One week from today the temporary extension of the National Flood Insurance Program expires. That's right - expires.
The Senate passed legislation which extends it through September 30, 2011. As one would expect, the move was welcomed by the entire industry, including the Mortgage Bankers Association. But it still needs to pass a House vote, where the bill known as "S. 3814 - the National Flood Insurance Program Re-extension Act of 2010".
Freddie Mac and Fannie Mae announced developments on the "Uniform Appraisal Dataset" (UAD) yesterday, which are meant to improve the quality and consistency of appraisal data. (Meant for the GSE's, my best guess is that it will impact non-GSE loan appraisals as well.) More details will follow, and implementation will be in 2011. Here is the verbiage supplied by Fannie:
"The UAD includes all data points required for a complete appraisal report and standardizes key data points. The standardization of certain data points will support consistent appraisal reporting, regardless of geographic location of the property or any localized reporting conventions, by addressing vague or disparate data currently included on some appraisal reports."
The information provided about lenders creating the ability to service or subservice loans, depending on the economic climate, brought in some welcome comments.
"I have failed to see where you mention the cost of subservicing, the cost of corporate advances for payments not made by borrowers plus the additional regulatory and reporting burdens and possible need for additional staff to manage retained servicing even if you subservice you still need internal staff who know what they are doing to work with the subservicer and provide them what they need especially in your accounting department and secondary marketing departments. When adding these factors and costs in does it not affect the value of retaining servicing as opposed to selling service released. Also no buffer zone between you and push back from agency on repurchases."
"One of the more insidious things that the big aggregators have done in the past years is hold sellers of servicing hostage to 'share agreements' where the aggregator provides them life-blood liquidity via warehouse lines but demands fidelity in the form of the share agreement. A bunch of smaller sellers, even those who could service or use subservicing, have to sell to the aggregators whether they are being paid a fair multiple or not. If one examines the servicing multiples, volumes sold, size of the warehouse, margins, the real cost of financing increases dramatically - and is often hidden."
"So companies wanna service their own loans? They'd better read THIS first.
In a few weeks the FHA will offer a new reverse mortgage option with much lower up-front fees than its current version but with lower borrowing amounts (10-20%). The annual FHA mortgage insurance premium will be the same for both the standard and saver versions, which allow borrowers 62 years or older to borrow against their equity. Remember that just like regular FHA loans, the FHA does not originate them - reverse mortgages are made by banks and other lenders.
GMAC was in the news regarding its suspension of foreclosure proceedings in 23 states. Paul Jacob with Banc of Manhattan summed it up nicely and commented, "As news about this issue emerges, the story appears certain to bring increased focus on servicers' attempts to streamline the paperwork for processing foreclosures - particularly in "judicial" states. The two obvious potential effects are a general slowdown or pause in processing as servicers scramble to review their foreclosure procedures and tighten-up the paperwork, and bigger differences in average times-to-liquidation between judicial and non-judicial states. Re: #2, in the last couple of years we've seen a number of similar issues crop up in judicial states, ranging from missing or suspect documents to the question of whether MERS has standing to bring foreclosures to court. None of these developments serves to speed up the process. From here, you want to watch to see if this brush fire spreads other major servicers; also, whether judges in different states start to pick up on the issue to pause foreclosure proceedings."
Know any good Realtors? Fannie and Freddie have already taken back nearly as many homes in the first half of 2010 as they did during all of 2009! F&F owned more than 191,000 homes at the end of June, double the year-earlier total, according to an article in the WSJ by Joshua Lott. That number will grow because they are taking back homes faster than they sell them, and in turn have warned lenders who are taking too long to reclaim homes once they have determined that the home is vacant or once they have exhausted foreclosure alternatives that they need to do more to dispose of these assets. Once they take homes back, Fannie and Freddie must not only cover the utility bills, attorney's fees, and property taxes, but they are also relying on thousands of real-estate agents and contractors to rehabilitate homes, mow lawns and clean pools. Fannie took a $13 billion charge during the second quarter just on carrying costs for its properties. The costs of managing those homes are adding up, but as you'd expect F&F, along with REO departments of large investors, reluctant to slash prices and dump lots of homes at big discounts. According to the article, Fannie is testing an effort in Chicago where it will rent vacant foreclosures rather than list them for sale. You can buy these properties by the way: READ MORE
I often get asked what sites I go to as I compile my daily commentary. The list goes on and on but today I thought I'd mention www.TheBasisPoint.com, a site focused on housing and finance information intended for consumers, so it's also got a good dose of media and pop culture commentary. It's run by Julian Hebron, an originator who's been writing about markets and housing for 12 years. It is worth bookmarking, following on Twitter, or whatever it is you do to track sites.
I am also occasionally asked about wholesale investors in different parts of the nation. The Bank of Ann Arbor, a little off the radar screen, lends everywhere except CA, NY, AK and HI (by the Bank's choice). It's only retail presence is in Michigan, wholesale in 46 states, and "Mini Correspondent' (where it retains underwriting). This lender came up in response to the issue regarding Freddie, TBW, and Cenlar serviced-loans that need refinancing. The Bank of Ann Arbor will accept these loans (up to 95% LTV/CLTV) even though Cenlar does not report to credit agencies.
Chase Correspondent revised its Collateral Policy by providing information or additional clarification regarding Chinese Drywall, Legal non-conforming properties, and Community owned or privately maintained streets. In addition, Chase is removing some collateral overlays from its Agency, FHA and VA products (Monroe County, PA properties, properties listed for sale and prepayment of HOA dues).
Fifth Third told its brokers that it is expanding its non-occupant co-borrower guidelines: "The subject property is no longer required to be a 1-unit property when a non-occupant co-borrower is on the loan. 2 - 4 unit properties are now eligible."
The Treasury market continued to chop around yesterday, and again today. It is almost as if the global markets act like the FOMC implemented a new round of quantitative easing, rather than suggesting that they would implement a new round if needed. The price of gold continues to make headlines - not a great sign for our economy (although the price of it is near historical averages for an ounce buying barrels of oil). The 2-yr hit a new low yield recently, near .4%, but foreign demand for Treasuries continues to be robust. Heck, the 6-month T-bill is down to .19%. MBS's, and in turn rate sheet prices, by the end of yesterday had worsened about .125 and $2.3 billion in MBS's traded.
Why we miss Rodney Dangerfield:
My wife's such a bad cook, the dog begs for Alka-Seltzer.
I'm so ugly I stuck my head out the window and got arrested for mooning.
My family was so poor that if I hadn't been born a boy, I wouldn't have had anything to play with.
It's tough to stay married. My wife kisses the dog on the lips, yet she won't drink from my glass!
My wife only has sex with me for a purpose. Last night she used me to time an egg.
My wife is such a bad cook, in my house we pray after the meal.
If it weren't for pickpockets, I'd have no sex life at all.
Last night my wife met me at the front door. She was wearing a sexy negligee. The only trouble was, she was coming home.