Market for Servicing is Spooked, Which Could Hit Mortgage Pricing; PHH Mortgage up for Sale?
my cousin asked me if there were any consumer groups that focused on
homeowners. Do you know of any?" The one that jumps to mind is the America's Homeowner Alliance,
"the first ever national advocacy and member benefits alliance
representing the exclusive interests of homeowners and aspiring
homeowners of America." Its slogan is, "To protect and promote
sustainable homeownership for all segments of America." Basically the
goals are to ensure that homeownership remains a public policy priority,
and to represent homeowners. But you can decide for yourself.
What's this? A loan program with 5 percent down payment on adjustable rate mortgages fixed for the first seven or 10 years, and no mortgage insurance requirement? With
all of the tough news, difficult standards to reach, layoffs, etc.,
there is some positive news. Guy Silas passes along news that Sandy Spring Bank, which serves the Washington/Baltimore metropolitan region as a large community bank, has just released a special offering to support local civil servants. It is an example of what local and community banks should be doing.
There is more information on the changes at Digital Risk,
and management sent out a note saying, "The action we took yesterday
was based on industry wide reductions in default related activity. We
simply are changing our workforce model from fixed to variable.
Unfortunately, this change requires a regulatory filing (of course) and
the media is taking their facts from the regulatory filing which is a
legal document and does not describe what is actually occurring." Read more.
Once again, a New York regulator is influencing the entire mortgage
industry. In this case, the industry is still talking about the Ocwen/Wells Fargo servicing deal that fell through
last week, and with good reason. Benjamin Lawsky, superintendent of New
York's Department of Financial Services, believes that the non-bank
financial sector has grown too much, too fast, with few capital
requirements in place. He may have a point, but this could easily
freeze the market for servicing, and if that (the demand for the
servicing asset) happens, prices will drop, and rates to consumers will
increase. Read all about it.
A report from the CFPB on January 30th says that mortgage servicing issues remain a top concern for the agency.
The CFPB's supervisory work completed between July and October 2013
uncovered the same sort of mortgage servicing problems that occurred in
2009 and 2010, as banks were overwhelmed with record numbers of home
foreclosures. The report claims servicers violated the Dodd-Frank Wall
Street Reform and Consumer Protection Act's ban on unfair, abusive or
deceptive acts and practices in a handful of areas, such as payment
processing, the transfer of servicing rights and providing borrower
information to consumer credit reporting bureaus. Examiners found that
two servicers engaged in unfair practices by failing to honor existing
permanent or trial loan modifications after a servicing transfer, which
resulted in borrowers being charged the wrong amount or being told to
pay the wrong amount. Agency examiners also found that two servicers
were requiring borrowers to waive any existing claims in order to get a
forbearance or loan modification agreement. The examiners found these
broad waiver clauses to be unfair as they were done without regard to
individual circumstances. The end result of the agencies efforts and due
diligence have been fines and penalties levied against the institutions
it oversees; according to the CFPB consumers have received $2.6 million
as result. Mortgage Servicing Problems?
two years a long time nowadays? Maybe I'm not the most qualified to
judge, considering I can't even remember what I received for Christmas
40 days ago. Thanks to Barbara Mishkin of Ballard Spahr for including,
and commenting, on a pretty good Washington Post article regarding the
history of the CFPB. The story reads more like an episode of "Days of
Our Lives" than it does an hour watching C-SPAN. I guess that will
happen when pools of talented labor are drawn from the private and
public sector, and meet in a sort of micro-meets-macro government Thunderdome type scenario. The article is good, taking the reader from concept (who had the idea?)
to implementation; through confirmation of the current Director; to
employee turnover (yes, there has been substantial turnover in two
years). For an agency not-yet up to flank speed, the challenges and
expectations have never been greater. Ultimately, the CFPB has to the
address the issue of being a federal bureaucracy, all the while trying to clean up a federal bureaucracy: Ballard Spahr blog. And Washington Post.
Let's check on some lender & investor updates from recent weeks.
broadly speaking, are underwriting guidelines becoming more lenient, or
less? I guess it depends on how big your company is.
Total Mortgage Services,
LLC announced it hired Andy Pettola as a new Executive Vice President
to lead its wholesale lending division Total Mortgage Wholesale. I don't
usually mention individual moves in the industry, as there are too
many, but this is interesting because "Immediately joining Mr. Pettola
at Total Mortgage Wholesale is a team of nine account executives, all from MSI, that were responsible for over $1 billion in loan production in 2013."
The latest earnings release from PHH
(which is mostly closed today due to the storm) seems to sum up the
state of mortgage bankers everywhere. Pre-tax mortgage banking income
fell to a loss of $45 million from a loss of $22 million in 3Q, below
forecasts, due to higher expenses. Interest rate lock commitments fell
27% Q/Q to $2.1 billion from $2.9 billion, lower than expected. Total
closings were down at $9.5 billion from $14.8 billion in the prior
quarter but above estimates. Gain on sale margin was 3.84%, up from
3.74% in 3Q.
Speaking of PHH, is the mortgage company "on the block"? Perhaps.
been much discussion on the topic of EPO recourse. Surprisingly, not
all investors have such language in their loan purchase agreements. First Mortgage Corporation,
headquartered in Ontario, CA, is an example. With minimal overlays to
FHA & VA guides, FMC specializes in lending to the low-to-moderate
income borrower through its retail, wholesale and correspondent
channels. FMC also offers a unique down payment assistance program with
maximum financing down to 580 credit score and CLTV of 99.5%. (The DPA
program is available in AZ, CA, NM, NV, TX & UT.) "With a very low
seriously delinquent rate of 3.39%, FMC's exceptional servicing
department helps correspondents reduce the incidence of early payment
default." Correspondents interested in learning more about the program
should contact Sharon Magnuson at email@example.com.
has updated Desktop Underwriter to align with the VA 2014 county loan
limit changes, which went into effect for all casefiles submitted or
re-submitted after January 18th.
of April 1st, Fannie will require servicers to send a notification to
borrowers with mortgage loan modifications with a step interest rate
adjustment that includes the amount and effective date of the increase;
the amount and due date of the new monthly payment; an explanation of
how the interest rate cap was set and how it will be fixed once it
reaches the interest rate cap; a payment schedule table; an explanation
that the monthly payment includes an escrow for property taxes, hazard
insurance, and other escrowed expenses which, if changed, will change
the monthly payment; an explanation of how the new monthly payment was
determined, servicer contact information and instructions to contact the
servicer with any questions; the Homeowner's HOPE Hotline number and
instructions to ask for Making Home Affordable help; an explanation that
the borrower can seek assistance with household budgeting from
HUD-approved housing counseling agencies; and information on additional
educational resources at Fannie's Know Your Options website.
will be implementing version 2.4 of EarlyCheck over the weekend of
April 14th, adding approximately 175 new loan-level edits for the .xml
file format and 35 new edits for the 1003 and MISMO AUS .3.1 origination
file formats. The
release will also include 55 4dit message text changes, five edit
severity changes, one input file type change, and 50 edit deactivations,
all of which are designed to more closely align EarlyCheck with Loan
Delivery, support ATR and QM, and support the changes made to DU 9.1.
is introducing a new first lien mortgage insurance master policy that
strengthens customer relationships with a first-in-the-industry Policy
Commitment Letter-specific to each lender-that clearly defines each
party's roles and responsibilities, adding certainty and flexibility.
Guaranty's master policy has been approved by Fannie Mae and Freddie
Mac and has been filed in all 50 states and the District of Columbia.
The Policy Commitment Letter-along with new Claims and Appeals
guides-clearly spells out policies and practices governing underwriting,
claims, and appeals. Future updates will be sent to the lender and
automatically be merged into the Policy Commitment Letter to provide an
enduring written record. The Policy Commitment Letter also provides
additional flexibility to enable a lender and United Guaranty to agree
to reflect operational changes-and provides an easy-to-reference,
automatically updated record of those agreements. All lenders are
required to sign and execute the Policy Commitment Letter to insure
loans on or after the July 1, 2014, effective date of the new master
policy. When the new master policy becomes effective, the existing one
will be canceled, and all new applications for insurance submitted to
United Guaranty will be governed by the new master policy and Policy
Commitment Letter, which do not affect loans that are insured under the
current master policy.
As part of Ginnie Mae's modernization efforts, issuers are now required to access the Ginnie Mae Enterprise Portal
in order to request Commitment Authority, for which they must authorize
their selected bank to accept ACH debits from BNY Mellon for the
commitment fees. Lenders
are also able to submit master agreements, requests for pool numbers,
and requests for commitment authority directly through the GMEP and must
upload their master agreements by March 31st.
Per the January 10th rules, Wells Fargo is requiring that all submitted loan package include evidence of how the DTI was determined. In
recent weeks, DTI Review has recorded an influx of loan files where the
documentation does not support the calculated debt, the credit inquiry
letter is not complete, and debt and/or income documentation is missing,
resulting in suspense conditions. Lenders
are encouraged to use the Income and Debt worksheet; however,
alternative forms will be accepted provided they reflect all monthly
income types for each borrower, how the monthly income was determined,
the total qualifying income, the primary residence PTI, the front and
back end DTI ratios, the total monthly debt from the final AUS/credit
report/1003, any additional debts not listed on the credit report, an
explanation for debts not included in the DTI, and a list of all
documentation used to support how the underwriter derived the total
income and assets.
you really want to hear about rates? New York could be very quiet with
the approaching storm - are folks hoping for a 5 day weekend? The 10-yr had a 2.76% close Wednesday after a 2.74% open, and this morning is at 2.74% - so we may see a small improvement in rate sheets today.
We've had Retail Sales (-.4%, ex-auto unchanged) and Jobless Claims (up
8k to 339k from 331k, in line with expectations). The Treasury
concludes its quarterly refunding with $16 billion in 30-year bonds
auctioned at 1PM EST.