Many
of us enjoyed a little BBQ grub yesterday. For the meat
eaters, there is almost
a 1 in 3 chance that the hot dogs and pork sausages consumed
on the Fourth of July originated in Iowa. The Hawkeye
State is home for nearly 20 million hogs and pigs - almost
one-third of the nation’s estimated total. North Carolina (8.6
million) and Minnesota (7.6 million) were also homes to large
numbers of pigs. And Texas
accounts for about one-sixth of the nation's total
production of beef hot dogs, steaks, and burgers.
(Nebraska is #2 and Kansas #3, per the USDA.) For chicken, the
lion's share (food humor) comes from six states: Georgia,
Arkansas, North Carolina, Alabama, Mississippi, and Texas. And
let's not forget the lowly potato: approximately half of
the nation’s spuds were produced in Idaho or Washington in
2011.
The
industry,
and servicing values in the state of California, waits to
see if the governor signs into law the “Homeowner’s Bill of
Rights.”
Among other things, “The bills also create an
overly-complicated approach to prohibiting dual-tracking, lack
clarity around critical definitions, and fail to address many
industry concerns, including that a new ‘right’ to
modification is being created.” Here is the latest effort to
stop it: http://mba-pac.informz.net/mba-pac/archives/archive_1702607.html.
Nearly
20 financial services trade groups issued a joint letter
protesting a plan in California to use eminent domain to
seize mortgages from private investors. These groups see
this as a serious threat to the mortgage market as it offers a
way to restructure mortgages without costing taxpayers a dime.
If the program in California is successful, there is a fear
it would be implemented across the United States, meaning
mortgages in most states are at a prepayment risk. It
also could impose losses on whoever holds the credit risk on
the mortgages. The success of the program could cause much
higher risk premium going forward the market as there is
massive prepayment risk whenever a loan is underwater; thus,
higher mortgage interest rates and a strain on the housing
recovery. Previous permits to restructure mortgages without
incurring losses for taxpayers have run into Constitutional
problems or needed taxpayer funding. Under the Constitution,
the government must pay the fair value for property seized
under eminent domain. The courts have previously said this
power extends to the seizure of mortgages. This means the
holder of the credit risk would suffer a loss on the
underwater portion of the loan. The government can then
restructure the loan so the borrower is no longer underwater.
The Supreme Court has long held that states cannot tax the
federal government. There are potential losses through eminent
domain as similar enough to keep investors from trying it.
Whether this could apply to loans backed by Fannie and Freddie
is a more open question as these entities are now under
conservatorship and the federal government has pledged to
ensure they have positive capital positions. But they are also
private companies. Not surprisingly the financial sector
objects to the use of eminent domain, arguing it would
do more harm than good by drying up the supply of credit and
further depressing home prices. Here you go: http://www.sifma.org/news/news.aspx?id…89939266.
Switching
topics, though it hasn’t issued any written guidance on the
matter, the FHA has mandated that loans are not considered
eligible for FHA financing if existing tax liens haven’t
been paid off or the borrower isn’t in a repayment plan.
Unless a fully executed payment arrangement and proof of 12
months’ timely payments can be provided, tax liens should be
paid in full before closing. Satisfied tax liens should be
removed before closing, and for cash-out refinances,
outstanding liens may be paid off using proceeds if an
underwriter approves the decision.
In the wake of its decision to rescind previously issued
guidance on collections and disputed accounts, the FHA has
decreed that the current guidelines remain in effect. As per
this guidance, judgments must be paid off, but collection
accounts are not required to do so. Disputed credit
accounts or derogatory credit on public records discerned
through a credit report must be referred to an underwriter,
though for accounts of less than $500 and more than two years
old, AUS approval will suffice. The FHA also clarified that
only eligible borrowers who sign the Note and their legal
spouses are allowed to take title to VA properties at closing
and that income-based repayment student loan payments must be
included in debt ratios. IBR payments of over $100 require
the actual payment amount to be included. Cases where the
payment is less than $100 and 1% of the total loan balance is
more than $100 will require a minimum of $100 to be included.
Game-changing
investor & agency updates continue. Remember that
it is best to read the actual bulletin, but this will give you
a flavor for what is going on out there.
Wells Fargo Funding is requiring sellers to follow the
standard Disaster Policy with regards to any
properties affected by the wildfires in Colorado. Properties
located within seven zip codes of El Paso County and five zip
codes of Larimer County must be re-inspected for damage from
fire, smoke, heat, and ash.
Flagstar is imposing a minimum FICO score requirement for
all FHA streamline refinances that are registered on or
after July 6th. Such loans that aren’t serviced by Flagstar
will require the borrower to have a credit score of at least
680; note that FHA DE Delegated loans are exempt and that
there are no ARM products available for these types of loans.
Clients should register and lock non-Flagstar serviced loans
using the correct product name ending in “other servicer,”
which allows the loan to be priced accurately.
Those based in New York should be aware that Fifth Third
is working with the state government on licensing requirements
and should watch for communications on any changes. For the
time being, Fifth Third will continue to accept new
applications, registrations, and locks for New York
properties.
Affiliated
Mortgage,
who had announced that it will no longer lock, re-lock, or
extend any FHA Streamline Refinance transactions as of June
18th,
reminded clients that all such loans should be delivered in
fundable condition prior to July 11, 2012 and purchased by AMC
before July 18, 2012. All FHA Streamline Refinance
transactions registered before June 15th are subject to a -2.0
pricing adjustment.
As
of July 2nd, Franklin American ceased to allow FHA
streamline refinances on 2-4 unit or investment property
transactions. Franklin
American also revised its pricing adjustment for USDA loans
with FICO scores over 720 to +0.250. For loans with FICO
scores between 640-679, the adjuster has been updated from
-0.250 to -0.500.
Clearpoint
Funding
has updated its offerings to include a non-credit qualified
FHA Streamline Refi loan that will allow current FHA
borrowers to refinance without an appraisal and less in the
way of documentation. In order to be eligible for the
non-credit qualifying loan, homeowners must have a
mortgage-only credit report from all three repositories with a
minimum score of 660 and 12 months’ payment history, while the
credit qualifying loan requires a minimum score of 640 and six
months’ payment history. The maximum cap for all FHA
Streamline Refinances has been updated and is now 4.25%.
Mortgage
Harmony
Corp., home of the borrower initiated
interest rate reset feature trademarked as the “HarmonyLoan”
has been busy recently. They just launched a web based
portfolio retention solution, called HarmonyLoan Conversion
Software, which portfolio lenders can use to immediately free
up sorely needed back office personnel. In less time than it
takes to process, underwrite, and close 1 loan, they deliver a
solution to retain thousands of loans at the “click” of a
button. For additional information, please contact Kevin
Ziolkowski at kziolkowski@mortgageharmony.com
or see Kevin at the California Mortgage Banking Conference in
San Francisco, July 9-12th, 2012.
US Bank has revised its submission requirements such
that applications should include the updated version of the
broker’s specific office or company form, the Title Company
Fee Sheet, a signed and dated Fannie 1003 form, the Borrower’s
Authorization Form, a fully completed Mortgage Loan
Origination Agreement, and Anti-Steering Disclosure. For
HELOCs, the Title Company Fee Sheet and Anti-Steering
Disclosure aren’t necessary.
Fifth Third has clarified its Property Fieldwork Waiver
policy for DU Refi Plus loans. If either Fifth Third or the
correspondent seller has obtained an appraisal on a subject
property in the last six months, the appraised value must be
entered into the property value field in DU. If a PFW is not
returned, the appraisal should be underwritten as per the DU
findings.
United Guaranty issued a reminder that borrowers should
be designated as “self-employed” when they own 25% or more of
a business and the positive income from the self-employment is
being used to qualify them. Borrowers must fulfill both
criteria to be considered self-employed, while borrowers who
own less than 25% of a business or who aren’t using the
self-employment income for qualification do not need to be
indicated as being self-employed. When verifying borrowers’
self-employment, UG requires a verbal verification to be
obtained within 30 calendar days prior to the note date; for
regular employment, the verbal verification should be obtained
within 10 business days prior to the note date.
GMAC reminds correspondent clients that all loans
submitted for purchase on and after March 7, 2011 will mandate
a Closing Protection Letter. The letter should include the
names and addresses of the borrower and closing agent and all
of the necessary signatures. In addition, the Title
Underwriter issuing the letter must be the same as the Title
Commitment Issuer. Loans that don’t include this letter will
be suspended until it is received by GMAC.
Stearns
Lending
launched its Initial Disclosure Portal, a system that lets
brokers more easily request Initial Disclosure documents and
create a TIL program. The IDP is accessible via SNAP and will
be available for loans that are in the process of locking or
registering with Stearns; loans pre-locked through Quick
Pricer will not produce this option.
Weststar has updated the FICO adjusters on all FHA, VA,
and USDA loans with credit scores in the 620-639 and 640-679
ranges. For the former, the previous -1 adjuster has been
revised to -1.5, while for the latter the previous -0.250 has
been revised to -0.500. A reminder has been issued by Weststar
that electronic signatures may not be used for FHA initial
disclosures, final applications, final disclosures, and
closing documents. They are, however, permitted on FHA third
party documents and Fannie, VA, and USDA forms.
Turning
to the markets, Tuesday, with the early close in the
fixed-income markets, MBS prices finished down/worse by about
.125 – better than the US 10-yr note which was down about .375
and closed at 1.62%. But that was then, this is now. This
morning’s ADP came in better than estimates by 75% - +176k.
And Jobless Claims dropped 14k to 374k, lower than forecast.
And
the MBA reported what lock desks everywhere already knew: last
week’s
applications dropped almost 7%, with refi’s down over 8%
and purchases up almost 1%. It is the third straight week of
declines. The refinance share of total mortgage activity
slipped to 78 percent of applications from over 79 percent the
week before. The government refi index had declined by 21%.
At
10AM EST is the ISM Non-Manufacturing Index for June, called
lower, and at 11AM is the Treasury’s announcement of the
details of next week's auctions of 3- and 10-year notes and
30-year bonds - estimated unchanged at $66 billion. But
tomorrow is the big day for news with the 5:30AM PST
employment reports. But in the early going, MBS prices are
better than Tuesday afternoon by about .125 and the 10-yr
yield is at 1.59%.
Very punny, part 1 of 2:
52 cards 1 decacards
1 kilogram of falling figs 1 FigNewton
1000 milliliters of wet socks 1 literhosen
1 millionth of a fish 1 microfiche
1 trillion pins 1 terrapin
10 rations 1 decoration
100 rations 1 C-ration
2 monograms 1 diagram
4 nickels 2 paradigms
2.4 statute miles of intravenous surgical tubing at Yale
University Hospital 1 IV League 100 Senators Not 1
decision
If
you're interested, visit my twice-a-month blog at the STRATMOR
Group web site located at www.stratmorgroup.com.
The current blog discusses the issue of the Freddie Mac &
Bank of America buybacks, and its potential impact on the
industry. If you have both the time and inclination, make a
comment on what I have written, or on other comments so that
folks can learn what's going on out there from the other
readers.
