While rumors swirl about the topic for the phone call with Stearns Lending’s correspondent-wide staff today (let’s hope its good news), Richard Cordray’s job future, and more retail layoffs (this time Walmart’s cuts), how about something non-lending? Do you have a hankering for music from back home? Really miss that right-wing or left-wing talk show? Here’s a free website that lets you listen to radio stations from anywhere in the world. In other radio, non-mortgage, news, Norway has become the first country to eliminate FM radio. There's even a music-themed joke today.
The industry is still talking about the FHA MIP change earlier this week. What else is going on in FHA & VA land with lenders and investors?
FHA announced that it is reducing its annual Mortgage Insurance Premium (annual MIP) rates for most Title II forward mortgages with Closing/Disbursement dates on or after January 27, 2017. These annual MIP rate reductions will expand access to mortgage credit, and are expected to lower the cost of housing for the approximately 1 million households that use FHA annually. This FHA Mortgagee Letter provides detailed information about the annual MIP rate reductions, including a reduction of 25 basis points (bps) in the annual MIP rate for most new FHA-insured mortgages. The new annual MIP rate for mortgages that fall into this category is 60 bps.
FHA issued Mortgagee Letter 2016-25: 2017 Nationwide Forward Mortgage Limits - Correction for Special Exception Areas to provide official notification of the previously announced correction to the ceiling limits for calendar year 2017 in the special exemption areas of Alaska, Hawaii, Guam, and the Virgin Islands.
Pacific Union Financial, LLC announced the release of the FHA Section 203(h) Mortgage Insurance for Disaster Victims loan program to the Correspondent channel. Section 203(h) loans are available to victims whose previous residence (owned or rented) was in a Presidentially-Declared Major Disaster Area (PDMDA) and the property was destroyed or damaged to such an extent that replacement is necessary.
FAMC has modified its FHA FICO/DTI overlay with new policy as follows: FICO < 640: DTI cannot exceed 45%, regardless of AUS results and FICO > 640: DTI per AUS.
Mortgage Solutions Financial has made updated to its VA and USDA Streamline guidelines effective January 1st. Mortgage Solutions Financial will also be implementing the "Auto-Lock" functionality within its pricing engine for all FNMA, FHLMC, FHA, VA, and USDA lock requests. Loans will be locked immediately upon lock request.
Plaza's Wholesale Lock Policies WH-LP-001 have been updated. The update includes revisions to Section 8 of the Policy concerning Broker Compensation: increasing the allowable compensation dollar cap, clarifying discount pricing considerations, and VA loan considerations. In addition, references to the Mortgage Broker Fee Agreement and Non-Discrimination disclosure have been removed.
Plaza Home Mortgage will also align with FHA annual MIP changes announcing a 25-basis point reduction in the annual MIP rate for most FHA Title II forward mortgages with closing/disbursement dates on or after January 27, 2017.
Paramount Residential Mortgage Group's Resource Center in FastTrac has been updated with PRMG Appraisal Guidelines and the addition of the VA 2017 Calculator Tool.
And let's not ignore the continued conventional conforming (Freddie & Fannie, for the most part) tweaks that lenders and investors are making to start the new year!
First off, no one at either agency is ever allowed to talk about the future. But the WSJ says a Fannie/Freddie reform bill modeled on the Crapo/Johnson legislation from '14 stands the best chance of passing through Congress. That bill would wind down Fannie/Freddie, transfer their securitization infrastructure to a new cooperate owned by the banking industry, and wrap mortgages w/an explicit gov't guarantee issued by an FDIC-like agency.
Yes, envisioning a Fannie and Freddie endgame has turned into a pastime. The question of what to do with Fannie Mae and Freddie Mac has bedeviled investors and politicians ever since their crisis-era bailout. Donald Trump's election, and comments by his pick for Treasury secretary, have raised hopes of a solution.
The future of Fannie & Freddie under Trump is up in the air. By many measures, the housing market is the strongest it's been since the lead-up to the Great Recession. Home prices have returned to pre-recession levels nationwide. The foreclosure rate has fallen significantly, and mortgage rates are still low by historical standards.
Wells Fargo Funding has removed its overlay for tax return transcripts on Loans originated by Sellers opting to use Desktop Underwriter® (DU®) validation service for income and employment.as of January 10th. In accordance with Fannie Mae's removal of PIW fees for loans delivered to Fannie Mae on or after January 1, 2017. Wells is making system enhancements to accommodate the change. However, until system support is available, Wells Fargo Funding will apply post-fund adjustments to refund the PIW fee.
U.S. Bank Home Mortgage is enhancing its conforming LPMI Fixed Rate and Lender-Paid MI Programs. Qualifying ratios will be determined by LP or DU, the maximum debt-to-income ratio of 45% has been eliminated. Funds to close/reserves will be determined by LP or DU, the greater of either the standard FHLMC required reserves or two months PITI in reserves has been eliminated.
Fannie Mae's Lender Letter states updates regarding the approval of the acquisition by Arch Capital Group Ltd. of United Guaranty Corporation and its affiliates and updates to forms. In addition to the guidance related to United Guaranty, the list of Fannie Mae's Approved Mortgage Insurance Forms has been updated to include some newly-approved forms for Essent Guaranty and Radian Guaranty. This document lists the respective customer service numbers for Arch MI and United Guaranty.
Wells Fargo Funding has reinstated Prior Approval underwriting option on conventional Conforming Loans for Sellers that have delegated underwriting authority. Effective for Best Effort Registrations, Locks, relocks, and renegotiations on and after January 5, 2017.
Arch MI and United Guaranty are now one company. For now, Arch MI's and United Guaranty's systems will continue to look and operate as they currently do. In December, 2016, United Guaranty announced changes to our Underwriting Guides in response to changes to conforming loan limits. These changes became effective January 3, 2017. Underwriting Requirements Guide and all supporting documents are available on the UG website.
Have you integrated with the Desktop Underwriter (DU) validation service? Fannie Mae's validation service uses third-party data vendors to independently validate borrower income, assets, and employment data, providing our lenders Day 1 Certainty on validated loan components. Visit the DU validation service web page to view a list of DU validation service vendors and other resources.
Fannie announced M.I. updates. Last week Arch Capital Group Inc. announced that it completed the acquisition of United Guaranty Corp. from American International Group Inc. Fannie Mae approved the acquisition of UGC and affiliates United Guaranty Residential Insurance Co. and United Guaranty Mortgage Indemnity Co.
Origin Bank has added eMortgage warehouse financing to the bank's product offerings. The technology of eMortgages, mortgages for which documents are created, transferred and stored electronically rather than by using traditional paper documentation methods. The bank is partnering with Fannie Mae, a leading source of financing for mortgage lenders, and is one of only a handful of companies offering this service. The digital technology provides benefits such as faster liquidity in the secondary market, operational efficiencies, quicker warehouse inventory turn times, increased data quality, and consistency and accuracy in the closing process. The bank began offering eWarehouse financing for loans sold to Fannie Mae on January 1, 2017. (For more information contact Ken Johnson or Kim Cates.)
Occasionally I am asked about books on secondary marketing. As those in the trade know, much of the knowledge is learned on the job. There does exist, however, The Handbook of Mortgage-Backed Securities, the first revision following the subprime mortgage crisis. Check it out. "It is designed to provide not only the fundamentals of these securities and the investment characteristics that make them attractive to a broad range of investors, but also extensive coverage on the state-of-the-art strategies for capitalizing on the opportunities in this market. The book is intended for both the individual investor and the professional manager. The volume includes contributions from a wide range of experts most of whom have been actively involved in the evolution of the mortgage-backed securities market."
Yes, in some way the MIP change earlier this week influenced MBS pricing - especially the spreads between Ginnie & Fannie securities. Don't cross-hedge! And something else that impacts the price of mortgage-backed securities are prepayment speeds. How long will those loans backing those pools be around, or are they all paying off? What investor wants to pay 105 for something that returns 100 in four months? The December prepayment prints posted on Friday evening and both conventional and Ginnie Mae prepayment speeds declined. The slowdown in Ginnie Mae speeds was more significant that Fannie & Freddie. With the backup in rates, as well as the slowdown due to the winter season, analysts are expecting a slowdown in prepayments into the Spring.
In terms of rates yesterday, Tuesday fixed-income securities like agency MBS or U.S. Treasuries barely budged and decided to focus on declining oil prices despite a steady equity market and a surge in positive sentiment at small U.S. businesses. WTI (West Texas Intermediate) crude fell 2.14% to $50.85/bbl., a multi-week low. We even had a decent $24 billion 3-year note Treasury auction. The 10-year note spent most of the session in a 6-tick range with the yield closing little changed across the curve.
Today the only scheduled news is the non-market-moving MBA application index for last week. Are consumers adjusting to higher rates? Probably: apps were up almost 6% last week with both purchases and refis showing nice pickups. We also have a $20 billion 10-year T-note auction, but garnering more press will be Donald Trump's first news conference since July, slated for 11AM ET today. For numbers today we find the 10-year note yielding 2.38% after closing last night at 2.38%. And current coupon Agency MBS prices are nearly unchanged.
Jobs and Announcements
In hiring news, "AmeriHome Mortgage continues its expansion in 2017! The Correspondent Lending business will be hosting the first of several Open House Job Fair events on January 26th in our Dallas office. Management is actively recruiting for experienced mortgage operations professionals, including underwriters and operations supervisors, as well as entry level customer service representatives. For immediate consideration, go to the AmeriHome Mortgage Careers Page or send your resume to firstname.lastname@example.org. AmeriHome is also excited to announce that they are now offering a new Assignment of Trade (AOT) commitment option. This allows sellers to trade unspecified pools of loans, transfer hedge positions prior to hedge expiration, avoid bid/ask spread when listing hedges, and deliver up to 10% high balance into trades with no hit. Contact your AmeriHome Correspondent Sales Rep to find out more."
And, "With a steady growth rate of 28% in 2016, Envoy Correspondent has a plan in place to build upon their success by hiring both open Regional Account Managers (RAM) positions that available for the TX/OK and CA/NV regions. Each region has a small number of established/producing lenders, so maximizing those relationships and successfully developing each region is essential. Correspondent delegated and non-delegated experience is preferred. Qualified candidates should email their resume to Jeff Haar - Western Division Manager."
On the retail side, "MB Financial Bank's (MB) dedication to Community Lending begins with our employees and their commitment to expanding the availability of credit in all the communities we serve. MB's new Community Home Advantage Program (CHAP) provides certain consumers with a significantly improved price - assisting with closing costs or in the form of a lower interest rate on loan transactions secured by properties located within specific markets. MB has openings for Community Lending Loan Officers in Georgia (Atlanta), Pennsylvania (Philadelphia), California (Los Angeles, Anaheim, Irvine, San Diego), Missouri (St. Louis), Michigan (Detroit), Illinois (Chicago), and New York (Buffalo). Contact Mark Powell (734-548-6126) regarding LO opportunities. MB also has openings for Community Lending TPO Account Executives in Georgia (Atlanta), Illinois (Chicago), and New York (southern). Contact Mark Mazzenga (610-496-1277) regarding TPO opportunities. Bilingual candidates are encouraged to apply to join our nationally-ranked team of mortgage professionals. EEO/AA Employer. Equal Housing Lender. Member FDIC. NMLS#401467.
"Assurance Financial has a solid reputation for closing loans on time. It's what we do. Our back office supports its mortgage loan originators and branch managers so they can focus on originating more new loans rather than worrying about closing their pipeline. Assurance is expanding its footprint, selectively hiring branch managers and MLOs in good markets. For more information, contact Paul Peters, CMB at 225-239-7948 or visit www.LendTheWay.com/Careers."
In product news, MortgageLead.com recently launched its warm transfer program for both purchase and refinance warm transfers. The most popular program right now is the VA-eligible warm transfer lenders interested in helping Veterans get into VA loans. Many of you will notice that MortgageLead.com is powered Suited Connector - already one of the leading players in the mortgage lead space.