"Rob, with the Fannie price changes Tuesday, does the securities market still charge a premium for high balance conforming?" Yes it does - pools that have more than 10% of high balance (HB) conforming loans in them face a price hit of up to 2 points, depending on the HB concentration of that pool. And there are plenty of rumors out there of a major lender that mispriced its high balance conforming loans - perhaps only charging .250 - much to the delight of correspondent clients directing all their production to that lender. Wouldn't that be a rude awakening: collecting .250 but facing a hit of 2.00 on pool made up of 100% high balance? If a lender delivers less high balance percentage, then they go down from there. But even if you're delivering 35% or less, it still runs about .75% to 1.35% for conforming, depending on the coupon.
In headline news Ocwen continues to peel off its primary asset - servicing - by announcing another major sale - this time $9.6 billion to Walter Investment.
On the training front, HomeBridge Financial Services, Inc. launched a comprehensive knowledge center and monthly webinar series for professionals seeking information on how to prepare for TRID implementation. The first free TRID webinar takes place Tuesday, March 24. "The TILA-RESPA Integrated Disclosure rule won't take effect until August, but it's something you should start preparing for immediately. HomeBridge knows that TRID is going to be one of the greatest regulatory changes many of us have ever seen and is taking a true partnership approach in helping the entire industry prepare for the challenges to come.
In other TRID training news, the Mortgage Bankers Association released a TILA RESPA Integrated Disclosure Resource Guide designed to assist lenders in complying with the TRID rule by August 1. TRID was issued by the CFPB and combined the mortgage disclosure regimes established by the Truth in Lending Act (TILA) and the Real Estate Settlement Procedures Act (RESPA) into one single rule. "TRID is 1,888 pages in length and affects every business functioning in the single-family mortgage market," said the MBA's Jeffrey Schummer. Specifically, the TRID Resource Guide covers the new Loan Estimate and Closing Disclosure in detail, outlines top issues with the rule, and provides a set of model policies and procedures along with checklists for implementation and working with technology providers. For more information on how to purchase the TRID Resource Guide, please click here or contact education@mba. org. In addition to the new resource guide, MBA will also host two upcoming forums, Thursday, March 26 in Chicago and Thursday, April 16 in Washington, D.C. For more information on these forums, including how to attend, please click here or contact education@mba. org.
And is everyone going to be ready for TRID? Probably - suddenly the industry is making good progress - here's a story from October Research on the general preparedness of the industry.
How are some appraisers keeping up on appraisal news? Here's one source of news: NAN.
While we're learning about stuff, HUD changes are afoot, effective mid-June. Donna Beinfeld writes, "In an effort to reconcile all HUD manuals into one handbook, HUD released their new handbook known as: Handbook 4000.1. It is over 500 pages. I think consolidating all of their many manuals into one format (similar to Freddie and Fannie's Seller/Servicer Manuals) is awesome. I think it is a bad move if there are many changes related to the topics, since everyone will have to read the 500+ pages and mentally identify changes from existing policies. That will be the difficult part of digesting all of this information. This incorporates most of the underwriting requirements (4155.2), 203k program requirements, QC Audit, and Doing Business with FHA." Thank you Donna!
How 'bout a smattering of vendor news?
First up, VirPack, a provider of document management and delivery solutions to the residential and commercial/multifamily mortgage industries, announced that BofI Federal Bank has selected VirPack's Document Management and Delivery System as its enterprise document management and delivery solution. BofI Federal Bank, headquartered in San Diego, CA, is a nationwide branchless bank that provides financing for single and multifamily residential properties. With more than $4.8 billion in assets, BofI Federal Bank distributes its loan products through retail, correspondent and wholesale channels.
Credit Plus, a provider of intelligent insight for mortgage professionals, announced it will be offering instant, electronic Verifications of Deposits and Assets (VODAs) through AccountChek, the mortgage industry's leading provider of automated deposit and asset verifications. "Say goodbye to the paper chase," said Greg Holmes, National Director of Sales and Marketing for Credit Plus. "Lenders will no longer need to manually gather print copies of an applicant's bank statements."
Electronic verification of deposits and assets has been approved by both Fannie Mae and Freddie Mac. Each organization recently revised its guidelines to allow acceptance of electronic, third-party VODAs. "By partnering with AccountChek, we're able to provide lenders with deposits and assets verification right away," Holmes said. "Not only does it save time, but because data is provided directly from financial institutions, the risk of fraud is virtually eliminated." For more information about electronic VODAs from Credit Plus, visit its website or email info@creditplus. com.
My cat Myrtle let me know, in no uncertain terms, that its time to talk about dem markets...
Whoever thinks that stock and bond markets move in opposite direction is incorrect, and we were reminded of that yesterday when both rallied considerably. It was all sparked by a statement that began, "Information received since the Federal Open Market Committee met in January suggests that economic growth has moderated somewhat. Labor market conditions have improved further, with strong job gains and a lower unemployment rate. A range of labor market indicators suggests that underutilization of labor resources continues to diminish. Household spending is rising moderately; declines in energy prices have boosted household purchasing power...the recovery in the housing sector remains slow and export growth has weakened. Inflation has declined further below the Committee's longer-run objective, largely reflecting declines in energy prices...Consistent with its statutory mandate the Committee seeks to foster maximum employment and price stability."
After Janet Yellen told us that the Fed was no longer patient about raising rates, she then proceeded to tell us why the Fed might not be in a hurry. So the Federal Funds target remains at a target range of 0bp to 25bp. The Prime Rate is unchanged at 3.25% and Discount Rate at 0.75%. Reserve balances are unchanged at 25bp. And the impression that the markets have of the Fed's impression of the economy is that its policy bias is that risks to the economy and labor market are nearly balanced.
Traditionally the Fed moves these rates - it does not set mortgage rates. It has, and does, influence the demand for agency MBS through Quantitative Easing and buying these securities, but it does not, in and of itself, set rates. And it is well known that the markets will move prior to any Fed move - so even when short term rates do move the long term rates may have either already adjusted or not even move.
In general rates shot down - but mortgage prices lagged yesterday and earlier this year - why did MBS "gap out wider?" Something very similar happened earlier this year when rates went down (and the 10-yr hitting 1.64%) but mortgage rates lagged - especially FHA & VA loans. Basically the drop to interest rates infers prepayment risk and wilting carry on dollar rolls.
Something similar happened to VA loans earlier this year. In fact, in some cases VA loan prices actually worsened when then general bond market rallied. That was attributed to the then new FHA mortgage insurance premiums. VA loans, and FHA loans, go into Ginnie Mae securities, and lenders use those securities to create rate sheets after adding costs to originate, profit margins, loan level price adjustments, the price drop from one month to the next, and so on.
In January the government announced lower mortgage insurance premiums for FHA loans, and Ginnie Mae MBS underperformed versus the Fannie Mae MBS because investors re-assessed prepayment speeds. Certainly lenders saw great lock volumes: by lowing the MI going forward, it made refinancing more attractive. But investors, and any servicing holder, immediately saw that it meant that prepayment speeds are increasing which in turn made the existing MBS worth less.
Any investor that purchased a Ginnie Mae 4% security for "106," loses that 6 point premium. And the higher up the coupon, the bigger the incentive for a borrower to prepay is. Which is why investors have early payoff penalties - they don't want to lose the entire premium they recently paid for the loan.
Today things calm back down with the usual weekly Jobless Claims (+289k last) but also the current account balance for Q414 (whatever that is), March Philly Fed (+5.2), and February Leading Indictors which were +0.2% in January. As one would expect the markets have moved back a little this morning with the 10-yr "up to" 1.93% from Wednesday's 1.92% close and agency MBS prices are worse a shade.
Jobs and Announcements
Gershman Mortgage, headquartered in St. Louis, Missouri is opening a mortgage origination office in Denver, Colorado. Gershman Mortgage is a 60 year old privately owned company specializing in both commercial and single family mortgages. It is seeking a producing Branch Manager for single family loan originations along with Loan Officers for the office. Gershman has branch locations in Missouri, Illinois and Iowa and is presently expanding into five other neighboring states. The commercial side of this venture is managed by Scott Graber, a Denver resident with many years of experience in commercial financing. Please forward a confidential resume to Al Will, President.
Franklin American Mortgage, the nation's sixth largest wholesale lender, is proud to announce that Dave Weatherford has been hired as VP, Regional Manager. Weatherford is a proven sales manager with over 15 years of experience in training top-performing sales executives. Franklin American Mortgage is seeking highly-motivated, experienced sales professionals to serve as account executives under Weatherford in the following areas: Chicago; Kansas City; Minnesota; and Utah. Responsibilities include: developing prospective accounts, maintaining loan production from active accounts, and educating both prospective and active accounts about product changes and updates. For more information on Franklin American Mortgage Wholesale Lending, please visit http://whyfamcwholesale. com/. "To learn more about these positions and to apply online, view our job listings or e-mail Jennifer Rader for more information. Franklin American Mortgage is FHA Direct Endorsed (DE), VA Automatic and LAPP Approved, FNMA/FHLMC and GNMA approved seller servicer."
MB Financial Bank is looking for new branch locations and loan officers to join its national team. MB Financial Bank is currently seeking new Retail Branches and Loan Officers to fulfill opportunities in 45 states and who are interested in becoming part of a strong, nationally-chartered bank with a dedicated, customer service focus. MB provides competitive compensation, quality benefits, internal training, marketing support, servicing portfolio leads, and generous tiered commission compensation plans to promote success and growth. Individuals who are looking to join a successful bank with a robust product offering, competitive pricing, and significant income potential should contact Mark Mazzenga, Mortgage SVP and National Sales Manager. MB Financial Inc. is the Chicago-based holding company for MB Financial Bank, N.A., which has approximately $16 billion in assets and a 110-year history of building deep and lasting relationships with middle-market companies and individuals. Equal Housing Lender and Member FDIC. NMLS#401467.
Planning for the future has helped HomeBridge become one of the nation's largest independent non-bank lenders in the U.S. They offer outstanding opportunities for dedicated mortgage professionals, and are always searching for the best the industry has to offer. With offices from coast to coast, management, sales and operations professionals should visit www.homebridge.com/careers to learn more.