Dec. 8, 2012: We're missing first time home buyers; now we have a housing shortage? Investor updates only an underwriter would love
Rob Chrisman

Despite growing signs that the housing market is starting to recover from the depression-like conditions of the past few years, first-time homebuyers don’t seem to be benefiting from that recovery. The recent Campbell/Inside Mortgage Finance HousingPulseTracking Survey results, besides being really confusing by combining and capitalizing different words, showed that the first-time homebuyer share of home purchases fell to about 35% in October. That was not only down from the 37% share seen as recently as June, but also the lowest first-time homebuyer share ever recorded in the HousingPulse survey. And we know that plenty of special interest groups become grouchy when things like this develop into trends.


The decline in first-time homebuyers participating in the housing market comes at the same time that purchases of non-distressed properties have risen significantly this year. In fact, HousingPulse data show that the non-distressed property share of home purchases climbed to roughly 65% in October, up from only 56% back in February and the highest non-distressed property share recorded by HousingPulse in its three-year history. First-time homebuyers are the only group of buyers tracked by HousingPulse that have not seen their share of non-distressed property home purchases rise over the past five months. Current homeowners have seen the biggest jump in purchases of non-distressed properties with their share rising from 50% in June to 54% in October. Even investors saw their share of non-distressed property purchases inch higher from 11% to 12% over the past five months. But first-time homebuyers have seen their share of non-distressed property home purchases fall from 39% in June to 34% in October, the HousingPulse survey results show. There will be a test on all this Monday.

Sticking with October numbers, the authenticity of this year's recovery may still be in question, but according to Freddie Mac's Economic and Housing Market Outlook for October, the housing sector is showing strength unmatched in previous years. Based on growth in residential fixed investment, which Freddie Mac explained is the component of GDP that includes expenditures on new housing construction, additions and alterations to the existing housing stock, and broker commissions on property sales, the tide appears to be turning for housing.


And heck, check out this story about housing shortages in areas where the foreclosure rates are the highest. Holy Shadow-Inventory-False-Scare Batman! Here you go:


On to some thrilling and chilling investor news to give us a sense of the trends. It never lets up.

As per the agencies’ policies, Fifth Third is requiring sellers to submit HOEPA/HMDA Required Information Forms as part of all HPML loan packages in order to accurately report HMDA data.  The HOEPA/HMDA form includes Initial Application Date, Lock Date, and Initial ARM Index Rate fields, the information in which must be the same information used by sellers to complete mandatory compliance testing and any applicable calculations.  Sellers are warned that entering inaccurate data can result in loans being inadvertently identified as HPMLs, which requires them to be repurchased.  For more information on the data points, see the Higher Price Mortgage Loan section of the Correspondent Processer Selling Guide.

Fifth Third will require the initial GFE and TIL to be issued to the borrower no more than three business days after the lender’s date of application beginning on December 3rd in accordance with RESPA-TILA.  All loan packages where the GFEs and TILs aren’t dated within the three-day requirement will be rejected, and for any loan for which the GFE has been re-disclosed, the package must include a Change of Circumstance form.

In accordance with Maryland commercial law, Fifth Third will not purchase any loans whose packages do not include a financing agreement presented to the borrower within 10 business days of the application date.  The agreement should provide the term and principal amount of the loan, an explanation of the type of mortgage, the interest rate and whether or not it’s subject to change, the points to be paid by either the borrower or the seller, and the term during which the financing agreement will remain in effect.

Flagstar has updated its Broker and Correspondent Loan Purchase Agreements and will require current customers to sign updated agreements when being recertified.

Following the policy changes that took effect last August, Flagstar has aligned its policies with the VA to allow the dependent children of veterans and the surviving spouses of deceased veterans to satisfy the VA property occupancy requirement.  Flagstar’s updated policy also exempts certain disabled veterans from paying funding fees.

Mountain West Financial has updated its purchase transaction policy to allow property flips in cases where no identity of interest is in evidence.  This includes family sales, properties in estates, employer/employee sales, builders acting as realtors or brokers, realtors or brokers selling their own properties, realtors or brokers acting as a listing/selling agent in addition to the mortgage broker, or transactions where there is a pre-existing seller/buyer relationship.  Property flips are only permitted on single-family primary residences and require a second appraisal where the appreciation in value exceeds 150%.

MWF has revised its Early Payment Default policy to define an EPD as a loan where any of the borrower’s first four payments due become 90 days or more delinquent.  In the case of a HUD Repo without an appraisal, this applies to the first 12 payments, and for VA Streamline refinances without a property valuation, the first 24 payments.  Should a loan be discovered to be an EPD, it will be audited by a designated compliance officer within 30 days of the EPD notification.  The MWF Early Pay Off policy has also been updated such that any load paid in full within 180 days will be considered an Early Paid in Full.
Sun West’s disaster policy has gone into effect for all Maryland areas affected by Hurricane Sandy, which include Allegany, Baltimore, Calvert, Caroline, Charles, Dorchester, Frederick, Garrett, Hartford, Howard, Kent, Queen Anne’s, Saint Mary’s, Somerset, Talbot, Washington, Wicomico, and Worcester Counties.  The policy also applies to affected areas in Virginia, which include the counties of Accomack, Arlington, Clarke, Craig, Culpeper, Essex, Fairfax, Falls Church, Faquier, Frederick, Greene, Highland, King and Queen, Lancaster, Loudoun, Madison, Manassas Park, Mathews, Middlesex, Nelson, Northampton, Northumberland, Prince William, Rappahannock, Shenandoah, Surry, Warren, and Westmoreland as per FEMA and state declarations.  All properties located in these counties require interior and exterior re-inspections before the loans can be funded or purchased, and any necessary repairs to return damaged properties to their pre-disaster condition must be completed prior to purchase.

In response to the storms and landslides in Alaska, the Sun West disaster policy is also in effect for the Alaska Gateway Regional Educational Attendance Area, Chugach Regional Educational Attendance Area, Denali Borough, Kenai Peninsula Borough, and Matanuska-Sustina Borough.

M&T Bank has increased the maximum funding price for best effort locks from 105.5 to 106 and for mandatory locks from 106 to 106.25. The maximum price on Treasury jumbo loans is not affected and remains at 101.5.

M&T’s disaster policy is in effect for all declared disaster areas in Virginia and Maryland affected by Hurricane Sandy along with Barbour, Boone, Braxton, Clay, Fayette, Kanawha, Lewis, Nicholas, Pendleton, Pocahontas, Preston, Raleigh, Randolph, Taylor, Tucker, Upshur, Webster, and Wyoming Counties in West Virginia and Belknap, Carroll, Coos, Grafton, and Sullivan Counties in New Hampshire.  Properties located in the designated counties whose appraisals were completed before November 8th must be re-inspected by the original inspector to certify that they are free from damage prior to purchase.  The disaster policy is also in effect for properties in the Alaskan counties affected by the recent storms, landslides, and floods whose appraisals were completed prior to September 30th.

MSI has updated its REO policy and will be ordering RELS Field Reviews for all conventional REO transactions, regardless of the current holder/owner; exceptions can no longer be provided.

Effective for conforming loans locked on or after November 30th, MSI will accept DU loans with PIWs provided that the PIW is identified at lock-in, the loan is underwritten by MSI, the DU findings show that a PIW is permitted, and the Fannie PIW fee is paid and clearly disclosed on the GFE.  PIWs will not be accepted for properties in designated disaster areas; new construction properties; mixed-use properties; REO, foreclosure, or short sale properties; or properties for which the Sales Agreement indicates an “adverse environmental condition.”  In order for MSI to accept a Property Fieldwork Waiver, the loan must be DU Refi Plus, the 1008 form must indicate that the property address has been validated by the underwriter, and the loan must be underwritten using the estimated value as per DU.  Loans for which the PIW or the PFW hasn’t been exercised require a full appraisal.

In compliance with the NMLS Streamlined Renewal Process, Bay Equity will be suspending all brokers that haven’t renewed either their own or their company license by December 20th until their renewals have been approved.

Radian Guaranty has rolled out HarmonyLoan, a new MI provider platform that lets borrowers adjust their interest rates without undertaking a traditional rate-term refinance.  Provided that the rate is being reduced by at least 25bps, borrowers can use the system to reset their mortgages via a web-based system.  A demo of HarmonyLoan is available at; use for the username and password1 for the password.

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