|
Mar. 8, 2011: Comp plans & webinars unveiled; Option ARM securities; strategic defaults analyzed; more mortgage jobs; investor & vendor news updates
Rob Chrisman
This is
kind of exciting: a new website. It was created by home builder
Lennar, showing how/why buying a new home is better than buying
a foreclosure. http://www.lennar.com/Buy-A-Home/New-Homes-Vs-Foreclosed.
I don't know if it answers the question about what to do with
those new over-built Central Valley communities in California
filled with "For Sale" signs.
Fraud in Connecticut? No way... but the longtime registrar at
Quinnipiac Law School faces sentencing for conspiracy stemming
from a mortgage fraud scheme and filing false tax returns.
http://www.therepublic.com/view/story/156d852cf03c401ba306cae633927ec0/CT--Registrar-Fraud/.
Kinecta Federal Credit Union is expanding its broker
business in the Central and Western US, and is looking for
seasoned Wholesale AE's in the California (Sacramento and San
Diego), Washington, Illinois, Kansas, Missouri, Nebraska, Ohio,
Utah, Idaho, and Wisconsin markets. Kinecta has over $3.5
billion in assets and is serving over 220,000 member-owners
across the country. According to the release, "Kinecta offers a
competitive compensation and benefits package in addition to a
dynamic culture - AE's will develop and maintain relationships
with wholesale and correspondent mortgage loan clients to gain
loan business." For more information, visit the company website:
www.kinecta.org. If you are
interested or know someone who might be, send a resume to Erika
Schlarmann at eschlarmann@kinecta.org.
They're coming fast and furious now. And I don't mean refi's.
Even with the lawsuit against the LO comp implementation that I
mentioned yesterday, filed by the NAIHP, compensation plans
continue to be fleshed out by originators. Especially since
there are only about 3 weeks left!
Flagstar released
more details on its comp plans, and told clients it
allows rates to be locked with pricing exceeding the lender-paid
comp fixed amount, with the excess being a borrower credit.
"Prior to April 1, broker owners need to consider the level of
compensation they need their company to receive on Flagstar-Paid
transactions to meet their business needs; you should be mindful
to assess the trade-off between receiving enough compensation to
cover expenses versus remaining competitive in your marketplace.
To assist with this exercise, we offer reports showing the
historical fee revenue received by your company on Flagstar
loans over the prior 24 months." “The Flagstar-Paid Compensation
Schedule is required to be completed for each broker ID and will
determine the amount of compensation paid to your company when a
transaction is designated as Flagstar-Paid. The schedules are
designed to allow much flexibility to meet your needs…Schedules
can be initially updated every 30 days until July 1, at which
time they can be updated every 90 days thereafter. Regardless of
which broker compensation option is used (Borrower-Paid or
Flagstar-Paid), you are still able to pay third-party costs for
borrowers by utilizing premium pricing. When selecting an
above-par interest rate, the premium is credited to the borrower
in Block 2 (GFE) / Line 802 (HUD-1) according to RESPA.
Borrower-Paid – Credit can be used to cover third-party costs
only. Flagstar-Paid – Credit must be used to cover broker
compensation per schedule and can also be used to cover
third-party costs.”
Home Savings of America announced two training
sessions. For brokers on the West Coast it will be this
Thursday, 11:30-1PM PST. To register for this meeting go to https://homesavingsofamerica.webex.com/homesavingsofamerica/j.php?ED8989167&RG1&UID0&RTMiM0.
For East Coast brokers the session is this Friday, 11:30-1PM
EST, and to register go to https://homesavingsofamerica.webex.com/homesavingsofamerica/j.php?ED8989492&RG1&UID0&RTMiM0
.
U.S. Mortgage
Partners arranged for a live
web presentation on compensation. It will take place on Thursday
the 17th, 2PM EST. "Please join us as attorneys from the Board
of Governors' Division of Consumer and Community Affairs provide
updated information and answer questions about the new
regulatory requirements for loan originator compensation.
Written questions can be submitted via email in advance of the
event, or may be submitted during the event using online chat.
To register for this free event go to: http://www.visualwebcaster.com/event.asp?idw385.
Analytics firm Interthinx plans to launch the Equifax undisclosed debt monitoring system as
part of its service. “The debt monitor detects new debts issued
to borrowers during the critical 30-to-45 day quiet period of
the loan application cycle. From the time a loan application is
filed to its closing, underwriters are generally unable to
detect new debts issued to the applicant during the extended
quiet phase.” The plans are for Interthinx’s FraudGUARD to
incorporate the Equifax undisclosed debt monitor so that
Interthinx’s clients can obtain instantaneous updates on every
new debt listed under a loan applicant's name.
MCT Trading, known as a hedging and risk
management firm, and MountainView Capital
Holdings, an advisor to participants in the mortgage and fixed
income capital markets, announced a strategic relationship in
which MCT will introduce select clients to MountainView’s
services in an effort to address more of its clients’ needs. Per
the press release it will give MCT’s clients “a more robust
suite of services, including mortgage servicing retained versus
released execution analysis, mortgage servicing rights valuation
and hedging, whole loan sales advice, and potential whole loan
purchases by MountainView’s funds.”
A new cooperative has
sprung up for folks out in California. CMC
(California Mortgage Cooperative) is actively seeking
small mortgage banks who wish to share a centralized back office
platform and use their size and numbers to negotiate better
pricing and warehouse line terms. It "came together as a small
group of mortgage bankers and originators who formed a strategic
alliance aimed at growing their business in the face of mounting
government restrictions and increased net worth requirements
imposed by FHA.” Here you go: http://www.californiamortgagecooperative.com/.
CitiMortgage, besides the usual
credit overlays that the company sends out (the last update was
a few weeks ago - remember that practically every investor has
overlays over and above the underwriting requirements of the
agencies, since they don't feel that those risk parameters match
their own) recently sent out a series of credit policy updates.
These focused on a wide range of topics, including verification
of assets & funds to close requirements, seasoning
requirements for R/T refi’s, FHA Streamline Refinances, and
other FHA-related changes. Citi also tweaked its Fannie Refi
Plus appraisal requirements, adjusted appraisal fee handling
& the settlement agent approval process.
In ten days Citi will
be “implementing security enhancements on the Correspondent
Website; these enhancements will require users to select
additional security questions and provide answers upon their
initial login.” Clients will see an “Update Profile” page as
correspondents log into the site.
Home Savings of
America reduced
its High Balance adjustment for the Conforming 5/1 LIBOR ARM to
1.00 in fee from 1.25 2, and told clients it will now allow
current market relocks 30 days after expiration, cancellation,
or denial on fixed products. (ARM products will still require a
60 day window to relock at current market.)
NYCB, who allows 30 day
jumbo locks, told brokers that now, for jumbo fixed loans,
escrow waivers will be permitted. A .125 price adjustment factor
for an escrow waiver will apply unless prohibited by state
regulation.
Mortgage Services III rolled out changes such as
an MSI overlay to the FHA Streamline Refi program, clarified
verbiage on trusts and POA’s, revised reserve requirements,
corrected the effective date for the AVM requirement for FHA
Streamlines, clarified MSI reserve requirements for investment
properties, etc. As always, it is best to read the actual
bulletin for specifics.
In the last several weeks Option ARM securities
have been discussed by analysts. For example, Banc of
Manhattan's Paul Jacob noted that, “ Virtually all of the Class
of 2005 has passed the 5-year mandatory recast -- yet we saw
almost no uptick in delinquencies in this study group of WAMU
2005 Option ARMs. The reasons: (1) Borrowers who have hung on
this long have already absorbed 4 payment annual increases of
7.5% each. (2) The increase in payments at the recast isn't
very large; only 12.5% for a typical loan of this vintage. (3)
Because rates are so low, borrowers making the minimum payment
have been reducing principal for two years. We believe this is
critical to borrower psychology; you're more likely to stick it
out if you see that you're making some progress…Because if the
recasts aren't a major issue, the sector's priced attractively.”
But price action on securities backed by Option ARM’s has come
under pressure lately. A story in Bloomberg recently noted that
the price of the debt, which hit a low of 33 cents on the dollar
in 2009, dropped slightly from recent highs and is now in the
low 60 cent range. Generally investors have “reduced worst-case
assumptions for the size of losses on defaulted mortgages such
as option ARMs, a change that helped boost values of the bonds
linked to those loans.”
Defaults are obviously a concern to any investor holding
mortgages. In a recent study Barclays noted that, “Most
popular studies overestimate the level of strategic mortgage
defaults. We think that the strongest cases of active
strategic defaults are less than 1% of total defaults. These
borrowers are clearly capable of making mortgage payments,
always remain current on all non-mortgage debts and actively
take out a new mortgage on a new home before defaulting on the
existing mortgage.” Barclays goes on to define “passive
strategic defaulters” as those who have not experienced income
or payment shocks and remain current on all non-mortgage debt
outstanding. Another segment of the population defaults on their
mortgage obligations while continuing to service other debt, but
display clear signs of income or payment shocks. (These are
ideal candidates for modifications.)
Barclays notes that, “The only characteristic that seems to
matter is the borrower FICO at origination. Borrowers with high
FICO scores at origination have a higher share of strategic
defaults in total defaults. Higher loan balance and limited
documentation borrowers display a higher share of strategic
defaults but that merely reflects high-FICO concentration in
those loans.”
Turning to the
markets, there is no scheduled market-moving news until later in
the week. The Treasury is scheduled to auction $32 billion of
3-yr notes today at 11AM MST, $21 billion of 10-yr notes on
Wednesday, and $13 billion of 30-yr bonds on Thursday. Yesterday
10-year Treasury notes were nearly unchanged at a yield of 3.50%
as we watched equities being hit by higher oil prices, tension
in the Middle East, and worries over Europe. MBS prices finished
the day worse by about .125. And we begin today
with the 10-yr unchanged at 3.50% and MBS prices also roughly
unchanged.
After his examination, the doctor said to the elderly man: 'You
appear to be in good health. Do you have any medical concerns
you would like to ask me about?'
'In fact, I do.' said the old man. "After we make love, I am
usually cold and chilly; and then, after we make love with her
the second time, I am usually hot and sweaty."
After examining his elderly wife, the doctor said: “Everything
appears to be fine. Do you have any medical concerns that you
would like to discuss with me?' The lady replied that she had
no questions or concerns.
The doctor then said to her: 'Your husband had an unusual
concern. He claims that he is usually cold and chilly after
having sex with you the first time; and then hot and sweaty
after the second time. Do you know why?'
"Oh, that stupid old geezer'' she replied. 'That's because the
first time is usually in January, and the second time is in
August.”
|
