And
companies continue to add staff, some times to replace lost
staff, but many times because they are expanding. On Q
Financial, Inc. is hiring for positions as it is further
expanding its originations presence on the east coast by
opening a new sales and operations center in Atlanta, GA and
will also be expanding into other Southeast markets. On Q is a
retail-only independent mortgage banker founded in 2005. Based
in Scottsdale, AZ, it currently has 30 offices in AZ, CA, WA,
CO, TX, NC, and GA, is approved to lend in a total of 21
states, and is a Fannie Mae approved seller/servicer. On Q
will fund nearly $2 billion in residential mortgages in 2012
and is seeking experienced mortgage professionals to join
their team. Martha Simmons Scott is the new SVP of Sales and
Business Development, Southeast Region and David Rapson is the
new SVP, Southeast Region Operations Manager - all interested
individuals should send an e-mail to Martha.Scott@onqfinancial.com
or David.Rapson@onqfinancial.com.
Learn more about the company at www.onqfinancial.com.
Perhaps
it will pick up some Citigroup folks, as that company
announced it will slash 11,000 jobs worldwide in its
“continuing battle against high operating costs and
persistently sluggish markets.” It is unknown (by me, at
least, and others I asked) what the impact of this will be on
the mortgage channel – many of the cuts are in its global
consumer banking business (6,200, there, 1,900 from capital
markets, 2,600 from back office operations). The figure
represents only 4% of its total workforce and will bring the
headcount down to 250,000, down by a third since 2007. The
market liked it: the stock rallied 6% yesterday. And it is not
alone: Swiss bank UBS, British bank HSBC, Bank of America (in
the process of slashing 30,000 jobs companywide and
eliminating 750 branches).
And while we're on the buyback topic, no, buybacks have not
gone away. (Wouldn't that be nice?) In fact, buybacks may
be increasing. "U.S. Bancorp Says Freddie Stepping Up
Mortgage Repurchase Demands - Freddie
advised U.S. Bancorp it is expanding potential putbacks to
mortgages made in 2004 and 2005." And we all know those
will go from U.S. Bancorp back to the original originator –
here is some of the nitty-gritty: http://www.nasdaq.com/article/us-bancorp-says-freddie-stepping-up-mortgage-repurchase-demands-20121204-01537#.UL9tZ-Q0WSo.
The
conversation
regarding “High Cost Loans” versus "Higher Priced Loans"
continues,
and I received a few good notes on it. Not that I want this to
turn into a compliance manual, but think it is important to
keep things straight. "I believe the threshold that was
initially described applies to “Higher Priced Mortgage Loans”
addressed in section 35. While restrictions do apply on
higher priced mortgage loans they are not as severe as high
cost loans. Section 1026.32 Requirements for certain
closed-end home mortgages. (a) Coverage. (1) Except as
provided in paragraph (a)(2) of this section, the requirements
of this section apply to a consumer credit transaction that is
secured by the consumer's principal dwelling, and in which
either: (i) The annual percentage rate at consummation will
exceed by more than 8 percentage points for first-lien loans,
or by more than 10 percentage points for subordinate-lien
loans, the yield on Treasury securities having comparable
periods of maturity to the loan maturity as of the fifteenth
day of the month immediately preceding the month in which the
application for the extension of credit is received by the
creditor; or (ii) The total points and fees payable by the
consumer at or before loan closing will exceed the greater of
8 percent of the total loan amount, or $400; the $400 figure
shall be adjusted annually on January 1 by the annual
percentage change in the Consumer Price Index that was
reported on the preceding June 1. § 1026.35 Prohibited acts
or practices in connection with higher-priced mortgage loans.
(a) Higher-priced mortgage loans. (1) For purposes of this
section, except as provided in paragraph (b)(3)(v) of this
section, a higher-priced mortgage loan is a consumer credit
transaction secured by the consumer's principal dwelling with
an annual percentage rate that exceeds the average prime offer
rate for a comparable transaction as of the date the interest
rate is set by 1.5 or more percentage points for loans secured
by a first lien on a dwelling, or by 3.5 or more percentage
points for loans secured by a subordinate lien on a dwelling.
(2) “Average prime offer rate” means an annual percentage rate
that is derived from average interest rates, points, and other
loan pricing terms currently offered to consumers by a
representative sample of creditors for mortgage transactions
that have low-risk pricing characteristics. The Bureau
publishes average prime offer rates for a broad range of types
of transactions in a table updated at least weekly as well as
the methodology the Bureau uses to derive these rates. (3)
Notwithstanding paragraph (a)(1) of this section, the term
“higher-priced mortgage loan” does not include a transaction
to finance the initial construction of a dwelling, a temporary
or “bridge” loan with a term of twelve months or less, such as
a loan to purchase a new dwelling where the consumer plans to
sell a current dwelling within twelve months, a
reverse-mortgage transaction subject to § 1026.33, or a home
equity line of credit subject to § 1026.40."
Concerning the CFPB and whether or not it's focus is on
saving the consumer ducats, Jeremy Potter with Norcom writes,
"In response to TR's comment about the CFPB's interest in
FHFA's handling of MIP, I often tell our staff at Norcom, our
brokers and anyone who will listen that CFPB never claims to
make things cheaper. Many members of our industry seem to
think that part of consumer protection is keeping prices down
and we sarcastically say 'don't they realize that they are
making everything more expensive.' The truth is that I don't
think they care. They were tasked to protect the consumer and
the market. To their credit (I guess), I've never heard them
claim that that meant making it cheaper to get a loan. In
fact, CFPB seems to operate on the 'make the lender pay' idea
in many areas without regard for where/how those costs might
get passed on. We should stop hoping that CFPB turns their
attention to consumer cost because it doesn't look like
it’s gonna happen."
And
now for some ever-present investor, lender, and conference
news…
Shares of Ocwen ("NewCo" spelled backwards) sold off
after an article in the Wall Street Journal noted that
regulators could delay the closing of the Homeward and ResCap
transactions. Later in the day, OCN entered into a consent
order with the NY Department of Financial Services requiring
it to hire an independent monitor. Investment bank KBW
announced, "We are not changing out outlook for the deals.
Given the upside to our $40 PT, we upgrade OCN to Outperform
from MP."
American International Group (AIG) shuffled the
management of its mortgage insurance unit for the second time
this year, naming a new chief executive for United Guaranty (UG)
and moving the prior CEO to a senior underwriting position.
Donna DeMaio would become CEO of UG, “which has become a core
unit for the company in the wake of its post-bailout
restructuring.” DeMaio joined UG earlier this year as COO
after seven years as chief executive of MetLife Bank. Kim
Garland, who had run UG since last February, will become chief
underwriting officer for the global consumer business in AIG's
property insurance unit.
The
Texas Mortgage Bankers Association will be hosting its
annual Southern Secondary Market Conference in Woodlands, TX
from February 12-14, 2013. Interested parties should register
by January 11th at https://www.texasmba.org/reg_secondary.htm.
Sponsorship
opportunities are available as well; see https://www.texasmba.org/secondary/marketing.asp
for more information.
As
part of the changes made to its FHA product guidelines, Stonegate
Mortgage is requiring that all FHA loans with credit
scores between 620-639 will require a DU Approve/Eligible or
LP Accept/Eligible. The minimum credit score for FHA
Streamline refinances has been reduced from 640 to 620;
however, loans with scores between 620-639 will require
reasonable income, a Verbal Verification of Employment, and
verification of non-employment income where applicable.
Streamline refinance loans with credit scores over 640 aren’t
subject to the income verification requirements and the DTI
SMC overlays will no longer apply. The changes go into effect
on December 3rd.
The FHA has published the necessary protocol for
reporting delinquent loans in areas affected by Hurricane
Sandy on the Single Family Default Monitoring System, the full
details of which are available in Chapter 14 of the HUD
Handbook. This includes how to input loans that were already
scheduled to be reported before the disaster, loans about to
go into foreclosure, and loans in the midst of foreclosure;
current loans shouldn’t be reported in SFDMS. As a reminder,
a 90-day moratorium has been imposed on foreclosures in
affected areas, and mortgagees are responsible for consulting
FEMA to determine whether properties are in designated
disaster areas and to obtain disaster declaration dates.
The USDA has revised guidance for determining if Rural
Housing program applicants are able to secure a conventional
loan with an RD guarantee and now makes a distinction between
traditional conventional credit and non-traditional
conventional credit. For a full list of the traditional
credit criteria, see RD Administrative Notice 4687, Definition
of Conventional Credit (www.rurdev.usda.gov/SupportDocuments/an4687.pdf).
There was a fair amount of news yesterday. ADP Private
Payrolls added 118,000 workers in November, slightly lower
than the projected median forecast of a 125,000 rise, but
still pretty close. And we learned that Productivity increased
2.9% in 3rd quarter 2012 (annual rate) and unit labor costs
fell 1.9% In manufacturing, productivity fell 0.7% and unit
labor costs increased 3.2%.
But
the more interesting news for our biz was that the Mortgage
Bankers Association report that applications rose for the Nov.
30 week by +4.5% after prior drop of -0.9%. The refi Index
rose by 6% while purchases gained by +0.1% as the average 30
year rate fell to 3.52% which matches the lowest in history of
the survey. The Purchase Index has been mostly flat for two
years but it has increased in nine of the past eleven weeks to
the highest level since 2010 when tax credits raised activity.
This trend would seem to confirm that, while still weak on
historical basis, the sector is gaining strength. Refi share
of applications gained to 83% from 81%. The HARP share of
refinance applications increased to 27%, and the ARM share
decreased to 3% of total applications. Harp refinancings
have increased more than 77 per cent in the first nine
months of this year compared with the whole of 2011, and
investors and originators are very aware that early repayment
rates within agency MBS have been running at an annualized
rate of 30% according to monthly data from eMBS, the research
group.
Digging
a little deeper, we learn that the rise in prepays has taken
its toll most sharply on pre-crisis MBS paying coupons of
5.5-6%,, whose previous high prices reflected investors’
confidence that the underlying loans could never be
refinanced. And the recent sell-off of these MBS was
exacerbated by the US election, which increased the likelihood
that Edward DeMarco would be replaced by President Obama as
acting director of the FHFA with someone more open to permit
more radical policies to aid refinancing, such as forgiving
mortgage debt. And a new FHFA regime might allow homeowners to
“re-Harp”. Harp is currently only applicable to loans created
before mid-2009, and although the originators themselves are
not calling for the date to be changed since there is so much
business, that may change as refi business ebbs.
Returning
to the temporal markets, yesterday the 10-yr ended rallied in
price and the yield sank to 1.59%, and stocks rallied at the
same time. Today we’ll have Initial Jobless Claims (for the
week ending 12/1) which is expected to decline to 380k from
393k, along with some auction news for next week and some MBS
purchase stats and prepayment reports.
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.
