Maxine Water's Plan for Fannie and Freddie; Lenders Only Making $150 per Loan With All That Liability?
Rogers writes, "Could this be a trend for Generation Y and how they
achieve homeownership and tackle mounting student loan debt?"
(And regarding the old residential lending advice, "Don't lend on
anything with a license plate or wheels", I didn't see a license plate.)
Freedom Mortgage is
pleased to announce that Jeffrey P Mastro has joined the company as VP
Renovation/Correspondent Lending based in the Clifton Park NY office.
Jeff has 30 years renovation experience in retail, wholesale and
correspondent lending, and will be expanding Freedom's renovation
lending team nationally. Jeff will be recruiting correspondent AE's with renovation experience to work with Freedom's national correspondent network.
Renovation lending is an important product for borrowers purchasing or
refinancing homes in need of repairs or improvements, and Freedom
Mortgage looks forward to providing the expertise to revitalizing homes
across the U.S. Jeff can be reached at Jeff.Mastro@Freedommortgage. com.
California's Redwood Trust, Inc. is seeking a Correspondent Credit Operations Manager for its Residential Mortgage Conduit. "Redwood
Trust, Inc. is searching for a highly motivated and experienced Credit
Operations Manager to oversee the workflow management for an established
conventional conforming and jumbo correspondent lending program.
Redwood is successfully purchasing closed loans from over 125
originators and it's the responsibility of the Credit Operations Manager
in working with other managers to ensure that the originators'
committed loans are data validated, re‐underwritten,
conditioned and funded within the established service level agreements.
In addition to meeting turn times, the candidate will be also be
responsible for designing, modifying and implementing optimal system and
process workflows and departmental configurations to achieve the future
targets of additional originators, increased loan volumes and expanded
mortgage products. The candidate will have a very high level of
interaction with purchase operations, sales, credit policy, post
purchase operations, compliance and capital markets as well as an
ongoing external communication with Redwood's correspondent
originators." To apply for the position, look for "Careers at Redwood" (the company currently has several openings) or email Dawn Bordeaux at dawn.bordeaux@redwoodtrust. com.
And MENLO Company, a premier Investment banking consulting and retail Mergers & Acquisitions firm, focuses on small to mid-market, mortgage brokerage and mortgage banking firms whose purchase production ranges from $3M/month to $25M/month.
"The market is consolidating due to the costs of legal and compliance
for most firms", says Rick Roque, MENLO's founder, and also Managing
Editor of Mortgage Compliance Magazine. "We are focusing on helping
bona fide groups of mortgage professionals in all 50 states, connect
with more mature and stable Retail Mortgage Firms, and to get clients
competent leaders in target markets". If you or your team falls within
this production range, contact Rick at rick@menlocompany. com.
Bank of America bought Countrywide and Merrill Lynch in 2008 and 2009 respectively. How is that investment paying off? Well, it just cost BofA another $9.5 billion.
And while we're talking about jaw-dropping numbers, the MBA released its latest profit figures for independent mortgage bankers.
"...an average profit of $150 on each loan they originated in the fourth
quarter of 2013, down from $743 per loan in the third quarter..." Remind
me: why are many lenders willing to assume the liability of potential
buybacks? Never mind - here is the story: Mortgage Profits Hit Record Lows in Q4.
HUD has issued a proposal to avoid FHA loans from being prohibitive under CFPB rules which take effect next year. Last week, HUD
published a proposal to eliminate the requirement that an FHA loan
borrower be required to pay interest after the loan is prepaid. Well
that's nice of them...but sort of intuitive, isn't it? Well not really.
It's all based off of monthly interest accrual with FHA loans; if an FHA
loan is prepaid on a date that is not a regular payment due date the
borrower must pay interest through the end of the month even though,
officially, the loan has been paid off. This is a clear violation of Reg
Z high-cost provisions, however, set forth by the CFPB. Ballard Spahr write, "In
connection with the adoption of the Regulation Z ability to repay rule
and modifications to the Regulation Z high-cost loan provisions that
became effective in January 2014, the CFPB revised the definition of
"prepayment penalty" to provide that interest charged consistent with
the monthly interest accrual amortization method is not a prepayment
penalty for FHA loans consummated before January 21, 2015, but is a
prepayment penalty for loans consummated on or after such date." HUD's proposal can be found on the Federal Register.
I am yammering on about HUD, someone recently asked me about Greystone.
I replied with, "It is a big company." (That's why I make the big
bucks, right?) Seriously, Greystone
"provides mortgage finance solutions across multiple platforms,
including FHA, Fannie Mae, Freddie Mac, USDA, CMBS, bridge, mezzanine
and other proprietary loan programs. In 2013, Greystone was ranked #1 in
combined multifamily and healthcare FHA lending, ranked #1 in Small
Loans and #3 in Affordable Housing as a Fannie Mae DUS lender in 2013,
and is a top-5 Freddie Mac lender for seniors housing." It was in the
news a few weeks ago when it announced it had provided a $40.4 million
HUD loan to refinance Viera Cool Springs Apartments in Franklin,
Tennessee. "The FHA financing was structured as a non-recourse 35-year
fully amortizing HUD 223(f) loan. Viera Cool Springs Apartments is a
sprawling 468-unit market-rate townhome community. The property, built
in 1987, is ideally located in the Cool Springs submarket within
Nashville, equidistant from Memphis and Knoxville. The location benefits
from a superb transportation network and is known as one of the premier
business centers in the Southeast." If you need more information about
it, go to Greystone.
Steve W. asks, "Does anyone a an explanation why the 20 year APOR Rate is almost a full point lower that the 30 year APOR rate
when you can only get an 1/8 to a quarter better in a real rate on the
street. This is causing 20 year loans to be HPMLs more often than they
should be. I know it sounds impossible but could the FFIEC have made a
mistake on their tables?"
Dave Gottfried from Cantor Fitz volunteers, "Rates on the fixed side
are calculated mainly for 30yr and 15yr product and when calculating
other rates they think are important they use interpolated levels. It
appears 20yr rates default to the 15yr APOR rate levels. See link below
and read: Methodology for Determining the "Average Prime Offer Rates". I
think this answers your question."
The industry is catching its first whiff of Maxine Waters' plan for Fannie Mae and Freddie Mac.
Many continue to say that any chance of a plan being solidified during
an election year, passed by Congress, and signed by the president during
an election year is slim. And it can't be much fun for the folks at
F&F to have their future being batted around in the press and in the
halls of Congress. Here is the latest on Maxine's plan.
SIFMA set up a website that discusses agency reform. It is good reading for anyone requiring a deeper look.
Let's flip over to some recent state-level changes.
Department of Insurance, Financial Institutions and Professional
Registration recently amended 20 CSR 1140-30.240 regarding the
supervision of residential mortgage loan brokers. The amendments will
require that before renewing or applying for a Missouri loan broker
license, the applicant must register with the NMLS. Applicants will be
required to obtain a unique identifier through the NMLS and maintain an
active status by paying the applicable application and renewal fees.
Also, each licensee must annually attest to the completeness,
truthfulness, and accuracy of its records filed with the NMLS. Failure
to do so can lead to a suspension of the broker's license. The
amendments to CSR 1140-30.240 become effective on April 30, 2014.
has recently made provisions to its notary fee schedule. With the
passage of Enrolled Act No. 26, the state's Legislature has amended W.S.
34-26-302 to increase the allowable fee a notary may charge (from $2 to
notarial acts are affected with this passage; taking an acknowledgment,
administering an oath or affirmation without a signature, jurats,
witnessing or attesting a signature, certifying or attesting copies,
taking a verification upon oath or affirmation, and noting a protest of
negotiable instruments. These changes become effective on July 1, 2014. Wyoming Notorial Act.
New Jersey as re-adopted, and has made changes to, its predatory lending regulations.
Wright of Bankers Advisory writes, "The Predatory Lending regulations
implemented under New Jersey Home Ownership Security Act ("the Act")
have been re-adopted and certain definitions have been technically
amended to be consistent with new January 2014 federal Home Ownership
and Equity Protection Act ("HOEPA") amendments. The Effective
Re-adoption Date is February 12, 2014 and the Effective Amendment Date
is March 17, 2014." Amended definitions along with the re-adoption of
consumer protections contained within the Act, can be found here.
Hey, either you like talking about convexity or you don't. The Federal Reserve Bank of New York LOVES talking about convexity. The bank's recent publication, Convexity Event Risks in a Rising Interest Rate Environment,
addresses a few market specific concerns, such as how major changes in
the composition of agency MBS ownership caused by the large-scale asset
purchase programs may have prevented a major convexity event triggered
by MBS duration extension hedging. The bank's researchers conclude that
MBS hedging activity remained muted by historic standards and likely
contributed only modestly to the rise in interest rates.
I continue to hear some company's activity is picking up while for others it is languishing.
(Certainly no loan officer who has been around more than five years
thinks that the loans have become any easier to do.) Any residential
lender who has seen their volumes continue to bump along the bottom is
in good company, as the MBA's applications numbers from yesterday are
further sliced and diced. The
Composite Index, a measure of total loan application volume, fell by
3.5% in the latest week, while the refinance index declined by 8% with
the purchase index up 3%. The refinance index now makes up 54% of all
applications, the lowest level since April 2010. No wonder we are
seeing guidelines being relaxed - some would say a race to the bottom -
the low rates are not enough. Has everyone who could refinance already
yes, rates continue to do well. Yesterday we saw a nice rally with both
the 10-yr and agency MBS improving about .250 in price. The reason?
Thomson Reuters wrote, "There were a number of influences pushing prices
higher including some month- and quarter-end buying, a strong 5-year
note auction, a continued flight to safety bid associated with Russia,
and mixed economic data." Traders supposedly saw lower-than-average MBS
selling from originators - which makes sense with applications
continuing to slow. This morning we'll have Initial Jobless Claims and
the final read on Q4 GDP (+2.7 expected from +2.4). The GDP number is
"old news" given that we're almost done with the first quarter of 2014
already. Later we'll have Pending Home Sales and a $29 billion 7-yr note
auction. Prior to those numbers we're looking at an unchanged market from Wednesday afternoon.