Hats off to comedian George Carlin, who has passed away due
to a heart ailment.
For any agents that admit, “I didn’t realize that
verified employment wasn’t the same as verified income”, please
contact an underwriter. (This was an actual quote from an actual agent, and I
am not going to say who it is. I am waiting for someone to ask something like,
“Can I get a stated income second behind my reverse mortgage, and use the
income from my reverse mortgage for what I state?”)
The Justice Department is investigating 19 companies,
including mortgage lenders, investment banks, hedge funds, credit-rating
companies and accounting firms, for mortgage fraud. They also stated that
roughly 400 individuals have been criminally charged for their roles in
home-lending schemes, with 60 arrested last Wednesday alone. Real-estate
developers, brokers, agents and appraisers were among those charged, along with
lenders, lawyers and so-called straw buyers.
In Washington,
SHB 2770 went through yesterday. No more negative amortization or
prepayment penalties will be allowed in the state of Washington: http://www.dfi.wa.gov/cs/updates.htm#legislation
Why did I put my entire 401(k) in Thornburg stock a few
weeks ago? Last Thursday Thornburg Mortgage shares dropped 63% to 24 cents
per share. Last week Thornburg said that it had lost $3.3 billion during
the first quarter, and has had to face several billion in margin calls this
year. Thornburg is one of those companies in the business that everyone is
rooting for, and is truly a victim of the credit crunch rather than poor loans.
Thornburg must still complete a tender offer to repurchase at least 90% of
outstanding preferred stock as part of the deal to receive the new investment
from a group led by Matlin Patterson.
Bloomberg reported that Triad will become the first mortgage
insurer to stop selling new policies after the collapse of talks with
Lightyear Capital LLC to form a new company with Triad employees. The
insurer’s shares plunged 40%. The decision to halt sales was prompted in
part by Freddie Mac's suspension of the company as an approved insurer, Triad
said. Triad, which traded above $60 a share in 2005 closed at $1.22 per share
last week. Triad may now enter “runoff,” continuing to pay claims
and book profits or losses from previously sold policies. The company would
cease operation when the last of its existing policies expire. Freddie Mac will
stop buying loans that have Triad insurance on July 15.
Reverse Mortgage lenders? Wells Fargo, Financial Freedom,
Countrywide, World Alliance, and Liberty
Reverse are the top 5. Interestingly, the Indymac
Bank’s total mortgage loan production in May was $2 billion, down 13%
from $2.3 billion in April. Financial Freedom, the banks reverse mortgage
subsidiary had total production of $315 million in May, down 10% from April.
Other interesting notes about Financial Freedom’s production: HECMs = 70%
of their reverse mortgage production, “Cash Account” = 30% of their
reverse mortgage production, and overall production is down 29.5% vs. May 2007.
Industry experts believed that Financial Freedom would suffer tremendously due
to the loss of their Jumbos, and also note that UBS pulled their entire Jumbo
Reverse product on secondary and many companies are scrambling to seek Wall
Street investors for product.
Who owns who? MetLife Bank, N.A., a unit of MetLife, Inc.
announced that it has completed its acquisition of EverBank Reverse Mortgage
LLC from its parent; EverBank Financial Corp. EverBank Reverse Mortgage will be
a wholly-owned subsidiary of MetLife Bank. Currently, reverse mortgages will
continue to be offered under both the MetLife Bank and EverBank Reverse
Mortgage brands. MetLife Bank is a federally chartered bank.
Franklin American stated that any loan sold to them,
regardless of loan type, product guideline or automated underwriting
requirements, which has been originated by a third party entity must include an
IRS Form 4506T executed by the borrower(s) on the day of closing.
US Bank wholesale sent out an important correction to their
3/1 & 5/1 IO ARM qualifications. Namely they have a 45% Max DTI, a
qualifying rate: fully indexed rate 1 year LIBOR + margin, or the
start rate, which ever is higher, and…a qualifying payment: 3/1
uses 27 year amortization & the 5/1 uses a 25 year amortization for the
qualifying payment.
Economic news? None today, although mortgage prices are
worse by .125 in prices and the 10-yr is up to 4.15%. We see the
April S&P/CaseSchiller home price index tomorrow, along with June US
Consumer Confidence and the beginning of the 2-day FOMC meeting. Wednesday
brings May New Home Sales, along with the FOMC meeting’s outcome
(expected to leave overnight rates unchanged). Thursday we get
unemployment data and final Q1 GDP, and then on Friday we have May’s
Personal Income and Consumption. The markets also have to absorb $50 billion in
Treasury supply this week, and if the auctions last month were any indication
of demand, things could be “choppy”…
Some fascinating things on old tombstones:
Harry Edsel Smith of Albany,
New York, born 1903--Died 1942.
“Looked up the elevator shaft to see if the car was on
the way down. It was.”
=============================
In a Thurmont, Maryland,
cemetery:
“Here lies an Atheist, all dressed up and no place to
go.”
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In a Ruidoso, New
Mexico, cemetery:
“Here lies Johnny Yeast... Pardon me for not
rising.”
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In a Uniontown, Pennsylvania,
cemetery:
“Here lies the body of Jonathan Blake.
Stepped on the gas instead of the brake.”
Rob
