I think rumors of Charlie Sheen going to work for the mortgage industry as a
lobbyist are untrue. Well yeh they are, I just made that up. But maybe someone can use
his tact, especially with pithy quotes like, "My success rate is 100% - do
the math." SheenDream
Onto something more serious, like the need for due diligence. Here's an interesting, although long, story about Sue Allon's efforts in that field: SueDilligence
Late in 2010, mortgage bankers
seemed to be scrambling for warehouse lines. Now that things have quieted down
need-wise, how is the warehouse biz doing? Jim Reynolds, of Reynolds
Financial Services in New Jersey, wrote to me: "I believe it's safe to say
that the warehouse lending business is back. After dropping below 15 warehouse
lenders about 3 years ago, we estimate there are now over 65 active warehouse
lenders serving 3 market segments: small, medium and/or large cap mortgage
banking platforms. We are observing a tightening of margins, including a
decrease in "floor" pricing arrangements, especially with the large
and mid-cap mortgage bankers. A return to mezzanine financing is being reviewed
by several large lenders; overall, it is still a very profitable asset based
business, with very high quality collateral. For those interested, The
Reynolds Group will be presenting its 2011 Annual Warehouse Lending Survey in
NYC during the National MBA Secondary Marketing Convention at the RMA Warehouse
Lender Roundtable, and you can go to Reynolds.
I don't want this to turn into a site for 65 warehouse banks, but here is one with a bit of a niche. Bank of the Sierra is offering mortgage warehouse lines of credit from $1-10 million for mortgage bankers originating California product. The bank itself has been around for over 30 years and has grown to $1 billion in assets. "The warehouse lines are simple with no non-usage fees and no capture requirements and no line origination fee; however, there is an operational audit required to be performed by a third party which usually costs $2,500 to $3,000. Collateral package fees are just $125 per package. Rates are as low as WSJ Prime plus 1.625% or 4.875%; pricing is adjusted based on the specific risk profile of a client." Contact Brent Amos: email@example.com.
Hispanic, Asian and
African-American real estate leaders are in Washington DC this week for the
2011 Multicultural Real Estate & Policy Conference, and will
distribute a joint plan for preserving minority homeownership to elected
officials during member visits to Capitol Hill. The plan calls for more diverse
and innovative solutions needed to meet the housing challenges facing
multicultural communities now and in the future. Check it out! Mulitcultural
The National Association of Independent Housing Professionals (NAIHP), represented by the Washington, D.C. law firm of Howrey, filed suit with the United States District Court for the District of Columbia against the Federal Reserve Board (Board), to prevent implementation of the controversial Regulation Z rule that restricts mortgage loan originator compensation. It appears that things are in motion. NAIHP
Last week I mentioned some good news for brokers. Changes are continuing in the wholesale channel, and some are indeed good. For example, JMAC Lending continues to expand its AE base to service brokers. JMAC is looking for California wholesale reps out in the field. JMAC itself has been focusing strictly on the wholesale business for about 13 years, and offers jumbo, conventional, and FHA product lines where the broker can speak directly to an underwriter if need be. The company's website is JMAC and if you are interested, or know a wholesale rep looking for a good opportunity, contact firstname.lastname@example.org.
Is refinancing into an FHA loan an option for many who default, or anyone else for that matter? The required documentation for income or employment verification changes in mid-April, a switch from policies instituted in late 2009. The FHA (ML 09-32) also prevented borrowers from rolling in the closing costs on the refi into the balance of the loan (they previously allowed this) and introduced some other changes as well which resulted in a slowdown in FHA refi activity. It would appear that when a FHA borrower is coming to refinance, the lack of the ability to roll-in closing costs into the balance of the loan has caused a drop in refi's. Also, that should mean that the slight relief in terms of employment income verification will not make a big difference to overall refi application approvals.
It is generally believed that the reason that FHA changed the streamline refinance requirements initially was due to the increase in defaults on streamline refinance transactions - delinquencies and compare ratios shot up. A certain percentage of borrowers lost their jobs soon after closing, or said they were convinced by an originator that lowering their payment would stall or allow them to 'skip' a payment, hence the need to verify the borrower is current for the month due. According to one long-time underwriter and trainer, FHA also realized that borrower's that had no investment in the refinance went delinquent or into default at a rate of 3 times as often as borrower's that paid their closing costs, hence the need to only allow the borrower to roll in the costs if there is value to substantiate it. Many do not realize this, but FHA is known to call the borrower when their loan goes into default for research."
What has HUD been up to lately?On March
26th it will be auctioning off 150 homes in Phoenix. (If a servicer forecloses,
it experiences a loss. At some during the process the house is conveyed to HUD
and the servicer is reimbursed by the FHA mortgage insurance fund.) HUD
is conducting a live auction "to owner occupant homebuyers who have not
purchased a HudHome in the past two years and agree to occupy the property as
their primary residence for a minimum of 12 months. Buyers may be able to
utilize FHA insured financing for as little as $100 down, and HUD will pay up
to 3% of the buyers closing costs." StepRightUP HUD
offers free training to brokers wanting to be involved in selling HUD homes.
Registration required but with no fee. Today: Training1 Tomorrow: Training2 March 14: Training3
On April 7 HUD is offering a free FHA Refinance Webinar geared toward LO's, Underwriters & others: "Learn general principles of Streamline, Cash-out, & Rate & Term refinances. This training should help you calculate any refinance confidently." (If it lasts more than 4 hours, consult a physician...) Once again, registration is required, no fee. FHARefiTraining
Tomorrow (and every 2nd Tuesday of the month) there is a Live Meeting webinar demonstration of the HOPE LoanPort from 2-4EST. This will be followed by an interactive question and answer session for all participants. To register: HOPE
In fact, HUD is offering training and information sessions all across the nation, and too lengthy to reproduce here. But go to Events&Training and on the left side click on "Events & Training".
HUD also announced the reactivation of the Emergency Homeowners' Loan Program. EHLP It "provides emergency mortgage relief to homeowners who are unemployed or underemployed and at risk of foreclosure and who meet certain requirements of the program."
Last but not least, in the last month HUD has released a slew of Mortgagee Letters, ranging from HECM counseling fees to tier ranking scores to "multifamily hubs." Letters
Rates have certainly been contained within a certain range, as have MBS trading volumes, although we have seen some volatile days. Friday, for example, 10-year notes recovered 75% of Thursday's loss, gaining about .625 and moving back down to a yield of 3.49%. MBS prices were better by about the same - but for the entire week mortgage rates were pretty close to unchanged.
Few will argue that there is some type of recovery occurring. Jobs will certainly help many qualify for home loans, but the higher rates have all but shut off refinancing. The early part of this recovery was fueled a reduction in inventories, and then by government stimulus (cash for clunkers, QE-whatever), and now it seems that the job market is improving. Granted, as more unemployed begin looking for work again the improvement in the numbers will be limited, but things are better than 6 months or a year ago. Unfortunately for our business, home sales and new home construction continue to face a long and difficult road to recovery. While sales of existing homes have risen for three consecutive months, most of the increase appears to be due to a rise in foreclosure sales and distressed transactions.
If you're looking for lots of economic news, this is not your week. In fact, aside from the auction there is nothing until Thursday's Jobless Claims and the Trade Balance. On Friday we have Retail Sales, a Michigan Consumer Sentiment number, and the always thrilling Business Inventories number. FULL ECON CALENDAR
The man said to the dentist, "Doc, I'm in one heck of a hurry. I have two buddies sitting out in my truck waiting for us to go deer hunting, so forget about the anesthetic, I don't have time for the gums to get numb. I just want you to pull the tooth, and be done with it! We have our feeders set to go off in thirty minutes... I don't have time to wait for the anesthetic to work!"
The dentist thought to himself, "My goodness, this is surely a very brave man asking to have his tooth pulled without using anything to kill the pain."
So the dentist asks him, "Which tooth is it, sir?"
The man turned to his wife and said, "Open your mouth Honey, and show him."