Fed Chair Janet Yellen appears to be doing her part to warn the markets that the odds of a short-term rate hike in the next few months are pretty good. Wild cards, of course, linger, but last Friday she signaled the central bank will likely raise interest rates within months if the U.S. economy keeps gaining strength. Of course the Fed doesn't set long-term rates, or mortgage rates, but its thoughts on the economy do tend to influence the long end.
Residential lending is never too far from the courtroom, or the regulator's desk. The U.S. Securities and Exchange Commission reported that California-based First Mortgage Corporation and six of its executives agreed to pay $12.7 million to settle charges of defrauding investors. According to the SEC, the executives said current, performing loans were delinquent and pulled them from residential mortgage-backed securities guaranteed by the government corporation Ginnie Mae. First Mortgage then sold the loans at a profit into newly issued mortgage-backed securities. That caused Ginnie Mae, which stands for the Government National Mortgage Association, to publish false and misleading prospectuses, the SEC said.
And in Massachusetts a former bank manager was sentenced in connection with a multi-year, multi-property mortgage fraud scheme in Dorchester. Arthur Samuels, 41, was sentenced to one year and one day in prison, two years of supervised release, and was ordered to pay restitution of $2,229,492. In 2012, Samuels pleaded guilty to four counts of wire fraud and one count of bank fraud - apparently from 2007 to 2008 Samuels engaged in a scheme with Michael David Scott, and others, to purchase multi-family residences and then sell individual condominium units in the buildings to straw buyers.
IMPAC is rolling out its "next generation" of non-QM lending products: iQM mortgage series for both wholesale & correspondent clients. "New iQM Lending Products Incorporate 'Intelligent, Human-Backed Underwriting' to the Qualification Process to Help Qualify More Borrowers. "IMPAC Mortgage Corp., a leading nationwide wholesale and correspondent mortgage lender, announced its next generation Non QM product series...incorporates realistic consideration of a borrower's unique situation, rather than a 'by the numbers only' underwriting approach where borrowers qualify through AU engines based on rigid data-driven parameters. The iQM Series includes four programs: Agency Plus, for borrowers with multiple properties, including those with prior foreclosure and bankruptcy; Alt Doc, for borrowers using bank statements or eligible assets to qualify; Investor, for established investors allowing an unlimited number of financed investment properties; and Foreign National, for non-U.S. citizens that lack a FICO score or U.S. tax returns."
Flex Fixed 30-year program from LHFSWholesale provides a home loan option for borrowers with lite credit, problem credit, first time homebuyers as well as foreign nationals. A few of the program highlights include FICO Scores down to 500, Primary Wage Earner Middle Score Used for Decision Score, Full Income Qualification or 24 Month Bank Statements, and Loan Sizes from $75,000 to $2,000,000.
At Citadel Servicing "Borrowers Qualify with up to 85% CLTV, 1-day seasoning from Short Sale or 1-year seasoning from Foreclosure or BK. Up to $1mil. combined loan amount available. Also, Loan amounts up to $500,000. Bank Statements are used for income self-employed. Contact Rick Mehta for information.
The following AmeriHome non-Agency program guides have been updated with guidelines changes and extensive clarifications: Core Jumbo Program Guide, Expanded QM Tier 1 and Tier 2 Program Guide and Non-Agency Hybrid ARM Program Guide. Changes that are "effective with this announcement, May 26" are effective for loans with commitments dated on or after the announcement date.
Altavera Mortgage Services provider of third-party residential mortgage origination services, is expanding its closed-loan file review services (also known as pre-purchase review) beginning in Q3 2016. "Altavera has provided closed-loan review of agency and non-QM products on a limited basis since 2015," said Altavera President Brian Simons. "Now, in response to increasing requests from larger firms, investors and aggregators, we're pleased to formalize this service offering and make it available to all our clients. Altavera is a U.S.-based fully licensed and SAFE Act compliant mortgage-only business.
Sun West has updated its Conventional High-Balance product guidelines. Investment properties are now offered for high-balance transactions with FICOs greater than 660. Maximum LTV/CLTV has been extended up to 95% for fixed-rate mortgage transactions for single unit principal residences. The requirement of field review of property for loan amounts greater than $625,500 with an LTV, CLTV, or HCLTV ratio greater than 80% has been removed. LTV, CLTV, and HCLTV ratio maximums for high-balance product for borrowers with 5-10 financed properties now aligned with standard product requirements. Non-Occupying borrower's income and liabilities are now considered by Desktop Underwriter (DU) for all principal residence mortgage transactions. Previously, only the credit and assets were considered by DU.
Last week the New York State Assembly passed A6932 by a wide margin, and it appears that the Senate companion bill, S4781, is gaining momentum. Lenders doing business in the state of New York should be very concerned about this legislation. If passed, the bill would require lenders/servicers to maintain properties once they are vacant and abandoned, regardless of the fact that the lender/servicer has no ownership in the property and is in store for a foreclosure process that will take at least 3 years. The fine for noncompliance will be $1,000 per day. It is very probable that many lenders will leave the state, due to the legal risk and financial burden that will be placed on them when properties become vacant and abandoned.
By the way, the New York Mortgage Bankers Association is meeting next week in Albany. Lenders doing business in the state of New York should be contacting their member of the New York State Senate and encouraging them to oppose the bill.
Jim Bopp, with Platinum Home Mortgage, opined, "The heat is really being turned up in New York State on banks, mortgage bankers, and mortgage servicers on the topic of Vacant and Abandon Properties (aka - Zombie's) and it looks like it is going to get worse before it gets better. There is another town in NY (Cohoes) that is contemplating something similar to what you see coming out of Hempstead and the NYS Assembly passed a bill last week A-6932 that is much along these same lines: 1. Creating Registries, 2. Creating Pools of money to take care of properties that would be funded by banks, 3. Requirements for banks to start inspections very early in either delinquency or the foreclosure process, 4. Property maintenance Requirements, and 5. Much, much more."
Utah's Mortgage Lending and Servicing Act was amended to include a revised definition for "mortgage lender". Effective May 9th, the term now encompasses an entity that takes and processes an application, provides required disclosures and in some cases, underwrites the mortgage loan and makes a final credit approval decision, closes the mortgage loan in its name, funds the loan, and sells the mortgage loan to an investor. A mortgage lender who is required to be registered under Chapter 2 is no longer exempt from the requirements of Title 61, Chapter 2c, Utah Residential Mortgage Practices and Licensing Act.
Kentucky has amended its annual continuing education requirement for renewing MLO licenses. Effective July 15th, Kentucky will mandate 8 hours of annual CE, which will include 1 hour of Kentucky state-specific education. The number of hours for license renewal is also dropping from 12 to 8 and there will no longer be a requirement to complete 4 hours of Kentucky state-specific education every-other-year. More information can be found here.
Real estate settlement agents in Virginia know that certain amendments will become effective in July. The amendments now include a definition of the term "closing disclosure" to encompass "the combined mortgage loan disclosure statement of final loan terms and 48 closing costs prescribed under the RESPA Act of 1974, the CFPB Regulation X and Regulation Z." The new definition will be included in various sections alongside the term "settlement statement."
The South Carolina Department of Consumer Affairs issued a notice stating that there would be no changes to the dollar amounts under the Consumer Protection Code. On the first of July, dollar amounts in the Consumer Protection Code are subject to modification, based upon the changes in the Consumer Price Index for December of the previous year.
Looking at the bond markets, we began a news-filled week with quite a bit yesterday. Personal Income and Spending met or exceeded expectations. The S&P/Case-Shiller Index numbers indicated that U.S. home price growth remained robust in March. The Chicago Purchasing Manager Survey wasn't so solid in May, however, falling and hitting its lowest level since February and the sixth time it has been in contraction over the past 12 months. And lastly the Consumer Confidence Index was "92.6" in May. The Conference Board Consumer Confidence Index, which had decreased in April, declined further in May.
For specific market activity, U.S. Treasuries reversed sharply from losses to gains as it seemed investors reassess the odds of a June rate hike. The session opened with higher treasury yields following Friday's after-the-close comments from Fed Chair Yellen (and Bullard's over the weekend) calling a rate hike over coming meetings "appropriate" adding that the risks from waiting were "not that great." The probability of a June rate hike is now 21%, down sharply from Friday's close, according to the CME website. The cumulative probability of a hike by the end of the July FOMC meeting is 57%.
Today we've already learned that U.S. mortgage applications fell 2.3% last week, with purchase apps down almost 5% and refinance activity decreased 3.9%. (Refinances were 54.3% of loan applications versus 53.7% in the prior week.) Later this morning we'll see the non-market moving ISM factory index for May, along with Construction Spending in April both at 10:00AM EDT. The latest Beige Book will be released at 2PM EDT showing activity in the Federal Reserve's districts. In the early going rates have improved: the yield on the 10-year is back down to 1.82% and agency MBS prices are .125 better than Tuesday's close.
Jobs and Announcements
In job news, Security National Mortgage Company is among the TOP 50 mortgage lenders in the country and they are looking for LIKE-MINDED people to join the team. SNMC is searching for an Area Manager over Production/Recruiting in the Upper Midwest. "Security National is on solid ground and has been in the financial business for over 50 years and is backed by a public traded parent company, Security National Financial Corporation, (SNFCA-NASDAQ). The company is approved with FNMA, FHLMC, and offers many non-agency products, superior customer service, in-house processing and underwriting, and a full service marketing and advertising department. Don't just take their word for how great it is at Security National. The company has won a variety awards including the Best of State, Top Places to Work, Scotsman Guide 'Top Mortgage Lender', CEO of the Year, Sales and Marketing Team of the Year (SAMY Award), and more. To make a transition to a solid, growing company, contact Director of Business Development Justin Pater (801.864.2240)."
In ops jobs news, "An exciting, well-known, and rapidly growing retail lender is in need of several operations positions. The company has a culture of fully supporting its loan officers in assisting their clients, and due to increasing loan officer ranks is hiring closers, underwriters, post-closing specialists, operations mid-level and senior management. Most are able to work remotely so if you are interested please reach out directly to the president and we will be happy to respond immediately to your inquiry! It's a great company that you will really enjoy!"
And in personnel news congrats to Dominic Lavoie (510.788.8547) who has joined National MI's Sales team as Vice President of National Accounts, responsible for managing national accounts across the country. He brings over 13 years of mortgage experience to his role, and prior to entering the mortgage business, he was a 2 time Olympian in hockey and a member of several U.S NHL teams.National MI is a private mortgage insurance company that recently celebrated its third year of doing business and now has over 1,000 customers nationwide. To contact Dominic or other National MI Sales advisors: Click here
National Mortgage Professional Magazine has extended the deadline for its third annual Mortgage Technology Provider Directory, appearing in the June 2016 edition. There are a few spots left for innovative companies that offer unique products/services to the industry. Follow this link by June 6 to include your company.