Underwriters will soon be entering that netherworld where they want 2013 tax returns, but borrowers just don't have them yet. With that in mind, here's a little trivia from our compatriots at the IRS: 47.8% of the individual income tax returns filed in the USA for tax year 2011 reported less than $30,000 of adjusted gross income. The mortgage and financial services sector has more than its fair share of personnel who made that in a month last year, and the year before. Maybe not this year...although generally the gap between the haves and the have not's seems to be widening.

The market for servicing is roiling. The average borrower doesn't know that the rights to service their mortgage may be sold and bought (creating a letter they receive in the mail saying they will start sending their payments somewhere else). Despite the apparent speed bump that the market has seen on the demand side from non-depository servicing buyers basically waiting for regulators to tell them if they have enough capital to keep going and keep their stockholders happy, the supply continues. Even Ocwen is reportedly selling a block of servicing.

And it didn't take too much digging into my e-mails to find a couple sales announced just last week. Interactive Mortgage Advisors, LLC is brokering a $50 - $70 million/month of flow Fannie/Freddie & Ginnie co-issue residential mortgage servicing rights. "This offering is presented on behalf of a Texas mortgage banking entity with strong financials. Prospective purchasers are invited to submit bids in the form of a pricing matrix to allow the Seller to sell loans direct to Fannie/Freddie & Ginnie and simultaneously sell the servicing under a monthly co-issue structure. Quality characteristics of these portfolios include: 98% Retail Originations, over 60% Texas, weighted average FICO greater than 730."

And Phoenix Capital, Inc. is selling a chunk of $418 million Fannie Mae and Freddie Mac mortgage servicing rights - but this one has a little hair on it. "Seller is a well-capitalized, independent mortgage banker established in 1980 with extensive experience in servicing sales. Prior to contract execution, Seller expects to have an executed settlement for the majority of the Fannie Mae product included in this offering such that origination representations and warrants will not transfer to purchaser. Seller does not have a similar agreement with Freddie Mac; however has not received a repurchase request in the past 12 months." The bulk package is 63% FNMA EXP; 22% FNMA A/A; 14% FHLMC SWP; <1%FNMA S/A, 83% fixed 30-yr, 14% fixed15-yr, 3% ARM, 28% delinquent loans, including 14.6% in FC, 37 delinquent loans also in bankruptcy; 2 current bankruptcies, 4.61% weighted average interest rate, 73% weighted average original LTV..." Fifty percent of the properties are in MA, NJ, and TX.

Today is a federal holiday, so news might be light. So let's use the opportunity to catch up with some relatively recent lender, investor, vendor, and agency updates - they just don't stop. And as always, it is best to read the actual bulletin for full details.

PHH has revised its VA underwriting guidance to allow the residual income requirements to be reduced if the borrower is an active duty or retired service person living near military-based facilities and to omit family members due to verified income not considered for underwriting approval purposes.  Discretionary allotment, wage garnishment, auto lease payments, revolving debt, and child care and other employment-related expenses must now be included in the total debt calculations, while installment debt may be excluded if there are less than 10 payments remaining.

Affiliated Mortgage has revised the LTV maximum to 95% for 1-unit primary residence purchase transactions for Community Second-only mortgages and non-Community Seconds, 4-unit primary purchase transactions, and 4-unit primary residence cash-out refinances.  All such transactions are subject to a CLTV maximum of 95%, apart from 1-unit primary residence Community Second purchases, for which the maximum CLTV is 105%.

Kinecta has changed its FICO requirements for Agency Fixed and Super Conforming Fixed transactions such that the minimum credit score is determined by DU.  For mortgage insurance, the minimum FICO is 620.

Titan Capital has announced the launch of its Scenario Help Desk, which can be reached at clientservices@titancapitalsolutions.com.

In response to QM and ATR, WesLend is now offering "No Lender Fee" pricing on its daily rate sheets.  The Lender Fee is now included in the daily base pricing and LLPAs where applicable.

WesLend is now offering a Preferred Payment Plan option for Non-Conforming borrowers with non-Wells Fargo ACH/AMP accounts in HI, IL, KS, KY, LA, ME, MA, MI, MO, NH, OH, OK, RI, and TN.

WesLend has reduced its cash-out, LTV/FICO, and non-owner occupied LLPAs for Conforming Fixed and ARMs and DU High Balance transactions and has reduced the purchase special on Non-Conforming 5/1, 7/1, and 10/1 ARMs from .625 to .375.

Impac has updated its manufactured home guidelines to better align with those of FNMA, changing the primary residence maximum LTV to 95% for purchases and rate/term refis and 65% for cash-out refis and changing the second home purchase and rate/term refi maximum LTV to 90%.  The MFH age restrictions and "time on site" restrictions have also been removed.

Envoy Correspondent has removed its overlays pertaining to NY CEMA transactions for refinances, effective immediately.

Joe Amaroso, formerly of REMN, has launched Indeed Abstract, a new Mount Laurel, NJ-based title company.  "Indeed Abstract offers the full spectrum of title and closing services for purchase, refinance, and reverse mortgage transactions, along with a mobile notary network, a nightline to assist with evening and weekend closings, online ordering, and 24-hour transaction monitoring."

Software provider Mortech, a division of Zillow, has enhanced the compliance capabilities of the Marksman pricing engine to integrate the APR/POR rate check spread, applicable DTI limits, and requirements for the lender fees and points calculation.  Users are issued with a full compliance worksheet that provides an overview of the loan scenario at both the application stage and when the loan is locked and discloses which test have been performed and the test results.  Marksman also provides checks for HPML transactions, Home Ownership and Equity Protection Act rules, investor eligibility, and a workflow for anti-steering that allows the lender to print an anti-steering disclosure form. 

Per Regulation Z, Wells Fargo is requiring that all individuals who have an ownership interest in the property be provided with a fully executed Notice of Right to Cancel.  This applies to all loans, including those where a non-vested individual is deemed to have an ownership due to state laws based on community property, homestead, dower/curtesy, etc.  Wells will also accept a Spousal Waiver, Warranty Deed, or transactional Quit Claim that shows that the non-vested individual no longer has an interest in the property in lieu of the Notice of Right to Cancel.

Wells has updated guidance to state that electronically signed documents from TPOs or mobile apps will be ineligible for purchase and that electronic signatures may not be applied to multiple electronic records simultaneously.  Loan packages with electronically signed documents must include evidence of Borrower Consent Language showing that the borrower agreed to receive and sign any application documents as such.

To align with Fannie's updated guidance, Wells is now requiring condo and PUD projects to have gap dwelling insurance policies if the amount of the HOA blanket coverage is between 80% and 100% of the replacement cost.  Loans on properties in projects with insurance that covers less than 80% of the replacement cost will not be eligible for purchase.

Effective for all commitments, re-locks, or re-negotiations dated February 17th or after, Wells is requiring that all loan files include the updated Loan Submission Summary.  As a reminder, the revised LSS features a new Disclosed Index Rate that must be completed for Conventional Conforming ARMs to meet the Agencies' ULDD requirements.

US Bank is now offering 5/1 ARM loans with a 2/2/5 cap structure and a new FHLMC Super Conforming 7/1 LIBOR ARM program.  The latter is available for primary residences, second homes, and investment properties and offers a cash-out option.  The new program is subject to the same 5/2/5 cap structure of the existing FHLMC Conforming 7/1 LIBOR ARM.

US Bank is offering its correspondent lenders an extended rate lock option that allows the loan to be floated down to the current market within 30 days of closing if the market improves.  Non-applicable fee options are no longer accepted but the Elite LIBOR ARM series and 10/1 Interest Only ARMs are now eligible.

EverBank is now accepting mortgage insurance from United Guaranty for all applicable transactions.

EverBank has changed its FHLMC Conforming Fixed, Conforming ARM, and Relief Refinance-Open Access products to remove the Home Value Explorer option for appraisals.

SunTrust has updated its Conforming Agency pricing to increase the pricing improvement applied to loans above $350,000 from .25 to .375.  The .25 adjustment still applies to transactions from $200,000 to $349,000.

SunTrust has revised its guidelines on long-term disability and age of documents and removed its co-signed debt inclusion, minimum borrower contribution requirements in cases where gift funds are being used, and declining income overlays to align with FNMA.  In addition, the evidence of continuance of gift funds overlay, declining income overlay, and the requirement that borrowers using foreign income to qualify must be US citizens have all been removed.

Franklin American has aligned its guidelines to align with the Agencies on the calculation requirements for stocks, bonds, mutual funds, and retirement assets as reserves and on the payment of fees outside of closing by credit card.  The guidelines on calculating the property value for construction conversion mortgages has also been expanded to encompass FHMLC policy.  For VA products, FAMC has updated the definition of Eligible Veterans/Borrowers to include same-sex married couples when approved by the VA.

FAMC has rolled out a new Conventional 10/1 ARM product, available for purchases, rate/term refis, and cash-out refis.  The program uses the same cap structure (5/2/5) and qualifying rate guidelines as the Conventional 7/1.

Citi has improved all of its CRA premiums by 10bps such that all eligible loans will receive payups of 40bps or 60bps as applicable, effective immediately.

PennyMac is now offering a Jumbo program to all correspondent lenders with a TNW of $2.5m and above.  Loan amounts of up to $2 million are available for 1-unit purchase transactions with an LTV at or below 70% and a FICO of at least 720.

The markets are closed today, so pricing folks either aren't pricing, or are looking at the Asian & European markets (who for some unknown reason don't celebrate President's Day along with us) and adding in some cushion just to throw something on rate sheets. We're coming off a Friday that had a weaker-than-expected Industrial Production number, but (go figure) stocks rallied and bond prices sank. Investors appear to be discounting recent data due to bad weather.

Inflation has not been an issue for many, many years, but still analysts talk about it - especially when there isn't much else to talk about. And this week we'll have the monthly inflation reports: the Producer Price Index (PPI) and its sibling the Consumer Price Index (CPI). They come out Wednesday and Thursday, respectively. The minutes from the January 29 Federal Open Market Committee Meeting will be released on Wednesday, as will Housing Starts. Its cousin Existing Home Sales will be released on Friday. Throw in the Philly Fed and Empire State numbers and that about does it.