Cloud-based Mortgage Valuation; SEC Drops Wells Fargo Inquiry; More on CFPB Exams from OB
Better to be approximately right than precisely wrong. And a lot of
neighborhoods are trying new things in real estate - thanks to Tony B. for this.
It is an example of locals financing their own properties to help themselves.
And lenders continue to expand - business is good! In Kentucky and Ohio Victory
Mortgage, LLC, is seeking Loan Originators and support staff for its new branch
in Columbus, Ohio. Victory is a subsidiary of Victory Bancorp based out of
Northern Kentucky and is expanding its branch network to include the Columbus
Ohio market. It is one of the top seven largest lenders in the Greater
Cincinnati Area and is "the affiliate lender for Fischer Homes who has been the
Greater Cincinnati Area's largest homebuilder for the past five years, and Fischer
Homes' entry into the Central Ohio market is what is driving Victory Mortgage's
expansion." The LO position will include developing and maintaining a quality
network of business relationships with Fischer Homes as well as other referral
sources including realtor and refinance business. Resumes for Loan
Originators should be emailed to Jason Welch at jwelch@victorymortgage .com.
And a few states over, but without geographic restriction, Peoples Bank (KS)
is searching for retail loan officers, focused on purchase business, across the
nation. Peoples is a federally-charted (FDIC) community bank that was
founded in the mid-1800's, has a solid mortgage banking culture which has
evolved over 30 years, and which will close $2.5 billion in 2012 in all 50
states. Peoples Bank has Fannie/Freddie approvals, significant warehouse
spread, proven and tested compliance practice, scalable state-of-the-art
Information Technology platform and a solid back office which delivers
consistently competitive service levels (like consistent 72 hour underwriting
turn times). Please send your confidential resumes or questions to Marcia
Robertson at mrobertson@bankingunusual .com.
Does the SEC ever say, "Oops, my bad!"? Apparently it does:
"Wells Fargo says it won't face SEC action on mortgages," and here is
TransUnion reports the
percentage of mortgage holders at least two months behind on their payments
declined in 3Q to 5.41% vs.5.49% in 2Q. This is the lowest level in 3Ys, but
still well above the 1% to 2% historical level. Optimists say that this means things are improving, while critics will
say that those inclined to be behind on payments have already been foreclosed
Here are some relevant sites, questions, and observations recently
Tammy Butler with Optimal Blue addresses CFPB exams - page down once here.
"If the FHA would try to impose mortgage insurance for the life of the
loan they would be in violation of a federal compliance law, the Home Owners
Protection Act (HOPA). There is even a covenant in security
instrument regarding mortgage insurance so this is not something FHA can change
easily, without changing the regulation. Congress would have to vote on that
and loan documents would have to be changed. That would take a year! Just
some information from an aging compliance person!"
"Rob, what happened to the train of thought that believed that
current housing policies, including the $25 billion servicer settlement, harmed those who have done the right thing-those
who didn't overleverage their homes, paid their mortgages on time, didn't
borrow more than they could afford, or saved all their lives but are now
punished with near zero interest rates?" Good question and one that many
in the industry wonder.
Here's another: "As I was filling out the NMLS call report the other day
and my numbers were not working out, it occurred to me that they will rarely
ever work our correctly. Here is the situation. The call report asks for the
number and total dollar amount of applications taken and the number and amount
of loans closed, denied etc. So far so good. Except when a loan is taken in one
quarter and finalized in another with a different loan amount. The math can't
work out and the system will not allow it to not match. Kind of an interesting quandary.
I'm a pretty small shop but how do the big lenders do it when it could be tens
of thousands of dollars a quarter."
Steve S. observes, "A couple of year ago there was a study out on the FHA
loans with down payment assistance. For loans over 680 credit score there
was no difference in the delinquency or foreclosure rate as compared to
standard FHA loans with down payments. When you got below 680 the numbers
went off the charts. So the problem with FHA is that they don't have a floor on
credit scores. And raising the premiums won't stop the bad loans."
[Editor's note: it comes down to ability to repay, right?]
John J. with Patriot Bank Mortgage writes, "HUD seems to think
there is no price elasticity for HUD loans by their raising premiums and monthly
go-alongs. The HUD fund up until the euphemistically called financial
crisis was healthy because it had a broad spectrum of credit quality
loans. Certainly there were the edgier low-income, first-time home buyer
loans but there were also lows with very good credit quality. The reason
these better borrowers went with an FHA/VA low was primarily for the low down
payment requirements. The HUD share of business waned in the early 2000's
because of sub-prime lending which had fewer 'hoops' to jump through to get a
loan. The financial crisis hits and sub-prime dissolves. Now where
do these low quality loans go? Back to HUD. Once the private
mortgage insurance industry stabilized, they decided to get back in the
game. They must just love the fact that HUD thinks they can work their
way out of their dilemma by raising premium rates. All that does is make
HUD the real lender of last resort. The better qualified borrowers who
might once have chosen an FHA/VA loan can now scrounge up just a bit more down
payment and get an agency loan with private MI, which incidentally is cheaper
than HUD premiums and getting cheaper each time HUD raises theirs. The answer
for HUD is to lower premiums to encourage the higher quality loans but tighten
underwriting guidelines, principally FICO/DTI ratios where the borrower is but
a 'flat-tire away from defaulting'."
Turning to relatively recent lender & investor changes, we're no
longer in the environment where payments were calculated using algorithms and
flood insurance was checked against FEMA maps in house, no typos allowed on FHA
or VA submissions, credit reports were hand delivered and borrowers had no
access or right to view them, women of child bearing age were excluded from
using their income to quality (until ECOA came out), conventional qualifying
ratios were 25 and 33. So...
Mortgage raised the price cap on its government products from 4.50 to 6.00 points
today. The price cap is the total of the compensation paid to the broker
(by the lender) and premium credited to the borrower (after all adjustments are
taken in to consideration). The reason for this change is to increase YSP
available to credit to the borrower so that brokers can offer low or no cost
streamlines. (360 continues to offer streamlines down to a 640 credit
score and have no requirements regarding the prior servicer.)
Residential mortgage lender Platinum Home Mortgage Corporation (the one
based in Rolling Meadows, Ill, not the myriad of other Platinums) announced
that Mike Azzarello, CMB has been named senior vice president and managing
director of its "Traditional Correspondent" Lending Division. In his new
role, Azzarello will build the new traditional correspondent program group, based
out of Jacksonville, Florida.
As per the GSEs' recent clarification, MGIC has announced that it
will not require lenders to represent the condition of disaster-affected
properties for HARP loans. MGIC has further updated the disaster policy
or its HARP Refi-to-Mod program to state that lenders must obtain exterior-only
inspections for properties in areas that have been impacted by a natural
disaster to assess whether or not any damage has been sustained. These
inspections don't need to be submitted to MGIC but should be kept in refinance
loan files. Provided that there either isn't any material damage or the
damage has been sufficiently repaired before closing, HARP RTM properties
remain eligible for the program. In cases where there is material damage
and the property isn't restored to its pre-disaster condition before the
refinance closes, the property will be rendered ineligible.
Veros, GMAC's appraisal management service, has added AMC Axis to
its appraisal rotation. Axis will be slotted into the vendor distribution and
can also be selected manually.
Level1Loans and IntraPrise Solutions, Inc. announced the creation of
Level1Analytics LLC, a joint venture to provide cloud-based mortgage
valuation and other financial modeling software to owners and managers of
mortgage and mortgage related assets. Each of the companies has a 50% joint
ownership in the private venture, which is led by Dr. Thomas J. Healy, CMB of
Level1Loans and Jeff Van Voorhis of IntraPrise Solutions. Read more
M&T Bank will no longer allow lender-funded advances to establish
new escrow balances on FHA Streamline refinances as of November 28th.
Loan packages received on the 28th and after where the HUD-1 discloses an
escrow advance will not be eligible for purchase. In cases where a loan
has been received by funding but not purchased by the deadline, the lender
should document that the package has been made whole either by payment having
been received from the borrower or the paid-off lender before M&T can
authorize purchase. Premium pricing to defray closing costs and prepaids
with lender credits will still be permitted for FHA Streamline refinances.
Let's all be careful what we wish for, as one trader noted yesterday,
"Treasuries were on the rise again Tuesday on the strong demand for the US
two year note auction and concerns that US budget negotiations were not making
progress." Does that mean that if & when the U.S. government
"mans up" and settles the fiscal cliff issue, rates will rise?
Perhaps not, as the markets would rather have certainty than uncertainty - but
it is better than the alternative which could easily harm our economy but push
rates lower. But if a LO's borrower is out of a job because companies won't
hire due to the economic climate, a low possible refi rate won't help.
On Wednesday we saw some price movement during the day, but for the most part
MBS prices were pretty flat on below-normal volume. We learned that New Home
Sales decreased 0.3% in October, but is up 17.2% year over year. The median
sales price was $237,700; the average was $278,900. The seasonally adjusted
estimate of new houses for sale at the end of October was 147,000, which
represents a supply of only 4.8 months at the current sales rate. The press
doesn't seem to be focused on that "shadow inventory" any more.
Treasuries continued to move higher, and thus rates lower, due to risk
aversion associated with the uncertainty of a resolution to the fiscal cliff
crisis before year-end but prices on MBS were essentially unchanged (spreads
Today we've had Initial Jobless Claims for last week (expected to drop
from 410k to 390k, it went from a revised 416k to 393k) and the second reading
on third quarter GDP (expected to move from +2.0% to +2.8%, it came out nicely
at +2.7%). Later we have yet another in the seemingly endless chain of housing
numbers (Pending Home Sales) and the final leg of this week's coupon auctions
with $29 billion in 7-year notes. In the early going the 10-yr is up to
1.64% and MBS prices are roughly unchanged.
My wife was screaming at me: "Leave!! Get out of this house!"
As I was walking out the door she yelled, "I hope you die a slow and
So I turned around and quietly asked, "So now you want me to stay?"