The commentary on Saturday noted predictions for 2014, and how things were shaping up so far. Attorney Phil Stein observed, "Here is another issue to consider about how 2014 is shaping
up so far. The tide really seems to be turning in favor of
correspondents as they continue to face repurchase and make-whole claims
from aggregators. Plaintiffs generally have a really hard time proving
their claims on the merits when correspondents put them to the test --
and, increasingly, plaintiffs are not getting a chance to get into the
substance of their claims, because courts are recognizing that their
claims are barred by the statute of limitations. In four of my cases in
the last three months, my clients have had claims against them dismissed
with prejudice because the claims were filed after the statute of
limitations had run. Now that the courts are showing how willing they
are to dismiss claims as being too stale to pursue, correspondents have even more reason not to give in to demands that they believe are unjust
-- and so do the major banks when confronted with any lingering
'vintage' claims from the GSEs or investors in private-label
On the jobs front, last week the commentary mentioned the explosive growth of LoanStar Home Lending but did not mention that SVP California Production John Giagiari is also aggressively looking for originators in Northern California. John
said "I have seven more Intero Real Estate offices to place originators
and need to fill those spots immediately!" John can be reached at Jgiagiari@GoLoanStar. com.
And PHH Home Loans, LLC Midwest is continuing to expand its Retail Division in Chicago and Minneapolis. PHH Home Loan's is in its 24th
year delivering superior service in the MN and IL markets and seeks
experienced LO's who are in need of a broader product menu and dedicated
back office support where they are partnered with loan processors
familiar with their predominant product sets. "PHH Home Loans brings
the strength of one of the largest non-bank mortgage companies through
our parent, PHH Mortgage Corporation and combines it with our local
presence, diverse product menu, management guidance, processing support
and technology", remarked President Mary Baymler who has been with the
company since its inception. PHH is looking to fill Illinois retail
positions in its Lisle, Barrington, and Northbrook locations with
Minnesota openings in Edina, Coon Rapids, and Maplewood. Interested
applicants should contact HR Director Cathy Bauman at Cathy.Bauman@phhonline. com. PHH
Home Loans is proud to be an EEO/AA employer M/F/D/V and maintains a
drug-free workplace and performs pre-employment substance abuse testing.
I lose track of the number of agencies that can pursue lenders (and borrowers) for wrongdoing:
the CFPB, the Department of Justice, investors, other lenders, 50 state
Attorneys General - no wonder compliance and legal budgets have
ballooned beyond reason in the last year or two. But let's not forget
the FBI, which lumps mortgage crimes in with other white collar crimes. But there is some recent news regarding this: despite
its public commitment to mortgage fraud enforcement, the Justice
Department did not ensure that the problem was a high priority law
enforcement matter. Justice Department Inspector General Michael
Horowitz said that within the FBI's Criminal Investigative Division
mortgage fraud was the "lowest ranked criminal threat'' in the unit's
"lowest crime category'' from fiscal 2009 to 2011. And in some of the
bureau's most prominent field offices, including Los Angeles, Miami and
New York, mortgage fraud ranked low or was not listed as a priority at
all during the review period. The inspector general also reviewed a
highly publicized October 2012 incident in which the department and
Attorney General Eric Holder vastly overstated the success of an
enforcement effort involving total losses first estimated at $1 billion.
The actual loss involved in the fraud scheme was about $95 million and
the number of criminal defendants charged as part of the initiative was
107, not 530 as originally reported by Justice officials. Here's the
week the commentary discussed Millennials, financial literacy, and
first time home buyers - yes, they're all linked. I received a few
general questions about financial literacy in general. Financial literacy is defined as the ability to understand how money works.
It is the measure of the skills and knowledge to make informed and
effective decisions about money. What is really interesting though is
that the level of financial literacy in the United States came into
sharp focus after the credit crisis of 2008. This event brought to light
how many people had taken on far more debt than they could ever repay.
New laws, the formation of the CFPB and tougher underwriting standards
have all combined to tamp down the excesses of that period, but do
individuals know more than they used to other than anecdotally? Many
potential buyers and borrowers are lacking knowledge of simple personal
finance questions. And even inside of mortgage lenders, does management
make sure that LOs understood the correlation between interest rates and
bonds? About how when prices go up, rates go down, and why?
government agency web sites like the CFPB have great information, it
appears few U.S. citizens are availing themselves of the information. If
you Google "how can I improve my credit score," there are plenty of
legitimate organizations right alongside fly-by-night debt consolidation
outfits. Surveys have found that most people do not seek out financial
information, but tend to come by it haphazardly. This can be from
friends or family, clicking on an internet ad, or sometimes speaking to
someone in a bank. One issue with lighter customer traffic in banks
given a shift toward digital channels is that financial literacy in the
U.S. as a whole could suffer.
Perhaps the digital answer is a start-up financial web site that aims to fill the need for accessible financial information. The site is called Phroogal
and is based upon the idea that a social collaboration approach could
be more effective at communicating legitimate financial information than
traditional financial web sites which tend to be populated with FAQs.
The site provides a search engine-type forum for people to ask questions
and for other users to relate experiences and get answers from
professionals. The site links in pages from the CFPB with relevant
information on a specific inquiry. The idea is to link an informational
and social approach for financial questions. I don't know if it will
raise the financial literacy of the U.S. but it is interesting
Speaking of learning, on April 23 New Penn Financial is presenting Lou "MBS" Ranieri in a presentation to its client base.
"His depth of knowledge in both the mortgage and capital markets arena
make him a sought after speaker and influential in developing
legislation for our industry and the securitization market. As a member
of the Shellpoint Partners Board of Directors we are privileged to be
able to offer this unique opportunity to hear his insights on GSE
reform, securitization markets and pending legislation that impacts us
all today and in the future."
Let's continue playing catch up on some relatively recent lender & investor news!
Guild Mortgage Co.
is opening a new branch in Harrison, Arkansas. The opening is the
company's first branch in the state of Arkansas, and part of a large
expansion into the South and Southeast. With the addition of the
Arkansas branch, Guild now has more than 200 branches and satellite
offices in 20 states. (Guild, with its home-grown LOS, had loan volume
of $7 billion in 2013 and servicing volume of $13 billion.)
The title says it all: "Ocwen Freezes Future Mortgage Servicing Deals."
Ocwen is well known in the industry as the buyer of delinquent or
otherwise troubled servicing assets. But this will certainly roil the
general servicing market - especially for the non-bank buyers.
Affiliated Mortgage has
revised the minimum FICO scores for its FHA programs to allow scores
down to 620 with DTIs of 45 or less and 640 for DTIs of 50 or less. All
FHA, VA, and Conventional cash-out transactions in CA, IL, and MA
require a minimum score of 640, while Texas 50(a)6 cash-out loans and
all other VA cash-out transactions require a minimum of 620.
rolled out its new 5/1 and 7/1 Jumbo ARM products, which are available
for loan amounts up to $2m with a FICO score of at least 700 and a max
DTI of 40. The
program is being offered for owner-occupied and second home purchase,
rate/term refis, and cash-out refis for 1-4 unit properties in CA, CO,
FL, IL, KY, MN, NJ, PA, OH, TN, WA, and WI.
Compass Point Research & Trading reported on U.S. Bank's earnings.
Once again, a big bank's results mimic what many other lenders are
seeing. "Mortgage banking resilient in 1Q14, but pressure remains. Total
mortgage banking revenue increased to $236M from $231M in 4Q13 due to a
47% increase in servicing revenue ($163M from $111M in 4Q13). The
dramatic increase in servicing revenue was attributable to favorable
hedging gains that likely won't be repeated. Offsetting the decent servicing income was a 39% decline in origination revenue
to $73M from $120M in 4Q13. The decline in revenue was driven by a
decline in originations to $6.2B from $8.6B combined with a decline in
gain on sale margins to 0.72% from 1.13%. Roughly 70% of USB's
originations are derived through the correspondent lending channel and we would expect outsized pressure on all correspondent originators
due to the intense competition we are seeing for newly originated MSRs.
We currently model margins will decline to 70 bps and remain at that
level, but there could be some additional pressure heading into back
half of the year as supply starts dry up in the seasonally slow fourth
quarter. On a positive note, application volume was only down 4%, which
is in-line with volumes indicated by the MBA application index."
Citadel has launched its stated income program,
which allows loan amounts from $100,000 to $500,000 for LTVs up to 65%
on single-family residences, townhomes, 2-4 unit properties, and condos,
both warrantable and non-warrantable. In addition, all occupancy types are eligible. For
foreign nationals, the funds to close must be verified in USD with a
valid banking relationship in the country of origin, and impounds for
taxes and insurance are required for all transactions.
have been "stuck" in a range for quite some time. The easiest
"benchmark" to discuss is the yield on the U.S. 10-yr. T-note, since it
is very liquid. It has ranged between 2.60-2.80% for several weeks, and
this morning we're right about at the midpoint. But who knows - some
event overseas or news here, might jar us one way or the other. There is
a fair amount of news this week, although mostly "second-tier" numbers
that rarely prove to be dramatic. Tomorrow we start with a spate of
housing news (including Existing Home Sales), Wednesday is the MBA's
application numbers and New Home Sales, Thursday is Jobless Claims and
Durable Goods, and on Friday is the Univ. of Michigan Confidence number. Speaking of the 10-year T-note, Thursday
it closed at 2.72% and that is exactly where we are this morning - and
don't look for much change to agency MBS prices either.