Real estate agents, and lenders interested in joint ventures and “affinity programs,” are very interested in the Realogy news that the United Services Automobile Association (USAA) is discontinuing the USAA Real Estate Rewards Network, an affinity program that generates leads for the Cartus Broker Network. The Cartus Broker Network is a network of brokers from the company's owned brokerage (NRT), select company franchises (RFG), and certain independent brokers who receive referrals from Cartus' high-quality lead-generating relocation and affinity programs. KBW’s Bose George reports that, “Upon the USAA program's end in September, Realogy is launching a new military rewards program to offer similar benefits, though it is unclear how effective the replacement program will be at generating leads without the partner organization.”

Lender Warehouse Product

With rates rallying this summer, Comerica Bank has been successful in providing temporary and permanent increases to many of its customers’ warehouse lines within very tight timeframes. Warehouse capacity is critical, and when time is of the essence, Comerica is agile. That is why agility is one of Comerica’s core values. With over 50 years of warehouse experience, this isn’t Comerica’s first cycle. Comerica’s relationship managers possess a wealth of experience and stand ready to respond to your needs. At Comerica Bank, warehouse lending is one part of a well-diversified commercial lending portfolio. This allows Comerica to grow with you when volume spikes unexpectedly. If you would like to experience this type of confidence in your warehouse partner, let Comerica Bank raise your expectations of what a bank can be. Please contact Von Ringger (313-222-9285) or Trey Worley (214-462-4279). Member FDIC. Equal Opportunity Lender. Loans subject to credit approval.

FHA, VA, HUD, and Ginnie

Some of this will be review of recent changes, or potential changes, but I receive enough emails asking about them, and how lenders are reacting, that I figured listing them would be advantageous in case you missed anything.

FHA has published Mortgagee Letter (ML) 2019-13, Single-Unit Approval Process — Obtaining FHA Case Numbers for Single-Unit Approval Originations, which outlines the procedures mortgagees must follow for Single-Unit Approval case number assignments. Questions about the Single-Unit Approval case number assignment process, as well as other general questions, should be directed to the FHA Resource Center.

FHA published Mortgagee Letter (ML) 2019-12, which rescinded ML 2019-06, “Down payment Assistance and Operating in a Governmental Capacity,” ML 2019-07, which extended the effective date of ML 2019-06, and ML 2019-10, which suspended the effective date of ML 2019-06. The rescissions are effective immediately. The definitive policy guidance for FHA’s down payment assistance program continues to be found in its Single Family Housing Policy Handbook 4000.1 (SF Handbook) Section II.A.4.d.ii.

FHA recently proposed changes to its annual lender certification to better align with statute and regulation without undermining its ability to hold lenders accountable for compliance with FHA approval and continuing eligibility requirements. The proposed annual lender certification was posted on FHA’s Single Family Housing Drafting Table (Drafting Table) for feedback from May 9, 2019, through June 8, 2019. After assessing the feedback received, FHA made additional changes to streamline the annual lender certification.

This month, under the provisions of the Paperwork Reduction Act, FHA published a Federal Register Notice, “FHA Lender Approval, Annual Renewal, Periodic Updates and Required Reports by FHA-Approved Lenders,” (Docket No. FR-7011-N-38) requesting public comments on the proposed changes. The changes to the annual lender certification statements are also posted on the Drafting Tablefor stakeholder awareness.

In a recent press release, FHA announced the publication of its Condominium Project Approval Final Rule and new condominium sections of FHA’s Single Family Housing Policy Handbook 4000.1. The polices become effective October 15. Read FHA’s new condominium approval regulation.

HUD announced joint policy actions designed to reduce risk associated with cash-out refinance lending. The changes preserve homeowners’ ability to convert home equity to cash via a government-sponsored mortgage but also improves the risk profile of HUD’s housing finance programs.  HUD plans to lower its maximum loan-to-value (LTV) requirements for cash-out refinance transactions from 85 percent to 80 percent. This policy change will be effective for loans with case numbers assigned on or after September 1, 2019 and aligns with the maximum cash-out LTV allowed by the Government Sponsored Enterprises (GSEs). Read FHA’s mortgagee letter.

HUD published a proposed rule to amend the HUD interpretation of the Fair Housing Act’s disparate impact standard. The proposed rule as amended would provide more appropriate guidance on what constitutes unlawful disparate impact to better reflect the Supreme Court’s 2015 ruling in Texas Department of Housing and Community Affairs v. Inclusive Communities Project, Inc.

Meanwhile, Ginnie Mae is taking further action to manage risks associated with ‘loan churning’ among mortgages insured by the Department of Veterans Affairs (VA). Rapid, serial refinancing has proven to deplete home equity and wealth for veterans with VA-insured mortgages and harmed investor confidence in mortgage-backed securities (MBS) that Ginnie Mae guarantees. Ginnie Mae has revised the pooling eligibility requirements applicable to all VA-guaranteed refinance loans and established new pooling criteria for certain cash-out refinances with loan-to-value ratios exceeding 90%.

In response to Ginnie Mae's Request for Input (RFI) on its "Stress Testing Framework and Recommendations," The Community Home Lenders Association (CHLA) submitted its comment letter which made three major recommendations. First, “Stress testing should not be used for smaller Ginnie Mae issuers as it would not accurately assess smaller issuer risk, would undermine Ginnie Mae’s access to credit duties, and would increase issuer concentration. Second, if applied in any capacity to any smaller issuers, stress testing should: (1) be fully transparent, (2) not impose an undue regulatory compliance burden on smaller issuers, (3) be fully beta tested for smaller issuer impact and negative bias before being applied to any smaller issuers, and (4) not supersede qualitative reviews or liquidity or net worth ratios that have historically been used to supervise smaller issuers. And third, Ginnie Mae should proactively communicate with warehouse lenders about whether and how it intends to apply stress testing to smaller issuers – in order to avoid warehouse lenders reducing credit to smaller issuers merely out of fear or lack of knowledge of any changes that Ginnie Mae might be considering.

(CHLA's letter laid out extensive arguments why formal stress testing is not appropriate for smaller issuers. The letter also cautioned that any use of stress testing in any context for smaller issuers should be transparent and understandable, should not impose new compliance costs and burdens on small issuers, and must be fully beta tested before any use with small issuers.)

U.S. Bank Correspondent/HFA issued SEL-2019-040 covering VA IRRRL clarifications and VA updates to Chapter 13 Notice of Value.

HUD recently announced that the maximum LTV/CLTV for FHA Cash-Out Refinance is being reduced from 85% to 80% on FHA case number assignments on or after September 1, 2019. Plaza’s FHA program guidelines have been updated to align with this change. In addition, its VA program guidelines have been updated to reduce the maximum LTV/CLTV for cash-out refinance transactions to 90% and it’s VA Renovation program guidelines have been updated to reduce the maximum refinance LTV/CLTV to 90%.

PennyMac Correspondent weighed in with a revision to Announcement 19-45: FHA ML 19-11 and Ginnie Mae APM 19-05: Updates to FHA Cash-out Max LTV and its recoupment calculation announced in VA Circular 26-19-22.

Based on the FHA reduction to LTV and CLTV percentages for Cash-out Refinance Mortgages to 80 percent (80%) of the Adjusted Value. This is effective for case numbers assigned on or after September 1, 2019. Any loans currently submitted to Sun West Mortgage, both Wholesale and Correspondent Channels, with LTV / CLTV exceeding 80 percent must have case numbers assigned on or before August 31.

In response to recent updates made by the U.S. Department of Veterans Affairs (VA) to its Lender’s Handbook, Wells Fargo Funding will not purchase the following types of VA Loans:

VA Farm Residence Loans, VA Loans for Alterations and Repairs or VA Supplemental Loans.

Mortgage Solutions Financial issued a revision to Announcement 22-19C regarding VA Cash Out loans with LTV > 90%.

loanDepot Wholesale/Correspondent posted an Announcement updating information relevant to VA Fixed and ARM Matrix, VA Funding Fee Broker Responsibilities Reminder and FHA Condominium Project Approval Requirements.

Recent announcements by FHA and Ginnie Mae will result in changes to Mountain West Financial, Inc. guidelines for FHA and VA loans. Effective with case numbers assigned on or after September 1, 2019, FHA is reducing the maximum LTV for cash-out transactions from 85% to 80%. All FHA cash-out transactions with an LTV >80% must have a case number assigned prior to September 1, 2019. Currently, MWF allows VA refinances up to 100% LTV. To align with new pooling restrictions, put in place by Ginnie Mae, MWF will limit VA non-IRRRL refinances to 90% LTV effective with loans locked on or after September 1, 2019. All VA non-IRRRL refinance transactions with an LTV >90% must be locked prior to September 1, 2019, must fund no later than September 16, and must have a first payment due date no later than November 1, 2019.

LoanStream Mortgage issued a guideline update for FHA lending. As of September 1st, the max LTV for FHA cash out refinance transactions is reduced from 85% to 80%. FHA case numbers MUST be assigned by 8/31 or loans will be subject to new guidelines.

Capital Markets

The US Treasury yield-curve inversion deepened this week. The yield on the three-month Treasury bill was as much as 52 basis points higher than the 10-year note, a spread last seen in March 2007.

Yesterday in the bond market U.S. Treasuries dropped across the curve, including the 10-year closing -2 bps to 1.47 percent, as equities from around the globe dropped for the same reason. Germany's 10-year yield and Italy's 10-year yield hit fresh record lows. The rally started overnight in a “convexity bid” amid heavy buying in the long end of both the U.S. and bund curves. The UMBS basis saw limited supply, some of which was month end-related ahead of the long weekend for the Labor Day holiday, causing rates to rally. Investors awaited new developments in the U.S. and China trade negotiations, and Treasury Secretary Mnuchin said the U.S. doesn’t intend to intervene on the dollar for now.

Today should provide some more clarity on economic growth, as we have just had the 2nd Q2 GDP print out (down to 2.0%). Additionally, markets have been left to digest initial jobless claims for the week ending August 24 (215k, up a bit as expected), and continued claims for the week ending August 17 (1.698 million). Later this morning, the advanced goods trade deficit for July, July wholesale and retail inventories, and the July Pending Home Sales Index will all be released. We begin the day with agency MBS prices worse a smidge and the 10-year yielding 1.50%.


Jobs and Personnel Moves

Bay Equity Home Loans has entered the northeast market with the acquisition of assets of Village Mortgage. “We are pleased the people of Village Mortgage have chosen to join Bay Equity,” said Bay Equity Chief Executive Officer Brett McGovern, “they are experienced and highly respected mortgage professionals who share and embrace our family culture and our commitment to an exceptional borrower experience. This is a clear win/win having a great group of people joining a bigger stronger platform and the benefits that come with that. A great culture fit for both groups.” The northeast team is led by Regional Sales Manager Laurel Caliendo. “We have found a great new home in Bay Equity. From loan products to industry leading operations and support teams, we are off to a great start,” said Caliendo. “We are very impressed by the commitment of ownership and executive management to our success.” Bay Equity is actively looking for similar opportunities. Renee Blackwell-Hildebrand is leading this effort for Bay; contact her for a confidential discussion. 

Lender Sierra Pacific Mortgage continues to expand in 2019 by recently announcing the opening of its 25th new branch office. The Indian Wells office is led by lending veterans Patrick Mahon and Debbie Calixto. The team of loan professionals handle purchase and refinances in Riverside County. There are plenty of incentives for Coachella Valley consumers and originators alike to head to Sierra Pacific. In addition to its expansive Adventum™ product, prospects choose Sierra Pacific after learning that over 97% of closed borrowers would refer friends and family to them. “Sierra Pacificcontinues to invest in the expansion of our Retail channel while aligning our growth with expanding national markets,” said Jay Promisco, Chief Production Officer.  “Patrick Mahon’s leadership and our new Indian Wells branch represents our lasting commitment to build upon Sierra Pacific's 33-year legacy.” To be part of this growth, contact Chris Schenk, Director of Sales Development.

“Are you a highly motivated sales professional with a strong competitive edge about yourself? Do you have a proven track record of success in Non-QM sales? Do you feel like you could do so much more with the right company, with the right Non-QM products and in the right situation? If so, you just might be the Wholesale Account Executive we are looking for. Highly competitive compensation package with a massive territory, there is no limit to what the right person can earn and accomplish in this very unique opportunity.” Please submit inquiries to Anjelica Nixt for forwarding.

Waterstone Mortgage Corporation has named Andy Peach as the company’s new President & CEO after more than 30 years of experience in the mortgage lending industry, including leadership roles in retail, consumer direct, correspondent, and wholesale production. Congrats!

Mountain West Financial announced that Ed Adams is its most recent addition to the MWF Leadership Team, bringing over 30 years of origination, management, and leadership experience. He will oversee all aspects of the Retail Channel. “MWF would like to extend a warm welcome, we are excited to see the new tools and ideas Ed brings to this incredible group of high performers!”