Jul. 7, 2012: Link to Countrywide’s VIP report; Texas population growth; M&A and lender updates

Jul. 7, 2012: Link to Countrywide’s VIP report; Texas population growth; M&A and lender updates Rob Chrisman

Census data indicates 33% of people aged 65+ have a mortgage today vs. only 20% 20 years ago. Needless to say, this is of great interest to Congress, and the CFPB: http://articles.chicagotribune.com/2012-07-05/classified/ct-mre-0708-podmolik-homefront-20120705_1_home-equity-conversion-mortgages-loan-product-consumer-financial-protection-bureau.

Hats off to Texas, which threatens to secede from the Union from time to time. Texas had eight of the 15 most rapidly growing large cities between Census Day (April 1, 2010) and July 1, 2011, per the Census Bureau. It continues the growth seen between 2000 and 2010. But among cities with populations of 100,000 or more in 2010, New Orleans, still rebounding from the effects of Hurricane Katrina in 2005, ranked first, growing by 4.9 percent to 360,740. This puts the city’s population at 79.2 percent of the pre-Katrina July 1, 2005, estimate of 455,188. Looking at the highest numerical growth, New York topped the list, adding nearly 70,000 people since the 2010 Census. Again, Texas was well-represented, with six cities among the top 15, including Houston, San Antonio and Austin, which ranked second, third and fourth, respectively. California checked in with three cities, including Los Angeles, San Diego and San Jose; Phoenix; Denver; Charlotte, N.C.; New Orleans; and Washington also made the list.

In terms of total population, New York continued to be the nation’s most populous city by a large margin, with 8.2 million residents in 2011, followed by Los Angeles and Chicago. The 15 most populous cities remained unchanged since the 2010 Census. However, Austin, Texas, moved up from 14th to 13th in total population, supplanting San Francisco. Per the Census Bureau, more than three in every five people living in the United States (62 percent or 194.4 million people) lived in incorporated places, commonly thought of as cities. More than a third of the nation’s population (37 percent or 116.2 million people) lived in cities with populations of more than 50,000.

Aside from my dog, no one has ever considered me a VIP. So it is interesting to see how they’re treated in the lending world. “How Countrywide Used its VIP Loan Program To Influence Washington Policymakers” has had a lot of publicity, and I’ve received many requests for the actual document. Here you go: http://oversight.house.gov/wp-content/uploads/2012/07/Countrywide-112th-Report-7.3.12-1207-PM.pdf As a quick example, pages 105 &106 focus on Clinton Jones – the person reportedly responsible for keeping NAIHP & NAMB out of the Appraisal and Mortgage Disclosure Hearings.

Here are some somewhat recent M&A/investor/lender updates, providing a flavor for the environment. They just don’t stop. As always, it is best to read the actual bulletin, but these will give you a sense of direction for the mortgage market.

Lending Processing Services announced that it has acquired LendingSpace, a provider of mortgage loan origination software solutions. The LendingSpace technology platform is expected to boost LPS’ origination technology solutions, including Empower and PCLender, programs used by mortgage lenders, credit unions, and community banks. The LendingSpace product suite features a lending platform that includes full web-enabled capabilities to enhance collaboration between retail originators and their lending partners. Following recent adjustments to its simultaneous transaction fixed rate pricing, Wells Fargo Wholesale has lowered several Home Equity rates for simultaneous and standalone transactions.  Home Equity pricing has been consolidated into a 3 x 2 grid, replacing the old grid of four tiers of credit scores and three tiers of CLTVs.  With regards to Home Equity credit, Wells’ policy has changed such that non-continuous income sources (note, trust, 401k, retirement, alimony, or public assistance income, for example) should only be factored in if they are expected to continue for at least for five years and have been verified.  Section 900.06 of the WFHE Broker Guide have been revised to include the full updated verification requirements for retirement, Social Security, disability, note, trust, IRA, 401k, Keogh, alimony, child support, foreign, benefits, and public assistance income. Wholesale clients are reminded that failure to fill out the IRS Form 4506-T leads accurately and completely leads to delays in the loan application process and that the IRS will reject any alterations, additions, or corrections made to the form after submission. The updated non-branded Consumer Handbook on Adjustable Rate Mortgages/ARM disclosure is now available in the Client Tools area of the Broker’s First website as well as the Business Forms and Documents section of the Broker Guide. Citibank Correspondent has published its new turn times, and clients can expect a decision to be made about their loan between four and ten business days after the complete package has been received.  Suspense condition review has been listed at two to four days.  In order to keep things moving along, clients should ensure that they are familiar with the relevant loan manufacturing processing controls, as failure to comply will result in loans being suspended.  When verifying a borrower’s business, third party documentation and a phone listing are both needed.  Credit enquiries from the past 120 days and large deposits both require Letters of Explanation.  Other faults that will result in a loan being suspended are improper income categorization, lack of a Paid and Closure Letter where necessary, an incomplete Name Affidavit, and address discrepancies. US Bank rolled out numerous changes to its products and processes, including 90% LTV purchases up to $750,000 with no mortgage insurance; combo refinances, purchases, and cash-out refinances of up to $1.5 million; cash-out transactions up to $500,000; short sale and foreclosure purchases up to 90% LTV; and vacation home loan amounts up to $1 million.

The revised application submission checklist now requires an updated version of a company-specific submission form, Title Company Fee Sheet, Fannie 1003 application, Borrower’s Authorization Form, completed Mortgage Loan Origination Agreement, and Anti-Steering Disclosure.  The Title Company Fee Sheet and Anti-Steering Disclosure aren’t necessary for HELOCs. Flagstar recently announced that its Underwriting Support Desk would be handling all communications concerning conventional underwriting; however, underwriters are once again available to offer assistance on existing files.  Clients are asked to use either email or voicemail to contact the underwriters (not both) with questions specific to loans that have been submitted and reviewed or to declined loans and should provide the loan number and borrower name upon making an enquiry. At present, Flagstar clients can expect a 72-hour turn time for condo reviews and are reminded that rush requests will not be accepted.  The best way to ensure a quick review turn time is to search the wholesale website for documentation requirements and submission protocol, review the condo questionnaire before submission, and send in all the necessary documentation at once.  Flagstar requests that the condo review staff not be contacted unless three full business days have passed since the submission. Flagstar has clarified its flood insurance policy for refinance transactions.  In situations where an existing policy is being used, the policy should have at least 30 days remaining before it expires or needs to be renewed from the date of closing and funding or purchase.  Clients are reminded that all borrowers with property in a flood zone are required to be furnished with a Notice to Borrower of Property in a Special Flood Area (Flagstar Document 3214) at least five days before closing.  The recently updated version of the notice should be used for loans with application dates of June 18, 2012 and later; all Notices should be signed by the borrower and include the necessary flood community information.  Properties in the SFHA (per FEMA) with multiple residential buildings are required to have separate policies for each building. Though sending prefunding documents to the Flagstar Funding email box (Funding@flagstar.com) is a viable option, Flagstar has issued a reminder that uploading documents to the Paperless File Manager or sending them via fax (248-312-2423) can often be faster. Jumbo fixed rate products that are locked with Franklin American on or after July 1st will be subject to revised guidelines, which dictate that non-purchase money subordinate liens be seasoned 12 months to be considered a rate/term refinance and that additional documentation is necessary in cases where the borrower has been receiving a distribution of assets from a retirement asset account.  The maximum percentage of vested value of retirement accounts has been raised from 50% to 60%, and the maximum amount of collections that must be paid off has been raised from $250 to $1,000.  In addition, a written explanation from the borrower with regards to credit inquiries is required if these inquiries have been in the past 120 days, increased from the previous 90-day timeline.. Mountain West Financial has been approved to add its newest division, an in-house AMC called Mortgage Works, LLC that went live on July 1st.  As a result, the Appraisal Fee and Mortgage Works Appraisal Administration Fee are required to be disclosed on both the GFE and Final HUD-1, the former on which they cannot be combined. And MWF has changed the price adjuster for Government High Balance and VA loans; as of June 20th, the adjuster for FICO scores of 640-679 is 0.500. Stearns Lending has rolled out an updated VA loan program that allows for 100% purchases with a FICO score of 620 and 90% purchases with a FICO score of 640 for primary residences.  Gift Funds and 4% seller concessions are allowed as well. In response to record levels of submissions, SunWest Mortgage has offered to extend all locks that expired on or before July 15, 2012 by 10 days for no charge.  It has also published extended review times in underwriting that may be viewed at http://trk.cpro30.com/Tracking/t.c?SsqZ-VE1s-jpGOo5.  Freedom Mortgage reminds clients that all locks or application received on or after June 25th for FHA Streamline Refinances will require a minimum FICO score of 650.  Locks or applications for DU Refi Plus products will be subject to a maximum LTV of 115% and a PIW requirement in the DU Findings. Investors Bancorp, Inc. has agreed to a merger in which it will acquire Marathon Banking Corporation, parent corporation of Marathon National Bank of New York, a deal valued at $135 million.  Investor Bancorp will acquire 13 branches in the New York metropolitan area, $738 million in deposits, and $902 million in assets, increasing its presence in the area to 22 branches and its deposits to $1.3 billion.  The merge, orchestrated by KBW, is expected to close towards the end of the year. June 15th saw FEMA announce that New Hampshire residents who were affected by the storms and flooding in Cheshire at the end of May are eligible for disaster aid.  As such, M&T Bank requires that properties whose appraisals were completed before May 29, 2012 be re-inspected as per FHLMC Form 442/Fannie Form 1004D by the original appraiser.  The appraisal should include an exterior photo as proof of damage and a description of any negative conditions that may impact marketability.  In cases where there is no damage, the appraiser should certify that the property is in the same condition as before May 29th, and the re-inspection should be submitted to an M&T underwriter for review before closing. Clients are reminded that, when registering non-M&T FHA Streamline transactions to M&T, the original appraised value on the existing loan should be entered in MEME, which allows the system to correctly calculate the underwriting LTV.  The “current” LTV must be calculated manually outside of MEME.

IT’S SO HOT in Indiana (Part 1 of 3)  …..the birds have to use potholders to pull the worms out of the ground. …..the trees are whistling for the dogs. …..the best parking place is determined by shade instead of distance …..hot water comes from both taps. …..you can make sun tea instantly. …..you learn that a seat belt buckle makes a pretty good branding iron. 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.

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 Rob Chrisman.  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.)