Every day we have news coming out of Fannie Mae and Freddie Mac. Some of the news is attempts at changing the structure of the two – being under government conservatorship under the FHFA is not a long-term solution – and some of the news pertains to programs and policies. Both are a few paragraphs down. And occasionally I am still asked about F&F CEO pay. Yes, Congress capped it late last year at $600k, but rest assured that those under the CEO level at the agencies have no such limits. But in general CEOs are paid a lot because they're worth it.
In the secondary markets, PennyMac sent an announcement that it is removing the Mandatory Forward delivery method from its offering of commitment types. "PennyMac is removing the Mandatory Forward delivery method from its offering of commitment types. Best Effort, AOT/DT and Bulk will NOT be affected by this change. Please note important cutoff dates for Mandatory Forward below..." View the important cutoff dates for Mandatory Forward. PennyMac, however, sent along an e-mail to me saying, "We are not eliminating mandatory delivery. We have bulk and we have Direct trade and AOT and we have Best efforts. No one was using the rate sheet forward concept that we called Mandatory so we are killing it."
Congress only has about 15 legislative days, or less, left before the November election - so don't look for a lot of government changes to Freddie or Fannie this year. But that doesn't stop the jawboning, posturing, negotiating surrounding the two, and the internal changes that impact the residential lending business.
One editorial piece noted, "It's been said that Washington is where good ideas go to die. We don't know about that, but some bad ideas are certainly hard to get rid of. Consider the persistent non-solution to the zombie-like status of Fannie Mae and Freddie Mac known as 'recap and release.' The plan is to return the two mortgage-finance giants to their pre-financial-crisis status as privately owned but "government-sponsored" enterprises. That is to say, to recreate the private-gain, public-risk conflict..."
And the GSE front-end risk-sharing plan is 'drawing fire' from small lenders.
Recently Freddie Mac received some bad news. A federal appeals court revived a lawsuit accusing Freddie Mac and several former top officials of defrauding shareholders by concealing its subprime mortgage exposure and its inadequate risk management prior to the 2008 financial crisis. The 6th U.S. Circuit Court of Appeals said a lower court judge erred in concluding that the Ohio Public Employees Retirement System did not sufficiently allege that its losses were caused by Freddie Mac's disclosure shortfalls.
A few weeks ago the industry learned of something new to worry about: a borrower's language preference. Fifty-four members of the House, in a letter to Federal Housing Finance Agency Director Mel Watt, urged the agency to exclude from its new Uniform Residential Loan Application a question asking borrowers to indicate their language preference, saying that FHFA should work with Congress, federal agencies and industry in developing a "comprehensive approach" to address mortgage consumers with limited English proficiency.
A draft Republican Party platform calls for dismantling Freddie Mac and Fannie Mae and limiting the government's role in the mortgage system. The platform also calls for scaling back financial regulations and getting rid of the Consumer Financial Protection Bureau. Obviously nothing is going to happen in 2016 regarding any of this, but it is good to know what some folks are thinking.
The Fannie Mae Servicing Guide has been updated to include changes related to the following: Post-Foreclosure Bankruptcy Clarification, Short Sale Offer Acknowledgement and Pooled from Portfolio (PFP) Mortgage Loans. Read theAnnouncement for details.
The area median incomes (AMIs) used in determining borrower income eligibility for HomeReady mortgage loans have been updated, as announced in this Selling Notice. The 2016 Income Eligibility by Census Tract Lookup spreadsheet is posted on Fannie Mae's website and updated AMIs will be implemented in Desktop Underwriter® (DU®) the weekend of July 16, 2016. For manually underwritten HomeReady loans, lenders can begin using the updated AMIs immediately. Loans already in the pipeline will not be affected by updated AMIs.
Lenders are encouraged to use the revised Fifth Third Condo Questionnaire for condominium loans delivered to Fifth Third. Fannie Mae Form 1076, Freddie Mac Form 476 and other common industry questionnaires (CondoCerts.com, Homewise, etc.) are acceptable. Regardless of the condo questionnaire used, it does not eliminate the lender's responsibility for verifying the project meets all applicable project warranties and guidelines. The updated Ineligible Condo list is available in the Correspondent Connect Online Guides and Forms.
Per Fannie Mae's announced postponement of DU Version 10.0 until September 24, 2016, Mountain West Financial will not be implementing any changes for DU Version 10.0 until Desktop Underwriter can support the changes. This would include Trended Credit Data; Underwriting Borrowers Without Traditional Credit; and Borrower's with Multiple Financed Properties.
Sun West Mortgage Company is aligning its guidelines for Multiple Financed Properties as per Fannie Mae announcement SEL 2016-03. The revised policy is effective for loan submissions on or after 06/30/2016. The updated guidelines can be accessed through its website.
Citi's recent bulletin includes credit policy updates, regarding Principal Curtailments, Arch Mortgage Insurance and AUS Note Updates: LP Loans. Clients should check out Citi's 2016-07 bulletin.
Ditech updated its Conforming, FHA and VA underwriting guidelines. The Client Guide and product summaries must be referenced for complete guideline requirements. Conforming underwriting guidelines are being clarified or updated related to the following topics: Restructured Mortgages, Written Verification of Employment for Bonus, Overtime, Commission Income, Self-Employment Income FHA underwriting guidelines are being clarified or updated related to Energy Efficient Homes as a Compensating Factor. VA underwriting guidelines are being clarified or updated related to termite/pest inspection fees.
Effective August 1 Mortgagees must use the updated HUD 92900-A. This form will be incorporated into Mountain West Financial Disclosure package and is required for case numbers assigned on or after August 1, 2016. Also announced byMWF, it now has the availability of the Fannie Mae Property Inspection Waiver (PIW) on loan transactions with confirmation of the offer indicated on the final submission of the DU Findings.
Pacific Union is pleased to announce the availability of the USDA Streamlined-Assist product, formerly the USDA Pilot Refinance program (available only in certain states). Loans with no credit score or credit score <620 will be subject to Specialty pricing. Pacific Union also announced Pacific Prime, its new proprietary Jumbo Fixed Rate financing option. All Correspondents approved for Conventional lending are eligible to submit loans under the Pacific Prime Jumbo program. This is a non-non-delegated program; therefore, all loans must be submitted to Pacific Union for underwriting/eligibility review prior to closing, using a Non-Delegated Submission Form. A $675 Non-Delegated Jumbo Administrative Fee will be netted from the purchase price.
Rates: up a little, down a little. For many lenders rates are the least of their problems, unless you include possibly paying penalties for previous loans paying off early. On Friday U.S. Treasuries, and agency MBS prices, traded modestly lower/worse on no news of substance although the 10-year risk-free T-note had a half point price range during the day.
This week we have a full larder of economic tidbits although today there is zilch. Tomorrow we have the Case-Shiller 20-city Index if you'd like some news from May, July Consumer Confidence, and June New Home Sales. Much later we'll have a $26 billion 2-year Treasury auction - grab your checkbooks.
Wednesday we'll have the MBA's Mortgage Index, June Durable Goods Orders and Durable Goods Orders ex-transportation, June Pending Home Sales, and then the FOMC rate decision - there will be no change to short terms rates. Thursday contains the usual Initial Jobless Claims, but also June's International Trade Balance, and a $28 billion 7-year Treasury auction.
Friday will be some substance: Q2 GDP, Chain Deflator, and ECI - Advance Estimate (08:30 EDT), the Chicago Purchasing Manager's survey, as well as the Bank of Japan's statement on rates - but Japan has had low rates for many years so don't get your hopes up.
If you're trying to guess where rates sheets will be, we closed Friday with the 10-year at 1.57%. This morning it's at 1.59% and agency MBS prices are slightly worse.
New products in the primary markets? Yes, there are.
StockTrade Capital Markets is an aggressive NON-QM secondary market purchaser of whole loans. Accepting credit scores as low as 500, Borrowers 1 day from a housing event, allowing bank statements for income and LTVS to 90% with loan amount from 100,000.00 to 2,000,000.00 Warehouse lines for this product are available, and willing to accept Brokers wanting to become a Banker. We even can arrange for all services to be out sourced such as underwriting, closing, funding and compliance. Depending on the Client's needs, we can arrange something to fit. Accepting new Seller apps now. Click here to register for rates and guidelines. Seller questions and general inquiries can be directed to William Stock(619-721-0743).
And Greenbox Loans was founded based on the concept of 'out of the box' underwriting of residential loans. Raymond Eshaghian, President of Greenbox Loans believes that the "The residential lending environment has been plagued by regulatory challenges limiting credit to well qualified borrowers that do not fit in the box. We think outside the box with a common sense approach in helping qualified borrowers obtain the financing they need. Greenbox's proprietary programs and guidelines include 24 Months Bank Statement loans with 580+ FICO score - up to $2MM loan amounts, no income investor loans (borrowers qualify based on rental income up to 75% LTV), no income investor loans for Foreign National borrowers up to 70% LTV, Non-Prime loans up to $2MM with 500+ FICO score, Non-Prime loans for borrowers with recent short sale/foreclosure/BK discharge, and non-warrantable condo programs. For more information on programs or on becoming an approved broker, contact Greenbox Loans at (800) 919-1086; email wholesaleinfo@greenboxloans. com for additional program information.
And Compass Analytics, LLC announced the offering of CompassPPE (formerly known as LenderHub) - an enterprise level product, pricing, and eligibility engine (PPE). "CompassPPE (CPPE) is a comprehensive, contemporary product and pricing engine designed for flexibility and ease of use with robust capital markets capabilities that enable lending institutions of all sizes to offer a point-of-sale PPE to their correspondent, wholesale, and retail origination channels. CPPE empowers originators and lock desk personnel with a streamlined lock and relock workflow that combines mobile access, automation, historical pricing, LOS integration, and optional integration to Compass Analytics' risk management solution, CompassPoint. Capital markets groups can now comfortably enable automated locking, relocking and extensions, and utilize originator performance reporting to implement dynamic and granular control of profit margins and mortgage servicing rights (MSR) values.
"Additionally, CPPE is the first PPE in the industry to offer a comprehensive application programming interface (API) that allows all core PPE functions and PPE integrations to be leveraged programmatically from within a client's proprietary user interface and system. Compass Analytics has established investor relations, accuracy, support, flexibility, and capital markets control as the hallmarks of its PPE solution, as the company feels that other providers have lost this targeted focus." For more information, find Compass on the web at compass-analytics.com or contact Wes Horbatuck to schedule a demo or a meeting.
Jobs and Announcements
Nationstar Correspondent recently welcomed Tolly Spence to the Nationstar Correspondent Sales team as the new Southeast Regional Account Executive supporting clients in Alabama, Arkansas, Florida, Georgia, Louisiana, Kentucky, Mississippi and Tennessee. "Spence brings 28-years of mortgage industry experience including 13-years of consultative Correspondent Sales, 5-years of Mortgage Insurance/Title Insurance Lender Relations and 10-years of Mortgage Origination/Banking to Nationstar Correspondent, and this experience allows for him to leverage a broad bandwidth of knowledge and execution best suited for the correspondent including Best Efforts, Mandatory, Bulk Mandatory, Direct Trade and AOT. Spence's success comes from building long term strategic partnerships that result in increased revenue, reduced expenses while growing future opportunity and protecting stakeholders." Current clients or are interested in partnering with Nationstar Correspondent and are located in the Southeast Region can contact Mr. Spence by clicking above.
Flagstar Bank, the 12th largest lender with over 25 years of experience originating mortgages nationally, continues to expand its retail lending business nationwide and is seeking experienced loan processors, underwriters and closers. "Flagstar offers competitive loan programs, innovative technologies and robust marketing in addition to comprehensive training programs to support successful careers. We are united by our core STAR values of service, trust, accountability, and results that value each and every employee. Positions are available in Bellevue, WA; Phoenix, AZ, Costa Mesa, CA and Troy, MI (headquarters). Opportunities to work remotely are also available. To apply, email Scott Fitzgerald. Become a member of the growing Flagstar team!"