My grandmother used to say, “Some people are like a Slinky: not really good for anything but they bring a smile to your face when pushed down the stairs.”

Before we launch into the plethora of investor updates, let’s take a look at the market. With the absence of any bond-market news, the focus continues to be on stocks. Asian stocks rallied last night back to levels last seen in October. To many, in spite of the poor earnings results by many companies, it would appear that investors don’t want to miss out on a rally, and seem to be putting cash to work in the stock market. From last week, the Michigan Consumer Sentiment Index rose for the second straight gain, from 57.3 in March. Today we have Construction Spending and Pending Home Sales. Tomorrow the ISM Services number, Thursday our old friend Jobless Claims, and then on Friday we can get fired up about all of the Unemployment data. Hourly Earnings are expected to be up .2%, Nonfarm Payrolls -663,000, and the Unemployment Rate expected around 8.5%. The results of the government's stress tests for 19 large financial institutions will be released on Thursday. We also have the Treasury selling over $70 billion in securities Tuesday-Thursday, which is weighing on the bond market. 10-yr is at 3.14% and mortgage prices are a shade better than Friday afternoon.

OK, here we go. Alphabetically:

AmTrust reminded their customers that “the Fannie Mae Refi Plus program will allow both conforming and High-Balance loans up to a 105% LTV for all occupancy and property types. Fannie Mae Refi Plus loans with an LTV greater than 80% LTV will continue to only be eligible with the 'No Mortgage Insurance' option. This is for loans where the original LTV on the existing Fannie Mae mortgage is identified by Gemstone AU to be less than or equal to 80% LTV but the new loan LTV is greater than 80%. All existing subordinate financing must be resubordinated in order to be eligible for Fannie Mae Refi Plus. No new subordinate financing is permitted.”

AmTrust also let their customers know that they are on guard for fraud and property ponzi schemes in all states. “In an effort to protect AmTrust Bank as well as our Clients from financial loss, we have implemented the following process: Effective on 05.03.09, all loans without an Underwriting Approval involving the purchase of a newly-constructed home must be sent to AmTrust Hi-Speed for underwriting. AmTrust will place a QC Hold on certain purchase transaction loans. Accurate Seller and Appraisal data must be entered in Gemstone to ensure quick removal of QC Holds.”

Citi came out with their DU REFI PLUS plan up to 105% LTV. “DU Refi Plus is now available for loans up to 105% LTV which do not require mortgage insurance per the DU findings. Originally announced as an 80% LTV limit in Bulletin 09-11 dated April 27, 2009, our DU Refi Plus program now aligns with Fannie Mae Announcement 09-04 in order to provide more options to customers. Maximum LTV is 105%, CitiMortgage is not required to be the current servicer since loans with MI are not eligible, must be underwritten by Desktop Underwriter (DU) resulting in an Approve/Eligible or Approve/Ineligible, Expanded Approval loans are not eligible, maximum Loan Amount: Agency Conforming and Agency Jumbo; availability determined by DU.

Citi also stated that, “The use of a written VOE (Verification of Employment) as the only documentation used to verify income and employment is no longer permitted, regardless of AUS finding. A pay stub showing YTD earnings or a W2 is required. A verbal VOE must be still performed prior to the loan closing. On May 7th Citi “In addition to gift funds being permitted with a purchase, gifts are also permitted in connection with a refinance of a primary residence or a second home. Gift funds are not permitted on investment property transactions.” And on May 8th, Citi “To comply with Fannie Mae requirements for loans receiving a DU Refi Plus eligibility finding, effective with registrations on and after 5/8/09, all loans receiving the DU Refi Plus finding must be registered using a DU Refi Plus program code. Also, loans re-submitted to DU on or after 4/4/09 that receive a DU Refi Plus finding, must be registered as a DU Refi Plus loan.”

Effective Friday, “Each correspondent that sells Loans to CitiMortgage must ensure that its origination appraisal practices are in compliance with the HVCC and represents and warrants to CitiMortgage that any appraisal and all appraisal practices used in originating a Loan to be sold to CitiMortgage: (i) conform to the requirements of Fannie Mae and Freddie Mac and (ii) comply with Home Valuation Code of Conduct issued by the Federal Housing Finance Agency. Effective with loan applications taken on and after May 1, 2009, where the appraisal is not in the name of the correspondent but in the name of a third party lender, the HVCC Compliance Certification form (Exhibit 23) must be completed and submitted in the final loan file.”

Fannie Mae came out with the details on their new mortgage loan data requirements. ”Fannie Mae has issued Announcement 09-11: Mortgage Loan Data Requirements. To comply with Federal Housing Finance Agency (FHFA) requirements, Fannie Mae will now be requiring loan origination identifiers and appraiser data elements for mortgage loan applications dated on or after January 1, 2010. This Announcement provides detail on the following: The Secure and Fair Enforcement Mortgage Licensing Act (S.A.F.E. Act) requires all states to implement a system to license and register mortgage loan originators. The Nationwide Mortgage Licensing System and Registry (NMLS) has been developed to implement the S.A.F.E Act. The NMLS will issue unique identifiers for loan originators and loan origination companies. Updates to the 2000-Character Loan Delivery Files - To support the requirements referenced above, Fannie Mae has updated our 2000-Character File Format and 2000-Character File Format Field Definitions documents with fields for the loan originator’s unique identifier, loan company’s unique identifier, appraiser’s state license number, and supervisory appraiser’s state license number. Updates to the Uniform Residential Loan Application (Form 1003) - Form 1003 will be updated shortly to capture the identification for both the loan originator and the loan originator company. We are working with Freddie Mac on changes to this joint Fannie Mae / Freddie Mac form, and additional information will be forthcoming. Form 1003 already includes fields for the capture of the other required identifiers.”

GMAC correspondents were told that GMAC “will now accept the temporary increase in conforming loan limits for high-cost areas authorized by the American Recovery and Reinvestment Act (ARRA). Specifically, the ARRA permits loans originated in 2009 to use the higher of the current permanent high-cost loan limits, or the temporary loan limits in place for loans originated in 2008 that were applicable to jumbo-conforming mortgage loans (high balance conforming products). Fannie Mae is extending eligibility under the high-balance loan feature to encompass these temporary limits.” GMAC differentiates between “general” loan limits ($417,000), “Permanent High-Cost HERA” limits ($625,500) and “Temporary High-Cost” ARRA limits ($729,750).

Wells Fargo’s correspondent group “continues to require written acknowledgement, signed by the borrower, which they either received all appraisal reports at least three business days prior to close, or they have waived their right to receive such reports within the time frame set out in the Home Valuation Code of Conduct (HVCC or Code). This policy remains in effect for loan applications taken on and after May 1, 2009. However, the following amends HVCC related requirements announced in our April 20, 2009 Newsflash: Due to the lack of an industry-standard approach specific to Section II of the Code – Borrower Receipt of Appraisal, Wells Fargo will accept Seller-prepared documentation of borrower’s receipt, when signed by the borrower(s). Wells Fargo recognizes that Sellers need additional time to implement processes specific to evidencing borrower receipt of the appraisal. As a result, Wells Fargo Funding will not suspend for the borrower written acknowledgement until June 1, 2009.”

As I mentioned last week, lenders are adjusting to the HVCC. Most agree that the purpose of HVCC is fine – honest agents and brokers don’t want fake appraisals. The borrower will receive a copy of the appraisal from the appraiser, as does the lender who can deal with correcting any errors in the report. Borrowers are paying up-front for appraisals, and brokers will not be able to move locks as easily as they did in the past although many retail agents can. Tangential companies have sprung up to help originators, such as the one I mentioned last week (ServiceLink) or Dart Appraisal www.DartAppraisal.com.

A drunk staggers into a Catholic Church, enters a confessional booth, sits down, but says nothing.  The Priest coughs a few times to get his attention, but the drunk continues to sit there. 

Finally, the Priest pounds three times on the wall. 

The drunk mumbles, “Ain't no use knockin’, there's no paper on this side either.”

Rob

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