Deals from Radian & Freddie, Prosperity and F&M Bank & Trust; MBA's Per Loan Profit Numbers; Comp Survey Expanded
Radian announced it has entered into an agreement with Freddie Mac on a pool of delinquent loans which eliminates credit risk on 9,756 delinquent loans, 12.6% of delinquent inventory. RDN paid $255 million to Freddie Mac and deposited $205 million in a collateral account. The latter amount, less any offset related to successful rescission and denial activity, will be paid to Freddie Mac. The agreement relates to a pool of 25,760 loans that were delinquent as of December 31, 2011. The agreement eliminates credit risk on 9,756 loans that were delinquent as of July 31, 2013 and on 4,586 "re-performing" loans. The settlement reduced the company's delinquent inventory by 12.6%.
Before all the folks out there working on other settlements start calculating percentages, remember that Radian had previously paid $370 million of claims on this pool of loans. As part of this agreement, the company paid $255 million to Freddie Mac and deposited $205 million in a collateral account. The latter amount, less any offset related to successful rescission and denial activity, will be paid to Freddie Mac. As of July 31st, Radian had completed $10 million of loss mitigation activity that was deemed final under the agreement. Another $140 million of claims had been rescinded, denied, or curtailed but were not considered final under the agreement.
And residential lenders have a little less money to settle buybacks. The MBA released figures from its study showing that in basis points, the average production profit (net production income) was 75 basis points in the second quarter, compared to 86 basis points in the first quarter. So volumes are down, and lenders are making less on it. Secondary marketing income declined to 263 basis points in the second quarter, compared to 274 basis points in the first quarter. One last thing before you click on the site: total loan production expenses (commissions, compensation, occupancy, equipment, and other production expenses and corporate allocations) increased to $5,818 per loan in the second quarter, from $5,779 in the first quarter.
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Another thing that is not helping the lending industry is the continued proof that all-cash purchases are on the upswing. Yes, cash purchases are very high, but how long does it take to save up a 30% down payment, on average? Someone sent me an ad, which I can't verify the accuracy of, with a photo of a house with a handicapped ramp and rail leading up to the porch with the caption, "With a 30% down payment and taking 25.2 years to accumulate a down payment, we will have to have grab bars and ramps in first time homebuyer homes."
Do you wonder what happens to ex-CFPB folks? In this case legal firm Morrison & Foerster LLP picked up Leonard Chanin (former Deputy Director for rulemaking at CFPB), and he has been joined by Tom Noto (formerly Associate GC at BofA for mortgage and before that GC of Ameriquest) and Don Lampe (ex-Dykema) in M&F's Mortgage and Fair Lending Team with about a dozen other attorneys. Here is the release for more information.
How about some upcoming events, lender & investor news, and agency news?
The Mid-Atlantic Lender Conference is coming up, hosted by the Mortgage Bankers Association of Metropolitan Washington, on October 9. If you're in the DC area, you should check it out.
Premier Nationwide Lending (PNL) rolled out its "Lock and Shop" program through its retail origination channel. CEO Brad Sullivan stated, "With the 'Lock and Shop' program, we will credit approve a home buyer and lock in their interest rate before they find the property they want to call 'Home.'" With the "Lock and Shop" program from PNL, if rates go up, the borrower is protected. If mortgage rates decrease, the homebuyer will have an option to 'float down' to the lower rates. John H. P Hudson, Production Manager and Vice-President of Regulatory Affairs for PNL, said, "The threat of increasing interest rates stripping away a borrower's loan approval is removed from the equation. This means less fallout and a greater opportunity to deliver excellent service to our borrowers and referral partners. Learn more about Premier Nationwide Lending or the new "Lock and Shop" program HERE.
Turning to jumbo loans, Keith L. did some digging, and found as lenders release Jumbo products, some will NOT allow you to use them if an Agency High Balance loan is available - even if the agency jumbo is priced higher than the true jumbo. "Investors that allow HB loans to ran as Jumbos in counties that qualify for HB: Wells Fargo will not allow - must use Agency HB if fits; Chase will not allow - must use Agency HB if fits; US Bank - you may use Jumbo in HB Counties as long as it qualifies; Flagstar - you may use Jumbo in HB Counties as long as it qualifies; SunTrust - you may use Jumbo in HB Counties as long as it qualifies." Thank you Keith!
Prosperity Bancshares, Inc. (NYSE: PB), the parent company of Prosperity Bank, announced the signing of a definitive merger agreement with F&M Bancorporation Inc. (OTC: FMBC) and its wholly owned subsidiary F&M Bank & Trust Company ("F&M Bank") headquartered in Tulsa, Oklahoma, whereby F&M Bank will be merged with and into Prosperity Bank.
The Fannie Mae Lender Record Information application (Form 582) has been published on the website and is now available 24 hours a day, as is an updated accompanying job aid. As a reminder, lenders that submitted their fiscal year on June 30, 2013 are required to submit their annual certification via this form, along with their audited financial statements, by September 30th. A new REOgram job aid is also available on the FNMA business portal, which provides guidance on entering a REOgram as well as manual and bulk uploads; see the "Job Aids" section of the Servicing Learning Center for access.
US Bank is now pricing its Home Possible products using the standard Conforming 30-Year Fixed pricing, with no additional hits for LTV or credit score. As a reminder, Freddie has reduced the Home Possible delivery fee from 150bps to 75bps on 1-unit primary residence purchase transactions.
Per additional MI disclosure requirements, Fifth Third has restricted the maximum LTV for second homes and investment properties on all products to 80%. All relevant loans with LTVs over 80% will be required to fund by December 1, 2013. As a general MI reminder, Fifth Third guidelines state that the coverage must be the more restrictive of the AUS findings and the applicable product guide, and reduced coverage mortgage insurance is not permitted.
PennyMac will be updating its pricing grid for the USDA Guaranteed Rural Housing program and an LLPA for the 203(k) product, neither of which will be available to lock as of August 26th due to the fact that they are still in the process of development. These will be launched at a later date; in the meantime, lenders are encouraged to monitor the updates in anticipation of the release.
Effective immediately, PennyMac has aligned its assumability requirements for the Freddie Mac 3/1 ARM product with those of Fannie Mae, which allow for an assumption during the life of the loan after the initial fixed period.
Franklin American has announced that, effective immediately, when locking Conventional FHLMC loans where LP is selected as the underwriting type, the system will require that the DTI ratio be entered in order to proceed.
FAMC has updated its principal reduction guidelines such that loans where the compensation is paid by the borrower on a brokered transaction, the reduction result in a loan modification, or the reduction is not applied before the documented first payment due date are not eligible for purchase. FHA and VA loans must comply with the requirements of their corresponding agencies, while Conventional and USDA loans must meet the FAMC requirements (USDA loans are also subject to the Rural Development guidelines). For loans on properties in Texas, state law allows principal reductions for the amount of closing costs paid outside of closing up to $1000. All loans need to have the HUD-1 Settlement Statement reflect the reason for the principal reduction and amount, and in cases where the reduction is applied after closing but before the first payment is due, must be accompanied by a pay history disclosing as much.
Rates go up a little, down a little - yesterday bond prices improved and rates dropped slightly. But right before Labor Day, does anyone care about rates...is anyone going to lock in a loan and lose three days? Maybe... we all know rates have gone, and the Fed's weekly release of its QE3 purchase stats confirmed that: for the week ending August 28 there was no buying in 30-year 3% securities for the first time since it began purchases in that coupon in February 2012, while 4.5s put in their first appearance at $1.7 billion, or 11.6 percent, since QE1. Meanwhile, 30-year 3.5s made up 21.6 percent and 4s 51.4 percent of total purchases.
This morning we have a new batch of economic chowder. There is no official early securities market close, but I wouldn't want to try selling an MBS for a pipeline hedge after noon PST. We've had Personal Income and Consumption, expected +.2% and +.3% respectively, and were +.1% and +.1% - slightly less than expected. Later we'll see the Chicago PMI and Consumer Sentiment. Thursday the 10-yr closed at 2.75% and in the early going is sitting around 2.76% - don't look for much change on the MBS prices that help set rate sheets.