|
Aug. 29, 2011: IT job; reader input on refi plan; markets are pretty quiet after hurricane's weekend
Rob Chrisman
An
IT person is someone who understands this joke: “The definition
of ‘Installation routine’: A process employed by many
applications to overwrite and thereby trash the user's existing
and painstakingly created AUTOEXEC.BAT and CONFIG.SYS files.”
Mortgage banking has become extremely dependent on computers and
systems, speaking of which…
I
have been retained by an
expanding residential retail lender that is searching for a
Business Applications. The lender is looking for someone
who either lives in California or is willing to relocate. The
role is relatively straightforward: “to strategize and maintain
the organization's business applications for mortgage banking,
accounting and customer support software applications through
best practices, appropriate integration and meaningful reporting
for the sake of the business needs, and is responsible for
planning and coordinating the processes required for the
provision of user applications and systems necessary for
business operations. This individual will apply proven
communication and problem-solving skills to guide and assist the
division heads on issues related to the design, development, and
deployment of mission-critical information and software
systems.” The person should be very familiar with Document
Management Systems, Citrix, Windows, DataTrac, Point, and so on.
I am happy to send anyone the description, which is too lengthy
for the commentary, so if you know of someone who might be
interested, please pass them my way: rchrisman@robchrisman.com.
Along
those
lines, Citi sent
its clients a reminder that, in spite of the “suite of
technology products that makes it easier for you to do business
with us, errors occur when using the eImaging program that can
be easily avoided.” Citi goes on to explain that, “Some
documents, most frequently appraisals and HUD-1s, are locked by
the provider to prevent tampering with the contents. This
‘protection’ also causes problems when attempting to image for
long term storage. Please remove this security feature prior to
sending your images to Citi. A PDF print driver (or other tool
that allows printing/imaging without permitting other access to
the documents) is a great tool for this.” Citi’s bulletin also
goes on to make recommendations regarding naming convention
errors, examining the eImaging Report itself, acceptable file
types (eImaging accepts PDF and TIFF files contained within a
zip file. Including documents of other file types like .doc,
.xls, etc., will cause upload errors and/or omissions of loan
documents.), and image resolution (300 dots per inch
recommended, 200 and below unacceptable).
Last
week we had a flurry of chatter
about some potential, vague government-backed refinance plan,
and I received a number of valuable comments. "The elephant in
the room that's being ignored is mortgage insurance.
With today's PMI structure, the rate for an FHA refi loan needs
to be an average of at least 1.25% below the old loan's rate in
order to meet the benefit to the borrower standard. Existing
underwater conventional loans that have MI on them can only be
refi'd by the servicing lender. Borrowers I've talked with in
this situation are telling me that their existing lenders are in
no hurry to do the refinances. That pulls a huge number of
loans off the market. Government and elected officials can talk
all they want, but until the MI issue is dealt with, the vast
majority of quality borrowers who bought at the wrong time are
not going to receive significant, meaningful help."
"Very few borrowers can do a Streamline Refinance do to the two
recent increases in the monthly mortgage insurance premium
(MMI). The higher MMI eats up most of the interest rate savings,
and prevents borrowers from achieving the ‘5% month’s’ savings
requirement. Why wouldn’t
the government just simply grandfather in all borrowers
current MMI premiums when they Streamline a mortgage? This
way, a borrower who took out an FHA loan prior to October 2010,
when the factor changed from .55 to .90 can lower the rate on
their mortgage from say 5% to 4% or 4.25% and meet the 5%
savings rule. The way things stand now, they would need an
approximate rate of 3.75% to achieve the savings. The Government
can actually make money on this Idea as they could simply create
new guidance that states the MMI will be grandfathered in but
the Upfront on a Streamline will increase to 2%. The Increase in
the UFMIP will have little impact on the overall monthly payment
as compared to going from .55 to 1.15 on the MMI the way things
stand now. If this window of low rates were to last and this was
implemented immediately, you would see refinancing on an epic
scale. What are the negatives in your opinion of this idea?"
"Your
reader/analyst
who argues that homeowners would accept lower monthly payments,
while keeping underwater equity status is an insult to any
homeowner with an ounce of intelligence and an understanding of
basic math. Let’s take an example. A homeowner purchased a home
in 2007 (at the height) for $400,000. Fast forward 4 years, and
from their perspective that home they thought would at least
retain the original purchase price in value is now valued at
$200,000 with no drop in property taxes. Does anyone really
think they are not going to throw their hands in the air and
walk away? What reasonably intelligent person is going to say,
‘Hey! At least my new payment is lower… deal! I’m going to
keep this place and keep pouring money into it, because my
‘rent’, less ‘taxes’, is cheaper and I won’t have to move!’
Wrong! Most intelligent people are going to say, ‘Hmmm…
$200,000 underwater. I wonder if I will break even in the next
30 years. This isn’t an investment, it’s a money pit. I can
rent the same house down the street and not have to pay for
maintenance, property taxes and MI payments… and finally save
some money!’
“In
my simplistic opinion, this market, the industry, and the
economy are not going to “correct itself” or “recover” until
this mess runs its course. Underwater properties and foreclosed
properties are going to have to sit on the market until sold, at
the new, much lower price. Banks, Servicers, and Agencies are
going to have to take heavy hits/losses and Loan Officers
selling payment, not rate, are going to have to start getting
real about what their futures look like. Homeownership will once
again become something you work hard to earn, not something
handed to you on a silver platter. Simply put, there is no way
government involvement is going to be able to make ‘right’
contracts between borrowers, lenders, servicers, and investors
without some, or all of those parties realizing losses. You
can’t just make it disappear."
Meanwhile,
investors
& MI companies continue to make changes. MGIC announced
changes to its underwriting requirements, effective with MI
applications received on or after today. “MGIC is revising its
underwriting requirements to allow for loans up to $750,000.”
Revised requirements for loans greater than $625,500 include the
$750k loan amount, primary residence, purchase or
construction-permanent, maximum LTV/CLTV of 90%, maximum DTI of
41%, minimum FICO of 740, and so on. Consult the MGIC bulletin
for exact details.
At
Bank of America,
starting today, “the Agency Price Guide for Conventional and
Government loans is updated to include the following changes:
the adjustment for Conforming 30 Year Fixed Rate High Balance
loans is now 1%,” as is the adjustment for DU Refi Plus
Conforming 30 Year Fixed Rate High Balance loans.
Turning
to the markets – there isn’t a heckuva lot going on. Friday’s
speech by Ben Bernanke was largely as expected: no QE3, the Fed
has options if needed, growth is on track but the recovery is
erratic and healing will take time, and the Fed has limited
ability to ensure long run growth. There is a tacit warning from
Bernanke that Washington need to get their act together, and
that monetary policy alone can’t sustain long term growth.
Treasury 10-year notes improved by about .250 in price, down to
2.19%, although for the week 10-yr notes about 1 point and the
yield was up 12 basis points.
Today
we had Personal Income and Consumption. (In the old days it was
called "Consumption, now it is called "Spending.") Personal
Income was +.3% and Spending was +.8%, neither of which really
moved the markets. PCE prices were +.4%. Later we have Pending
Home Sales. Tomorrow is yet another housing measure with the
Case-Shiller 20-City Index, and Consumer Confidence. Wednesday
is some ADP job information (private sector only) and the
Chicago Purchasing Manager's number, Thursday is Jobless Claims,
Productivity, Unit Labor Costs, an ISM Index, and Construction
Spending. Friday is the Big Daddy: unemployment. In the early going the
10-yr.’s yield is up to 2.25% and MBS prices are worse by
about .125.
(From 9/1 through 9/9 I will be out of the country. I have lined
up several very knowledgeable "guest writers" of varying
mortgage backgrounds who will be taking my place every day.)
Here’s
some
hurricane advice for the next one, I believe thanks to Dave
Berry:
First,
you need to understand two basic meteorological points: (1)
there is no need to panic.
(2) We could all be killed.
You
need to consider these important hurricane preparedness items.
Homeowner’s insurance: If you own a home, you must have
hurricane insurance. Unfortunately, if your home is located in
Florida, or any other area that might actually be hit by a
hurricane, most insurance companies would prefer not to sell you
hurricane insurance, because then they might be required to pay
you money, and that is certainly not why they got into the
insurance business in the first place.
If
you live in a low-lying area, you should have an evacuation
route planned out. (To determine whether you live in a
low-lying area, look at your driver's license; if it says
"Florida" you live in a low-lying area.) The purpose of having
an evacuation route is to avoid being trapped in your home when
a major storm hits. Instead, you will be trapped in a gigantic
traffic jam several miles from your home, along with two hundred
thousand other evacuees.
If
you don't evacuate, you will need a mess of supplies. Do not
buy them now! Tradition requires that you wait until the last
possible minute, then go to the supermarket and get into vicious
fights with strangers over who gets the last bottle of water.
Of
course these are just basic precautions. As the hurricane draws
near, it is vitally important that you keep abreast of the
situation by turning on your television and watching TV
reporters in rain slickers stand right next to the ocean and
tell you over and over how vitally important it is for everybody
to stay away from the ocean.
If you're interested,
visit my twice-a-month blog at the STRATMOR Group web site
located at
|
