Replacing real estate agents with “something else that doesn’t earn a 6% commission” is certainly a discussion topic. Here’s one new venture: peer to peer real estate marketplace. But as Brian B. from New Jersey points out, “If a new company says it’s taking out the middleman and it will handle all the paperwork, isn’t it now the new middleman?” All I know is what I read in the newspapers, and The National Association of Realtors reports 88% of all buyers financed their homes the past year, but 98% of younger buyers financed, showing finding financing is especially key for young homebuyers. I guess they have less moola. At the other end of the mortgage process, servicers of loans along the Gulf Coast are now seeing increasing delinquencies from areas hit by the hurricanes. Will the government help adjust Compare Ratios? See below!

Impact of Natural Disasters

I received this note over the weekend. “After taking care of homeowners located in natural disaster impacted areas, LENDERS FEEL THE PAIN. Lenders are faced with navigating significantly increased Neighborhood Watch (NHW) Compare Ratios and early payment default penalties.  One lender’s NHW compare ratio increased 200% from August 2017 thru November 2017. Of this increase, 82% of the new delinquencies were active forbearance agreements directly attributable to the natural disaster. In these cases, the borrowers made 11 on time payments on average prior to the delinquency. Furthermore, there are significant variances in delinquency reporting for the status and reason codes; which makes loan performance analytics difficult to manage. Additionally, aggregators are exercising early payment default and indemnification triggers for borrowers in forbearance agreements related to the natural disasters. In some cases, the repurchase price of a loan can include administrative fees exceeding 10% of the loan amount; which can send small to mid-sized lenders into a financial tailspin. To make matters worse, HUD has not provided clear guidance on how it will handle increased NHW compare ratios which are due to natural disasters.  The uncertainty of potential HUD corrective action along with the financial risks will continue to plague lenders deep into 2018 and beyond.”

Fees Changes and Performance

The MBA 3Q17 Performance Report is out, and the industry earned 40 bps per loan in the quarter. The survey showed that those companies that were 100% retail or consumer direct earned 48 bps and those that were 75% or more wholesale earned 9 bps. There were only 23 wholesale respondents in the survey versus 223 retail respondents, so the results may not be representative.

Mountain West Financial Wholesale posted the following: Starting February 1, 2018, VA has raised appraisal fees in the state of Texas. LendingQB fee templates and Mortgage Works AMC appraisal fee sheets will be updated by the February 1, 2018 effective date to reflect revised VA appraisal fees in this state.

Effective Monday, February 5, 2018, Flagstar will no longer allow Borrower-Paid compensation or a flat fee as part of the compensation schedule.  Customers will still have the flexibility to choose a compensation plan up to 275 basis points, including amounts for minimum and maximum dollar amounts.

The first stage of Flagstar’s Loantrac portal upgrades are effective immediately. Navigate its simplified, streamlined new fee summary page without having to browse through multiple pages to find the needed information. Save commonly-used business contacts within the portal to reduce the need to re-enter information manually and Issue lump-sum credits easily.

Plaza will increase the fees in Minnesota for appraisal orders placed on or after January 29, 2018. As a reminder, if clients know the appraisal fee is higher due to complexity, they are required to disclose the most accurate amount. Click here for the fee schedule.

Starting November 20th, Mortgage Works AMC added an additional $100 onto the base appraisal fees for properties located in the following counties: Alameda, Calaveras, Contra Costa Kern, Lake, Marin, Napa, Nevada, San Francisco, Santa Clara, San Mateo, Solano and Sonoma. Mountain West Financial has updated its appraisal fees to coincide with these changes.

Back in November the funding fee assessed for Fifth Third Correspondent Lending loans was reduced to $199 from the then current $399 per loan file. Effective for delegated loans locked on or after Monday November 27th, the funding fee will revert to $399.

Capital Markets

The increase in rates/yields continues as the yield on the benchmark two-year Treasury note surpassed 2% Friday for the first time since 2008. Will the increase attract US investors back into the market as well as fresh foreign investment, as returns now compare with similar bond yields overseas? Perhaps. The 10-year wrapped up last week at 2.55%.

Last week, the first couple economic releases were a little soft followed by stronger reports as the week ended.  The Job Openings and Labor Turnover Survey showed job opening edging down for the second straight month in November, letting up from a robust advance through the first three quarters of 2017. The headline producer price index fell, surprising a market looking for a small increase, and showed widespread softness across the core measures of the index. As the week progressed, Treasury yields jumped as concerns of a swell of Treasury issuance transfixed the market. On Thursday, data released by the US Treasury showed the federal budget deficit was $23 billion in December and $225 billion through the first three month of fiscal year 2018, $200 billion above the estimate provided by the Congressional Budget Office.  As the deficit increases, so does the need to fund the deficit through debt issuance. On Friday, the headline consumer price index met expectations, however the core index rose 0.3 percent versus market expectations of 0.2 percent. Retail sales rose 0.4 percent in December and November’s figures were revised higher, indicating a strong holiday shopping season.

When all was said and done, the 10-year Treasury note finished Friday yielding 2.55%, up from 2.47% the prior week and according to CME Group’s FedWatch Tool, probabilities for a March Fed Funds rate increase jumped from 67.3% to 72.6%.

Turning to this week’s calendar, today there is only the Empire State Manufacturing Survey (drops to 17.7, weaker than forecast) as well as three treasury auctions. Wednesday brings weekly MBA mortgage applications, December Industrial Production and Utilization, the January NAHB Housing Market Index, weekly Crude Inventories, and the January Fed Beige Book. Thursday’s data includes housing starts and permits, initial jobless claims and the January Philadelphia Fed. The week ends with consumer sentiment. We start the trading week with the 10-year yielding 2.54% and agency MBS prices better a few ticks (32nds) versus Friday afternoon.

New Products

Carrington Mortgage Services, LLC is now offering Non-Agency, Non-Prime loan programs. In our continuing effort to promote and support for the underserved borrower, our Non-Agency products allow borrowers with recent credit events, credit scores to 500, no MI loans and expanded ratio options, additional choices to qualify for a loan. Carrington began their journey to serve the underserved four years ago by expanding guidelines and manually underwriting government loan programs for credit challenged borrowers.  Today, mortgage brokers working with Carrington can further expand their business with these Non-Agency programs available on primary, secondary and investment properties. Fixed and ARM programs available. Loan amounts up to $1.5 million. Visit www.CarringtonWholesale.com for more information on our non-agency program or call 866-705-9506 to speak with an account executive.

CitiMortgage will now offer a new single digital platform to its clients after inking an agreement with two digital technology platforms. The front-end digital originations platform will be powered by LoanFX from Digital Risk, a provider of digital technology platforms and services, and the new loan originations system will run on LoanSphere from Black Knight. The new digital capabilities will allow CitiMortgage clients to complete the full loan cycle, from research to application, processing, scheduling appraisals, handing title, to closing through one digital platform.

The Quality Jobs Fund, which was created by the Federal Home Loan Bank of San Francisco and is led and managed by the New World Foundation (NWF), provided its first investment – $5 million to the Central Valley Fund. The Davis-based investment firm provides flexible capital solutions that facilitate the expansion of small- and medium-sized businesses, creating quality jobs and training employees for better positions. FHLBank San Francisco seeded the Quality Jobs Fund (QJF) with a $100 million charitable contribution to facilitate quality job creation, finance small business expansion, and support job training in its three-state district of Arizona, California, and Nevada, and in other communities nationally. The groundbreaking initiative will improve the wealth-building potential of working families, help generate future homebuyers, and serve as a catalyst for sustainable, long-term community development programs, especially those in underserved communities. Specifically, the QJF is supporting innovative programs that upskill low-income workers in vital industries and that finance the expansion of businesses creating quality jobs. QJF investments will focus on helping to increase wages for working families, thereby increasing the pool of potential homebuyers and helping sustain vibrant communities.

Pacific Union Financial announced that its PacificPlus, a Down Payment Insurance (DPI) program, is now available in Maryland, North Carolina, Virginia and Washington, D.C.

The PacificPlus DPI program provides optional insurance that protects all or part of the homebuyer’s initial down payment in the event of a loss when the property is sold in a down market, up to a maximum of $200,000 for purchase transaction that meet the required criteria.

Guaranteed Rate has a no-cost Red Arrow Approval Express program which can speed up the mortgage process and help homebuyers obtain their dream home more efficiently. This program delivers a full underwrite of credit, income and assets, providing an edge over competing buyers. For qualified buyers and conditions, the program allows buyers to: Secure credit approval before they’ve settled on a property, get full underwriting approval in as little as four hours, make an offer backed by an approval and compete with cash buyers and enjoy greater negotiating power. Consumers can call 773-290-0505 with questions and to be directed to a loan officer to further explain the program.

Guaranteed Rates’ announced its new proprietary program, GR Flex Power, a jumbo loan program. The program’s pricing is controlled and is underwritten by the company. It requires as little as a 10 percent down payment option for loans up to $3 million with no private mortgage insurance required. The program includes various financing options such as fixed rates and ARMs, and interest-only options are available with a 15 percent down payment.

Pacific Union announced its participation in the USDA’s Manufactured Homes Pilot Program that allows the financing (purchase and refinance) of an existing manufactured home constructed on or after January 1, 2006, in conformance with the Federal Manufactured Home Construction and Safety Standards (FMHCSS), as evidenced by an affixed HUD Certification Label.  Guaranteed loan applications submitted under the pilot program must be manually underwritten.  Additional details regarding the USDA’s Manufactured Home Pilot Program are available in Pacific Union’s Manufactured Homes Program Guide and/or USDA’s Manufactured Housing Pilots under the Section 502 Programs Single Family Housing Direct and Guaranteed unnumbered letter.

Unison Home Ownership Investors, provider of home ownership investments, announced multiple promotions and additions to its management team and substantial 2018 expansion plans. In 2017, Unison expanded into five additional states including Illinois, New York, Arizona, New Jersey and Pennsylvania, bringing its total footprint to twelve states plus Washington D.C. Unison has also processed over 14,000 consumer inquiries for its flagship programs. Earlier this year, Unison was recognized as a leader in today's financial technology space by winning three Benzinga Global Fintech Awards, and the FinovateSpring 'Best of Show' Award. GoBankingRate included Unison on its list of 'Startups to Watch in 2018' and Bank Innovation added Sponholtz and Riccitelli to its list of 'Most Innovative CEOs in Banking.' In addition, the company raised over $300 million in total investment capital, experienced significant growth in headcount and added industry veteran, Ron Suber, as an investor and strategic advisor. The company will also launch additional products and expects to grow origination volume by over 500 percent next year.

Caliber Home Loans’ 5-Star ARM allows the client to lock in a low initial interest rate for the first five years. After five years, the rate will adjust up or down, and lock in for the next five years. If it increases, it’ll never be more than 2% of the current rate. Caliber's 5-Star ARM follows standard agency guidelines. To learn more, visit the Caliber website.

HomeXpress Mortgage Corp. is now offering AssetXpress on its PrimeX program. His product is solely based on the borrowers’ seasoned, liquid assets. Contact Steve Cutter with questions.