Barclays Lay-Offs; Fifth Third Cuts Washington; Indiana Mortgage Company Purchased
who wouldn't want to have some steel-cut oatmeal with FHA Commissioner
Carol Galante? Ride a ski lift with HUD Secretary Donovan? Argue over a
boot warmer with the CFPB's Peter Carroll? Or talk shop over s'mores
with Seth Wheeler, a senior adviser at the National Economic Council?
Given the very limited number of folks allowed into the MBA's Mid-Winter
Conference, you can do all of that.
At the other end of the spectrum, Barclays
said it would axe up to 12,000 jobs this year - up to 9 percent of
employees could go, including 7,000 in Britain, where half of the
affected staff had already been notified. The cuts are not concentrated
in any single business area.
I just lost one of my sources of cash: Fifth Third
has joined a host of other large banks in announcing it will no longer
offer payday (deposit advance) short-term loans. In other banking news, Citibank
has agreed to pay $110 million to settle a lawsuit that it forced
thousands of homeowners to pay property insurance premiums through
force-placed hazard and flood insurance. And Morgan Stanley agreed
to pay $1.25 billion to the Federal Housing Finance Agency to resolve
claims that it sold shoddy mortgage securities to Freddie and Fannie.
Were they filled with loans made to people who lied about their incomes?
Or maybe mis-rated by the rating agencies? Those questions aside, the
securities were created in the heady days of 2005-2007 and totaled $11
Can an underwriter require a borrower to state where they have their hair cut? Maybe not (yet) but in England, sure.
"Rob, what do you hear about ARM production?
All of my LOs and doc drawers are scared to death of them in this QM
era." Tell them to buck up. (Yes, that's with a "b".) Last week's MBA
applications numbers showed adjustable rate mortgages were 7.5%, up from
2013's 5.8%. It is still well below recent era averages - since 1990
ARM share has been closer to 15%. In the secondary markets, jumbo ARMs
are doing pretty well - last week Goldman Sachs formed a $500 million
7/1 deal with pre-QM originations (read: lots of IO), and I believe that
about 90% of the loans were 90% jumbo ($800k average loan balance).
In other current events, "mortgage guy" (for lack of a better term) Marc Savitt rolled out his Congressional web page.
we're on politics, a few weeks ago the President gave the yearly State
of the Union Address, and if it wasn't for the fact it pre-empted reruns
of the Big Bang Theory, I would have missed it. As I sat there
wondering how much money had been spent on business suits in that room, I
heard the President fumble with the word, myRA, and
I knew it wouldn't be the last time my ears would hear it. The official
Treasury Department release over the weekend claims, "Only about
half of all workers have access to an employer-based retirement plan,
such as a 401(k). And left on their own, few workers save. It is
estimated that fewer than one out of 10 eligible workers actually
contribute to an IRA." I hate being left alone, by the way. While
the details are extremely vague, the basic starting points of the
program have been established, and they are: 'an investor can start with
an initial deposit of as little as $25, with subsequent contributions
as little as $5; if an employer chooses to participate, contributions
are made through automatic payroll deductions; there are no fees, 100%
of any contribution goes into the account and is invested in a Treasury
security; and finally, the myRA is not tied to any one employer, it can
be rolled into a Roth IRA, and in the event of a withdrawal (which can
happen at any time) the contributions are tax-free'.....now let's talk about yield.
to a different Washington, what, they didn't like Starbucks rainforest
policies? "Effective end of day Friday (midnight EST) February 7, 2014, Fifth Third Correspondent Lending is temporarily suspending loan registrations in the state of Washington.
All state of Washington transactions must be registered no later than
the end of day Friday February 7, 2014. State of Washington transactions
in the locked or registered pipeline prior to this deadline will be
eligible to be delivered for purchase. When Fifth Third is ready to
resume business in Washington, we will send another communication
re-opening our Washington registrations."
Keeping on with lender, investor, and vendor news...
a follow-up to our recent EPO discussions, a leading provider of client
retention tools is offering an interesting niche product to lenders
that provides an effective last line of defense against EPO penalties. Monitoring Advantage, a service of Advantage Credit, Inc.,
is a compliant, full service monitoring service that has the power to
greatly mitigate EPO cost and increase income for lenders and
originators. "A great complement to a lender's CRM system, Monitoring
Advantage can also be delivered outside of a CRM environment. The
service provides the most timely, actionable information for lenders to
ensure high client retention rates and a very compelling ROI." Contact Rebecca@monitoringadvantage.com to learn more.
Carrington Mortgage Services
announced its Wholesale Lending Division is offering a 15 day on-time
closing program. The program includes "get your loan ready for CTC in 15
days or your borrower gets a $500 closing cost credit", both FHA and
agency loans are eligible, along with purchase and refinances down to a
credit score of 580. "Early disclosures are available to move your loan
more quickly to closing and prequalification letters for your purchase
loan borrowers." Learn more here. (By the way, Carrington is expanding, and is hosting a job & career webinar on Wednesday the 12th.
remains committed to providing our correspondent partners with
pertinent information regarding the upcoming CFPB rule changes. In
support of our continuing efforts, please click here for an updated version
of our Frequently Asked Questions (FAQ's) document which provides
answers to questions received to date regarding PHH requirements for
CFPB regulations. This document, along with additional information on
this subject, is posted on our SOAR website. Please access SOAR and
select "CFPB Resources" under the "Hot Links" section for additional
Liberty Savings Bank
announced to brokers that it only charges the "early payoff penalty"
for 120 days and only if the broker is responsible for the borrower
refinancing their mortgage. If
the borrower sells their home or refinances their mortgage with another
institution during this 120 day period, there is no penalty. Liberty does wholesale in the following states: CO, FL, IN, KY, MI, MN, NC, OH, SC, UT, WI. (Any brokers that may be interested can contact John Mertz at email@example.com.)
sent clients an update to the Program Guidelines for Conforming
Products has been published which is effective immediately. "Please
refer to the updated Program Guidelines for complete details. 1.3.1.
Standard Conforming - Fixed Rate and ARM, 1.3.2. Super Conforming -
Fixed Rate and ARM: the maximum allowable LTV/CLTV limits are unchanged,
but added notes which reflect recent maximum LTV/CLTV restrictions on
Adjustable Rate Mortgage (ARM) products submitted to Desktop Underwriter
(DU) version 9.1. Loans exceeding DU's limits but within Provident
Funding's limits must be submitted to Loan Prospector (LP). 2.5.9.
Validation of Tax Returns: Added a requirement for loans with qualifying
income derived from a corporation, S-corp or partnership to provide an
additional fully executed 4506-T form for each Business Federal Tax
Return and a requirement to provide the IRS Form 7004 (Application for
Automatic Extension) and obtain the 4506-T transcripts confirming "No
Transcripts Available" when business returns are on extension for the
most recent year. 2.11. Power of Attorney: Updated the acceptable use of
a Power of Attorney to be restricted to transaction types of Purchase
or Rate and Term except as required by applicable law. Also added a
requirement that at least one borrower on the transaction must
physically sign the loan documents unless the attorney-in-fact or agent
under the power of attorney is either the borrower's attorney-at-law or
the borrower's relative."
BOK Financial Correspondent Mortgage Services now
allows for 100 percent gift funds without any overlays for FNMA
products. This allows all of the borrower's down payment and financing
costs to be paid by a gift from a relative, fiancée or domestic partner.
Pete Tamoney, Mid-Atlantic Region sales manager with Correspondent
Mortgage Services, says now is the perfect time for originators and
correspondents to update their channel offerings and consider what their
partners have in the way of gift fund programs. Tamoney said they're
actively pursuing new relationships with community banks and credit
unions nationwide and accepts inquiries at firstname.lastname@example.org.
Envoy Mortgage CLD
has announced a reduction in the minimum credit score requirement for
FHA loans from 640 to 620. Due to the additional risk of purchasing
loans where borrowers have credit scores below 640, additional overlays
will be applied for credit scores from 620 to 639. Transaction types
are limited to 1-unit purchase or rate/term refinance transactions
only. Loans must also receive an AUS approval and cannot exceed a 45%
overall DTI. Lenders must review Envoy CLD's FHA product description
for all overlays that will apply to these transactions.
Horizon Bancorp, the parent company of Horizon Bank, announced its second acquisition in four months: an agreement to purchase all the assets of Indianapolis-based 1st Mortgage of Indiana,
Inc., a full-service mortgage lender with a single location in central
Indiana. Horizon will buy the assets of 1st Mortgage in a 100 percent
cash transaction. The amount was not disclosed. (In November, Horizon
spent about $18.4 million to buy Summit Community Bank, which has two
locations in the Lansing, Mich., area.)
As a reminder, the FHA is now accepting electronic signatures
for all documents in the case binder for mortgage insurance, servicing,
loss mitigation, and insurance claims as well as for HUD's REO Sales
Contract and other related addenda. The new policy is effective for FHA Single Family Title I and II forward mortgages and HECMs. For full details, refer to HUD Mortgagee Letter 2014-03.
In an effort to both allow access to credit and to manage its own risk, the FHA has effected new manual underwriting requirements, the full details of which are explained in Mortgagee Letter 2014-02.
The letter provides an explanation of maximum qualifying ratios based
on the borrower's minimum decision credit score and compensating
factors, which vary depending on whether or not the borrower has
discretionary debt and how many units the property has. It
also details out how underwriters can document compensating factors for
a mortgage with a ratio that exceeds the standard qualifying
requirements in order to consider borrowers who do not meet automated
credit assessment criteria. The
new guidance also requires cash reserves equal to one or more total
monthly mortgage payments for 1- and 2-unit properties, while the
existing reserve requirements for 3- and 4-unit properties remain
Turning to the fixed-income markets, demand continues solid but supply is down (just ask most lock desks). There just wasn't much to talk about, so I am not going to waste your time. And there isn't much news today aside from the
Treasury starting its quarterly refunding auctions this week, with a
1PM 3-yr note sale of $30 billion. The 10-yr yield closed Monday with a
yield of 2.68% (about where we were much of last week, give or take a
little) and in the early going today it is sitting around 2.69% and agency MBS prices are down/worse a few 32nds.
A news flash from the Olympics, care of The Borowitz Report:
- Construction in Sochi is "very much on track" to be finished in time
for the 2018 Winter Olympics, Russia's head of Olympic planning said
been accused of being overly optimistic, but I really think we're going
to make that 2018 deadline," the official, Dmitri Brilosky, said.
Brilosky pointed with pride at the progress his team had made in
constructing bathrooms at the site. "We've finished installing the
surveillance cameras," he said. "Now we're getting ready to put in the
Russian official was more guarded when asked by a foreign reporter if
all the elevator shafts would have elevators in them by 2018. "I'll have
to check on that," he said. "That might be cutting it close."