Since inflation doesn't exist much anymore in the economy, how about in your garage? Detroit has plenty of empty garages and so the city announced a new 0% down program to give the market a shot in the arm - who needs a down payment assistance program when there is no down payment?

Yes, balancing borrower and lender demands is never easy, and when you throw the government into the mix things can get dicey.

A CEO of a large lender wrote to me this week. "Rob, if I promote a new president, does Fannie Mae have to approve of her?" Good question. Fannie put out a change that the big lenders are rumored to be subjecting to legal reviews. Is Fannie putting itself in the position of needing to approve a new president of Citi or Chase? Certainly some changes impact counterparty risk - but ask your rep about what it means for you.

Fannie Mae announced the HomePath Ready Buyer program (which has a few copyright and trademark letters after the name), qualifying first-time homebuyers to receive up to three percent of the purchase price in closing cost assistance toward the purchase of a HomePath property, upon completion of an online homebuyer education course.  On a $150,000 home, this could result in up to $4,500 in savings for the buyer.  In addition, Fannie Mae will reimburse the $75 cost of the homebuyer education course at the time of closing.

But there was great interest in a WSJ about agency fees. The FHFA must be nearing a decision on lowering risk based pricing for weaker borrowers with an offset on increasing costs to investment property borrowers. This revenue neutral move has not been officially announced, the start and effective dates still unknown, with just a modest lowering to g-fees for lower FICO borrowers anticipated. An official release may come next week, but again, nothing has been officially stated. Possible changes include any mix of the following: elimination of the ADMC, 25bp upfront, approximately 5bps impact on borrowing costs, modest reduction of g-fees, CRT execution implies room for a 15bps drop, but a severe move could impair GSE financials, flattening of the LLPA charges, lowering for FICOs (680-720 range) and LTVs (around 80), or raising MI capital charges, which could raise borrower paid private mortgage insurance, netting out any reduction in borrowing costs from the above.

Remember that the FHA's 50bps reduction in fees, announced in January, has effectively shifted borrower economics in the subject FICO/LTV bands in favor of FHA execution.  This only further dampens the impact of the pending FHFA changes.

Dave Stevens with the MBA sent out his thoughts on the current and future state of Freddie and Fannie. "I wanted to share with you an article I wrote for Linked-In on the subject of GSE reform. The tenor of my argument is that both companies are critical providers of capital for both single family and multifamily mortgages, and the health of the real estate markets are in jeopardy as long as these two companies remain in their current state of conservatorship.  Further, I wanted to reiterate the simple fact that recapitalization and release, however good an idea it may or may not be, just isn't going to happen - for political, legal and practical reasons. You can read the article here, and I encourage you to share it with others who are interested in this important issue."

Freddie Mac has made significant progress in their post-funding quality control reviews through their quality control information manager (QCIM) system that streamlines the QC process and provides information about the quality of loans that are delivered. These changes include the capability of accessing current and historical QC results to identify trends and the types of defects that occur to improve business operations and process improvements. Other noteworthy innovations include data gathering tools to standardize the Uniform Mortgage Data Program, offering repurchase alternatives, early selling representation and warranty relief and having two appeal opportunities for repurchases. Freddie Mac's review timelines take about 90 days of receipt of the loan file and for appeals, 30 days of receipt. Click here to read the article and review Freddie Mac's loan repurchase and appeal process.

The Federal Home Loan Bank updated its Mortgage Partnership Finance (MPF) Xtra Underwriting Guidelines. The updates includes reducing the maximum LTV, CLTV and HCLTV ratios for fixed-rate, cash-out refinance transactions secured by a one-unit primary residence to 80% for manually underwritten loans and loans underwritten with DU. Standard Fannie Mae Selling Guide requirements will also now apply to waiting periods and re-establishment of credit after a significant derogatory credit event, mortgage payment history requirements, rental income documentation and obtaining a signed IRS Form 4506T. There have also been changes to the condominium and PUD project standards and policies to organize policy requirements based on unit type, streamline the project review methods and revise certain requirements for units in condos. The liability insurance requirements have been clarified for PUD projects to clearly state that liability insurance is only required and must be verified for attached units in new PUD projects and condominium projects that qualify for a Limited Review will no longer require fidelity/crime insurance.

LDWholesale has updated information on its Texas 50(a)(6) Notice, Fraud Alerts/Frozen Accounts on Credit, State Specific Disclosures, FHA Manual Downgrade, and Fannie Mae Cash-Out Transactions. Additionally, LDWholesale's new website is now available.

Fannie Mae recently updated its seller guide with information regarding requirements related to the Office of Foreign Assets Control (OFAC) Specialty Designated Nationals (SDN) List, Changes to Title Defect Reporting, Clarifications in Obtaining Increased Mortgage Release Borrower Relocation Incentive and other Miscellaneous Revisions.

Beginning May 11 you'll see changes in the Freddie Mac selling system that focus on expanding mortgage credit and improving data quality on Mortgages with Affordable Seconds. As announced in the April 9 Single-Family Seller/Servicer Guide (Guide) Bulletin 2015-4. When delivering the HMDA Rate Spread Percent to Freddie Mac, it should be the same as the rate spread percent reported to meet HMDA requirements. To assist you in accurately delivering this data, use the Federal Financial Institutions Examination Council (FFIEC) calculator to help calculate the rate spread percent value. As a reminder, you are required to deliver the HMDA rate spread percent if it is equal to or greater than 1.5 percent. Effective May 11, you'll receive a critical edit if you enter a HMDA Rate Spread Social Security Number and Mortgage Insurance Certificate Identifier. For details and more information, check out Selling System Updates, 2nd Quarter 2015 Tutorial by visiting its Learning Center Updates page on May 11, 2015.

Flagstar Bank has begun using Fannie Mae's proprietary appraisal review tool: Collateral Underwriter, for appraisals on Agency loans. Collateral Underwriter provides comprehensive and automated risk assessment functionality to help identify certain risk factors on appraisals.

Freddie Mac is permitting Affordable Seconds as a secondary financing option for all eligible first lien mortgages, in addition to Home Possible® Mortgages. Freddie is adding more flexibility to its requirements for mortgages with Affordable Seconds. Changes to these requirements are effective for eligible mortgages with Freddie Mac settlement dates on or after May 11, 2015. The selling system will be updated on May 11, 2015, to support this expansion. Additionally, in an upcoming release, Loan Prospector will be enhanced to calculate the amount of required reserves for the subject property and the Loan Prospector Feedback Certificate will state these required reserves.

Flagstar announced, effective immediately, rate and term refinances are now available up to 97% LTV under the Fannie Mae Fixed Rate program.

Fannie Mae's Reverse Mortgage Loan Servicing Manual has updated policy requirements for submitting REOgrams. Additionally, this Announcement clarifies the servicer's responsibilities regarding Home Keeper mortgage loans with respect to the hazard insurance and for home equity conversion mortgages (HECMs).

Fannie Mae is postponing the mandatory implementation of the self-employed income policies that were announced in Announcement SEL-2015-16.

Freddie Mac is catching up to Fannie Mae in the apartment building sector; Freddie Mac underwrote $21.2 billion of debt on apartment buildings in the second half of 2014, almost surpassing Fannie Mae to become the largest provider of U.S. apartment financing. The GSEs increased apartment lending in 2014 after Melvin Watt, the director of the FHFA, alleviated restrictions on that part of their business. The FHFA capped multifamily lending at $30 billion each this year, a $4 billion increase for Freddie Mac from the previous year. This has allowed Freddie Mac to push into segments of multifamily lending that had been previously off limits, driving demand for apartment buildings.

Freddie Mac began a program that catered to borrowers renovating their properties and Freddie Mac has been able to finance manufactured-housing communities and originate small apartment loans from $1 million to $5 million. Freddie Mac is also offering borrowers more generous terms, such as allowing landlords to defer paying off principal. Freddie Mac's multifamily-loan volume also exceeded Fannie Mae's by more than $2 billion in the fourth quarter. In 2014, Fannie Mae completed $28.9 billion in apartment financing, compared to Freddie Mac's $28.3 billion. Overall, both Fannie and Freddie are leading lenders for apartment financing and will continue to dominate this market in the future.

After a smattering of news Thursday the market didn't do much of anything. (How do you like that for a technical explanation?) Jobless Claims were a little higher than expected, Housing Starts less (analysts blamed the weather - but didn't they incorporate weather into their forecasts?), and the Philly Fed was better than expected - which all resulted in not much bond market movement. What is fascinating is that everyone, and their brother, expects the Fed to raise short term rates later this year - yet the 10-year is still below 2%. Supply and demand at the long end!

We've had some news out today in the form of March's Consumer Price Index (+.2%, core +.2%, -.1% year over year), and ahead of us the non-market moving April Michigan Sentiment and March Leading Indicators. We began the week with rates slightly higher (10-year yield at 1.98%) and we closed Thursday at 1.88% and this morning we're at 1.87% with agency MBS prices better a smidge.

Jobs and Announcements

If you're searching for new opportunities and interested in the middle part of the country, Commerce Bank in Kansas City, MO is expanding its mortgage division and currently has openings for the following positions: processors, closers, underwriters, post closers, and Transaction Specialists. Processors and closers should have at least 3 years of experience, underwriters 2 years, and Transaction Specialists should have a combined 8 years of experience in processing, underwriting or loan origination. All positions require a firm understanding of Fannie, Freddie, FHA and VA guidelines. Commerce Bancshares, Inc. operates as a super-community bank offering an array of sophisticated financial products delivered with high-quality, personal customer service.  With $24B in assets, it is the 37th largest bank holding company in the U.S. and for the 6th year in a row was ranked among the top 10 on Forbes' list of America's Best Banks.  Please visit Commerce Bank Jobs to learn more and apply.

Out west in Northern California, a mortgage company is looking to add a VP of Secondary Marketing. This individual will handle all pricing, hedging and loan sales and will report to the company's CFO. "As a rapidly expanding retail / consumer direct lender, we are looking for an individual with established industry relationships who is interested in working as part of an experienced team to grow the next great mortgage company. We want someone who has the drive to take ownership of the group, implement new loan sales strategies, discover new investors and new products and help us grow from $2 billion annually to $10 billion annually.  Relocation to Northern California would be preferred but not required." Interested parties can send me their inquiries at rchrisman@robchrisman. com.

Flagstar Bank recently hired Tim Fisher as senior vice president and regional sales director for the South Central Region of its Third Party Origination ("TPO") Division. Congratulations! In this role, Fisher is responsible for acquiring new relationships with independent mortgage brokers and mortgage lenders & expanding existing relationships in Texas, Arkansas, Louisiana, and Oklahoma, which he covers from his base in Dallas. Fisher has over 20 years of experience in the mortgage industry (First Continental Mortgage, Goldman Sachs, Morgan Stanley, First Nationwide and CitiMortgage) and was president of the Texas Mortgage Bankers Association.

Mid America Mortgage, Inc. owner and CEO Jeff Bode announced Adam Rieke has joined the organization as director of national TPO lending. Rieke brings an extensive track record of success in the mortgage lending arena.

And last but not least, The Mortgage Collaborative, an independent lending cooperative serving small and mid-sized mortgage lenders & community-based lending institutions, has deepened its bench by adding Rich Swerbinsky (EVP of national sales and strategic alliances), Nancee Mueller, CMB, (VP of member and vendor services), and announced David G. Kittle, CMB, will serve as Vice Chairman of the Board and Debra Still will fill the role of Secretary of the Board. Both Kittle and Still are former chairs of the Mortgage Bankers Association, and Kittle is also a founding partner of the Collaborative.  Another founding partner, Jim Park, is assuming the role of CEO for The Mortgage Collaborative.