Feb. 13, 2013: Mortgage jobs; all-cash on the rise while delinquencies drop; Nevada wants to do what?
Rob Chrisman



From: Rob Chrisman [mailto:rchrisman@robchrisman.com]
Sent: Wednesday, February 13, 2013 4:15 AM
To: rchrisman@robchrisman.com
Subject: Feb. 13: Mortgage jobs; all-cash on the rise while delinquencies drop; Nevada wants to do what?


The talk in the halls here in Houston at the Texas Mortgage Bankers Association secondary conference is about a) diminishing margins for 2013, and b) the level of appropriate government intervention. Yes, in a move that critics say is just another step in nationalization, the state of Nevada (state song: “Nevada Means Home”), in conjunction with the Federal government, may soon be competing with hedge funds and equity firms in buying up properties. Okay, skip that – they’d be buying mortgages. Citing the overhang of distressed homes as a major stumbling block to recovery, Bruce Breslow, Director of Nevada’s Department of Business and Industry, is proposing a new program for reducing it: he wants to use federal and other funds to purchase about $150 million in delinquent mortgages and substantially reduce the principal balance. Other states and free-market proponents will be watching the Nevada Means Home Retention Program: http://www.lvrj.com/news/nevada-program-would-buy-underwater-mortgages-190546811.html.


In spite of government intervention, private enterprise continues to flourish. Movement Mortgage, headquartered in Virginia Beach, VA, is looking for retail LO’s to help with established accounts already in place AND entire branches that could benefit from a positive culture change. Movement Mortgage recently welcomed Clay Duncan as newest Regional Manager to help lead the ggrowth and development of the Western Region including but not limited to Recruiting, Branch Development and Strategic Partnerships.  Movement Mortgage was named the 2012 Inc500 #1 fastest growing mortgage bank in America and received the Inc. Hire Power Award for being the fifth highest job creator in financial services during 2012.  This certainly appears to be a company “on the move”!  Anyone interested in more information may email Clay.Duncan@MovementMortgage.com for a confidential inquiry or visit http://www.movementmortgage.com/.



In sunny Southern California Envoy Mortgage is seeking an Underwriting Center Manager for its West Coast Underwriting office located in Irvine, CA. A strong underwriting background and demonstrated record of managing a high performing retail underwriting team is required, and live in the area or be willing to relocate. Nationwide lender Envoy (http://envoymortgage.com/) is licensed in 49 states, is a top 30 mortgage company for 2012 volume, has its own servicing portfolio, and is the 6-time winner of Mortgage Technology’s Top Tech Savvy Lender. Please send resumes to Barbara Sparks, National Underwriting Manager, at bsparks@envoymortgage.com.


There are government statistics released every week, and there are private statistics released every week. Every Wednesday the MBA releases its loan application data (from 75% of retail production) for the week before. Now we have stats from Optimal Blue and Mortgage News Daily showing that loan originators saw a 21.9 percent rise in the number of “locked-in” loans last week. On a yearly basis, rate lock volume was up 19 percent.” Mortgages insured by the FHA grew 26 percent week-over-week and 10 percent year-over-year, account for roughly 20% of locked loans. Of the refi’s that are out there, there are 3x as many rate & term units as there are cashouts. According to MD & OB jumbo business has increased nearly 46 percent year-over-year—the biggest yearly gain out of any category. But jumbo still accounts for less than 10% of locks. The numbers come from Optimal Blue mining its own customer data base so is not a purely random sample but is still a large, relatively diverse sample set.


And for more information telling lock desks what they already sensed, the MBA released its weekly numbers. After rising by 3.4% in the week ending at February 1, residential mortgage applications dropped 6.4% in the Feb-8 week.


Of course, the numbers above have nothing to do with borrowers borrowing. What about all cash buyers? The number of homes purchased with cash in California reached an all-time high in 2012 as the mortgage environment (perhaps) kept other interested buyers out, according to DataQuick. The company's data shows a total of 145,797 condos and houses were bought without mortgage financing in 2012, up from 125,812 in 2011 (the previous high) and 39,731 in 2007. According to DataQuick's John Walsh, the increase comes from high investor interest and a currently difficult mortgage environment. Talk to anybody on the front lines of real estate in California these days, and they will tell you about the ubiquitous nature of the all-cash buyer. For a number of years, cash-flush investors have been scouring the state for deals, and, according to DataQuick, there are more all-cash buyers now than ever. During 2012, 32.4% of all transactions (condos and homes) were all-cash, breaking the record set the previous year (30.4%). To put it in perspective, historically, cash purchasers typically represent 15% or so of all buyers, according to DataQuick. Not surprisingly, the all-cash buyers are getting a significant discount - buyers with a mortgage paid a median price of $305,000, while those without the benefit of a mortgage paid just $205,000. Both were up significantly from a year ago, suggesting what many in the business already know - price increases are being driven, in part, by the investor crowd.


For those who actually borrow, TransUnion said that the serious mortgage delinquency rate is heading downhill at a quickening pace, however long term delinquencies and the slow process of resolving them are impeding a return to more normal rates. According to year-end data, the rate of serious delinquencies - 60 days or more - fell 14 percent in 2012 compared to 7% in 2010 and 6% in 2011.  By contrast, when rates were rising, from 2007 to 2009, they increased by at least 50 percent each year. "The national mortgage delinquency rate experienced its largest yearly decline since the conclusion of the recession, though we still remain far above normal levels."


Speaking of which, I received this note, or similar notes, yesterday regarding Redwood Trust’s 0% delinquency. "Hey Rob, you know as well as I do that zero delinquencies ala Redwood is really a sign of a dysfunctional market as a whole. In the ‘normal banking’ days of past, before the pre-crisis run-up, lending officers who had zero delinquencies were seen as leaving money on the table. What is good for Redwood is not necessarily good for the industry. They are not the GM of our time."


Let’s move on to some training, MI, and agency news – it just keeps coming. As always, it is best to read the full bulletin for details, but these will give you an idea about trends in the biz.


To help mortgage professionals of all experience levels get ahead, Radian offers complimentary training in three format options: instructor-led classroom sessions, instructor-led webinars, and self-directed web-based training. Check it out at https://events-na7.adobeconnect.com/content/connect/c1/202628305/en/events/catalog.html?folder-id=757254621.


MGIC announced some recent guideline changes that were misrepresented here: MGIC will insure attached housing, condos and co-ops in Florida except for in West Palm Beach, Ft. Lauderdale and Miami.  Sorry for the confusion.  Here's a link to MGIC’s bulletin on the matter: http://www.mgic.com/pdfs/MGIC_Bulletin_03_2013_F.pdf.


Genworth has rolled out its “Simply Underwrite” guidelines as part of its new unit, Genworth U.S. Mortgage Insurance. Depending on the origination and institution type, the new guidelines consolidate several of the existing overlays into one national underwriting standard for DU- and LP-approved loans, which allows Genworth USMI to provide the same pricing and flexibility to a wide range of lenders. “For originators and processors, determining loan eligibility is very straightforward, provided that the minimum borrower contribution is at least 3% from the borrower’s own funds. The package includes a full URAR appraisal or FNMA Form 2055 exterior-only inspection, a Verbal Verification of Employment is obtained within the 30 days prior to closing, and all condo and co-op project approval considerations are met, the loan is eligible for coverage.  Simply Underwrite also allows FICOs down to 660 and DTIs of up to 45 and removes several geographic and property-type restrictions in all markets apart from attached housing units in Florida.


United Guaranty is revising its Performance Premium Full File RAP underwriting requirements to allow properties of up to 15 acres, an increase from the previous 10-acre maximum.  In addition, UG is aligning with the DU Approve/Eligible and LP Accept/Eligible reserve requirements for primary residence, second home, and investment property 1-unit purchases, rate/term refinances, and cash-out refinances up to $625,500 ad primary 1-3 unit purchases and rate/term refi's up to $625,500 where the borrower maintains the current residence.  As a note, the reserve requirements for 2-4 unit jumbo transactions remain the same.


Reflective of the general profitability trends for mortgage insurers, which, generally speaking, have been incurring higher losses, Radian Guaranty is reporting a weaker than expected Q4 for 2012.  Radian is estimated to have netted $1.8 million of realized losses, per investment banker KBW, while the MI industry as a whole recorded $307 million in losses.  Considering that that figure was around $172 million for Q3, the increase has been substantial—nearly 80%.  Owing to a pickup in reserves related to existing defaults, it’s also higher than what analysts predicted, which was closer to $240 million.  Delinquencies, however, fell from 12.6% to 12.1% overall, and for Radian, New Insurance Written clocked in above projections at $11.7 billion, due both to the vigorous refi trade and Radian’s growing market share.  About $2.9 billion of insurance written over Q4 was through HARP, which is disclosed as modifications.  Radian’s net premiums, at $14.4 million, came in both higher than the $10.5 million estimate and the $12.3 million recorded in Q3.


Guild Wholesale told brokers that effective 2/11, the policy for 15 day locks will be changing. In order to lock for 15 days a loan must be "clear to close", (i.e., a full approval with the appraisal reviewed and cleared by the underwriter). Loans not at this stage may be locked using lock terms of 30 days or longer.


As a reminder on an announcement a couple weeks ago, FHA has revised the procedures for underwriting loans where the borrower has a credit score below 620 and the Total Fixed Payments to Effective Income (debt-to-income) ratio exceeds 43.00%. These transactions must be manually underwritten, effective for case numbers assigned on or after April 1, 2013. Here is the link: http://portal.hud.gov/hudportal/documents/huddoc?id=13-05ml.pdf.


The market: up a little, down a little. There is a lot of blather out there from traders and analysts about not much movement – perhaps the market is preparing a big move one way or the other. Somehow I doubt it as the U.S. economy doesn’t seem to be doing poorly enough for really lower rates, or well enough for rates to shoot up. So here we sit watching housing and jobs, jobs and housing. Agency MBS prices have done pretty well, supported by news of residential REITs such as American Capital and Newcastle raising capital – they’re going to do something with it! Given recent thoughts on prepayments (or lack thereof), interest rate movement, and REIT share prices, perhaps REITs will become the players they were a few years ago. That’s good, because relying on the Fed to keep demand high and rates artificially low isn’t a long term plan for success. (In addition to its reinvestment of paydowns, the Fed is purchasing outright an additional $40 billion per month through QE3.)


But back to the day-to-day markets: yesterday the 10-yr closed at 1.98% dropping almost .375 in price while MBS prices “only” worsened about .250 on above-average sales volumes. Up a little, down a little, and in this case the blame was pinned on the 3-yr auction and risk trading ahead of last night’s State of the Union address. Today we’ll have Import and Export Prices, along with Retail Sales (expected to go from +.5% last month to +.1%). In the early going the 10-yr is chopping around slightly higher at 2.00%, and MBS prices are worse a shade.



Broccoli: “I Look Like a Tree”

Walnut: “I Look Like a Brain”

Mushroom: “I look like an Umbrella”

Banana: “Can we change the subject?”




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