Does anyone really retire anymore? Most seem to adapt to re-careers, heading off to other pursuits. But still plenty of U.S. citizens retire, and are paid a pension - just look at the expenses incurred by the U.S. Postal Service, or places like Detroit or Stockton. But where do governments invest the funds used for funding retirements? The Census Bureau loves this stuff, and puts out a quarterly survey (formerly known as the Finances of Selected State and Local Government Employee Retirement Systems Survey). It provides national summary statistics on the revenues, expenditures and composition of assets of the 100 largest state and local public employee retirement systems in the United States. These 100 systems comprise 89.4 percent of financial activity among such entities. This survey presents the most current statistics about investment decisions by state and local public employee retirement systems, which are among the largest types of institutional investors in the U.S. financial markets. See the financial transactions of these 800 pound gorillas HERE.
Once again we can all follow the inability of our government to come to a decision, or an agreement, about its fiscal responsibility. What happens to the process of making a home loan if the government actually shuts down? Too bad the government doesn't produce a single source, but here is a good start. It will give the patient reader enough of an idea of what portions of day to day functions can continue and which cannot, and lenders will be especially interested in the Department of Housing and Urban Development and IRS.
But I went back to an issue of the commentary I wrote in April 2011 (remember LO comp?), figuring that much of it is still applicable. "If the government shuts down today, every non-essential government employee should wake up really late and smile. After all, they are lucky. When private companies have budget problems, the people on the non-essential worker list don't get a three-day weekend. They get a six-month 'vacation' of filling out resumes, eating Ramen noodles, worrying about their mortgages, and looking for a job. In comparison, the furloughed government workers will have some time to enjoy autumn in D.C."
Back then, Caroline Baum wrote a notable blurb, "What if the U.S. government shut down and no one noticed? Even worse (or better, depending on one's point of view), what if all federal workers went on furlough and the public realized there were benefits, not just costs, to smaller government? Essential services will be maintained, including the distribution of Social Security checks. Employees involved in the military, national security and law enforcement will stay on the job. Non-essential workers will be furloughed. President Barack Obama says a shutdown would further reduce confidence in government. Guess what? It can't go much lower. The approval rating for Congress dropped to 18 percent last month, near the lowest in the Gallup poll's 37-year history of tracking the trend."
From 2011: "Word has it that since it doesn't rely on Congressional funds, the Federal Reserve (central bank) would remain open for business as usual, with normal staffing levels. The Fed would therefore be able to continue with its day-to-day operations. The SEC is expected to continue operations as well. But lenders and vendors were out warning originators about possibilities. CoreLogic told clients that, "If the government does a shutdown...we will make every effort to transmit orders to the IRS and SSA as quickly as possible once received. All SSN orders will be processed during standard business hours and may not be affected by the shutdown. In the event of a shutdown, we will still continue to submit all 4506-T Direct and SSN orders but service time is expected to be affected due to the IRS and SSA being unavailable to respond."
Also from 2011 research: "NMLS offices will remain open during any government shutdown and NMLS staff will continue to report to work...candidates should not expect their appointments to be cancelled or be affected by a shutdown of federal government agencies."
In 2011 Franklin American suggested clients, "Run CAIVRS' checks immediately on all loans that you want to close in the next week or two in case the shutdown does occur. A CAIVRS' problem is likely the most immediate impediment to obtaining insurance once the loan the program is reinstated. Remit any collected MIP as FHA Connection will not be available if a shutdown occurs. Complete the insuring of any closed FHA loans. If the government does shutdown, we expect FHA to publish a FAQ and answers on their website to address program operations. However, we wanted to give our lenders some notice of items they could do to avoid any penalties or process interruption of their government loan production."
Back then Plaza Home Mortgage told producers, "We have been advised that VA will continue business as usual during the shutdown. Therefore, we anticipate that the WEB LGY (formerly TAS) system used to order VA Case numbers and Appraisals will be available, and so will the issuing of VA Loan Guaranty Certificates." And Stearns Wholesale warned brokers, "To best prepare in the event the government moves to enforce a temporary shutdown, Stearns strongly recommends that any pending Case Number, LDP, GSA, CAIVRS, 4506T, and SSI Validation be ordered as soon as possible. If a shutdown does occur, FHA Connection and VA Information Portal may or may not be available, 4506T, IRS Transcript processing and SSI Validation will not be available. To avoid any delay in closing your loans, we strongly recommend you ordering any pending FHA, VA, IRS, or Social Security items today."
But this is all 2 ½ years old... there is still a lot of jawboning to be done by politicians, regulators, and the press. What a great use of our energy! I am sure the agencies, and investors, will be forthcoming with 2013 policies and procedures as the time nears for them to kick the can down the proverbial road again.
Let's continue to catch up on investor, lender, vendor, and agency changes. These will give you a sense of the trends out there, but as always, read the actual bulletin for details.
Stearns Wholesale is now allowing LTVs of up to 95% on Conforming and 90% on Super Conforming 5/1 and 7/1 ARM transactions, both of which have a maximum adjustment of a fixed 60 months. Cap structures for 2/2/5 for 5/1 loans and 5/2/5 for 7/1 loans.
Private MI company Essent let clients know that for MI apps received after October 21 it is updating its underwriting guidelines and rate cards. Eligibility Expansion and Rate Change Highlights include the elimination of DTI overlay and restrictions on Florida condominiums within Essent's Clear2Close guidelines, improved eligibility and pricing for properties in Alaska and Hawaii with loan amounts greater than $417,000, eligibility for Construction-to-Permanent transactions for loan amounts greater than $417,000, publication of new BPMI Refundable Singles rates, and the introduction of its new Affordable Housing Program - Effective November 4, 2013. Details of these changes can be found in the full announcement.
First Mortgage reminded its correspondent clients that it offers minimal overlays on government loans: FHA and VA loans with maximum financing down to 580 FICO, 90% LTV on FICOs down to 500, FHA 'streamline' refinances with no overlays to 4155, i.e. No FICO, no appraisal and no AVM (mortgage rating on subject property only), non-traditional credit borrowers (zero FICO), property flip loans < 90 days-even those with over 120 percent appreciation that meet FHA guidelines, FHA manufactured home loans, and 4506 W2 validation only for wage earners unless construction workers, truck drivers, sales, commission earners, etc. This West Coast investor buys closed loans in the following states: AZ, CA, CO, ID, IN, NV, NM, NC, OR, TX, UT & WA. (For more information contact Sharon Magnuson at email@example.com.)
Just what we need - yet another report to follow! LendingTree announced the release of its "Credit Accessibility Report." This report, measured monthly, measures the likelihood of borrowers gaining access to credit for home loans based on LendingTree data. According to the report, borrowers had an easier time accessing mortgage credit in August compared to prior months. Doug Lebda, founder and CEO of LendingTree, observed, "Lenders are easing down payment and credit score requirements while still adhering to conforming loan guidelines. And as the private securitization market starts to bounce back, borrowers who didn't qualify in the past may now have that opportunity."
PennyMac has updated its selling guide to clarify the types of Power of Attorney documents that it will accept for purchase. These include Durable Power of Attorney; Military Power of Attorney; Specific, Special, or Limited Power of Attorney; and General Power of attorney. All POAs must indicate that the mortgagor is appointing an attorney in fact, the name of the attorney being appointed, and that the appointed attorney is the same person signing the note on behalf of the borrower; be signed and dated by the borrower and notarized in turn; take effect prior to or on the document date of the note; be recorded prior to or concurrent with the security instrument; and contain both a statement of the borrower's name as it appears on closing documents and a recorder's stamp if previously recorded. Attorneys-in-fact may not be the seller, appraiser, broker, etc. or have any other financial interest in the transaction. For VA loans, the POA must contain the borrower's written consent to the specifics of the loan, and the lender must verify that the borrower is indeed alive and not missing in action using PennyMac's verbiage (available in the selling guide). As a reminder, Power of Attorney cannot be used for Jumbo transactions or properties held in a trust.
PennyMac has clarified its guidelines for acceptable forms of trusts, which include Inter Vivos Revocable, Family, Living, and Revocable Living Trusts. These may be used in connection with all property and occupancy types; for primary residences, at least one trustor/settlor must occupy the security property in order to sign the loan documentation. The loan file should include a copy of the trust agreement or Trust Certification that discloses the identities of the grantor/trustor/settlor, beneficiaries, and trustee; the powers given to the trustee; that the property is held as part of the trust; the revocability of the trust; that the trust was created and became effective during the lifetime of the original grantor/trustor/settlor; that the primary beneficiary of the trust is the settlor; and that one or more trustees will hold legal title to and manage the subject property. Irrevocable, Qualified Personal Residential, Institutional, Corporate, Testamentary, Land, and Blind Trusts will not be accepted; nor will Survivor Trusts that are no longer revocable or trusts established under the laws of any entity other than 50 states or Washington DC.
Yesterday the MBA confirmed what many lenders out there knew: residential mortgage apps were up last week 5.5%. It reported that the average loan size for refis jumped from $186k to $200k, which should bode well for HARP. Conventional refis increased by 6% and GNMA refis fell by 1.5%. Overall, the 90-day moving average only declined 4% week over week.
On top of that, we saw mixed Durable Orders data. August Durable Orders rose 0.1% from July, which was slightly above the consensus. The results fell short of expectations, however, when the volatile transportation component is excluded. And as a reminder, any government shut down will have a negative impact on GDP, which in turn will push rates lower. Should we be rooting for that? Regardless of your preference, agency MBS prices did very well yesterday, rallying about .250 in price and the 10-yr closing at 2.61%.
Today we will be savoring weekly Initial Jobless Claims, second quarter GDP revisions, and Pending Home Sales. And the results from the 7-yr Treasury auction will come out at 1PM EDT. In the early going rates are nearly unchanged from Wednesday's close.
Researchers for the Massachusetts Turnpike Authority found over 200 dead crows near greater Boston recently, and there was concern that they may have died from Avian Flu.
A bird pathologist examined the remains of all the crows, and, to everyone's relief, confirmed the problem was definitely NOT Avian Flu.
The cause of death appeared to be vehicular impacts!
However, during the detailed analysis it was noted that varying colors of paints appeared on the bird's beaks and claws. By analyzing these paint residues it was determined that 98% of the crows had been killed by impact with trucks, while only 2% were killed by an impact with a car.
MTA near Boston then hired an Ornithological Behaviorist to determine if there was a cause for the disproportionate percentages of truck kills versus car kills.
The Ornithological Behaviorist very quickly concluded the cause: when crows eat road kill, they always have a look-out crow in a nearby tree to warn of impending danger. They discovered that while all the lookout crows could shout "Cah", not a single one could shout "Truck."