FHFA Confines Buying to QM Loans; Nix The Use of Personal E-Mail Addresses; More Lawsuits
"Rob, do you know if an LO, AE, or correspondent rep has a matching 401(k) plan with their company, are bonuses including in that? Has the CFPB ruled on that?" I don't know. But one thing I do know is that one gauge of a business is whether or not a broker or banker is using a personal e-mail address. I am no expert in compliance, but I am wary when the owner of a mortgage company writes to me about something business-related and they are using some e-mail like StanTheMan@hotmail.com. In fact, I received this from a compliance expert: "Loan officers who have been in the industry for a long time, particularly brokers, are accustomed to using their personal email account (gmail, yahoo, etc.) for business purposes. Bank information security rules require that confidential customer data (basically anything not found in the phone book) be protected. When LOs conduct business that includes this data using their personal email account, the lender has no control over it and can't properly protect the data. Training old dogs new tricks is difficult, but LOs should only use their bank/mortgage company email accounts to conduct business." Shows how much I know....I didn't know they still made phone books!
Certainly no lender wants to run astray of the CFPB or the legal system in general, due to its business practices. Two large institutions can cross one lawsuit off of their books as it was announced that the Bank of America and MBIA settled their mortgage dispute. It is a "global settlement" of all litigation between both parties, including a resolution to MBIA's rep and warranty lawsuit against BAC and BAC's restructuring lawsuit against MBIA. Bank of America will pay $1.6 billion of cash and transfer $137 million of unsecured MBIA Inc. notes to MBIA Corp. It will also provide a $500 million line of credit to MBIA Corp. and terminate all outstanding CDS purchased from MBIA Corp. In return, MBIA will end its rep and warranty lawsuit against Countrywide and Bank of America and issue warrants to Bank of America to purchase about 5% of MBIA common stock at $9.59 (which had an intrinsic value of $47 million as of yesterday's closing price). Most analysts felt that the settlement is a positive development for Bank of America credit and MBIA-wrapped non-agencies.
But on the flip side, New York is going to sue Bank of America and Wells Fargo.
Lender, agency, and investor news just continues to pour forth. These will help you see the trends, but it is always best to read the actual bulletin for full details.
MSI has clarified that it will not permit the paying off of revolving debt to qualify a USDA borrower; borrowers must be able to qualify with their current debts. Paying off installment debt with proof of release of liability to qualify is acceptable; however, paying down installment debt falls under the above rule.
PHH has revised its lock policy to specify that loans may now be rate locked up to 30 calendar days after the Note date, replacing the previous 15-day parameter. As a reminder, PHH will not purchase loans that have aged beyond 60 calendar days after the Note date or loans that have been previously declined by another investor.
In light of the recent flooding in the Midwest, Kinecta has issued a reminder on its disaster policy, which requires an updated property inspection to be performed by a licensed appraiser if the original appraisal was completed before the disaster. If the property is deemed uninhabitable or the condition has been affected, a new full appraisal is required; if the property is deemed not to have been adversely affected by the disaster, the original may be used. All appraisals must include photos and should be completed using Fannie Mae Form 1004/D/Freddie Mac Form 442 (Appraisal Update and/or Completion Report) and the DU Property Inspection Report, if applicable.
An analysis of Radian Guaranty's suggests that delinquent trends are moving in a positive direction (that is, declining). March saw a 5.1% M/M decrease in the delinquent inventory, leaving the total number of units at 85,109, which represents a decrease of 8.7% from year end. Radian also reported 4,168 new default notices, a 23.9% M/M decrease versus the 5.3% increase experienced in February. Cures rose to 6,338 M/M, representing a 29.7% increase. Combined with the decrease in new notices, this took the cure rate from 89% in February up to 152% in March.
The FHFA announced that Freddie and Fannie will only buy loans that fit into the QM (Qualified Mortgage) box starting next year (read more...). Obviously there are outlets for non-QM loans, as these loans go into portfolios, private securitizations, or are done by private money lenders.
I wonder if disaster relief loans fit into the QM box. New York Gov. Andrew M. Cuomo has announced that Fannie Mae and Freddie Mac are unveiling a new mortgage relief program to protect victims of Superstorm Sandy from large spikes in their mortgage payments. Sandy victims who received forbearance will be eligible for a special mortgage relief program that allows those homeowners to lower their monthly payments and avoid sudden payment spikes. Fannie and Freddie's previous guidelines could have resulted in a typical family being forced to make an immediate balloon mortgage payment of more than $6,000 or see a monthly payment spike of more than $500 or 50 percent. By contrast, the typical family participating in this new program would not only avoid a payment spike, but could also see a more than $200 reduction in their monthly mortgage payment from pre-storm levels. FHFA, Fannie Mae, and Freddie Mac have communicated to DFS that a special mortgage relief program will be available to Sandy victims with Fannie or Freddie mortgages who were current on their mortgage payments before the storm. Among other provisions, the program will lower the homeowners' interest rate to as low as four percent, extend the term of the mortgage, and also provide additional forbearance to homeowners who are severely underwater on their mortgages (owe more on their loan than the market value of their home).
And I continue to be asked about this even though it came out in January. Fannie Mae announced new policies on lender incentives and flood insurance. Lenders will now be able to offer a refinancing incentive to encourage borrowers to refinance through DU Refi Plus and Refi Plus transactions in which borrowers move to a lower payment, or "to a more stable product or shorter term". These include (a) the lender may provide an incentive to the borrower in the form of a payment to pay off a portion of the mortgage loan being refinanced, and/or, (b) the lender may provide the borrower with a cash or cash-like (e.g., a gift card) incentive that is not reflected on the HUD-1 Settlement. Changes to flood insurance coverage requirements found in Fannie Mae Seller Guide B7-3-07 will be amended to reflect the acceptance of flood insurance coverage from private insurers as alternative to the coverage provided by the National Flood Insurance Program (NFIP). Details from this January announcement can be found here.
When in doubt, try a little edukation. In training and events news:
The FHA will be holding loss mitigation training in Columbia, SC on May 16th that will cover changes to the Loss Mitigation Waterfall and explain eligibility for the available FHA tools. The course is intended for HUD-Approved Counseling Agencies, servicing lenders, and non-profits. Register here.
On May 22nd, the FHA and HUD are offering an introductory webinar on minimum property requirements for existing and new construction. Register here.
A webinar will be hosted by the FHA on May 29th for those who want an overview of the Build on Own Land and Construction/Permanent/One-Time Close processes. Permanent financing and new construction, new construction documentation requirements, loan calculations, and manufactured homes will all be covered in the training. Register here.
With little to push the markets Monday, they didn't move much. Mortgage-backed security dealers reported "below normal volume" which was exacerbated by the MBA National Secondary Market Conference in NYC. Mortgage banker agency supply was just under $3 billion with 30-year 3s ultimately making up the majority of the selling. We saw the usual buying from money managers and the Fed. By Monday's close, prices on 30-year and 15-yr agency MBS were "down a tick or two" which is practically unchanged, and the 10-yr closed at 1.77%.
There is no market-moving news today either, but the higher coupons may be influenced by the April prepayment reports which include the speeds of the HARP-related bonds. Today we do have, however, a 1PM EST Treasury auction of $32 billion in 3-year notes.