Huh? Rumors again that FHLB Atlanta is exiting the HFLB Xtra mortgage program effective at the end of this year? Who can keep track of all the rumored, and actual, changes in the biz? (Keeping with the Atlanta theme… no establishments from that locale made the latest list from Travel and Leisure of “The Best BBQ in the U.S.”.) More credit and underwriting guideline changes below.
Credit and Underwriting Changes, Shifts in Approval Guidelines
Back on April 16th, credit-reporting agencies dropped all information on tax liens and court-ordered debts from consumer credit reports and ratings. Underwriters and LOs noticed the difference, as about 17% of consumers saw their credit scores rise. Some bankers say the change is unfortunate because the mere existence of a tax lien speaks volumes about a customer’s ability to meet financial obligations. Eliminating that information from credit reports could mean lenders, and secondary market investors, can’t fully see the risk they’re taking when lending.
On the other hand, it’s important to get a clear look at potential customers’ financial data, and prior to April 16th perhaps things weren’t so clear. The system listed tax lien data, but judgments and liens were often linked to the wrong people. (The last report I saw, Equifax, Transunion, and Experian said that 96% of civil judgments and 50% of tax liens weren’t connected to sufficient identifying detail.)
Underwriters know that borrowers who have tax liens or civil judgments often have other signs of credit risk as well. Nearly all the people in this group have credit records that show debt-paying delinquencies of 90 days or longer. Borrowers with liens and judgments also tend to have subprime credit ratings, and most people in this group have credit scores of less than 620.
Experienced LOs don’t want to return to the NINA days. We’ll see if QM/non-QM, and ATR, are enough to keep that from happening. Certainly, investors want more yield. There’s a delay in terms of knowing how large this potentially risky population is, but it is updated on a year lag basis and thus we will not be able to see the full 2017 impact until the end of 2018. For 2017 MGIC reports that that only 0.9% of NIW had a DTI above 50% (likely driven by some targeted affordability programs) and 15.2% of NIW had a FICO below 700.
Are all mortgage insurance companies showing discipline to eliminate the potential problem of “risk-layering” (e.g. low FICO and high DTI) that was a large driver of losses in the mortgage crisis? As every loan officer, and servicer can tell you, high FICO borrowers with many risk layers (e.g. high LTVs, cash-out refinance, etc.) can perform worse than lower FICO borrowers with no risk layers.
Banc of California announced that gifts are allowed with 10% of the borrower’s own funds on the following programs: 12-Month Bank Statements, Asset Income, 1-Year Tax Returns, No Fico and Expanded Criteria. (Previously no gift funds were allowed).
PRMG has updated its HELOC products. Front End DTI no longer exists, qualify with 45% Back End DTI only. Increased exposure to $1.250 M with 700 FICO up to 89.99 CLTV. FICO as low as 680 now accepted to 85% CLTV up to $1.250 M exposure. Max total exposure increased to $2M for 730+ FICO. Self-Employed – ordinary business income allowed for 25% ownership or greater.
FAMC will require 2017 transcripts for loans closed on and after June 17, 2018 if transcripts are applicable. Please refer to FAMC’s documentation requirements located within the Credit Documentation chapter of our on-line manual.
TheLender has VA loan options which include highlights such as minimum credit score: 500 AUS approved, 560 manual. Foreclosure/Short sale/Bankruptcy <2 years allowed with AUS Approval. Cash-out up to 100% LTV. HUD REO allowed.
Sun West has updated its manual underwriting guidelines specifically for the review of a borrower's credit. The updated guidelines include additional information on how various risk factors associated with a borrower's credit are analyzed during a manual underwriting review.
Pacific Bay Lending Group offers a Stated loan with just a business license at only 5%. No P&L needed and no prepay.
New Non-Prime...Prime and Non-Prime are offered at Loan Stream.
HomeXpress announced new guideline changes. New Full Doc Program: One-year W-2 with paystub (wage-earner) or 1-year Tax Return (self-employed). Self Employed Borrowers: borrower prepared P&L accepted. Reserves: Business funds may be used as reserves.
Debt Ratio: Up to 55% DTI ratio on case-by-case basis with sufficient compensating factors.
Mountain West Financial announced wider guidelines for its Jumbo A product. Changes include Second Home and Investment Property DTIs, Soft Markets, Rate and Term refinances of previously listed properties and Sale of subject property within 90 – 180 days.
Citadel Servicing Corp. offers Wholesale Non-Prime/Non-QM Lending with no reserve requirements.
Real Estate investors have options utilizing Pacific Bay Lending Group’s EZ Investor Cash Flow program.
Rates were flat again yesterday in what has been a muted week after last week’s Fed decision, with the 10-year closing at nearly 2.94% as concerns eased about a potential global trade war. Despite President Trump stepping up trade threats against China earlier in the week, markets are now viewing the rhetoric as a trade strategy more than anything else.
Looking at today’s economic calendar, we have already had initial jobless claims (non-event at -3k to 218k) and the Philadelphia Fed Business Outlook for June (19.9, weakening). Later this morning we will have the FHFA House Price Index MoM for April, Bloomberg Consumer Comfort and Economic Expectation readings, and Leading Index figures for May. Thursday starts with the 10-year yielding 2.92% and agency MBS prices are a couple ticks better versus Wednesday’s close.
Alight Mortgage Solutions, the leading provider of cloud-based applications for budgeting, forecasting, financial reporting and scenario analysis specifically designed for the mortgage industry, today announced that mortgage industry veteran, Katrina Marshall, has joined the team as Sales Director, Western Region and Strategic Accounts. Katrina brings a wealth of mortgage industry knowledge and 30+ years of experience to Alight as a mortgage executive managing originations, operations, underwriting and technology. For information on how Alight can help you improve decision making and foster a culture of accountability, request a demo or contact Katrina.
Are you using Floify’s new 1003 loan application? If not, what are you waiting for? Floify, the mortgage industry’s leading point-of-sale system, recently released the most advanced 1003 on the market, and it has been making BIG waves in the mortgage world! Not only has Floify greatly improved the borrower’s experience with the often-tedious application process via their “interview-style” 1003, they’ve made it quicker and easier for LOs to originate loans. Configurable fields, design elements, and business rules are just a handful of the powerful features you can access with this fully embeddable 1003. And now LOs can brand their application landing pages with contact info, graphics, and more! If you’ve been considering Floify for your lending operation, now is the perfect time to take advantage of this incredible solution and get yourself on the leading edge of mortgage tech.
Matthew Nyman, SVP, Director Secondary Markets at Bridgeview Bank Group (BBMC Mortgage & bemortgage), notes, “We have worked with DocProbe for the past few years have found DocProbe to be a competent and dependable resource for handling our final documents. It was a great decision to outsource this function to DocProbe. DocProbe understands what our investors require, and they have systems in place to deliver those documents to our investors in a timely fashion, they also give us the ability track those documents via an easy to use web interface. The transition to working with DocProbe was seamless and the fact that they offer no penalty guarantees along with no long-term contracts made the decision easy for us to sign up with DocProbe.” DocProbe is excited to announce its new partnership with The Mortgage Collaborative! We are looking forward to engaging and providing great value to the membership! DocProbe will be exhibiting at the Western Secondary in San Francisco next month. Reach out to Nick Erlanger to set up a call.
Lakeview Correspondent is pleased to announce that Pacific Northwest veteran Sunday Gillette has joined the correspondent sales team, covering the Northwest Region -- WA, OR, ID, AK, UT and Northern California. Sunday brings her formidable business development skills to the seasoned Lakeview Correspondent team focusing on Lakeview’s Best Efforts, Mandatory Bulk and Housing Finance Agency businesses. Lakeview will be at the Western Secondary next month in force, touting their new No MI Product and Investor Piggyback product, please contact Sunday now to get on the schedule.
Movement Mortgage continues its Texas expansion, announcing this week the Steve Kyles Mortgage Team has joined the lender in the Houston market. Kyles is a top producer who joins with Movement with his team, including Loan Officer Denell Salame and marketing coordinator Jolea Nealy. Houston Market Leader Kelly Rogers is actively recruiting and expanding Movement’s footprint in East Texas. Email her to learn about opportunities.
Flagstar Bank, is seeking a Senior MSP System Administrator to work in its HQ in Troy, MI. The Sr MSP System Administrator is responsible for the identification, evaluation, design and development of efficient processes and system utilization, concentrating on risk mitigation, cost effectiveness and industry best practices for all of Loan Servicing as it relates to MSP and the Black Knight’s suite of technology solutions. Requiring this person to be an expert proficient in using of MSP and its subsystems including: Director, Passport, and Navigator. If interested, please apply at the following link.
Evergreen Home Loans continues the exciting growth experienced in the last 5 years with the launch of a new brand, logo and website to enhance the customer experience. “I founded Evergreen Home Loans because I saw a need in the home loans industry for a company that could provide the best customer service experience to eliminate surprises and deliver on time,” said Don Burton, president. “We are committed to maintaining that focus and our new brand and website positions us at the cutting edge of innovation to best serve our customers, our business partners and our Evergreen associates.” The company is committed to their core conviction of GROWTH and is hiring loan officers looking to be part of a team that celebrates individual growth and success. Congrats to Melissa L. Walker, CMC who has joined Equifax in the Workforce Solutions Division as a Mortgage Business Consultant. Melissa is a subject matter expert for Equifax focusing primarily on The Work Number, employment and income verifications in the mortgage industry that have end-to-end employment and income verifications with real-time results meant to improve borrower experience, shorten turn times, and reduce fraud with a centralized, consistent and compliant process.