As the industry watches the personnel turmoil at Utah's Castle & Cooke Mortgage, here's an interesting promotional twist: a builder's real estate company paying borrowers $100 to consult with the builder's mortgage company after the borrower already chose another lender. "We are offering a $100 Visa gift card to home buyers who meet with one of our mortgage loan originators for a second opinion on their home loan," states Howard Hanna Mortgage Services. (More details can be found here. Last year Howard Hanna Mortgage Services averaged about $100 million a month. Howard Hanna Real Estate Services is located in several states around Pennsylvania and Ohio...specializing in residential and commercial brokerage service, mortgages, closing and title insurance, land development, appraisal services, insurance services, corporate relocation and property management - it has 167 offices and 5,700 sales associates.)
On the personnel side, Caliber Home Loans is now hiring experienced AEs in the Third Party Originations Channel to source wholesale, emerging banker, and correspondent business. Established to meet the requirements of this radically transformed industry, Caliber has a well-capitalized balance sheet, and a servicing portfolio of over $50 billion and growing. Built on strength and stability of experience, culture and innovation, Caliber Home Loans is a full service mortgage bank, offering a variety of operational solutions and products, and a range of delivery methods including wholesale, emerging banker, and correspondent. To learn more about this opportunity, please send your resume or questions to Chris Legg, West Division VP, at email@example.com. Let Caliber Guide you Home!
Financially strong credit union, forward thinking management, common sense underwriting, seasoned and courteous ops team, stellar product line, pricing that wins loyal members, reduced MI, hi-tech loan fulfillment, in-house realtor affiliation, over 600 associated employer groups including aerospace and health industries, several other ways to join....if you like what you see, read on. Financial Partners Credit Union is seeking seasoned, Mortgage Loan Originators in Southern California to meet the demand of their growing, retail business. Since 1937, FPCU has established itself as a financially strong mortgage lending resource to members, realtors and the communities it serves. "A full product suite that includes FNMA/FHLMC, FHA, Portfolio Conforming & Jumbo, HELOCs and 2nds is available to offer to new and established members nationwide. An aggressive commission plan, marketing support and exceptional benefits are offered to successful candidates." Contact Wendy Edralin at wedralin@fpcu. org or Todd Helmerson at thelmerson@fpcu. org for more information. Become a partner today.
The CFPB has had its hands full with charges of discrimination, and of planting sympathetic people in public hearings. That aside, it is pretty good about keeping us up to date on its activities. For example: details of its each of the new rules that is currently available.
But today the House Financial Services Committee will hold a hearing entitled "Who's in Your Wallet: Examining How Washington Red Tape Impairs Economic Freedom." According to the Committee memo, the hearing will examine the economic consequences of recent rulemaking, supervisory, and enforcement actions of the CFPB, FDIC, Fed, NCUA and OCC. Issues to be explored include how the agencies evaluate the costs and benefits of their actions, whether products or services are no longer being offered because of agency actions, the steps federal regulators take to measure the impact on consumers if they no longer have access to specific products or services as a result of regulatory action, and the procedures or standards agencies follow in determining whether to engage in formal rulemaking under the Administrative Procedure Act.
Lawsuits, and settlements, have become a fact of life in mortgage banking. Yesterday Citigroup announced a proposed settlement with 18 institutional investors represented by Gibbs & Bruns over 68 RMBS (residential mortgage backed security) deals done on deals done between 2005 and 2008. Under the proposed settlement, Citigroup would pay $1.125 billion to bondholders, which represents approximately a 7.6% payout of past and projected losses on those deals. The trustees have until June 30 to accept the settlement, with an option to extend the offer for an additional 45 days. Of the 68 deals involved, there are around 5 deals which are involved in active rep & warrant litigation initiated by the trustees - with one of the lawsuits against the originator. Additionally, some of the deals have had meaningful loss reversals in the past (most likely due to loan repurchases by Wells Fargo). There are quite a few deals with Wells Fargo as the originator and it's not clear how these deals are going to be treated as a part of the settlement. In addition, trustees do not appear to be indemnified, and this may delay the acceptance process.
In this case, Citi will make a binding offer to trustees (Deutsche Bank/HSBC/US Bank and Wells Fargo), offering a payment of $1.125 billion in cash and a reimbursement of any trustee expense in return for a release of all repurchasing claims. The settlement does include a servicing component similar to the Countrywide/JPMorgan settlements. The agreement is also subject to regulatory approval by the FHFA.
Analysts immediately pointed to the similarities between this deal and one involving Countrywide - the one where the FHFA entered into a settlement agreement with Bank of America to resolve existing litigation on securities fraud as well as other legacy contract claims regarding $57.5 billion of legacy securitizations from Bank of America, Countrywide, and Merrill Lynch. Bank of America agreed to pay $9.5bn in total, which included a cash payout of $6.3bn to resolve securities fraud claims and a fair market value purchase of $3.2bn for securities with a UPB of $5 billion. The settlement covered deals in certain legacy shelves and the repurchase of selected securities. BoA agreed to indemnify the GSEs from any damages resulting from this settlement.
And let's not forget another big settlement - the $1.9 billion one between the FHFA and Deutsche Bank Structured products announced last December. The agreement resolved ongoing securities fraud-related litigation as well as certain repurchase claims. After the announcement of this settlement, various trustee letters were sent out to bondholders stating that the FHFA would not pursue rep and warranty claims in certain deals, and the GSE entities were withdrawing their notices of repurchase demands for certain deals.
And the industry learns from past lawsuits. Talk about a sword over the lender's head. Recently in the legal case of Wells Fargo Bank, N.A. v. Lonzie Heath, the Court of Appeals for the Fifth District of Texas at Dallas affirmed a jury verdict concluding that the lender should forfeit all principal and interest because the fair market value of a homestead for a Texas home equity loan was less than the value indicated on the Acknowledgment of Fair Market Value. According to the Texas legal firm of Gregg & Valby, the originating lender apparently failed to sign the Acknowledgment of Fair Market Value as required by Article XVI Section 50 of the Texas Constitution. They write, "The trial court accordingly determined that the fair market value of the homestead, at the time the loan was made, was a question of fact to be decided by a jury. The jury determined that the fair market value at the time the loan was made was lower than that indicated on the appraisal and acknowledgment of fair market value. The jury further found that the lender failed to cure this violation after notice; and the lender, therefore, must forfeit all principal and interest on the loan. A motion for rehearing en banc has been filed in the matter and is pending." Considering that failure to sign the Acknowledgment of Fair Market Value places originators at risk of forfeiting all principal and interest, Gregg and Valby suggest, well, actually signing the Acknowledgment of Fair Market Value, and to have procedures and protocols in place for future closings. Imagine that!
How about some relatively recent investor updates?
Wells Fargo has updated its adverse credit history requirements for all Conventional Conforming transactions, including removing the minimum Loan Score parameters for bankruptcy, foreclosures, pre-foreclosures, short sales, and deeds-in-lieu. For bankruptcies, guidance now stipulates that at least 24 months must have elapsed since the discharge date or 48 months must have elapsed since the dismissal date, the latter which applies to borrowers who were unable to complete the Chapter 13 plan. Borrowers with multiple bankruptcy filings within the last seven years will be considered eligible if at least five years have passed since the discharge or dismissal. The seven-year requirement also applies to foreclosure situations that were a result of financial mismanagement. For deeds-in-lieu, pre-foreclosures, and short sales, Wells has removed the minimum down payment requirement and will allow loans with a DU certificate if the borrower has a 24-month history of re-established credit and the LTV/TLTV/CLTV is less than 80%. Cash-out refinances are no longer allowed on LP and manually underwritten loans if the borrower has experienced a pre-foreclosure, short sale, or deed-in-lieu within the last seven years, and only primary residences will be permitted for purchase transactions.
US Bank has expanded the credit box for its Piggyback Buster program to allow FICOs down to 680 for 1-unit LP Accept purchases and rate/term refinances with LTVs up to 95%. DTI must be 45 or below, and the loan amount must be within the conforming loan limits.
Citi has removed its previous deed-in-lieu/short sale/pre-foreclosure and high LTV overlays and has added LP Open Access as a program option for refinancing restructured loans. Borrower contribution requirements have been updated to require 5% of the borrower's own funds for LTVs over 80%, and HPMLs will no longer be eligible as Conventional loans and will only be accepted for FHA and VA non-streamline transactions. The Government HPML DTI has been changed to 43 in accordance with QM as well.
PennyMac is now permitting lenders to make changes to the original note in cases where a defect is identified prior to delivery if the correction is authorized with the borrower's initials. Loan modifications will also be permitted as an alternate form of correction but will not allow the prior corrective note process, and note defects identified after delivery must be accompanied by a Loan Modification Agreement to satisfy the correction requirements.
Per the State of Illinois' establishment of the Predatory Lending Base as an amendment to the Residential Real Property Disclosure Act, Nationstar is requiring all files on properties located in Cook, Kane, Peoria, and Will Counties to include a Certificate of Compliance showing that the loan info was submitted to the database. Transactions that are exempted must have a Certificate of Exemption included in the file.
Folks who think that the movement stock and bond markets are always linked are having a little trouble defending that false premise over the last few business days. Stocks have continued to fall, but rates have not done much of anything.
What might be of more interest to investors, and in a round-about way lenders, is the issuance of other debt. Sure, originators are pumping out agency and non-agency loans every day. But this week we have a 3-yr, 10-yr, and 30-yr Treasury auction. The Federal Home Loan Bank, which has not issued any debt since January, is in the market this week. Freddie Mac auctioned off $500 million of "reference bills" across three- and six-month maturities. And when you throw on corporate debt issuance, anyone needing to buy fixed-income securities has plenty of options.
But returning to mortgages, Monday was a quiet day although agency MBS prices improved slightly; the 10-yr's yield sat around 2.71% all day and closed there. There is no substantive scheduled news for today, although there is a $30 billion 3-year note auction. And, in the very early going, we're unchanged from Monday's closing levels.