Residential lenders are paying raptly following the news that President Donald Trump intends to roll back much of the 2010 Dodd-Frank financial regulations through an executive order today at noon ET, and work toward rescinding the Department of Labor's fiduciary rule. On the flip side, fintech startups are preparing to fight for a little-known provision in the Dodd-Frank Act that lets them mine customers' bank accounts for data that facilitate use of investment apps and other third-party banking tools. "Some of the rules may have even been unconstitutional in creating new agencies that don't actually protect consumers." But every lender will say that some of the rules work well - and that we need to keep those and change others and their enforcement methods.
All the tizzy last month has reminded us that the FHA's Mortgage Insurance Premium is only one type of mortgage insurance. There are several companies that offer MI in the Fannie Mae & Freddie Mac programs, with each having its advantages, disadvantages, legal issues, and quarterly results.
Arch MI will allow a PIW when offered by Desktop Underwriter and exercised by the lender according to Fannie Mae requirements. A full description of the requirements (as well as the ineligible items) is also found in the Fannie Mae Selling Guide. As with any other mortgage insurance submission, the lender is responsible for notifying the applicable Arch MI company of any changes pertaining to the loan-this includes situations that would render the Fannie Mae PIW offer invalid. This applies to all loans submitted for insurance, regardless of channel: delegated or full-file.
March 1, Arch MI and United Guaranty will combine their
program policies into a single Underwriting Manual to be used by all customers. Going
forward, the term underwriting
requirements will be
used to define credit policy. In comparison to Arch MI's current Guidelines
Summary and Underwriting Manual, the new Manual will have expansions and
changes to the underwriting requirements in a variety of areas.
The list of underwriting requirements being changed in the Arch MI Underwriting Manual, effective March 1, are too numerous for this simple commentary, and clients should read the full release for details. But they do include some interesting tidbits that lenders may be interested in. Some loan amount segments have credit scores lowered to 620. Maximum loan amount increased to $1,500,000. Increase maximum acreage to 15. Construction-to-Perm (CTP)/Renovation uses segments in the EZ Decisioning and Standard Program grids.
changes requiring a 30-day notice include removing eligibility for manufactured
homes as second homes. EZ Decisioning Debt-to-Income (DTI) ratio now set at
maximum 50% DTI. Eliminate delegated submission for loan amounts >$850,000
with a credit score <740. Remove eligibility for seasoned loans. And so on.
"Please notify your staff and branches of these changes, and update your
systems as necessary. If you have questions, please contact your Arch
MI Account Manager."
Over at MGIC, PathSoftware, "a new highly-configurable, cloud-based mortgage loan origination software (LOS) from CalyxSoftware, announced its integration with Mortgage Guaranty Insurance Corporation (MGIC). 'This integration allows for two-way communication and secure data exchange between PathSoftware and MGIC. PathSoftware customers can now obtain MGIC rate quotes and order mortgage insurance without leaving their loan file. The seamless integration also auto-populates the appropriate mortgage insurance premium fields back into the loan file without leaving Path-decreasing data entry time and increasing accuracy.'"
MGIC, stock symbol MTG, announced fourth quarter earnings: $0.28 per share on revenue of $267M, beating expectations. The better-than-expected numbers seemed due to lower-than-expected incurred losses due to a $43M positive reserve development. $39M of the positive reserve development came from an improved claim rate assumption, while the remainder relates to IBNR. The average monthly premium rate decreased to 57.5 bp from 58.3 bp, while the average singles rate dropped to 163.0 bp from 167.2 bp in 3Q16. MGIC had new insurance written (NIW) of $12.8B (up +31% YoY, down -10% QoQ). MTG expects to write -5% to -10% less business in FY17 due to the impact of rising rates.
Over at Genworth Financial management is dealing with more shareholder lawsuits over the China Oceanwide deal. "A shareholder complaint has been filed against Genworth Financial Inc. seeking to block the company's planned sale to China Oceanwide Holdings Group Co. Ltd.
The complaint said the proxy statement that Genworth filed in December 2016 asking the shareholders to vote in favor of the merger is 'misleading' and 'incomplete.' The proxy lacks material information about the process leading up to the agreement with China Oceanwide, the complaint states, preventing shareholders from being able to make an informed decision about the merger.
The proxy statement does not disclose if the standstill provisions contained in the confidentiality agreement with other interested parties contain a "fall-away" provision that allows each party to submit a superior proposal to acquire the company. That information would allow shareholders to determine whether other parties who were serious about acquiring Genworth were prevented from submitting superior proposals, the complaint said. The proxy statement also provided a "materially incomplete" summary of the key financial analyses performed by financial advisers Goldman Sachs & Co. and Lazard Frères & Co. LLC, the complaint said.
The presentations made by Goldman Sachs and Lazard to the company's board included the specific data and inputs used in analyses, but this information was omitted from the proxy statement in violation of the board's fiduciary duties to shareholders, per the complaint. The complaint also alleges that the consideration being offered to the company's stockholders for the sale is "unfair and grossly inadequate," given the company's prospects for future growth and earnings and its recent financial performance.
Capital & Servicing Markets - steady as she goes?
Rates have moved in a narrow band all week. Sure there are always some minor price movements between coupons (3.875% versus 4.50%), or between securities (Ginnie versus Freddie), or between maturities (30 versus 15-year, for example), but for the most part it's been pretty quiet this week.
Yesterday agency MBS prices improved slightly, and were tighter in spread to Treasury securities. The 10-year note matched the low yield of the week, 2.43%, although it closed nearly unchanged. We've been talking about supply and demand, and corporate debt issues - yesterday it was Apple's turn with the company pricing out $10 billion of debt.
Jobs and housing drive the economy, and this morning we've had lots of jobs news. Something that comes up every month is the "labor participation rate." Ever wonder about all those people you see driving around in the middle of the day, and wonder, "Why aren't they working?" In 2000, the labor force participation rate peaked at 67.3%. Today, the overall rate is 62.7%.
This morning we learned the U.S. job numbers for January. The unemployment rate came in at 4.8%, non-farm payroll was +227k (versus 180k expected, with a back-month revision higher), and hourly earnings were +.1%, workweek unchanged. Later we'll have a second-tier economic blurb, arguably third-tier in terms of interest rate impact, in the form of the Markit Services PMI for January, ISM non-manufacturing PMI, and then Factory Orders. After the employment data, we find the 10-year yielding 2.47% and agency MBS prices a shade better.
Jobs and Announcements
In secondary marketing job news, Open Mortgage, a nationwide residential mortgage lender, is looking for a Lock Desk Associate to join the company. "We are headquartered in Austin, TX but this positon can be worked remotely. We are looking for someone to: monitor and input all new locks, lock changes, and lock extensions, edit and monitor price groups, update info with our end investor if needed, extend locks in the LOS and investors as needed, relock loans and accounts for market movement, monitor pricing shown versus actual, input confirmations and ready for sale dates, check the MTM for errors, and monitor multiple reports setup for issues that need to be addressed. Qualifications include: experience using Excel, 2 years of Mortgage Experience, and degree preferred. Experience with Stagnant Loans Reports, Mark to Market Reports, and Best Ex Reports preferred. Join our team and come see why our motto is "Where Better is Possible." Contact Nick Whitten.
Assurant Valuations, part of Assurant Mortgage Solutions, appointed Marc Hinkle as Senior Vice President. Congrats! Hinkle will be responsible for Assurant Valuations' operations, with a focus specifically on broker price opinion products, hybrid/alternative products, data, analytics and default appraisal solutions. In addition, Hinkle will help ensure a positive client experience, while building relationships and educating clients on new product development and the many benefits Assurant offers. Prior to joining Assurant Valuations, Hinkle served as senior vice president at Mortgage Contracting Services, where he oversaw valuation operations, strategic initiatives, vendor management, third party service providers and other operational teams.
Vendors & technology? Harder and harder to run a company without them.
LoanCraft has added some new features to its popular Tax Return Analysis which allow even more configurability, including an option to include/exclude non-borrower income.
This is a report service, not software. LoanCraft does the work of scanning the data from returns and setting up the file. Simply upload tax returns and receive a full income analysis within four hours for a standard price of $25. Loan officers like it because it gives them immediate visibility about whether a self-employed customer will qualify. Underwriters like it because they receive a completed analysis without the back and forth in getting returns and K1s and filling in worksheets. Contact Ron George for information or visit www.loancraft.net/TaxReturnAnalysis.
PCLender, provider of internet-based mortgage solutions announced an enhanced integration with Blend, a Silicon Valley technology company. Because of the partnership, lenders who work with PCLender will be able to easily deploy Blend's platform creating an end-to-end digital mortgage experience that excites customers and streamlines lender workflows while reducing risk and ensuring compliance. Blend's advanced technology integrates seamlessly with PCLender's loan origination system (LOS) to ensure rapid deployment and quick time to value while reducing the number of systems a lender must work in.
OpenClose and MCT jointly announced they developed an integration that eliminates manual intervention and streamlines the delivery of loan data to maximize hedging for lenders. The integration works by automatically taking loan-level details that are originated and locked in OpenClose's LenderAssist LOS and then securely passing them directly to MCT to hedge. The entire process of obtaining critical data becomes very easy, with updates occurring every 15 minutes. This removes several steps in the data acquisition process, saving time, reducing errors and providing faster reporting. The longer lenders are exposed to interest rate movements the more prone they are to have locked loans without hedge positions.
In case you haven't heard, Nationstar Mortgage, controlled by Fortress Investment Group LLC, launched its new website and on the go mobile app. A key component of the enhanced website provides customers clarity around the home buying and mortgage process. Through new content and informative videos, customers can quickly find answers to questions about payments, statements, account setup or changes and mortgage assistance.
Member First Mortgage, LLC has selected Pavaso, Inc. and its Digital Close platform to conduct hybrid eClosings for Member First Mortgage customers. "Making the process digital is the ultimate way to serve our customers at the highest levels of transparency, efficiency and ease of experience," said Carmen Sherman, Chief Operations Officer of Member First Mortgage. "Our end goals include executing eNotes, with video notarization, and transferring to an eVault by the end of the year. In using the hybrid model now, the first step is easy for us and our investors, and the benefits to the consumer are tangible." In a hybrid eClosing, select documents, such as the Deed and Note, are printed and "wet-signed," but much of the closing package is executed electronically. Digital Close also provides built-in eSign and eNotarization capabilities that allow borrowers to sign and notaries to verify and stamp documents digitally although there are still some traditionally wet-signed documents.
Concord Mortgage Group, a division of NOIC, Inc., in partnership with Blend, a Silicon Valley-based technology firm, has released the Ready App, offering borrowers an elegant online portal to submit their applications, documents, and follow-ups in a secure, compliant manner. "Ready App is designed to take the friction out of applying for a mortgage by delivering a delightful and transparent experience, on any device, through simple conversational prompts and seamless direct connection to over 10,000 high-fidelity asset, payroll, and tax data sources."
HomDNA announced that its mobile technology offering is now integrated with the LoanSphere Expedite platform from Black Knight Financial Services, a leading provider of integrated technology, data and analytics to the mortgage and real estate industries. HomDNA, which delivers mobile technology and workflow solutions that span the borrower-to-homeowner experience, has integrated with Expedite to help mortgage lenders optimize the lending experience, increase borrower loyalty and extend customer value.