I received this note from a mortgage bank owner in Louisiana: "Hey Rob, get a load of this! We had an investor come back to us, asking that we prove to the due diligence team that a 20% LTV borrower was better off with the FHA loan that we gave her and not a Fannie or Freddie loan. Have you heard of this before?" Yes I have, but no specific investors, and watch for more of this if QM (Qualified Mortgage) provisions are too broad. Similar to the FHA streamline program, where the borrower's situation needs to be improved, you can bet that the choice of loan programs for some borrowers and for some LTV range could be questioned.

It is "Bring Your Kids to Work" Day, and I bet that is happening here. Georgia Banking Company is searching for a Senior Underwriter at their Atlanta location in their Retail Origination Division. Ideal candidates will have at least five years recent mortgage underwriting experience and be comfortable communicating openly with processors and originators regularly.  Current knowledge of regulations regarding mortgage lending, and familiarity with both conventional and government mortgage policies (FHA, VA/LAPP, and USDA), is required, and a DE is preferred.  Please submit your resume to Amanda Smith at asmith@geobanking .com.

Here is something mildly interesting: out in California, its Department of Real Estate published list of brokers who "provide private money loan services and are required to submit reports to the Department pursuant to Business and Professions Code Sections 10232 and 10232.2 for threshold brokers and/or 10238 (j) and 10238 (k) (3) for multi-lender brokers. Brokers are identified as Threshold Brokers, Multi-Lender Brokers, or Both. A link to the broker's license status information and business address is provided." Here is the site: http://search.dre.ca.gov/cons_brokers.asp.

"Who is Debra Still?" you ask? She is the Chairman-Elect of the MBA, and the CEO of Pulte Homes, and she testified before a Senate Banking Subcommittee on "Helping Responsible Homeowners Save Money Through Refinancing," more specifically a piece of legislation being considered: QM. "The MBA believes that a number of provisions contained within the bill will help overcome certain remaining barriers that have prevented responsible homeowners who have remained current on their mortgages, from reaping the benefits of historically low interest rates and existing mortgage assistance programs. MBA particularly appreciates the provisions that would standardize, and therefore simplify, Fannie Mae and Freddie Mac's borrower eligibility requirements.  We also support the bill's provision to lower borrowing costs by prohibiting the GSEs from establishing pricing differences based on loan to value ratios, borrower income or employment status.  "While the bill addresses two important and complex pieces of the refinancing process, MBA would offer a different approach to both subordination of second liens and mortgage insurance..." Here is Ms. Still's oral statement.

This commentary can't print every state program, but this one is noteworthy. The Utah Housing Corporation, which is not funded by tax dollars but by residential lenders in the state, announced earlier this month that it would be providing borrowers with two additional mortgage options with the introduction of HomeAgain and Score Loans. Would these fit into QM guidelines? Borrowers with credit scores as low as 620 are eligible for the Score Loan, while the HomeAgain Loan is aimed specifically at previous homeowners who aren't currently in the housing market and need down payment assistance - expected to draw a large amount of interest.  Read the news release in full.  

And apparently they're off to a strong start. For example, Veritas Funding is one of Utah Housing Corporation's top lenders participating in the program. Here are some additional comments from Chris Maturo, its VP of Sales and Business Development: "A good loan officer needs to understand their local market and learn about programs that provide more options to their borrowers.  As guidelines constrict, the Utah Housing Corporation, a Utah non-profit, has modified their guidelines to expand the opportunity for home ownership for low to moderate income borrowers in Utah.   Down payment assistance was previously reserved for first time homeowners.  Recently, guidelines have been expanded to include borrowers that have previously owned property. With no reserve requirements, it is a great opportunity to help borrowers in tight circumstances."

Moving from Utah to Mexico, Mexico's largest mortgage provider plans to offer home buyers fixed-rate loans for the first time, as things improve after the two-decade long inflationary hangover from the country's "Tequila Crisis." (The only time that happens in my house is when we run out.) "A legal overhaul will let Mexicans who finance their homes with state-controlled Infonavit, the company founded in 1972 to give workers access to home financing, get the 30-year mortgages for the first time as soon as June. The lender, which has made about 4.4 million loans since 2001, also plans to issue mortgage-backed securities in pesos next year to match income with obligations, the first such sales since 2004" reports Bloomberg. Inflation south of the border has declined to about 4% from 52% in 1995 when the peso's devaluation sparked capital outflows across the region.

How about some somewhat recent lender/investor/agency/MI updates? As always, it is best to read the actual bulletin, but this will give one a flavor for what is happening out there.

Out west Pinnacle introduced the Pinnacle Plus product, a 30-year fixed rate that allows 5-10 financed properties on second home and investment property transactions and transferred appraisals and requires a 620 credit score. Pinnacle has made a number of underwriting changes, including adding VA loans, walls-in insurance requirements, and termite inspection reports for all first floor units in certain TIP codes to its condo-PUD matrix; updating the loan amounts designated in the conforming high balance guidelines; adding 25- and 20-year loan term options to its Enhanced DU Refi Plus guidelines; and updating the listed FHA and VA guidelines.  Guidance on interested party contributions was added to the Good Neighbor Next Door guidelines, and it was clarified that appraisal updates are required to be dated prior to the appraisal expiration date for conforming guidelines.

Plaza Home Mortgage has announced that it has discontinued the VA IRRRL11 program that allowed borrowers to refinance and existing specific lender loan without an appraisal due to recent changes in the secondary market.  Loans with active locks and/or approvals will still be honored, though extensions and re-locks won't be allowed.  Although this particular program has been terminated, Plaza does still offer both no-appraisal and AVM and appraisal options.

The updated loan submission checklist has gone into effect at Fifth Third.  MCAW/1008, the fully executed 4506 T, and the VA IRRRL Indebtedness Questionnaire have been removed, and clarification has been provided on earnest money verification on purchased files and payoff statements for FHA Streamline and VA IRRRL loans.  The amended checklist must be attached to all registrations.

Under Regulation B, Fifth Third is required to return a credit decision of either Conditional Approval or Statement of Credit Denial to borrowers within 30 calendar days after receiving the application.  If Fifth Third is not supplied with enough information to make a sound decision, it will issue the borrower with a Notice of Incompleteness (a.k.a. a 10-Day Letter) extending the 30-day Regulation B clock and requesting more information.  The 10-Day Letter will request documentation of items in the borrower's exclusive control; any documentation needed from third parties cannot be included in the 10-Day Letter and is instead requested via a separate External Pend Notice that is sent to the broker.  If borrower-provided and third party documents are both missing from the application, Fifth Third will issue both a 10-Day Letter to the borrower and an External Pend Notice to the broker, after which both parties will have 10 calendar days to provide the necessary documents.

Under Code of Federal Regulations title 24 205.5 (d), Fifth Third will not consider reduction of loan principal as an eligible purpose for the use of escrow funds, and lenders with an existing loan cannot put escrow funds towards reducing the outstanding loan balance in the payoff amount.  This is effective for all new applications received on or after April 16th.

Fifth Third provides a friendly reminder that valuations should never be deleted from a loan file (except for FHA Streamline products).  If multiple valuation products have been obtained, the most comprehensive one should be used.

With all of this "stuff," it is easy to see why low rates only take things so far, and the MBA's application numbers for last week fell 3.8%. The MBA refi index fell 5.6% on the week while purchase apps rose by 2.7%. For the economy, we had Durable Goods, which, at -4.2%, was the largest decline in durable goods orders we have seen since January of '09. It is volatile anyway, and in this case was pushed lower by an almost 50% drop in aircraft orders.

But of more importance, arguably, although it was kind of a non-event, was the Federal Open Market Committee meeting. The actual text of the Fed's announcement and the actual levels of its future forecasts did not cause the move higher in rates.  Rather, weaker market levels in the morning combined with the fact that those FOMC-related events held the potential to cause volatility caused initial rate sheets this morning to be a bit weaker than they otherwise would have been due to market levels alone. But the announcement had minimal changes from the last one (March 13). Overnight Fed funds policy  remains  as  before,  with  the  pledge  to keep the fed funds rate exceptionally  low  at  least  through  late 2014. Of more interest to those in the mortgage biz, Chairman Bernanke also indicated that he didn't think that bond yields would rise precipitously when purchases end, "at whatever point", in part because the Fed would be holding a sizeable quantity, and also given the forward looking nature of markets which would have been pricing this in.

In other words, if you like mortgage rates where they are, that's good - they could be here for quite some time into the future. MBS prices ended lower/worse by about .125, giving up some of the improvement from Tuesday. The 10-yr closed at 1.99%. This morning we've had Initial Jobless Claims at 388k, from a revised 389k, with the 4-week moving average +6,250. We'll have a $29 billion 7-yr note auction, and the non-market moving Pending Home Sales Index for March. But rates are back down: the 10-yr is at 1.93% and MBS prices, which may show up on rate sheets, are better by about .250.

The Hotel Bill
An older lady decided to give herself a big treat for her significant 70th birthday by staying overnight in an expensive hotel.
When she checked out next morning, the desk clerk handed her a bill for $250.00.
She exploded and demanded to know why the charge was so high. "It's a nice hotel but the rooms certainly aren't worth $250.00 for just an overnight stay! I didn't even have breakfast."
The clerk told her that $250.00 is the 'standard rate', so she insisted on speaking to the manager.
The manager appeared and, forewarned by the desk clerk, announced: "This hotel has an Olympic-sized pool and a huge conference center which are available for use."
"But I didn't use them," she said.
''Well, they are here, and you could have," explained the manager.
He went on to explain that she could also have seen one of the in-hotel shows for which the hotel is famous. "We have the best entertainers from the world over performing here," the Manager said.
"But I didn't go to any of those shows," she said.
"Well, we have them, and you could have," the manager replied.
No matter what amenity the manager mentioned, she replied, "But I didn't use it!" and the manager countered with his standard response.
After several minutes' discussion with the manager unmoved, she decided to pay, wrote a check and gave it to him.
The manager was surprised when he looked at the check.
"But madam, this check is for only $50.00."
"That's correct. I charged you $200.00 for sleeping with me," she replied.
"But I didn't!" exclaims the very surprised manager.
"Well, too bad, I was here, and you could have."