This unrelated-to-mortgage banking short clip of a marriage proposal will take your mind off the markets: GoodCatch!
Maybe it will take loan reps' minds off of the volatility that apparently is wreaking havoc with pricing engines out there. Last week Optimal Blue "hesitated", and this week reports from agents say that NLYX is suffering the same fate. I am positive that I will hear from every owner of every pricing engine, but the perception out there is that some pricing engines can't keep up with the volatility and constant investor re-prices. Engines, whether they have functioned flawlessly for the last week or not, are having capacity issues when the market starts to make changes, whether it is the two listed above or others such as LoanSifter, Sollen, OpenClose, Avista, etc. The issues range from slower decision times to a complete temporary shutdown. Either way, loan agents may think that this is a conspiracy to slow locks down, which it is not although not being able to take locks during certain market conditions helps hedging. And no, I am not going to print a list of every pricing engine, which ones shut down, which ones are fine, and so forth.
To elaborate about pricing engines, vendors warn clients that pricing engines all scrub their data prior to it hitting a client's account, and if, after that, a particular lender has overlays it will take even longer to produce a price. Most of us, especially me, have no idea how complex a pricing and "decisioning" engine is. Pricing engines are dependent upon investor information, so if the investor is slow in updating a price, this impacts the turn time of the pricing engine from the loan rep's perspective. (In "the old days," we'd just shut down our lock desk if the market went wild.) With the volatility in the last few weeks, all the pricing engines set volume records in both pricing searches and in rate sheets loaded, basically doubling their average daily volume, and remember that searches just don't come from loan agents - searches by consumers using Google, Lending Tree, Zillow, etc. - only increase the traffic. There are, no doubt, customers out there contemplating changing price engines, moving from A to B, with probably an equal number thinking about going from B to A. But despite the delays it would be difficult to find an old-fashioned lock desk that could produce a manual rate sheet in this environment that is better than the engines.
Bay Equity is looking for
wholesale Area Sales Managers. This is an opportunity for a top
level Sales Manager to develop and grow a territory. Bay Equity, well
capitalized and located in SF, is looking to make hires west of the Rockies,
and in Texas. The ideal candidate has a strong network of AE's in their area
from which to recruit and hire. Bay Equity is currently licensed in CA, WA, OR,
NV, UT, CO, NM, TX, MT, ID, and AZ. If you are interested in this opportunity,
please send your resume to email@example.com.
Maybe some of the folks from Direct Mortgage (Utah) can give Bay Equity a call. Brokers received an e-mail, "Regrettably, I wish to inform you that Direct Mortgage. Corp. has made a decision to cease doing business in the wholesale lending business channel, and will discontinue accepting new rate locks for files that are not in the pipeline...There is just too much uncertainty in the industry. After all of the changes recently made there is still so much more change to come, and so much more uncertainty!"
But while some contract, the trend toward new business channels continues. For example, First State Bank of St Charles, located in St. Charles, Missouri, is targeting Community Banks and Credit Unions in the State of Missouri and surrounding states. First State Bank has been around a few years (144 to be exact) and now offers a "Secondary Market Channel, which allows firms to close as a broker or a correspondent, and they offer the optional benefit of in-house processing on these loans." For additional information, contact Charlie Nager at firstname.lastname@example.org.
In Florida Ocwen Financial is forming Correspondent One in order to securitize mortgages originated by Lenders One. In March of this year Ocwen and Altisource each acquired a 50% equity interest in Correspondent One, which would securitize newly originated Lenders One loans. (Per Ocwen, Lenders One clients originated 6% of all mortgages last year.) In an interesting note, Ocwen, which uses many overseas employees, said it plans "to deploy a full on-shore servicing alternative" for potential clients that prohibit using off-shore workers.
On a larger scale, Bank of
America (which services 14 million mortgages) agreed to sell part of its
troubled mortgage portfolio to Fannie Mae. The deal, reported by the WSJ,
will deliver the rights to process and collect payments on a pool of 400,000
loans with an unpaid principal balance of $73 billion for a purchase price
exceeding $500 million. It is viewed as the first big step to unload seven
million troubled mortgages through sales, loss mitigation and foreclosure.
BofA's stock price is down 43% this year. Remember that Fannie Mae doesn't
service any mortgages but can purchase the servicing rights in order to
transfer the day-to-day management of those loans to a different company.
Yesterday I included a piece on handling renegotiations in this volatile environment. Several readers wrote about how the LO comp changes impact renegotiations in today's environment. "Rob, unfortunately, the loan officer and a producing branch manager can no longer participate in these losses due to the new rules on compensation, unless of course they are employed by a company that is not following the rules by using some form of a point bank, or a proxy therefore. Capital market accounts, shared profits, etc., at the loan officer / producing branch manager are all expressly prohibited." And another: Things have changed - it would be nice if everyone in the food chain needs to share in the cost of renegotiations. But reducing the loan officer's compensation when the borrower's rate or fees are reduced is not permitted by the Fed Rule." And finally, "No, the loan officer compensation cannot be affected by a renegotiation. They can contribute nothing towards the change in price. The same goes for brokers: LO Comp cannot change. If you have anybody out there that has a way around this one on the wholesale side, please let me know! We are being asked to drop the rate by .125 to .50 percent, taking huge losses, while the broker is still making their 1, 1.5 or 2 points +. They have no incentive to hold the rate as their compensation cannot be affected. Am I missing something?"
The march toward lower loan limits in various parts of the nation continues. US Bank (USBHM) reminded clients that, "The Super Conforming Loan Limits for FHLMC/FNMA/FHA are due to expire on September 30, 2011. From all indications, it is likely that the current limits will not be extended and the new limits will be reduced not only to the absolute limit (reduced from $729,250 to $625,500) but individual county limits as well...the wholesale division is telling brokers that all loans approved and expected to close under the current loan limits must close, fund, and disburse no later than September 16. For VA loans, "the maximum loan amounts available through USBHM will not change however the Veterans maximum eligibility/entitlement available in Super Conforming counties is subject to change."
Wells Fargo wholesale told its brokers, "8/15/11 is the last day to lock/register any High Balance Loan above $625,500."
Bay Equity spread the word to its brokers of its schedule: the last day to lock loans with the existing loan limits is 9/15, the last day to submit a full package is 9/15, and the last day to draw docs is 9/23.
Franklin American Correspondent Lending announced that it will soon introduce the USDA Rural Housing program. Clients interested in the program should hustle up submit evidence of your USDA approval to FAMC.
ClearPoint Funding is offering up a broker training session on VA loans. The 1 hour class is tomorrow at 12PM EST via Webex - contact Jenda Pegoda at email@example.com.
BofA announced to its correspondent clients that new risk-based pricing disclosures (Dodd Frank Act Amendment to Fair Credit Reporting Act) have undergone a few changes since the December announcement, given Final Rules published in the Federal Register on July 15. "Effective August 15, clients who use the general risk-based pricing notice should now use the new disclosures, available with consumer credit score information, when a consumer's credit score was used in setting the material terms of credit. Clients should review the FCRA regulations for complete details."
GMAC (and other investors) are reminding clients Fannie Mae will implement DU Version 8.3 on August 20!
Volatility is so much fun for everyone involved. The latest knee-jerk reactions were set off by the Federal Open Market Committee's post-meeting announcement yesterday. There was no change in overnight rates (the FOMC only sets short term rates) but what was new was that the committee said it would keep short term rates at these levels through mid-2013. Although there was some dissention, the committee noted that the labor market has deteriorated, spending has flattened, housing is depressed, and the Fed expects a slower pace ahead than in June.
The treasury market had an intense rally after the release of the FOMC statement: 5-yr yields hit .819% and the 10-yr. touched as low as 2.04%. But then fixed-income markets sold off, stocks rallied, MBS prices ended the day better by about .625, and the 10-yr closed around a yield of 2.25% - but as one trader noted, "price action and liquidity has been very sloppy," post-FOMC.
Today will be spent digesting yesterday's news, although we have a $24 billion 10-yr note auction and we did have the weekly mortgage applications number from the MBA. The index of mortgage application activity rose nearly 22% last week - every lock desk could tell you that! Refi apps were up over 30%, and now account for over 75% of volume, but purchase apps dropped about 1%. 21.7 percent in the week ended August 5.
The nice thing about being senile is you can hide your own Easter eggs and have fun finding them.
Know how to prevent sagging? Just eat till the wrinkles fill out.
It's scary when you start making the same noises as your coffee maker.
These days about half the stuff in my shopping cart says, "For fast relief."
If you're interested, visit my twice-a-month blog at the STRATMOR Group web site located at www.stratmorgroup.com . The current blog takes a look at the recent U.S. credit downgrade by S&P, and whether it really matters. If you have both the time and inclination, make a comment on what I have written, or on other comments so that folks can learn what's going on out there from the other readers.