May 2, 2012: Mortgage jobs; lender updates; March foreclosure numbers; the latest on the principal forgiveness plot
Rob Chrisman
A
veteran banker once told me, "I've never seen a luggage rack on
a hearse." Many "experts," perhaps wishing to make a name for
themselves, called the housing industry dead and lending on life
support. And in fact, according to the Census Bureau, the home ownership rate
hit a 15-year low in the first quarter, falling to 65.4%
from its 2004 peak of 69.2%. Many can argue that it was
too high anyway. But rental properties had a vacancy rate
of 8.8% in Q1, the lowest level in about 10 years. And the Fed’s
April Senior Loan Officer survey showed Commercial and Industrial
loan demand increased last month, as more businesses
requested credit lines for inventory, accounts receivable
financing, M&A and infrastructure growth. In addition,
consumer mortgage demand increased, while other consumer lines
were stable.
(In fact, banks were asked to indicate what factors were
currently impeding their ability to originate residential real
estate loans. Most survey respondents cited periods during which
the high volume of residential loan applications exceeded their
application processing capacity, difficulty in completing timely
and accurate underwriting or in completing timely and accurate
appraisals or in hiring sufficient servicing or loan processing
staff as important factors.)
And
yes, residential lending in some sectors continues to grow. iServe Residential Lending
is searching for local branches and MLO’s in strategic
markets throughout the U.S. The company is licensed in 20
states, and has just announced its GNMA issuer approval. (Quite
a feat according to many!) iServe is a direct lender, with a
complete product mix of conventional, government, and jumbo
products, including the unlimited Harp 2. For more information,
go to www.joiniserve.com or
email joiniserve@iservelending.com.
And in Southern California, for something a little off the
beaten job path, the
Ventura County Community Development Corporation is seeking a
Senior Underwriter to underwrite first mortgage loans in
accordance with Fannie Mae Underwriting Guidelines. It is a
non-profit direct lender that assists first-time homebuyers with
first mortgage and subordinate financing. The Senior Underwriter
will work, at least initially, as an independent contractor,
paid for each loan underwritten, after which the position may
grow into a full-time employee position depending on VCCDC’s
growth in production and revenue. The successful applicant must
have at least five years of experience as a senior underwriter
responsible for underwriting loans to be sold to Fannie Mae.
EOE. If you know someone who might be interested, they should
send a resume to bgarcia@cabrilloedc.org.
And for more information, visit www.cabrilloedc.org.
Last
week’s applications were flat, per the MBA, or, in the parlance
of lock desks, “same ol’ same ol’.” Purchases were up 2.9% and
refi's were -0.7%, dropping to 72.6% of overall applications.
"When
you
take a bath, you come out clean," as one old saying goes, and
some would argue it pertains to foreclosures: get them out of
the way and let’s get on with some price appreciation! CoreLogic
has released its National Foreclosure Report for March 2012,
showing 69,000 completed foreclosures in March 2012 compared to
85,000 in March 2011 and 66,000 in February 2012. Through the
first quarter of 2012, there were 198,000 completed foreclosures
compared to 232,000 through the first quarter of 2011. Since the
start of the financial crisis in September 2008, there have been
approximately 3.5 million completed foreclosures.
The
industry frets about foreclosures, as it does chatter about principal forgiveness.
The FHFA has postponed a decision on principal forgiveness for
Fannie Mae and Freddie Mac-owned mortgage loans until possibly
late May, but that doesn’t stop the pressure in discussions with
the U.S. Treasury. FHFA Acting (when can we drop the “acting”?)
Director Edward DeMarco had said April 10 in a speech at the
Brookings Institute that he would consider principal forgiveness
as part of the HAMP program, after the Treasury upped the ante
by tripling the incentive amount it would offer, to up to 63
cents for every dollar the enterprises would write down on
qualified mortgages. But he has said that such a program would
encourage strategic defaults and cost taxpayers more than a
forbearance program. The FHFA has a state policy that
forbearance of principal is preferable to a permanent
forgiveness of principal in modifying loans belonging to or
guaranteed by Fannie Mae and Freddie Mac. Both the Treasury
Department and Democratic members of Congress have been
pressuring FHFA to allow principal reduction, a process that is
used in modifications of non-GSE loans under the Home Affordable
Modification Program (HAMP.) And two Congressmen sent a
publicized letter to DeMarco, citing Fannie Mae documents that
show that Fannie Mae officials concluded as far back as 2009
that reducing principal on its mortgages could save taxpayer
money by avoiding foreclosures. The plot thickens: http://www.washingtonpost.com/business/economy/fannie-chief-withheld-documents-favoring-homeowner-loan-program-lawmakers-say/2012/05/01/gIQAupI7tT_story.html?wprssrss_politics.
But
other plans are out there. Here’s one, claiming to be a “Win-Win” Principal
Reduction plan. “As a first step in any modification, an
appraisal will establish the property’s present value: the new
“Interest Bearing Principal Balance”. The difference between
this assessment and the loan balance, which includes loan amount
plus arrearages at the time of modification, is divided equally.
50% is written off as principle forgiveness and the other 50%
becomes non-interest bearing “Deferred Principal Balance” due on
sale of the property or in 30 years at loan maturity. As
example, take a $500,000 loan with $20,000 in arrears and
appraised value of $300,000. In this scenario $110,000 of the
loan is forgiven. The bank has $110,000 Deferred Principle
Balance and $300,000 Interest Bearing Principle Balance. It is a
win-win situation for everybody. This strategy is a path forward
from a moratorium or massive foreclosures. It can offer shared
benefits to both homeowners and lenders. It can prevent
foreclosures and help underwater home-owners who are in danger
of foreclosure or who might consider walking away from an
underwater mortgage as their best option in a crumbling or
stagnant market.” If you care to comment, write to John
Frangoulis (Realtech Financial Services) at John@rfn.net.
How
about some somewhat recent
lender/investor/agency/MI updates? As always, it is best
to read the actual bulletin, but this will give one a flavor for
what is happening out there. In no particular order…
First, a clarification for Flagstar. Yesterday
noted some information regarding the payoff statement for
refinances, that it “cannot reduce the loan payoff by the amount
of the escrow balance” and so on. To clarify, this policy
applies to all FHA refinances, including refinances of
conventional, VA and USDA loans, so any refi from a conventional,
USDA or VA into an
FHA loan...this policy would apply. (Flagstar still allows
escrow funds to reduce the payoff for conventional loans.)
Lenders
looking
to obtain FHA approval
can look forward to an online application process, which HUD plans to
implement in the near future. As the transition period
approaches, lenders who are currently in the process of
completing the application or who plan to do so should submit
their applications to the Lender Approval & Recertification
Division at OLA@hud.gov
to avoid delays. The subject line should read “New Applicant,”
and a contact name and phone number should be listed in the body
of the email. Lenders should not pay through pay.gov until
they’ve spoken to a Lender Approval representative. For lenders
who are already FHA-approved and seeking to add Title I or II
approval, a paper application is still protocol.
The FHA allows HUD-approved nonprofit agencies to act as
mortgagors for 203B and 203K mortgagees using FHA insurance.
Provided that the properties are resold to low- and
moderate-income families, such agencies may finance these
mortgages with the same terms and conditions as an
owner-occupant, which include a 3.5% down payment requirement.
HUD has entered a loan servicing contract with Deval, LLC, which
will handle Assigned Home Equity Conversion, Secretary-Held
Title II, Partial Claim Subordinate, Home Equity Conversion
Subordinate, Section 235 Subordinate, Nehemiah Subordinate,
Emergency Homeowners Loan Program Subordinate, Asset Control
Area, Hope for Homeowners Subordinate, and Good Neighbor Next
Door Subordinate mortgages.
If you’re interested in working for HUD, there are vacancies for
a PUD Single Family Appraiser in Philadelphia and a Program
Support Assistant in Denver. More information is available at www.usajobs.gov.
Due to home price declines and lingering unemployment, the Rural Housing Service
is launching its Rural Refinance Pilot to assist Section 502
borrowers in Hardest Hit states, which include Alabama, Arizona,
California, Florida, Georgia, Illinois, Indiana, Kentucky,
Michigan, Mississippi, Nevada, New Jersey, New Mexico, the
Carolinas, Ohio, Oregon, Rhode Island, South Carolina, and
Tennessee. The pilot program is being offered for a two-year
period and will let borrowers refinance at lower interest rates
and monthly payments without new credit reports, appraisals, or
property inspections.
The RHS has clarified the refinancing guidelines of the Single
Family Housing Guaranteed Loan Program (also known as the
ever-catchy SFHGLP). Current Section 402 Direct and Guaranteed
borrowers are no longer subject to the requirement that their
properties continue to meet the guidelines in HUD Handbooks
4150.2 and 4905.1.
Chapter 6G of GMAC’s
Client Guide (“Assets”) has been amended to include
clarification on Trade Equity (G604) and Employment and Income
Analysis and Documentation (6I). The latter includes
clarification on Stability and Continuance and Income (I601),
Income Types (I604), and Other Sources of Income (I607).
Chapter 7 (“VA Eligibility”) has been divided into three
sections, which include Eligibility, Transactions, and
Financing. The guide now defines Permanent Disability and
Temporary Leave as two different types of disability income, and
additional guidance is available in cases where the borrower
will not be returning to work before the first mortgage payment
is due.
GMAC has modified its policy on accepting electronic signatures
for FHA programs such that they are only permitted on third
party documents, which the FHA defines as originated and signed
outside of the mortgagee’s control. Wet signatures from the
borrowers and other parties involved in the transaction are
required for all other documents in the mortgage application and
Endorsement Binder.
Effective April 20th, GMAC has revised its Jumbo price
adjustments. The charge for cash out on Fixed rates has
increased for loans with LTV for 70 or less but over 65, as have
certain Fixed rate incentives. The purchase loan incentive for
Jumbo loans with LTV of 75 or less has increased for both Fixed
and ARM products.
Speaking
of
price changes, we saw a few late yesterday from lenders due to a
slight market move. Traders reported that the sales of
mortgage-backed securities picked up a little, although
generally the MBS price movement was about the same as for
Treasuries. (On the trading desk, we would say, “prices got
tired of going up, so they went down a little.”) Later this
morning we’ll have the
always-of-questionable-predictability-for-Friday’s-number ADP
number, measuring private payrolls, and then at 7AM PST we’ll
have March Factory Orders. In the early going the
10-year is back down to 1.94% and MBS a shade improved.
