Why fit in when you're born to stand out? I remember when every computer had McAfee anti-virus software – it stood out. This has nothing to do with mortgage banking, but shows how things can turn in the business world: like something out of a Hunter S. Thompson book, John McAfee is wanted for murder and is on the run. Here's something for your IT folks: http://www.wired.com/threatlevel/2012/11/john-mcafee-audio-interview/.

Lenders are on the run, trying to find employees. The Federal Savings Bank has numerous immediate full time mortgage processing, underwriting (conventional, FHA DE, and VA SAR) and closing positions in its regional processing centers (Chicago, IL; Overland Park, KS; Irvine, CA; and the financial district in NYC). It is the fastest growing federally chartered bank in the US (http://www.bizjournals.com/stlouis/news/2012/11/01/stifel-bank-ranks-fifth-in-us-asset.html), and is looking for personnel as a result of this tremendous growth. The Bank is “100% paperless, six sigma efficient, and a fun place to work.  We are a veteran-owned and operated Bank, and best of all we are a mortgage banking company powered by a national depository platform (not just another bank with a mortgage division).” For more information on the bank visit www.thefederalsavingsbank.com. “We assure your discretion and confidentiality - interested parties please contact David Romano” at dromano@thefederalsavingsbank.com.

Yesterday I once again mentioned the issue of youth ("youts") in our biz, and received this note from Trey Worly, VP at Comerica on the warehouse side. "Speaking of 'young people,' the MBA's Future Leaders Program for 2013 is taking applications.  Deadline for applications is February 1^st. The program is not limited to 'young people,' but it does serve as a spring board for advocacy and leadership development in the mortgage banking industry. The class of 2012 included 35 people from a wide spectrum of mortgage banking-related entities, including owners, managers, originators, and fulfillment personnel from independent mortgage bankers, large depositories, government agencies, multi-family lenders, and mortgage insurers. The program starts in April 2013, on the front end of the MBA's Advocacy Conference where participants will focus on leadership skills and political activism through participation in the Advocacy Conference and lobby on Capitol Hill.”  Check it out: http://www.campusmba.org/ProductsandServices/ProductsbyFocusArea/Leadership.htm.

Speaking of aging populations, the U.S. Census Bureau reports that the percentage of households headed by older adults has grown significantly over the last half century. The share of householders age 75 and older grew from 6% in 1960 to 10% in 2012. In 1960, 32% of all households in the country were headed by 30- to 44-year-olds, but by 2012 the percentage of these households had fallen to 26% after peaking at 34% in 1990. The share of households headed by older adults expanded as the number of 45- to 64-year-old householders shrank in the 1980s and 1990s but began growing again in 2000. These households now make up 39 percent of households in 2012. A large proportion of older householders live alone: in 2012 more than half of householders 75 and older lived alone, compared with almost a quarter of householders under age 30.

And lots of these folks are trying to obtain a home loan. What? Mortgage lending standards are too tight? Many argue that they are exactly where they should be, and are simply where they were 15 years ago. Some say that lenders are very reluctant to lend, while others point to mortgage company volumes bursting at the seams. Regardless, here is what the Federal Reserve Chairman has to say about lending standards: http://www.marketwatch.com/story/mortgage-lending-standards-are-too-tight-bernanke-2012-11-15.

Remember all the assurances from FHA officials over the last year that everything is okay? Well, it's not, and soon it will be official: the FHA is in the hole for $16.3 billion. Just like some ill-fated HELOC programs, the FHA can tap directly into the Treasury Department - it doesn't have to go through Congress for the money. But we can all expect to see calls for higher down payments and higher mortgage insurance premiums. And let's all watch the talk about "This is the new subprime channel." Here is more: http://www.businessweek.com/news/2012-11-16/fha-sets-stage-for-taxpayer-subsidy-with-2012-deficit.

Hey, government-controlled mortgage entities aren't the only ones who can lose money. The U.S. Postal Service lost nearly $16 billion this year, up nearly $10 billion from a year earlier. Most of the loss came from $11 billion in payments the service is required to make to prefund health benefits for retirees. The Postal Service didn't have the money to make these payments, so it defaulted on them. The service reached its $15 billion statutory debt limit in October, meaning it can't borrow any more money. The service wants relief from its retiree benefits prefunding requirements and more flexibility on how to manage its business. "Neither snow nor rain nor heat nor gloom of night stays these couriers from the swift completion of their..." well, never mind.

How about some relatively recent lender, vendor, and agency updates to give you a flavor for trends? For full details read the actual bulletin!

New Penn Financial has updated underwriting guidelines such that e-signatures are not permitted on documents provided to borrowers and conforming cash-out refinances require a minimum FICO score of 660.  Guidance on 4506-T tax transcripts have been revised as well, as all borrowers with extensions were required to have filed 2011 returns by October 15th.

Pricing solution and product eligibility software provider LoanSifter has published its most recent performance metrics on security, reliability, accuracy and speed.  Read the press release for full details (https://www.loansifter.com/news.aspx?IDD6).

Mortgage banking software developer On The Go Technology, which released its iPad-based LOS back in April, has just rolled out the new premium service.  The free app, which doesn’t require an internet connection, allows users to complete a full 1003 and export it to their desktop LOS, while the web-based premium subscription lets originators pull credit and generate initial disclosures on their mobile devices.

The USDA, which maintains that borrowers who apply for USDA loans should be unable to apply for “conventional credit,” has clarified its official definition of the term.  Borrowers with “conventional credit” are considered to be those who can put down at least 20%, can pay all closing costs out of pocket, and have DTIs of 36% or less and PITI equal to 28% or less of their monthly income based on the cost for a 30-year fixed rate loan term without private mortgage insurance.

USDA guidance has been updated to state that the presence of outbuildings doesn’t render a property ineligible for the program so long as the property is “predominantly residential in design, use, and character.”  Livestock shelters and machinery storage sheds, for example, are considered to be “functional farm structures,” the value of which must be subtracted from the property total on the appraisal.  Structures that can’t be used without significant repairs, e.g. charmingly dilapidated barns and crumbling grain silos, are not considered to add value to the property or to make it ineligible for USDA programs.

Freddie Mac has issued temporary guidance on property valuation documentation, which can’t be dated more than 180 days before the Note date (the previous requirement was 80 days).  The same age requirement applies to underwriting documentation.

Freddie’s selling system customer test environment has been updated to include the SEC’s Rule 15-GA-1 data points.  The CTE is available to help sellers prepare for the ULDD requirements for loans with applications dated on or after August 1, 2012 that are delivered on or after November 26th.

Wells Fargo correspondent reminds clients that closed loan files should include the most recent copy of the DU or LP findings report, as loans can’t be delivered to the Agencies if there are any discrepancies in the final loan data.  All loans whose submitted findings reports incur salability error messages will be suspended until errors are cleared; sellers should be aware that they have to get in contact with Fannie directly in order to do this, as Wells can’t relay the specific errors based on the submission number.

Flagstar reminds clients that all loan files are being reviewed to ensure that they include the Undisclosed Debt Acknowledgement with signatures at origination and closing.  This applies to any loan with an application dated February 1, 2012 or after.

Flagstar had previously announced that hurricane-affected properties with appraisals dated October 31st or after wouldn’t require full re-appraisals but would require a property inspection and an exterior photo.  The guidelines have been loosened for FHA Streamline Same-Servicer, Freddie Relief Refinance Same-Servicer, and Fannie DURP Same-Servicer properties affected by Hurricane Sandy, as Flagstar is still working on clearing these re-inspection conditions. Bergen and Somerset Counties in New Jersey and Rockland and Westchester Counties in New York have also been added to the list of affected areas.

Is anyone locking in loans? Well, probably, but much of the focus has been on the U.S. stock market. Since the US elections, the S&P 500 is down 5% and US markets have erased roughly $850 billion of equity capitalization – and rates haven’t done much. According to one view, 90% of the market weakness can be attributed to concerns about the US fiscal cliff. Out of the 5% of cumulative drop since Nov 7th, 4.5% (or 90%) happened on the first trading session after Election Day, and during two speeches by President Obama on Nov 9th and Nov 14th. In these speeches the President reiterated his positions on capital gains, dividends and income tax rates, raising market concerns about going over the cliff.  The Congressional Budget Office estimated allowing Bush tax rates to expire for upper incomes would raise about $800 billion of additional revenue over the next 10 years, coincidentally around the same amount as the US market capitalization erased over the past 6 days. And this is definitely a United States stock sell-off: the Euro STOXX 50 outperformed the S&P 500 by roughly 3% since the election.

Back to mortgages, things improved a little Thursday after mortgage rates have been hurt by the DeMarco down trade (him being replaced by someone who will promote refinancing every high rate agency mortgage), the worry about the fiscal cliff, or the fact that mortgage rates have nowhere to go but up (not too likely). Heading into the end of every year we see “window dressing”, and with the big gains in residential MBS we can expect to see some selling – especially if tax rates are going to go up next year.

For rates today, there is not much to report. The 10-yr comes in at 1.59%, about where it closed, and MBS prices are also nearly unchanged.


(Thanks to The Onion for this one, but sums up our collective attention span.)
WASHINGTON—As they scoured the Internet for more juicy details about former CIA director David Petraeus’ affair with biographer Paula Broadwell, Americans were reportedly horrified today upon learning that a protracted, bloody war involving U.S. forces is currently raging in the nation of Afghanistan. “Oh my God, this is terrible,” Allie Lipscomb, 29, said after accidentally stumbling on an article about the war while she tried to ascertain details about what specific sexual acts Petraeus and Broadwell might have engaged in. “According to this, 2,000 American troops have died, 18,000 have been wounded, and more than 20,000 civilians have been killed. Holy smokes! And it’s been happening for, like, 11 years.” Sources confirmed that after reading a few paragraphs about the brutal war, the nation quickly became distracted by a headline about Elmo puppeteer Kevin Clash’s alleged abuse of a 16-year-old boy.

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 some of the considerations facing the FHFA regarding Fannie and Freddie. 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.

Rob

(Check out http://www.mortgagenewsdaily.com/channels/pipelinepress/default.aspx or www.TheBasisPoint.com/category/daily-basis. For archived commentaries, go to www.robchrisman.com. Copyright 2012 Chrisman LLC.  All rights reserved. Occasional paid notices do appear. This report or any portion hereof may not be reprinted, sold or redistributed without the written consent of Rob Chrisman.)