholesale and Correspondent Lending. Mr. Warren will lead the sales and fulfillment teams for the wholesale and correspondent channels at the Irvine, CA based company. "Martin has been instrumental in the company's success over the past eight plus years and we look forward to his leadership in this new role as we continue our nationwide expansion" said Dan Upton, CEO of the company. With over $3 Billion in originations in 2015, Thompson Reuters recently named Nations Direct Mortgage in the top 25 Wholesale FNMA and FHA issuers. It is an approved Fannie Mae, Freddie Mac and Ginnie Mae direct seller/servicer and is poised for robust growth in 2016. They are aggressively expanding nationwide and are heading east to Dallas & Chicago to better support its sales efforts. "We're looking for talented underwriters and account managers to join our family! And if you're an account executive whose production has plateaued due to market saturation, come talk to us! If unlimited upside appeals to you, please contact us at recruiting@myndm.com to learn more."

In Texas CLM Mortgage, a Houston-based mortgage banker is seeking experienced loan processors and underwriters in its Houston office and established loan officers in the Austin and Dallas markets. CLM Mortgage is a small company with excellent financial backing that is on track to double production in 2016. "We are looking for underwriters that have experience underwriting VA loans with their SAR, and loan processors who have experience working across all loan types. With a strong family culture and people that live our values, come see why CLM Mortgage and our parent company have been ranked as one of the Top Workplaces in Houston for the last 4 years in a row!" Contact VP Mike Klein for confidential inquiries.

Another foreign company has made inroads into the U.S. mortgage market. In this instance Computershare has purchased Florida's Capital Markets Cooperative. Last month this commentary noted that, "Australia's Computershare, which purchased Specialized Loan Servicing for $113.6 million about five years ago, announced that it signed an agreement to acquire Altavera Mortgage Services, a provider of independent, third-party mortgage origination services to residential mortgage lenders."

In other cooperative news The Mortgage Collaborative announced the addition of two new correspondent lenders to its preferred partner network: Plaza Home Loans and Wintrust Correspondent.