Aug. 29, 2012: Mortgage job; Warren owns how much Wells? Residential apps continue slow down; Ginnie issuance numbers

Aug. 29, 2012: Mortgage job; Warren owns how much Wells? Residential apps continue slow down; Ginnie issuance numbers Rob Chrisman

Let’s see the local appraiser grapple with a 330 square foot pad: http://biggeekdad.com/2010/08/tiny-apartment/. But speaking of appraisers, what is the public hearing about the CFPB’s appraisal proposals? Here is one summary: http://seattletimes.com/html/realestate/2018979373_realestateharney26xml.html. In Ontario, CA, First Mortgage Corporation is looking for a corporate operations manager. (Many know First Mortgage due to its offering of FHA/VA products with no overlays.) The candidate will oversee transactional process flow and departmental integration to ensure efficient file movement.  Duties include oversight of processing, docs, funding, shipping, insuring, and will integrate with the Chief Underwriter/Underwriting Department. The candidate must reside within reasonable commuting distance. For confidential inquiries or resumes, please email Susan Kowalski at skowalski@firstmortgage.com. It is hard to tell if the recent drop in residential mortgage applications is due to the waning summer vacation, or to good rates losing their impact – probably a mixture of both. This week’s MBA figures totaling last week’s numbers showed that home loan apps were down 4.3% with purchases up 1.4% and refi’s down 5.7%.  The average loan size rose by approximately $5k to $203.3k indicating a shift back to lower coupon refi’s.  (Conventional refi’s were down 5.3% and GNs were down by 8%.) Everyone in the mortgage food chain, from LO’s through HR directors to investors, is keenly interested. But a loan here, and loan there, and before you know it, they add up. During the month of July Ginnie Mae guaranteed $32.04 billion in mortgage-backed securities (MBS). Issuance for Ginnie Mae II single-family pools led the way with more than $24.79 billion, while Ginnie Mae I single-family pools totaled more than $4.89 billion. Issuance for Ginnie Mae Home Equity Conversion Mortgage-Backed Securities (HMBS) included in Ginnie Mae II single-family pools came in at $703 million. Total single-family issuance for July was $30.38 billion. Ginnie Mae’s multifamily MBS issuance was more than $1.65 billion. Ginnie, which has about 90 employees, finances housing mortgage programs run by the FHA, VA, the Office of Public and Indian Housing (PIH), and the Department of Agriculture’s Rural Development Housing and Community Facilities Program (RD). While we’re taking Ginnie’s, in case there is any confusion out there, HUD does not allow Loan Officers to be an actively licensed Real Estate Salesperson working for a sponsored HUD approved mortgage company at the same time. Very few companies are aware of this infraction and HUD loves to key in on it whenever they hear that anyone (including processors, underwriters, setup clerks, closers or QC staff, etc.) in production is also an active licensed real estate salesperson. No issue if the license is “inactive”. Simply, an FHA loan originator cannot wear 2 hats in the industry. To participate in FHA lending programs and to obtain and maintain HUD approval a mortgagee must meet numerous requirements.  Among those requirements, is the following: “Full Time, Part Time and Outside Employment. A mortgagee may employ staff full time or part time (less than the normal 40 hour work week). They may have other employment including self-employment.  However, such outside employment may not be in mortgage lending, real estate, or a related field.” (HUD FHA Handbook 4060.1 (approval of mortgagees)) This prohibition on outside or dual employment applies to real property brokers, as well as, any other type of settlement service provider.  As such, if an approved mortgagee’s loan officer obtains employment as any type of settlement service provider, including a settlement agent, then the mortgagee is not in compliance with HUD’s requirements for FHA program participation.

What the heck is going on out there with Wells Fargo? Warren Buffett has $13 billion (yes, that starts with a “b”) of the company?! And Wells just booted Ally as the lender for GM cars. Wait a minute – wasn’t Ally’s old name GMAC? As in General Motors? Anyway, check it out: http://seekingalpha.com/article/833821-should-you-follow-buffett-s-lead-on-wells-fargo.

Now for a collection of long overdue investor/agency/lender/MI updates. Most are very recent, but sorry for the delay, but these will at least provide some flavor for trends.

The Chase pricing changes turned some heads this week. It changed its government SRP (servicing released premium) grids, breaking down Ginnie I and Ginnie II numbers. At the same time it expanded its loan amount adjuster, and changed its FICO & LTV grids for conventional, government, and high balance products. On the one hand pricing was made worse, but on the other hand some prices were improved. And once again, aggregators can do what they want to pricing, in this case increasing the base price and chopping SRP’s, and producers can find other outlets for their products if they so desire.

(A few weeks back Chase announced it was changing the following Non-Agency risk based price adjustments: 0.50% improvement for Fixed Rate and ARM transaction with LTVs greater than 70% and less than or equal to 80%. Purchase and cash out adjusters will no longer apply on Fixed Rate and ARM transactions and will be removed from Non-Agency rate sheets. New Non-Agency risk based price adjustments are effective with Best Efforts loans locked on or after July 27, 2012. This includes loans that are re-priced to current market due to relock, renegotiation, or product change. Chase is increasing the extension and relock fees on Agency Fixed and ARM loans by 0.125 for certain extension and relock periods. Note: There is no change to the extension and relock fees for FHA, VA and Non-Agency transactions.)

BB&T said it will close 12 BankAtlantic branches and 9 of its own branches in FL, as it consolidates operations related to its recent acquisition of BankAtlantic.

Provident Funding told clients that the release of the appraisal fee changes has been postponed to September 1st. “We recognize the fee change will impact disclosures already made to consumers, so the delay will allow time for you to honor any already issued GFEs without the need to re-disclose for a change circumstance.” The original announcement noted, “In order to ensure appraisers are compensated with fair and reasonable fees, LenderVend Appraisal Zone is making appraisal fee changes within specific markets.  The changes to the fees will be effective for appraisal orders on Wednesday, August 22, 2012. In the following states the fee charged to the borrower will increase by $45 for Interior Single Family Appraisals and by $35 for Exterior Single Family Appraisals: CA, HI, FL, NC, PA, NJ, IN, IL, and MD. In the following states the fee charged to the borrower will decrease by $45 for Interior Single Family Appraisals and $15 for Exterior Single Family Appraisals: ID, ND, and WY. In all states, the fee for the 1004D/442 (Update/Recert of Value) will increase to $225.” (Provident also recently told clients that it is now accepting electronic signatures on purchase contracts.) Citi reminded its correspondent clients, “The Opportunity to Cure Letter (OTC) is Citi’s first formal notification to a Correspondent about a possible representation/warranty breach in connection with a loan that may result in a potential repurchase. As secondary market investors and insurers more strictly enforce their contractual rights in today’s environment, a Correspondent’s timely and thorough response to an OTC is essential to the proper handling of the issue in the most favorable manner possible.  Per your agreement with Citi, the OTC requires a response within 30 days so that our Repurchase Department can research your response, supporting documentation (if applicable), have ongoing communication with you, and meet investor/insurer timelines. Responding to the OTC within 30 days can affect the mortgage insurance status and/or repurchase outcome for Citi and you.  There are many times your response may help resolve an alleged breach. If you do not reply within 30 days, surrendering your right to refute the claim at the OTC stage, Citi may have no other option except to repurchase the loan from the investor.  In turn, Citi will require the Correspondent to repurchase the loan in most cases. Upon receipt of any OTC, please respond to your Repurchase Coordinator as soon as possible with written details to address the facts set forth in the OTC, as it is to your advantage to provide any relevant information on the loan.  That allows time for us, if possible, to follow up with you for any more required information during the OTC stage.” M&T Bank has updated its FHA 203(k) Rehabilitation Program guidelines such that projects that alter the number of units within a dwelling are no longer permitted.  The definition of “partially completed projects” has been revised to include the purchase of a property in which the previous owners began work that was never finishes and the refinancing of a home with incomplete work-in-progress.  Partially completed projects will only be reviewed on an exception basis, and clients are reminded that FHA 203(k)’s can’t be used to “finish a build,” as the subject property must have been issued with a non-continent Certificate of Occupancy at least 12 months before the application date.

Clients are reminded to lock FHA Streamline refinances with the correct product code and to use the original LTV; all loans should include a Freddie HVE for pricing as well.  A 12-month “look back” for disaster alerts should be conducted, and if the property is in an affected area, it is necessary to do a drive-by with photos.  Even if income hasn’t been verified, it should be disclosed on the 1003.  M&T also reminds clients that, for FHA Streamline refinances, it will not consider condos for purchase if they’re not currently approved by the FHA. Following FEMA’s announcement about disaster aid in New Jersey, M&T is requiring properties in the relevant counties to be re-inspected if their appraisals were completed before June 30, 2012.  The original appraiser should complete the re-inspection as per Freddie Form 442/Fannie Form 1004D and include an exterior photo of the property and a certificate to confirm that there is no damage.  In circumstances where the property has been damaged, the appraiser must provide commentary on any condition that could affect its marketability.  All re-inspections should be submitted to M&T prior to closing so that an underwriter can certify that the property has not been adversely affected.

Yesterday the U.S. economy had some conflicting news, although once again it was good for the housing market. The Case-Shiller June Home Price Index rises +0.94% above expectation of +0.45% and just below revised up prior gain of +0.97%. Even with its two month lag and relatively limited survey scope, this is the fifth straight monthly gain and, for the first time in almost two years, the YOY read was a positive +0.50%. But any economic growth depends on jobs and housing, housing and jobs, and unless there is a revival of the employment gains seen from October last year, this nascent “recovery” in housing could be short lived. Fed is keenly aware of this and continues to stress job growth as key for continued economic gains, including housing. And thus it was disappointing to hear that the Conference Board’s Consumer Confidence Index declined to 60.6 in August from 65.4, and is now at its lowest level since November 2011.

Interest rates focused on the poor Consumer Confidence numbers, and the 10-yr T-note reached a two week low in yield, closing at 1.63%. There is a lot of “hope” out there that the economy is slow enough for the Federal Reserve to launch a new plan to buy more longer-dated securities to support the economy. In mortgages, volume remained in the “doldrums” with Tradeweb reporting at 76% of the 30-day moving average as many investors remain out on vacations, waiting for better entry, or more clarity from Chairman Bernanke.

Today we’ve had the second look at the 2nd quarter’s GDP numbers, with a slightly higher revision to 1.7% from 1.5%. “Plodding” is a descriptive word for this statistic, and it was pretty much as expected. At 7AM PST we’ll have Pending Home Sales for July, expected higher, and also a $35 billion 5-yr note auction. Later on we’ll also have the Fed’s Beige Book at 2PM EST. In the early going rates are nearly unchanged with the 10-yr at 1.63% and MBS prices up or down a shade, depending on coupon.

(Parental discretion advised – nudity.) Young Republican Gals Go Wild at Pool Party: http://www.youtube.com/watch?vfOoudtiA1pw.

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 new CFPB Rule combining TILA & RESPA disclosures. 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.)