Springfield wrote, "There's something happening here, what it is ain't
exactly clear..." But there is one movement that appears to be clearer,
and that is the increase in mortgage lending by non-bank institutions: Non-bankLendingIncrease.
"Congressional Republicans are moving aggressively to wind down mortgage giants Fannie Mae and Freddie Mac, but they face resistance not only from Democrats, but members of their own party who fear rapid elimination of the two entities would destabilize the fragile housing market." And many in the business would agree. Read more at the Washington Examiner: F&FtoStickAround?
And when you had a 25% market share last year of the mortgage market, the opinions that Wells' CEO has on mortgages matters somewhat: StumpfOpines
Yes, the US Court of Appeals has granted a stay on Fed's LO Compensation rule. This order does not permanently stay or otherwise modify the enforceability of the rule. Instead, it is a temporary measure to give the Court an opportunity to review the case and make a final determination. The Federal Reserve has until 12PM EST today to file a response to NAMB and NAIHP's (the plaintiffs) motions, and then the plaintiffs will be given the opportunity to file a response to the government's response no later than 10AM EST tomorrow. After that filing takes place the Appeals court can order a hearing or make a decision on the basis of the filed briefs. If the court decides in favor of the NAMB and NAIHP then the most likely course of action would be that the case would move back to the District Court. The stay would probably be extended to cover the period of time the case is in the District Court and could be extended further if there is another appeal. If the Appeals Court decides in favor of the Federal Reserve the stay will be dissolved upon the issuance of the decision. READ MORE: Originator Compensation: Still in the Fight
Well, did you or didn't you? Implement your compensation plan, that is. (If you thought I was asking about whether or not you swore and felt frustrated with the comp news Friday morning that would include practically everyone in the biz. The overwhelming sentiment seems to point to everyone preferring to change their focus to more positive issues that actually help borrowers and company's bottom lines.) One survey that I saw indicated that a majority of larger companies moved ahead with implementation by a factor of 3:2, whether or not they were independent or bank owned. For example, Wells Fargo wholesale told brokers, "Until a decision is made on April 5th, Wells Fargo will continue under the financial reform model that we began on 3/28. We will not be flipping back to the old way at this time." And, "At this time, CitiMortgage will continue business, including accepting new registrations, with the Regulation Z policy and system changes that were implemented on March 26, 2011. Sterling Savings Bank moved ahead with the new comp plan, as did many others.
But a good-sized group went the other way. Fifth Third, for example, at first put their entire wholesale registration on a temporary hold, and then announced it "will be operating business as usual; on a pre Reg. Z compensation rule model where you control compensation." Premier Nationwide Lending noted "business as usual until this is finalized." Flagstar "will continue to operate under the pre-April 1 rules until further notice. All requirements that were announced in prior memos for April 1, 2011, in connection with Loan Originator compensation have been extended," and Provident Funding, "has rolled back our operational implementation of the rule until further notice." This camp included Plaza Home Mortgage, Terrace, ICON Residential, Liberty Savings Bank, U.S. Bank Consumer Finance Division, Sierra Pacific, EverBank Wholesale, Pinnacle Capital, Home Savings of America, Mountain West Financial, Kinecta Federal Credit Union, MSI (Mortgage Services III), Bay Equity, and GMAC's wholesale & correspondent channels both are "standing by while standing by".
In the meantime, the wholesale investor channel appears to be doing well. Real Estate Mortgage Network, for example, is hiring regional managers AND AE's in Arizona, California, Colorado, New Mexico, Nevada, and Oregon. REMN has been in mortgage banking since the 1980's and is servicing about $1.4 billion as a Ginnie Mae seller/servicer, but just opened up the West Coast wholesale operation. The company, interestingly, has offered same-day approvals since 2002! And under the new comp scheme, is offering Broker Compensation from 100 - 350 basis points which can be updated monthly. For more information go to REMN, call (858) 273-3007, or contact Tom Conklin at email@example.com.
The latest survey shows that three out of four people make up 75% of the population. Statistics and numbers are interesting like that. But here is more good news: commercial and multifamily mortgage originations grew 88% in the fourth quarter of 2010 when compared to 4Q 2009 and hit $6 billion, the Mortgage Bankers Association said in its Fourth Quarter Commercial Real Estate-Multifamily Finance Quarterly Report. Much of this gain was due to a pick up by insurance companies in the CMBS segment - up 170%. Loans for conduits for CMBS saw a 60-fold increase compared to last year's fourth quarter, and GSE's saw a 65% increase. Multi-Family.
In spite of the compensation confusion, investors continue to make changes to their policies and guidelines. Bank of America, starting today, "Correspondent Lending will no longer accept AVMs to document 30% equity on a converting primary residence. Clients must document 30% equity in the existing property using at minimum a 2055 Exterior-Only Inspection Residential Appraisal Report in compliance with the Bank of America standard appraisal policy. The appraisal may be performed by a Bank of America Approved Review Appraisal Company."
Flagstar Bank rolled out its "Advantage Select" programs, which allow non-warrantable condos. It also cash out up to 75% max LTV for a primary residence with a 700 FICO requirement to $500k and up to 70% max LTV for 2nd Homes with a 720 FICO requirement up to $500k. Flag also came out with several updates on the Fannie Mae DU Refi Plus, Freddie Mac Relief Refinance, and the Freddie Mac Relief Open Access programs, and announced it will no longer be charging an additional LPMI premium for Genworth-specific loans on refi's.
Last week I mentioned that GMAC is using the VEROS Valuation team for correspondent lending - GMAC is using VEROS for wholesale as well.
MSI/Mortgage Services III announced, for conventional loans, the removal of the acceptability of the Fannie Mae Condo Approval, and a change in the Government ARM margin.
Wells Fargo sent its brokers news on compensation and anti-steering changes for high cost, TBD, etc. loans, notice of a process change for loans possibly impacted by "undue influence," clarified that appraisals for the USDA Rural Development program must be ordered via Wells' system, and updated its maximum CLTV levels and desk review policies for its Home Equity programs.
Plaza Home Mortgage, out of Jacksonville, in adherence to the Dodd - Frank Act Appraisal Independence changes, stated "All USDA appraisals ordered on or after April 1 must be ordered through a Plaza approved AMC," for VA loans "value discussions or communication regarding material aspects of the appraisal must be between the VA Underwriter and the Appraiser - the appraiser may not be paid directly by the borrower or the broker," and a few other appraisal issues. Plaza also dropped its maximum qualifying ratio on all FHA products to 50% for DU, LP or FHA Scorecard AUS approvals.
SunTrust rolled out a nice summary of government credit overlays as a resource tool provided to Correspondent Lenders. "The Correspondent Government Credit Overlay Matrix aids in identifying areas where SunTrust Mortgage, Inc. has additional credit requirements supplementing investor guidelines."
Jobs and housing, housing and jobs. After an improved Pending Home Sales number earlier in the week, on Friday the focus was on jobs after we learned that March non-farm payrolls rose 216k, with private payrolls up 230k. The overall payroll data was stronger than the market expected, and in the Household Survey (those pesky phone calls), the unemployment rate ticked down to 8.8% from 8.9%. A trader at Jefferies wrote, "Both the household survey and the establishment surveys are very encouraging and very clearly reflect improved labor market conditions. The only significant flies in the ointment are the lack of growth in earnings, which will translate into a continuation of very moderate income growth, and the continued substantial job losses at the local government level." (Even McDonalds is having a national hiring day on April 19th: 50,000 employees! Apply either on-line, or in any outlet.)
The strong employment numbers, combined with some "bullish Fed-speak" recently would normally push bond prices lower and yields higher, but perhaps the market focused on the big drop in Consumer Confidence. On Friday somehow the 10-yr clawed its way back from being down .625 and closed basically flat at 3.45%. MBS prices were also roughly unchanged Friday, and in some cases better by .125.
This is a decidedly light week for scheduled economic news, which gives originators one less thing to worry about. Zip today, tomorrow is a 10AM ISM services number, zip on Wednesday, Thursday holds the usual Jobless Claims number, and zip on Friday. Ahead of a lot of zips, the 10-yr is sitting around 3.43% and MBS prices are a shade better. FULL ECONOMIC CALENDAR
In keeping with the jobs theme, Arcelor-Mittal Steel, feeling it was time for a shakeup, hired a new CEO. The new boss was determined to rid the company of all slackers.
On a tour of the facilities, the CEO noticed a guy leaning against a wall. The room was full of workers and he wanted to let them know that he meant business.
He asked the guy, "How much money do you make a week?"
A little surprised, the young man looked at him and said, "I make $400 a week. Why?"
The CEO said, "Wait right here." He walked back to his office, came back in two minutes, and handed the guy $1,600 in cash and said, "Here's four weeks' pay. Now GET OUT and don't come back."
Feeling pretty good about himself the CEO looked around the room and asked, "Does anyone want to tell me what that goof-ball did here?"
From across the room a voice said, "Pizza delivery guy from Domino's."