In late breaking (true) news, my kids brought home their Redwood High School year books yesterday. It
turns out that a member of the yearbook staff who designed the cover, in artsy
fashion, put in writing that, when viewed in the mirror, reads “Redwood Sucks
[male body part]”. It doesn’t help that I believe that he deserves a prize for
creativeness – he was expelled days before finals.
In addition to the DU Plus High Balance information that
went out yesterday, here are some additional investor updates:
Fannie Mae, of course, will buy the loans with
no overlays whatsoever from approved sellers.
CitiMortgage correspondent told me that these
loans are indeed acceptable for purchase.
Taylor, Bean & Whitaker is buying this
product.
US Bank Home Mortgage is offering the DU
Refi Plus program. There are a few overlays
such as “Existing Fannie Mae loan cannot have MI and needs
a minimum FICO of 620. The maximum LTV is 105%.
Speaking of helping borrowers, Freddie Mac announced
several changes to its Relief Refinance Mortgage program. Under the
program, borrowers can continue to work with their existing servicer to
refinance their mortgage. If the borrower chooses to work with another Freddie
Mac-affiliated lender, the mortgage will need to be re-underwritten. Freddie
will allow the lesser of 4% of the new refinance mortgage amount or $5,000 of
closing costs, financing costs and prepaid monies to be rolled into the new
refinance mortgage. Freddie Mac’s standard post-settlement delivery fees, up to
a maximum of 2%, will apply to the Relief Refinance Mortgage program.
Wells’ wholesale group reminded their
customers that they will be charged, in most states, $19 in addition to our underwriting/commitment
and tax service fees for a flood certification fee must be charged on every
loan when ordered by Wells Fargo.
Flagstar is going the way of Citi in dividing customers up
into “Star Ratings”, based on pull through, quality,
volume, etc. Starting in early August, Flagstar will begin to use their
customer profile reports to reward those customers that consistently outperform
their peers. Look for a price bump, or hit, of up to .250 commencing in early
August versus standard rate sheet pricing. Flagstar also announced that
long-time officer Mark Hammond has decided to step down as President and
CEO on or before January 29, 2010 (although he will continue to serve as
Vice-Chairman and advisor). If you’re interested in the job, the Board is
accepting resumes – a desire to live in Michigan
from November through April is a plus.
CitiMortgage, starting in less than a month, and regardless
of income type or documentation method to be used in connection with the loan,
will require each correspondent to have a signed and processed IRS Form 4506-T. This gives
Citi the option to obtain the borrower(s)’s tax return transcripts for the two
years prior to the loan application date and verify the information provided by
the IRS in response to the Form 4506-T as part of each correspondent’s borrower
underwriting process. Additionally, each correspondent must provide a properly
completed Form 4506-T for tax return transcript for the same period signed by
the borrower at the closing for all conventional and government loans (except
non-credit qualifying FHA Streamline Refinance and VA IRRRL). It is required
for all wage earner, self-employed, commission and all other non-employment
income types, all underwriting methods, and whether or not the loan are originated
through retail or TPO channels.
I ain’t no underwriter, but some investors are taking a keen interest in the
way their customers are treating DTI, or “Debt-to-Income”. Some
underwriters apparently exclude certain types of debt, or carry out the calculation
of income or assets in interesting ways. One thing to keep in mind is that
automated underwriting systems making conventional loan decisions exclude
installment debt with less than 10 monthly payments remaining. When an FHA loan
is run through DU or LP, debts less than 10 months remaining are excluded from
the debt-to-income (DTI) calculation. Some investors, however, would prefer
that when the standard DTI is exceeded consideration should be given to debts
that were not considered in the calculation of the ratios, and for underwriters
to consider past credit performance (the most useful guide in determining
future payment habits) They advise sellers to consider whether the borrower’s
assets show sufficient reserves to help them cover debts that have been
excluded, and to analyze credit card activity within the credit report to
determine if the borrower is relying on credit to support their lifestyle. This
would suggest they’re likely to increase their credit debt again even if it is
paid off at closing.
Back to the markets! Yesterday the Fed was in buying their
usual $5-6 billion, but it didn’t seem to help mortgage rates which hit a
7-month high. There just doesn’t seem to be any demand for lower coupon
mortgages, and even 5% securities (which include 5.25-5.625% note rates) are
near par (100). A late-day rally in stocks didn’t help the bond market after
Paul Krugman (the Nobel prize-winning economist) commented that “we may look
back and find that this recession ended this summer”. Fortunately prices
improved a bit overnight, but we still have a $35 billion 3-yr auction to wade
through today. With no solid economic news, the 10-yr is at 3.85% and both
the 5-yr Treasury and mortgage prices are better by nearly .250.
A man feared his wife wasn't hearing as well as she used to
and he thought she might need a hearing aid. Not quite sure how to approach
her, he called the family doctor to discuss the problem.
The Doctor told him there is a simple informal test the husband could perform
to give the doctor a better idea about her hearing loss.
“Here's what you do," said the Doctor, "stand about 40 feet away from
her, and in a normal conversational speaking tone see if she hears you. If not,
go to 30 feet, then 20 feet, and so on until you get a response."
That evening, the wife is in the kitchen cooking dinner, and he was in the den.
He says to himself, "I'm about 40 feet away, let's see what happens."
Then in a normal tone he asks, 'Honey, what's for dinner?"
No response.
So the husband moves closer to the kitchen, about 30 feet from his wife and
repeats, "Honey, what's for dinner?"
Still no response.
Next he moves into the dining room where he is about 20 feet from his wife and
asks, "Honey, what's for dinner?"
Again he gets no response.
So, he walks up to the kitchen door, about 10 feet away. "Honey, what's
for dinner?"
Again there is no response.
So he walks right up behind her. "Honey, what's for dinner?"
"BOB, for the FIFTH time, CHICKEN!"
Rob
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or to subscribe write to rchrisman@robchrisman.com)
