Here we are at Halloween already. Who will win the inter-department costume contest, shipping or accounting? And what could be more horrifying for a borrower than an appraisal that is late, or comes in $50k under the transaction price? But what about the poor appraisers – don’t they have some frightful tales? Yes, they do. What isn't terrifying is the economy: traders believe that the 1.2% drop in Treasury security prices this month, the biggest loss in nearly two years, is a sign that the U.S. economy is truly recovering.
Jumbo news out there? Price adjustment changes? Yes, there's a little.
Lending standards in the jumbo space are loosening, even as the luxury end of the housing market underperforms. (I've heard Miami Beach is once again actually heading down in price.) Loan Depot is now offering 40 year jumbo products that are interest-only for the first 10 years. Redwood is now offering a 90 LTV product that goes down to a 660 FICO.
JMAC Lending now offers Newport, a non-agency program, with greater flexibility on LTVs. Some highlights include cash-out up to 90%, purchase up to 95% for rate and term, loan amount starts from $100K up to $2.5Million, no mortgage insurance, and loss mitigations with seasoning as low as 2 years.
Effective Monday, October 31, the Pacific Union SRP Schedule will be updated. The updated schedule is attached. Please note that the form and function of this schedule will remain the same; only the values contained in the schedule will change.
Effective for loans locked on Monday, October 31, Flagstar Bank will be making the below LPMI price adjustment improvements. The previous $417,000 loan amount category has been increased to $650,000. Since the mortgage insurance premiums may differ among the mortgage insurance companies, for loans that Flagstar Bank orders the LPMI, it will use its posted LPMI LLPAs so that each loan scenario is priced the same no matter who the mortgage insurance carrier is.
Wells Fargo Funding's published a non-escrow fee reminder in its newsflash. Non-escrow fees are updated quarterly and can be found on page 5 of the Wells Fargo Funding Best Effort Rate Sheet and on page 3 of the Wells Fargo Funding Mandatory Rate Sheet. Keep in mind non-escrow fees are state-specific and differ between fixed-rate and ARM products. Updates are in effect as of October 1st. Sellers who use a vendor(s) for product eligibility and pricing support are responsible for working directly with their vendor(s) to incorporate the non-escrow fees into impacted systems and processes for best execution.
As of October 5th, Impac released improvements to its iQM pricing. Currently, all iQM lock requests must be manually submitted through the Impac lock desk.
Effective with Best Efforts locks and loans locked in Mandatory commitments created on or after October 3, Nationstar Mortgage updated the values on its State and Loan Amount as well as the Escrow (by state) adjusters.
Citi Correspondent Lending posted its newest bulletin. Updates include Critical Document Requirements Change, Non-Occupant Borrowers, Home Possible: Homeowner and Landlord Education, as well as Construction-to-Perm Financing: Modifications to Single-Close Conversions.
PennyMac has posted a new 203K fee structure and multiple updates to its rate sheet.
Did you know NewLeaf Wholesale offers Extended Rate Lock with Free Float Down? Click here to read about it.
Nationstar Mortgage Correspondent Seller Guide update includes, new products and expanded offerings, introduction to Co-Op Lending Program, Weather related holdbacks, plus additional updates. Click here to download the complete update.
All VA Authorized Agents are required to pay an annual recertification fee to each lender with whom they intend to have an ongoing relationship in the coming year. The $100 recertification fee must be paid to Flagstar by December 30, 2016. Beginning November 1, 2016, the recertification fee may be processed via credit card payment. Please contact us at (866) 945-9872, option #3, and then option #5. A $2 transaction fee will be applied.
As a reminder, USDA Fiscal Year 2017 funds are now available. USDA is no longer issuing Conditional Commitments (Form RD 3555-18E) "contingent upon the availability of an appropriation". Conditional Commitments that were previously issued "contingent upon the availability of an appropriation", will be obligated within the USDA's financial system over the next two to three business days. Once obligated, an updated Conditional Commitment will be electronically generated within GUS. The new Conditional Commitment will not include the contingency language, indicating that the loan funds have been successfully obligated by the Agency. Closed transactions may not be submitted to USDA until the loan is successfully obligated. If a loan with a Conditional Commitment that was issued "contingent upon the availability of an appropriation" has been closed, the Loan Note Guarantee request may be submitted with the closing package.
Lenders and investors have taken note. For example, click here to view the PennyMac announcement regarding funding for the USDA 2017 Fiscal Year. (While we're on PennyMac, its mortgagee clause has been changed. These updates are also located in the Quick Reference Guide and Seller Guide on www.gopennymac.com.)
Turning to the economy, the average price of a Chicago Cubs world series ticket in 2016 is $3,000 dollars. The last time they were in the world series in 1945 ticket prices were $1.20. Now here are some more numbers. Consumer inflation increased about as expected, up 0.3 percent in September. Industrial production increased by 0.1 percent in September. Housing starts unexpectedly fell by 9.0 percent in September due to a sharp contraction in multifamily projects. Permits for new residential construction increased by a strong 6.3 percent in September as multifamily permits surged. This suggests starts will likely see a rebound in the coming months. Existing home sales increased by 3.2 percent in September.
Like molasses, aggregate household debt balances grew slowly in the second quarter of 2016. As of June 30, 2016, total household indebtedness was $12.29 trillion, a $35 billion (0.3%) increase from the first quarter of 2016. Overall household debt remains 3.1% below its 2008 Q3 peak of $12.68 trillion, but is now 10.2% above the 2013 Q2 trough. The largest component of household debt is Mortgage balances. These were essentially flat in the 2Q of 2016. Non-housing debt balances rose in the second quarter. Auto loans increased by $32 billion and credit cards increased by $17 billion. Ending on good news, there was a slight decline in student loan balances, which dropped by $2 billion.
It is now widely known that the FOMC is expected to raise interest rates before year end, most likely in December. Most economists will tell you that there needs to be further Improvements in the labor market. While it is improving, this needs to continue. Labor market data shows that this seems to be happening besides job openings which fell by 388,000 in August. Retail sales in September showed a bounce-back in spending last month. Total sales were up 0.6 percent. Stronger auto sales and higher gasoline prices were a major source of the bounce-back. Housing starts fell 5.8 percent in August. However, "The level of single-family permits is running ahead of starts, which suggests starts will likely see a rebound in the coming months."
Looking at the bond market, and therefore rates, late last week the U.S. Treasury yield curve steepened, which, given the low short term rates, meant that longer term rates moved higher although agency MBS prices didn't do much. The 2-year/10-year yield spread is back to 100 basis points for the first time in months. We had a positive surprise Friday from the first estimate of Q3 U.S. The first official estimate of Q3 U.S. GDP growth came out at +2.9% although traders were more interested in the FBI headlines regarding Clinton's e-mails.
Fannie's trading desk reports that, "Although we have seen MBS sell-off roughly 1 point over the past month, mortgage rates are largely unchanged, signaling that lenders are cutting margins to maintain production." We have a lot of news this week! And the smart money is saying by the end of the week rates will either be higher, lower, or the same. Seriously, we do have a lot of news starting with this morning's September Personal Income & Spending (+.3% and +.5%, respectively, giving us a 5.7% savings rate), and Core PCE Prices (unchanged); later is the October Chicago PMI. Tomorrow is the October ISM Index and September Construction Spending.
On tap for Wednesday is the MBA Mortgage Apps number, October ADP Employment Change, and the November FOMC Rate Decision. (This week we also have other central banks, such as Japan, Australia, and England, announcing any rate setting news.) Thursday are the October Challenger Job Cuts, Initial Jobless Claims, Q3 Productivity, September Factory Orders, and October ISM Services. And lastly Friday we'll have the October job numbers and September Trade Balance. That's a lot! For anyone wondering about rate sheets this morning, rates are slightly better with the 10-year yielding 1.83% and agency MBS prices better a few ticks versus Friday evening.
"The media has been timing the housing market wrong for the past five years. Don't let your borrowers get it wrong too. Join National Mortgage Professional Magazine for a complimentary webinar hosted by Freedom Mortgageand featuring MBS Highway's Barry Habib titled 'Knock-Out Your Competition' on Thursday, November 3rd, at 2 PM EDT. During this fast-paced webinar, Barry will teach you how to show your clients and real estate agents the opportunity in the current housing market. Additionally, Barry will help you stay ahead of the upcoming changes to interest rates. Sign up for this complimentary webinar here. Reserve early space is limited!"
On November 10th in Orlando, Capital Land Settlements and EquitiFirst Mortgage are hosting a Q&A on the ins and outs of the Reverse Mortgage. Registration is free but you must register by November 7th as seating is limited.
FHA live instructor-led Lender training in Henderson, N.V. This two-day training will cover a wide range of topics. Scheduled dates are Tuesday, November 8th, and Wednesday, November 9th, advanced registration is required.
Leading housing industry experts will gather to discuss the current state of the mortgage industry at the Atlanta Mortgage Leadership Roundtable on November 10. The event is being hosted by National Mortgage Insurance Corporation (National MI). Fannie Mae reps will also be on hand with an overview and demonstration of CU. TO register, contact Tracy Berry.
Franklin American has published its November, 2016 Wholesale Monthly Customer Training Calendar. Franklin American's calendar offers a variety of training opportunities such as Analyzing Appraisals, Condos as Collateral, Tax Return Review, LinkedIn Strategies for Loan Officers, and Loan Officer's Checklist for Success.
Jobs and Announcements
A well-known depository-owned lender is asking, "Attention homebuilders and financial services companies: Would you like to earn ongoing, reliable profits from your mortgage business and have control over your customers' home purchase and refinance experience? If the answer is 'yes' to either of those questions, let's have a confidential conversation. We have a proven track record of developing mutually beneficial joint ventures that deliver wow customer experiences, while managing the risk and regulations of the mortgage business." Interested parties, principals only, should send a note of interest to me to learn more and be put in touch with the institution.
In Ops job news, Orange County, California's JMAC Lending, a leading wholesale and correspondent lending company, is looking for Conventional and Government underwriters. The company is also in need of Doc Drawers and Funders. JMAC Lending offers a very competitive compensation and benefits package. Interested candidates should send their resume to Catherine Roletti.