Bernanke on Underwriting; Post Office and FHA Both Bleeding Red Ink; MBA Future Leaders
Why fit in when you're born to stand out? I remember when every computer
had McAfee anti-virus software - it stood out. This has nothing to do with
mortgage banking, but shows how things can turn in the business world: like
something out of a Hunter S. Thompson book, John McAfee is wanted for murder
and is on the run. Here's something for your IT folks.
Lenders are on the run, trying to find employees. The Federal Savings
Bank has numerous immediate full time mortgage processing, underwriting
(conventional, FHA DE, and VA SAR) and closing positions in its regional
processing centers (Chicago, IL; Overland Park, KS; Irvine, CA; and the
financial district in NYC). It is the fastest growing federally
chartered bank in the US,
and is looking for personnel as a result of this tremendous growth. The Bank is
"100% paperless, six sigma efficient, and a fun place to work. We are a
veteran-owned and operated Bank, and best of all we are a mortgage banking
company powered by a national depository platform (not just another bank with a
mortgage division)." For more information on the bank visit thefederalsavingsbank .com. "We
assure your discretion and confidentiality - interested parties please contact
David Romano" at dromano@thefederalsavingsbank .com.
Yesterday I once again mentioned the issue of youth ("youts")
in our biz, and received this note from Trey Worly, VP at Comerica on
the warehouse side. "Speaking of 'young people,' the MBA's Future
Leaders Program for 2013 is taking applications. Deadline for
applications is February 1st. The program is not limited to 'young
people,' but it does serve as a spring board for advocacy and leadership
development in the mortgage banking industry. The class of 2012 included
35 people from a wide spectrum of mortgage banking-related entities, including
owners, managers, originators, and fulfillment personnel from independent
mortgage bankers, large depositories, government agencies, multi-family
lenders, and mortgage insurers. The program starts in April 2013, on the front
end of the MBA's Advocacy Conference where participants will focus on
leadership skills and political activism through participation in the Advocacy
Conference and lobby on Capitol Hill." Check it out.
Speaking of aging populations, the U.S. Census Bureau reports that the
percentage of households headed by older adults has grown significantly over
the last half century. The share of householders age 75 and older grew from
6% in 1960 to 10% in 2012. In 1960, 32% of all households in the country were
headed by 30- to 44-year-olds, but by 2012 the percentage of these households
had fallen to 26% after peaking at 34% in 1990. The share of households headed
by older adults expanded as the number of 45- to 64-year-old householders
shrank in the 1980s and 1990s but began growing again in 2000. These households
now make up 39 percent of households in 2012. A large proportion of older
householders live alone: in 2012 more than half of householders 75 and older
lived alone, compared with almost a quarter of householders under age 30.
And lots of these folks are trying to obtain a home loan. What? Mortgage
lending standards are too tight? Many argue that they are exactly where they
should be, and are simply where they were 15 years ago. Some say that lenders
are very reluctant to lend, while others point to mortgage company volumes
bursting at the seams. Regardless, here is what the Federal Reserve Chairman
has to say about lending standards.
Remember all the assurances from FHA officials over the last year that
everything is okay? Well, it's not, and soon it will be official: the FHA is
in the hole for $16.3 billion. Just like some ill-fated HELOC programs, the
FHA can tap directly into the Treasury Department - it doesn't have to go
through Congress for the money. But we can all expect to see calls for higher
down payments and higher mortgage insurance premiums. And let's all watch the
talk about "This is the new subprime channel." Here is more.
Hey, government-controlled mortgage entities aren't the only ones who can lose
money. The U.S. Postal Service lost nearly $16 billion this year, up
nearly $10 billion from a year earlier. Most of the loss came from $11 billion
in payments the service is required to make to prefund health benefits for retirees.
The Postal Service didn't have the money to make these payments, so it
defaulted on them. The service reached its $15 billion statutory debt limit in
October, meaning it can't borrow any more money. The service wants relief from
its retiree benefits prefunding requirements and more flexibility on how to
manage its business. "Neither snow nor rain nor heat nor gloom of night
stays these couriers from the swift completion of their..." well, never
How about some relatively recent lender, vendor, and agency updates to give you
a flavor for trends? For full details read the actual bulletin!
Penn Financial has updated underwriting guidelines such that
e-signatures are not permitted on documents provided to borrowers and
conforming cash-out refinances require a minimum FICO score of 660.
Guidance on 4506-T tax transcripts have been revised as well, as all borrowers
with extensions were required to have filed 2011 returns by October 15th.
Pricing solution and product eligibility software provider LoanSifter
has published its most recent performance metrics on security, reliability,
accuracy and speed. Read the press release for full details.
Mortgage banking software developer On The Go Technology, which released
its iPad-based LOS back in April, has just rolled out the new premium
service. The free app, which doesn't require an internet connection,
allows users to complete a full 1003 and export it to their desktop LOS, while
the web-based premium subscription lets originators pull credit and generate
initial disclosures on their mobile devices.
The USDA, which maintains that borrowers who apply for USDA loans should
be unable to apply for "conventional credit," has clarified its official
definition of the term. Borrowers with "conventional credit" are
considered to be those who can put down at least 20%, can pay all closing costs
out of pocket, and have DTIs of 36% or less and PITI equal to 28% or less of
their monthly income based on the cost for a 30-year fixed rate loan term
without private mortgage insurance.
USDA guidance has been updated to state that the presence of outbuildings
doesn't render a property ineligible for the program so long as the property is
"predominantly residential in design, use, and character." Livestock
shelters and machinery storage sheds, for example, are considered to be
"functional farm structures," the value of which must be subtracted from the
property total on the appraisal. Structures that can't be used without significant
repairs, e.g. charmingly dilapidated barns and crumbling grain silos, are not
considered to add value to the property or to make it ineligible for USDA
Freddie Mac has issued temporary guidance on property valuation
documentation, which can't be dated more than 180 days before the Note date
(the previous requirement was 80 days). The same age requirement applies
to underwriting documentation.
Freddie's selling system customer test environment has been updated to include
the SEC's Rule 15-GA-1 data points. The CTE is available to help sellers
prepare for the ULDD requirements for loans with applications dated on or after
August 1, 2012 that are delivered on or after November 26th.
Wells Fargo correspondent reminds clients that closed loan files should
include the most recent copy of the DU or LP findings report, as loans can't be
delivered to the Agencies if there are any discrepancies in the final loan
data. All loans whose submitted findings reports incur salability error
messages will be suspended until errors are cleared; sellers should be aware
that they have to get in contact with Fannie directly in order to do this, as
Wells can't relay the specific errors based on the submission number.
Flagstar reminds clients that all loan files are being reviewed to
ensure that they include the Undisclosed Debt Acknowledgement with signatures
at origination and closing. This applies to any loan with an application
dated February 1, 2012 or after.
Flagstar had previously announced that hurricane-affected properties with
appraisals dated October 31st or after wouldn't require full re-appraisals but
would require a property inspection and an exterior photo. The guidelines
have been loosened for FHA Streamline Same-Servicer, Freddie Relief Refinance
Same-Servicer, and Fannie DURP Same-Servicer properties affected by Hurricane
Sandy, as Flagstar is still working on clearing these re-inspection conditions.
Bergen and Somerset Counties in New Jersey and Rockland and Westchester
Counties in New York have also been added to the list of affected areas.
Is anyone locking in loans? Well, probably, but much of the focus has
been on the U.S. stock market. Since the US elections, the S&P 500 is
down 5% and US markets have erased roughly $850 billion of equity
capitalization - and rates haven't done much. According to one view, 90% of the
market weakness can be attributed to concerns about the US fiscal cliff. Out of
the 5% of cumulative drop since Nov 7th, 4.5% (or 90%) happened on the first
trading session after Election Day, and during two speeches by President Obama
on Nov 9th and Nov 14th. In these speeches the President reiterated his
positions on capital gains, dividends and income tax rates, raising market
concerns about going over the cliff. The Congressional Budget Office
estimated allowing Bush tax rates to expire for upper incomes would raise about
$800 billion of additional revenue over the next 10 years, coincidentally
around the same amount as the US market capitalization erased over the past 6
days. And this is definitely a United States stock sell-off: the Euro STOXX
50 outperformed the S&P 500 by roughly 3% since the election.
Back to mortgages, things improved a little Thursday after mortgage rates
have been hurt by the DeMarco down trade (him being replaced by someone who
will promote refinancing every high rate agency mortgage), the worry about the
fiscal cliff, or the fact that mortgage rates have nowhere to go but up (not
too likely). Heading into the end of every year we see "window dressing",
and with the big gains in residential MBS we can expect to see some selling -
especially if tax rates are going to go up next year.
rates today, there is not much to report. The 10-yr comes in at 1.58%, about
where it closed, and MBS prices are higher.
(Thanks to The Onion for this one, but sums up our collective attention span.)
WASHINGTON-As they scoured the Internet for more juicy details about former CIA
director David Petraeus' affair with biographer Paula Broadwell, Americans were
reportedly horrified today upon learning that a protracted, bloody war
involving U.S. forces is currently raging in the nation of Afghanistan. "Oh my
God, this is terrible," Allie Lipscomb, 29, said after accidentally stumbling
on an article about the war while she tried to ascertain details about what
specific sexual acts Petraeus and Broadwell might have engaged in. "According
to this, 2,000 American troops have died, 18,000 have been wounded, and more
than 20,000 civilians have been killed. Holy smokes! And it's been happening
for, like, 11 years." Sources confirmed that after reading a few paragraphs
about the brutal war, the nation quickly became distracted by a headline about
Elmo puppeteer Kevin Clash's alleged abuse of a 16-year-old boy.