|
Dec. 27, 2011: PHH rumblings; FHA ant-flip waiver extended; unintended consequences of g-fee hike; tax deductible MI ending?
Rob Chrisman
Saturday
night,
while you were pleasantly dreaming of presents, the cookies for
Santa had a different experience: http://biggeekdad.com/2011/12/christmas-cookies/.
FHA lenders had reason for cheer and mirth at the end of last
week. "In an effort to continue stabilizing home values and
improve conditions in communities experiencing high foreclosure
activity, Acting FHA Commissioner Carol Galante will extend FHA’s temporary
waiver of the anti-flipping regulations." With certain
exceptions, FHA regulations prohibit insuring a mortgage on a
home owned by the seller for less than 90 days, but this rule is
waived through December
31, 2012, unless otherwise extended or withdrawn by FHA.
"All other terms of the existing Waiver will remain the same.
The Waiver contains strict conditions and guidelines to prevent
the predatory practice of property flipping, in which properties
are quickly resold at inflated prices to unsuspecting
borrowers. The Waiver continues to be limited to sales meeting
the following conditions: All transactions must be arms-length,
with no identity of interest between the buyer and seller or
other parties participating in the sales transaction. In cases
in which the sales price of the property is 20 percent or more
above the seller’s acquisition cost, the Waiver will only apply
if the lender meets specific conditions and documents the
justification for the increase in value. The Waiver is limited
to forward mortgages, and does not apply to the Home Equity
Conversion Mortgage (HECM) for purchase program. For FHA
technical support, please contact the FHA Resource Center at: www.hud.gov/answers
."
Various lenders and investors have fairly specific overlays or
restrictions. For example, wholesaler Mountain West Financial
states, "It is important to recognize the property as a flip
prior to issuing the initial GFE due to the additional appraisal
cost and inspections which must be disclosed up-front. If there
is a possibility that the transaction involves a property being
flipped, MWF recommends that the fees for the two full
appraisals, the two 1004D’s, and a home inspection be disclosed
up-front on the initial GFE to the borrower. Realizing the
property is a flip at a later date is not a valid changed
circumstance, making it non-allowable to redisclose with the
additional fees. All cases in which the sales price of the
property is 20 percent or more over and above the seller’s
acquisition cost will require (2) full appraisals. The
appraisals must be ordered through MWF’s Appraisal Department
via the company’s approved FHA appraiser roster."
As we found out last week, g-fees for new agency
loans will be going up to pay for the two-month payroll
tax cut. Under the
“unintended consequences” banner analysts were quick to point
out that, given the increase is scheduled for ten years,
Fannie Mae and Freddie Mac are not going away any time soon
unless the government comes up with the money elsewhere.
F&F will not absorb this increase, nor will lenders; it
will, of course, be passed on to borrowers. (The bill also will
raise the annual
insurance premium borrowers pay on FHA loans by one-tenth
of a percent.) The increased g-fee, which makes it difficult for
Congress to work on efforts to shut down Fannie and Freddie,
based on current rates and a $200,000 loan, will cost the agency
borrower about $11 per month. "These institutions, which have
been so costly to Americans and are so necessary to the housing
recovery, should not be the piggy bank for future arbitrary tax
policy," Dave Stevens (MBA) said. Due to their government
ownership, investors still view their (and FHA/VA) MBS’s as
safer investments than those offered by private firms. The law
allows FHFA to phase in the fee over two years.
Who wouldn't want to spend three days in Arizona in February,
lounging around the pool, spending a little time on the golf
course sipping a few tall cool ones? What if you could combine
that with a NMLS
conference? Here's your big chance: http://www.cvent.com/events/nmls-annual-conference-training/event-summary-aa8a2684e4fd4d8abb808495c2a879b0.aspx.
Last
week the commentary repeated a note from a reader asking, "How many non-depository
mortgage bankers are still giving partial lender credits to
borrowers?" and he suggested that, “I think you will find
that depository lenders do not allow this practice as it is a
violation of Fair Lending and Desperate Impact. Loan
Originators are not allowed to provide anything to one borrower
that is not equally available to another, yet loan originators
continually increase interest rates and give lender credits as a
means to compete.” A reader responded, “Perhaps the tide is
beginning to change back to the favor of non-depository
lending. Depository lenders have one set of rules and one
price sheet, and it is not possible to change the credit to the
borrower for all are treated equal because there is only one
price option. The same holds true with compensation and hence I
am sure this is where the real issue is with our fellow
bankers.” Another wrote, “In the non-depository model, in the
open market, all wholesalers have different pricing and
adjustments for each given loan. The only reasonable way to
ensure the borrower has the best opportunity at the best price
and terms on a given day is to be able to have the ability to
adjust borrower credit accordingly. If I can get my client
.25-.375 more going to lender B, C, or D, that’s where I am
headed.”
Followers
of
the Treasury Department’s HAMP program will need to update their
shortcuts to the latest
version of the HAMP Handbook, Version 3.4. Treasury issued
the latest HAMP Handbook, the consolidated guidance related to
HAMP for non-GSE mortgage loans, on 12/15. Version 3.4 of the
Handbook includes all of the prior Supplemental Directives,
including those with effective dates after the publication of
Version 3.3. In addition to these updates, Treasury announced
that Version 3.4 includes certain clarifications addressing: (1)
ARM loan eligibility (to qualify for HAMP, the borrower’s
monthly mortgage payment ratio prior to the modification must be
greater than 31%); (2) Timing of response to initial packages
(the servicer must acknowledge receipt of the Initial Package
within 10 business days, for example); and (3) “Escalated Cases”
and pending litigation. It is best to read it: https://www.hmpadmin.com/portal/index.jsp.
For
lenders and investors, the news continues. PHH employees may
have had a somewhat worrisome weekend. S&P downgraded PHH’s
ratings, and its new debt yielded 9.5%. Industry vet Joe Garrett
noted, "It wouldn’t surprise us if you see PHH get out of the
correspondent business, or maybe just scale it back." Its stock
has certainly taken a tumble: http://www.thestreet.com/story/11354767/1/phh-stock-hits-new-52-week-low-phh.html.
United Guarantee reminded
the industry that, "MI tax deductibility is scheduled to lapse
at midnight, December 31. If you have mortgage loans in
process that would qualify for MI tax deductibility, now's the
time expedite them to retain this benefit for your borrowers who
qualify! MI tax deductibility will also lapse for FHA and VA
loans, which were extended under the same law as private MI."
Home
Savings of America
reminds its brokers that, “The Dodd-Frank LO compensation
requirements prohibit an originator/broker from receiving dual
compensation, i.e. compensation from both the lender and the
borrower. Under Lender Paid Broker Compensation, fees paid in
advance by the broker, e.g., credit report, appraisal fee, VOE
fee, HOA certification, cannot be paid for by the borrower to
the originator/broker at closing. If the borrower is to pay
Third party fees, they must be paid by the borrower directly to
the vendor at closing through the closing agent. Under Borrower
Paid Broker Compensation, fees paid in advance by the broker,
e.g. credit report, appraisal fee, VOE fee, HOA cert, can be
paid by the borrower to the originator/broker at closing.”
Interbank
Mortgage Company
now allows reduced appraisals for owner occupied condos.
Interbank is also changing its Lender Paid Comp settings, and
starting 1/1 will allow these options: a floor, a ceiling, a
percentage, and a percentage plus flat fee option. A processing
fee will not be allowed. “This means, regardless of the lock
date, or the date the application is signed by the borrower, the
comp plan is effective when Interbank receives the loan.”
Texas-based
Supreme Lending is
expanding its reach, with the recent announcement that the
company added five branches in Alabama doing “nearly $500
million in mortgages per year.” (Editor’s note: See how it is
easier to talk about volume than it is profit margins?)
Last
week we had a slew of housing news, capped off by learning that
New Home Sales for November were up 1.6%, with a median sales
price of $214,100 and an average sales price was $242,900. But
look at these regional differences: sales in the Northeast fell
26%, the West was -17%, but the Midwest improved by 7.5% and the
South by 13%. But there was no holiday cheer for bonds, as 10-yr
T-notes moved up to close at 2.03%. But remember it was an early
close for the bond market, and trading desks were half-staffed
to begin with.
For
economic news on this holiday-shortened, lightly-staffed, last
week of the year, we don't have much. Today is a Case-Shiller
number and Consumer Confidence, Thursday is Jobless Claims and
Pending Home Sales, and then on Friday is the Chicago PMI
numbers. And so far things seem pretty quiet out there,
rate-wise, with prices little changed from Friday’s close.
A Missouri farmer in his pickup, drove to a neighbor's, and
knocked at the door. A boy, about 9, opened the door.
"Is your Dad home?"
"No sir, he isn't; he went to town."
"Well, is your Mother here?"
"No sir, she went to town with Dad."
"How about your brother, Howard? Is he here?"
"No sir, He went with Mom and Dad."
The rancher stood there for a few minutes, shifting from one
foot to the other, and mumbling to himself.
"Is there anything I can do for you? I know where all the tools
are, if you want to borrow one, or I can give dad a message."
"Well," said the rancher uncomfortably, "I really wanted to talk
to your Dad. It's about your brother Howard getting my daughter,
Suzie, pregnant."'
The boy thought for a moment. "You would have to talk to Dad
about that. I know he charges $500 for the bull and $50 for the
hog, but I don't know how much he charges for Howard."
If you're interested, visit my twice-a-month blog at the
STRATMOR Group web site located at
|
