The economy is so bad that Angelina Jolie adopted a child from America. The economy is so bad they renamed Wall Street " WalMart Street". The humorous list goes on, but one person who probably isn't smiling much is Rebecca J. Domecillo, of Lake Saint Louis, MO, who was sentenced to over two years in prison for her role in a mortgage fraud scheme.
Domecillo was associated with both Network Ventures and Premier Mortgage Funding. She pled guilty to mail fraud, to preparing phony loan applications for 'straw buyers" to purchase nine properties in the St. Louis area, obtaining inflated appraisals of the properties, arranged for their sale at inflated prices, and then stripped the inflated amount out of the transaction through phony invoices payable to companies she controlled.
Friday I mentioned an unconfirmed story from a reader about how "Northstar Alliance just cancelled all active loans in our pipeline last night due to issues with their investor Gateway Bank (which just came out of receivership)." I noted twice that this was not confirmed, and in fact it appears, according to Gateway's president and CEO, that Gateway Bank is doing quite well, and "firing on all cylinders". Gateway Bank has been operating under a Cease & Desist Order for quite some time and hope to have it dropped next year. They are not, nor have been, under receivership. Per management, its capital ratios are more than adequate and well above minimum requirements & industry practices, and its "Quick$ale loan purchase and sale program is doing very well. I apologize for any confusion.
"Fannie Mae is working with the Federal Housing Finance Agency (FHFA) to develop and adopt appraiser independence requirements that will replace the HVCC. Until the revised requirements are released, the existing HVCC provisions in the Fannie Mae Selling Guide continue to apply. Updated requirements are expected to be substantially similar to the current provisions. Pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, HVCC will sunset when interim final regulations are released to implement the appraisal independence-related provisions of the Act, which is expected to occur on or about October 21, 2010. Fannie Mae is committed to supporting strong appraiser independence requirements. The revised requirements will maintain the spirit and intent of HVCC, and continue to provide important protections for mortgage investors, home buyers, and the housing market. The revised appraiser independence requirements will be based on Fannie Mae's experience under the HVCC and will continue to support the integrity of the appraisal process. As part of the process to develop the revised requirements, Fannie Mae has received input from key industry participants. Fannie Mae expects to announce the revised appraiser independence requirements in an upcoming Selling Guide announcement." READ MORE
Freddie Mac announced that the effective date for the 120-day credit inquiry requirement is now extended to February 1, 2011. Sellers to Freddie, and in turn any originator who sells loans bound for Freddie, must determine if additional credit was granted based on inquiries made by creditors in the past 120 days, as reflected in the borrower's credit report. This applies to LP or manually underwritten loans.
A total of six banks were shut down Friday, three in Georgia and one each in New Jersey, Ohio and Wisconsin, thus hitting the 125 mark for U.S. bank failures this year - and we're not even done with the 3rd quarter. Gone are Bank of Ellijay, First Commerce Community Bank, and Peoples Bank, along with ISN Bank (NJ), Bramble Savings Bank (OH), and Maritime Savings Bank (WI). (Don't ask me how the word "maritime" relates to Wisconsin.) Community & Southern Bank (GA) agreed to assume the assets and deposits of the 3 Georgia banks, in Pennsylvania New Century Bank's logo, dba Customers Bank, will be placed over ISN's Bank, in Ohio Foundation Bank is assuming the assets and deposits of Bramble, and lastly North Shore Bank is taking over Maritime.
Loans originated through mortgage brokers fell 51% in the second quarter, accounting for just 10.5% of originations nationwide, a new low, according to exclusive production figures compiled by National Mortgage News.
Last week GMAC changed their extension fee structure, and starting today Pinnacle Capital (CA) reduced its "advanced extension fees" by a few basis points but increased its re-lock fees to .300. "Additionally, any Extension Fees incurred on the previous Lock will NOT be removed if re-locked within 30 days of the Lock Expiration or Cancellation Date."
Flagstar told its broker clients that starting tomorrow through 9/30 Flagstar will not allow "overlines" for "Other Investor" loans. "Please note that this is being done in an effort to more effectively handle heavy month end volume."
Flagstar released a series of bulletins to its clients. For example, although the FHA instituted a minimum credit score of 500 (and a score of 580 will allow a borrower maximum FHA financing), Flagstar reminded folks that its minimum credit scores for 1-2 units is 640, and for 3-4 units it is 680. "Flagstar will continue to permit loans to borrowers without credit scores, provided all FHA guidelines and Flagstar overlays are met."
Mortgage insurance company PMI removed 25 MSA's from its distressed list, but added 9. "Three steps forward, one step back." For the list please review PMI's website or announcement, but it is good to see more areas being removed than added and certainly helps mortgage investors eventually feel more secure about their investment.
AmTrust ratcheted up its DTI for Conforming Fixed and Standard ARM loans, with the maximum DTI increasing to 45% with Gemstone AU Approval for loans with certain characteristics such as LTV over 80%, loan amounts less than or equal to $417,000, minimum 740 credit score, etc. AmTrust also reminded its clients that all properties subject to a foreclosure redemption period are ineligible for financing until the redemption period expires, and instituted a post-foreclosure waiting period of seven years requirement for all manually underwritten loans. AmTrust also updated its Warrantable PUD guidelines, reminded brokers that for any loan where the property being purchased is a short sale transaction AmTrust requires written documentation on company letterhead from the current lien holder, approving the short sale and indicating the amount they will accept for the short sale, etc.
Last week I discussed some confusion that I was having on Rural Development loans. A reader wrote, "Wells Fargo only suspended those USDA refi's but it is still doing the purchase loans."
Last week I also mentioned how best to refinance a Freddie loan, sold to TBW, and which is now being serviced by Cenlar. (Freddie offers a "Relief Refinance (RR) Open Access" program where the Seller does not need to be the borrower's current servicer. Open Access RR allows to 125% LTV.) It turns out that one can only do this if Cenlar is reporting to the credit bureaus. In recent news, a bankruptcy judge has approved a settlement between the FDIC and Taylor Bean & Whitaker (TBW) over the ownership of more than $1 billion in disputed loans and mortgage-related assets. The FDIC, as receiver of Colonial Bank of Alabama (TBW's primary warehouse bank), had been fighting with TBW's trustee over ownership of various mortgage loans and other assets since the two companies collapsed a year ago after allegations of massive fraud. Under the settlement, the FDIC becomes the recognized owner of Colonial Bank's 99% interest in about 3,400 loans with an unpaid balance of $696 million. These are participation interests in mortgage loans that TBW sold to Colonial. In return, more than 3,200 loans with an unpaid balance of about $464 million plus another 579 loans with a balance of $89 million become the property of TBW's estate. The result, according to court papers, is that the estate will receive $78 million in sale proceeds from TBW-owned property that's already been sold off.
Lastly, I wrote about "PHH is using updated VA guidelines for Interest Rate Reduction Refinance Loans, whereby interior/exterior inspections are required. (Previously, no appraisal was required to be obtained for VA IRRRLs for any investor.) And a minimum representative credit score of 640 is required for all borrowers." It turns out that this is an investor requirement with PHH, not with the VA, and mimics most investor's requirements that added the AVM or appraisal to the VA IRRRL. One astute reader called the VA, which is easier said than done, and they confirmed that there is no such rule in place as of now. ("If the VA does eventually add an appraisal requirement for this product, it might make it too expensive to market as few would qualify.")
On Friday we finished the day with mortgage security prices down (worse) between .125 and .250, and investors changed pricing depending on how much profit margin was built into rate sheets to start the day. $1.9 billion of MBS's were sold, mostly 4% as has been the custom. The markets were pretty quiet over the weekend, and the biggest story this week will be tomorrow's Fed meeting. No change in the fed funds rate is expected, every word and sentence will be dissected. For economic news, there is none today, but tomorrow we have Housing Starts, and later in the week Existing Home Sales, Leading Economic Indicators, Durable Goods Orders, and New Home Sales. The tone of the economic data in general was not sufficiently negative to warrant more aggressive action at this time. Anyway, the 10-yr yield sits at 2.72% and mortgages are about unchanged from Friday afternoon. FULL ECON CALENDAR
What Do Retired People Do All Day?
Working people frequently ask retired people what they do to make their days interesting. Well, for example, the other day my wife and I went into town and went into a shop. We were only in there for about 5 minutes. When we came out, there was a cop writing out a parking ticket.
We went up to him and said, "Come on, how about giving a senior citizen a break?"
He ignored us and continued writing the ticket. I called him names. He glared at me and started writing another ticket for having worn tires. So my wife called him names. He finished the second ticket and put it on the windshield with the first. Then he started writing a third ticket.
This went on for about 20 minutes. The more we abused him, the more tickets he wrote. Personally, we didn't care. We came into town by bus. We try to have a little fun each day now that we're retired. It's important at our age.