Anyone in the reverse mortgage business, or with an older parent, or who is old themselves, should read why Consumer Reports is not a big fan of the product: READ WHY
Of course, the reverse mortgage industry is not a big fan of the report: READ WHY
There haven't been any new investigations launched in mortgage banking industry for a few days now, so Federal officials decided it's time to open an investigation to determine whether 22 mortgage lenders have been discriminating against qualified African-American and Latino borrowers by denying them loans. HUD is responding to complaints from the National Community Reinvestment Coalition, accusing 22 banks nationwide of violating fair housing laws by denying FHA loans to borrowers with credit scores that met the federal standard.
As those in the industry know, investors have overlays to protect themselves from risk - FHA's minimum FICO is 580, for example, but many lenders require higher scores. The NCRC claims that those requirements disproportionately harm black and Hispanic communities, since minority borrowers' credit scores fall between the federal threshold of 580 and the higher benchmarks set by the banks. The group also said the banks don't have a legitimate business reason to withhold mortgages from borrowers who meet FHA credit score guidelines, since the government's insurance eliminates their risk.
Economists and traders are observing that it is hard to decide whether investors selling fixed-income securities (thus driving rates higher) because they expect US stimulus to boost growth in 2011, or whether they are bothered by the amount of debt, now and anticipated. Most admit that growth would be far, far more preferable than seeing yields rising due to people thinking that America's fiscal situation being unsustainable.
Most believe that the economy is not strong enough to handle higher rates... but let's not forget the budget and deficit problems that we face. A news article tabulates that $38 billion in Federal aid will need to be replaced at the state level here in the US when the stimulus ends. "At least 31 states and Puerto Rico are forecasting deficits of $82.1 billion in the next fiscal year even as tax receipts are picking up." FULL STORY
The FHA announced the extension of condominium project approvals with an expiration date of December 7. The extension dates based on five-year time frames with the exception of those condominium projects with original approval dates from 1972 -1985. "The extensions were granted to reduce the impact of processing and reviewing the number of project approvals expiring at the same time while recognizing current housing market conditions. Lenders and/or other interested parties are encouraged to begin the re-approval or recertification process as early as possible as it is not anticipated that any further extensions of project approvals will be issued." The condominium look-up page: https://entp.hud.gov/idapp/html/condlook.cfm. FHA has scheduled a call to discuss the condominium project approval extensions and answer related questions today from 3:15 pm - 4:30 pm (EST). (800) 683-4564, Access Code: 623108, Confirmation Number: 184260.
HUD also weighed in regarding its stance on state mandated foreclosures, and the policy of HUD bearing the cost of any delays in the foreclosure process "when the servicer had to comply with moratoriums that were beyond their control, and where the servicers were not cited for non-compliance. A ninety (90) day extension is provided to mortgagees where the initial legal action to commence foreclosure has been cancelled to comply with a new state legislation. Where the mortgagee experiences a delay that is beyond its control, because the mortgagee is prohibited from initiating foreclosure due to state law or federal bankruptcy, the mortgagee will be in compliance if foreclosure is commenced within 90 days of the expiration of the prohibition." HERE is a link to the FAQ's that may answer some of the questions on extensions of time.
Not only do mortgage bankers have to deal with compensation questions, but also, "If I have to hold 5% capital of non-qualified mortgages that we originate, it will either kill my business or drive up the price of any non-vanilla loan." And, by the way, this is for every originator out there. Here is the latest that I have seen: MF GLOBAL
THIS free seminar from LoanSifter might provide some recent news on loan agent compensation. It is later today, so if you're interested register soon - like this morning.
I should mention that "Tradeweb" is spelled with a lowercase "w" instead of "TradeWeb" as shown in my write up yesterday. (I often am confused by names with possible capitals in the middle, like indymac, greenpoint, loansifter, tradeweb, nationstar, suntrust, microsoft...) By the way, I am occasionally asked about services that provide MBS quotes, and I will usually mention Tradeweb as a good source of mortgage security pricing, which may or may not have a direct impact on whole loan investor pricing. Tradeweb is robust and really intended for capital markets folks though. MND is about to launch their own service for originators. HERE is a pre-launch invite.
Fifth Third is following Freddie Mac's guideline changes in a number of areas. These include changes to derogatory credit, short sales (all short sales are now included in derogatory credit), recovery time periods from foreclosures and bankruptcies, the extension of conforming loan limits, and telling clients that loan terms less than 10 years are no longer permitted.
PHH sent out a revised "First Payment" Policy. "Each loan submitted to PHH Mortgage for purchase must be current as of the day of purchase. Early payment/first payment defaults will not be purchased." The bulletin goes on to describe payments due versus when loans fund during the calendar month.
US Bank National Wholesale Sales division followed Freddie Mac's revised reserve requirements - any loans not doing so must fund by year-end. For a primary 2-4 unit residence "borrowers must have 6 months PITI in reserves regardless of whether rental income is used to qualify the borrower(s). For second homes borrower(s) must have 2 months PITI in reserves for subject property. In addition, Borrower(s) must have additional 2 months PITI in reserves for each other financed second home and/or 1-4 unit Investment Property in which the Borrower(s) have an ownership interest OR on which the Borrower is obligated." Always check the bulletins for exact and further details.
GMAC Bank Correspondent Funding reminded their clients that Fannie will be updating its DU version this weekend, and that all "Flexible Products" will be expired. (Can "expired" be used in the future verb tense?) "The elimination of the Flexible mortgage products will not result in any eligibility changes for loans with LTV, CLTV, or HCLTV ratios over 95% up to 97% in DU. DU loans with LTV ratios up to 97% will be permitted as standard eligibility" with certain criteria, and some loans are excluded from the 95.01%- 97% LTV ratio eligibility (manually underwritten loans, high balance loans, etc.).
Franklin American notified its correspondent clients of several changes to their credit guidelines, including "the DU Version 8.2 Implementation, Conventional Conforming Fixed and ARM updates, Condominium Document updates, Underwriting Fee Increase and Rural Property Comp Distance update."
How about this market? Since the beginning of November, Fannie 4's (the MBS into which 4.25-4.625% mortgages are generally placed) are worse by more than 3 points. And it doesn't take long for businesses based on refinances to see the slow-down. Yesterday was another day with no scheduled economic news along with a Treasury auction. The 10-yr auction went well (the old saying goes, "If you liked it at 2.75%, you'll love it at 3.25%"), but rates are still higher. Tradeweb showed a heavier-than-normal MBS sales day, and Fannie 4's printed their fourth "handle" this week as they dipped below 99.00.
This morning we had Initial Jobless Claims, probably the most important piece of data in what has otherwise been a pretty barren week. Claims are one of the best leading indicators of the labor market, and have ranged from 450k to 490k for most of the year although in the last month the moving average has dipped below 450k. As you can guess, consumer sentiment is very sensitive to the labor market, and how good or bad folks out there feel influence spending, GDP, and economic growth. Jobless Claims came in 421k, down 17k from last week's revised number, and the 4-week moving average dropped 4k to about 427k. We have a $13 billion 30-yr auction ahead of us.
Two elderly people living in Ft. Myers, he was a widower and she a widow, had known each other for a number of years. One evening there was a community supper in the big arena in the clubhouse.
The two were at the same table, across from one another. As the meal went on, he took a few admiring glances at her and finally gathered the courage to ask her, "Will you marry me?"
After about six seconds of 'careful consideration', she answered "Yes. Yes, I will!"
The meal ended and, with a few more pleasant exchanges, they went to their respective places. Next morning, he was troubled. Did she say 'yes' or did she say 'no'?
He couldn't remember. Try as he might, he just could not recall. Not even a faint memory. With trepidation, he went to the telephone and called her.
First, he explained that he didn't remember as well as he used to. Then he reviewed the lovely evening past. As he gained a little more courage, he inquired, "When I asked if you would marry me, did you say ' Yes' or did you say 'No'?"
He was delighted to hear her say, "Why, I said, 'yes, yes I will' and I meant it with all my heart."
Then she continued, "And I am so glad that you called, because I couldn't remember who had asked me."