has Wells Fargo's Economics Group been writing about recently? The
economic recovery, of course; more specifically, how does one compare
economic recoveries across economic recoveries with any sort of meaning?
The group writes in Different Times for the U.S. Consumer, "the
recovery from the Great Recession has lasted, so far, 56 months, from
July 2009 until February 2014. In order to compare the current recovery
to past recoveries, we calculated the change in disposable personal
income (DPI) and the change in personal consumption expenditures (PCE)
from the end of the recession up until the next 56 months."
Going back to 1960 the group picked all of those recessions whose
recovery lasted at least as long as our current recovery (from July '09
to Feb '14). By doing that they evaluated the 6 recessions whose
recovery phase lasted, at least, 56 months, including the recovery from
the Great Recession. The conclusion? The biggest problem today is a lack of income growth.
But speaking of income, Costa Mesa, California's iApprove
Lending is searching for an experienced Operations Manager along with
frontline DE underwriters & compliance professionals.
The California company recently expanded into TX, CO, GA, VA, and OR,
with plans for additional states in the near future, through both
business on the wholesale and retail channels. iApprove
is an eight year old company with proven records with major
counter-parties, ample warehouse and investors capacities, and ideal
geographical locations. Resumes and inquiries should be sent to careers@iapprovelending. com.
And PHH Mortgage is recruiting Mortgage Loan Officers to support its inbound call platform in Honolulu, HI. PHH
offers a competitive compensation package which includes a base salary
and full benefits. Interested candidates can view more details and
submit a job application at www.phhjobs.com or send a resume directly to Gail Simons at Gail.Simons@mortgagefamily. com.
Qualified applicants will receive consideration for employment without
regard to race, color, religion, sex, national origin or any other
characteristic protected by law.
the flip side of companies expanding, I am hearing about selective
cutbacks by some companies. For example, NASB, North American Savings
Bank is rumored to have shut down an entire division in Springfield,
Missouri - solid producers, underwriters, processors, etc. JPMorgan
Chase reported it has laid off 3,000 people in its mortgage banking and
trading desk units since the end of last year as mortgage activity has
How can a week go by without a little settlement news? Yesterday it was First Horizon's turn: $110 million to settle misleading Freddie & Fannie $883 million of loans funded between 2005 and 2007.
Yes, I remember it well; it was 2005 and saying "Jumbo" or "Alt-A" without adding an IO at the end was unthinkable.
Borrowers would ask, "What happens at the end of the IO period?" "You
refinance of course! Here's my card, call me." As a matter of fact,
between 2005 and 2007 30-40% of fixed rate loans were IOs and more than
80% of hybrids were IO. Well, as most know, at the end of the IO period,
the loan is recast, and its amortization recalculated. I bring this up
after reading an interesting paper from a broker/dealer with a few
interesting facts facing the markets in the next year or three. After
years of relatively low levels of payment shocks in the Jumbo/Alt-A
space, we are now on the verge of what is likely to be a period of
higher payment shocks on Jumbo/Alt-A borrowers, especially on 10-year IO
loans. Over the past three years, a total of $40bn of loans in the
Jumbo/Alt-A space have gone through IO recasts, however, unlike in the
past three years, a significant portion of the upcoming recasts will be
on FRM loans and will undergo payment shocks of approximately 35-40%
above their initial IO payments. Hybrid IOs will also recast with large
payment shocks, especially on loans where the rate reset and IO recast
was staggered. For these loans, payments will jump 80-100% from current
levels but will still be only 10-15% higher than their initial
'underwritten' payments. IO loans that are yet to recast constitute
about 35% of the outstanding Jumbo and alt-A universe. Overall,
about $150B is set to recast in the coming four years. Of these, about
$50B will be from FRM deals while the rest will be on Hybrids. In other words, expect recasts and payment shocks to rise in 2014-17.
to more mainstream securities, Ginnie Mae guaranteed $17.79B in March.
The number of Ginnie Mae I single-family securities issued in March grew
to $670M, while the number of Ginnie Mae I Multifamily pools totaled
over $1.16B. During this time, Ginnie Mae issued more than $15.95B
Ginnie Mae II securities. In addition, Issuance for the Ginnie Mae Home
Equity Conversion Mortgage-Backed Securities (HMBS), included in Ginnie
Mae II single-family pools, was $510M. I believe these numbers could
grow as we creep deeper into 2014.
am in Chicago much of this week, and the MBA's celebrity economist Mike
Fratantoni is here as well. In the past I always thought that the MBA
application numbers came out at 6AM CST, but it appears they're out
early this morning. I noticed a story saying that mortgage
applications fell 5.9% from one week earlier, with refis dropping 7%
from the previous week and purchases dropping 4% from one week earlier.
"Both purchase and refinance application activity fell last week, and
the market composite index is at its lowest level since December 2000,"
said Mike. It appears that purchase apps are down 21% from a year ago
and refis are down to 2008 levels and account for 50% of all apps.
(Read More: Mortgage Applications Lowest Since 2000)
Zillow's first quarter Real Estate Market Reports
show home values increased 0.5 percent from the fourth quarter of 2013
to $169,800. The Zillow Home Value Index (ZHVF) climbed 5.7% from March
2013 levels. On a monthly basis, home values are up 0.2% nationally.
Zillow writes, "According
to the Zillow Home Value Forecast (ZHVF), we expect national home
values to increase 3.3 percent over the next year (March 2014 to March
2015). Of the 301 markets covered by the Zillow Home Value Forecast, 282
markets are expected to see increases in home values over the next
year, with the largest increases expected in the Riverside metro (12.0
percent) and the Orlando metro (8.2 percent)." Nationally,
the number of homes listed for sale on Zillow was down 0.5% annually in
March (seasonally adjusted), after having increased on a monthly basis
late last year for several months in a row. Inventory rose on an annual
basis in 337 out of 648 metros Zillow covers with inventory data.
I was recently involved in a conference call in which the topic of "referral fees"
was discussed, and what exactly constitutes as an agreement for a
referral of business. There are a few things to discuss; first is how
RESPA defines "referral" to a settlement service provider, which it does
in two ways: "A referral includes any oral or written action directed
to a person which has the effect of affirmatively influencing the
selection by any person of a provider of a settlement service or
business incident to or part of a settlement service when such person
will pay for such settlement service or business incident thereto or pay
a charge attributable in whole or in part to such settlement service or
business, AND, a referral also occurs whenever a person paying for a
settlement service or business incident thereto is required to use a particular provider of a settlement service or business incident thereto." The required to use
is key, in that it defines the event where a person "must use a
particular provider of a settlement service in order to have access to
some distinct service or property, and the person will pay for the
settlement service of the particular provider or will pay a charge
attributable, in whole or in part, to the settlement service."
Let us continue playing catch up on some recent Freddie news to obtain a sense of the trends out there!
Freddie Mac is
revising the requirements for mortgages with pre-modification
mark-to-market LTVs of less than 80%, for which eligible borrowers must
be offered the option of a 480-month, 360-month, or 240-month payment
term, depending on how the estimated modified P&I compares to the
current contractual P&I payment. Borrowers
will no longer be able to request a different payment term or change
the payment term after making the first trial period payment, which will
determine the modification term. The payment term will be equal to the shortest term covered by the first payment. The updated requirements will go into effect on July 1st, but lenders are encouraged to implement them before this.
As of July 8th, Freddie will be evaluating rates monthly to assess whether or not the Standard Modification interest rate must be adjusted. If
the interest rate changes, the new rate will be published on the fifth
business day of the month and must be implemented for Trial Period Plan
evaluations that are conducted on or after the tenth business days of
the same month.
Freddie Mac has updated the Electronic Default Reporting (EDR) Quick Reference Guide to reflect changes announced in Single-Family Seller/Servicer Guide (Guide) Bulletin 2014-1.
You must begin using these new codes starting May 1. As a result of the
new codes, five new error messages have been added. Please see the EDR
Quick Reference Guide for details. Additionally there are updates to
existing selling and servicing requirements, effective immediately,
unless otherwise indicated. Changes include requirements surrounding
reporting guilty pleas or governmental authority investigations to
Freddie Mac, incorporating FEMA's revised Standard Flood Hazard
Determination Form and updating flood insurance requirements and
revisions to the process for requesting and obtaining physical or
constructive possession of a note as well as related document custodial
functions and duties.
changes announced in this Guide Bulletin include: removal of
requirement that a borrower must maintain six month's rent loss
insurance for 2- to 4-unit primary residences when rental income is used
in qualifying, updated Guide Exhibit 4 and Exhibit 5 to reflect the
creation and use of the joint GSE MERS Rider Form in three states
(required use effective October 15, 2014), posting a document listing
the full table of contents for the Guide on AllRegs, and publishing the
most recent Historical Guide Snapshot.
For Sellers only, the guide has clarified that unemployment
compensation is an eligible source of income for Relief Refinance
Mortgages and the applicability of resale restrictions by updating Guide
Section 22.23, Purchase Requirements for Mortgages Secured by
Properties with Resale Restrictions. Please refer to Guide Bulletin
2014-6 for additional details on these requirements.
And on April 24, Freddie Mac issued Single-Family Seller/Servicer Guide Bulletin 2014-06,
which notifies sellers and servicers of numerous miscellaneous policy
updates. The Bulletin, among other things, (i) requires sellers and
servicers to immediately notify Freddie Mac of a guilty plea indicating
lack of integrity or upon being notified that law enforcement or another
governmental authority is investigating or prosecuting a
Seller/Servicer's board member, officer, employee or contractor for
fraud; (ii) updates flood insurance requirements and updates related
forms; and (iii) revises the process for requesting and obtaining
physical or constructive possession of a note as well as related
document custodial functions and duties. The Bulletin also (i) removes
the requirement that a borrower maintain six month's rent loss insurance
for a 2- to 4-unit primary residence when using rental income as
qualifying income; and (ii) clarifies selling requirements related to
unemployment compensation as an eligible source of income for Relief
Refinance Mortgages, and the applicability of certain resale
far this week there just isn't much going on in the fixed-income
markets, although Tuesday's prices faded about .125. (Thomson Reuters
observed, "There was also a better appetite for risk assets with
equities gaining on favorable earnings news, which provided a temporary
distraction from the crisis in Ukraine.")
news picks up a little today, however, so we may see some movement. At
7:15AM CST we have the March ADP Employment number, of questionable
predictive ability for the jobs number Friday, the first read on Q1 GDP
(expected +1.2%) at 7:30 AM CST, and April's Chicago PMI (+56.5 versus
+55.9 last). We'll also have the FOMC statement at 1PM CST (expected to
be a nonevent with another $10 billion in tapering, split equally
between Treasuries and MBS, and no changes to forward guidance
Treasury will announce its quarterly refunding; $70 billion in 3- and
10-year notes and 30-year bonds is expected for auction next week. The 10-yr closed Tuesday at 2.70% and it is nearly unchanged so far this morning as are agency MBS prices.