Jun. 30, 2012: Lender/agency/training updates; Credit union originations; Realtors to lenders: “Remember us?”

Jun. 30, 2012: Lender/agency/training updates; Credit union originations; Realtors to lenders: “Remember us?” Rob Chrisman

Any gal out there looking for a 5-7 foot Scientologist who likes nice houses, I hear there’s one available, if you don’t mind a little baggage…

Realtors know that Census data finds that while most people in this country have moved to a new community at least once in their lives, about 40% never leave the city or town where they were born. There are many factors that come into play when you look closely at who moves and who doesn’t that we find interesting. For instance, did you know the affluent are the most likely to move (by income group), while those with a college degree will move about 33% more often than those with a high school diploma (by education level)? In addition, those who live in the Midwest are about 25% more likely to stay in their hometown than those who live in the West (by geography). Given that roughly 41 million Americans move every year, this “churn” provides a good opportunity for community banks to capture new customers. It also provides a nice opportunity to introduce these new customers to the small businesses & individuals you already have as clients and that already operate in the mover’s new neighborhood.

Remember when Realtors called the shots, demanding lenders bring treats to their open houses, asking lenders to ferry their children around, demanding long-extinct underwriting guidelines and programs? The tide has turned, given what I am hearing, and now Realtors are crying out for lenders to once again pay attention to them. One Realtor in North Dakota wrote to me, “Tells those loan agents that when they’re done dating the new girl (e.g., HARP’s, FHA Streamlines, refi’s in general), they’ll be crawling back to me.” Jenn P. from Marin County, north of San Francisco, wrote, “I’ve been pleased with the lenders who I use who always show up to my signings with my buyers.  That didn’t happen the last time we were so busy!  It didn’t really even happen in the slow times.” Of course, we’ve all been waiting for the refi biz to fizzle, but here lenders are, increasing their margins daily to slow the floodgates of business, 80% of which is refi…

Real estate agents appear to be playing a significant role in determining who writes their customers’ mortgages.  Homebuyers are increasingly relying on their real estate agent to recommend a specific lender in about one-third of the mortgage-financed home purchases in the U.S.  Agents reported that they recommended one or more specific mortgage providers in nearly 60% of the transactions where they represented the homebuyer. When homebuyers do not follower their agents’ recommendation it is generally because the homebuyer has an existing banker relationship or a pre-approval letter from another mortgage provider. Real estate offices frequently partner with a lender or have their own lending division, but only 16% of home purchases involved a lender in such a partner relationship. Referrals are often a one-way street as the in-house mortgage person rarely generates leads for the agent. In a housing market where getting approved for a mortgage can be a big challenge, preapproval letters play an outsized role in how mortgage lenders are perceived by agents.  Even with a preapproval letter a borrower could face a mortgage rejection helps explain why cash homebuyers generally pay about 10 percent less than homebuyers requiring a mortgage when purchasing a home. Loan originations hit the highest ever volume recorded in the first quarter, according to data submitted by more than 7,000 credit unions. First mortgage and consumer loans helped fuel the strong origination growth, with credit unions recording the highest dollar volume of first mortgages originated in first quarter history. First mortgage originations totaled $26 billion through March 31, comprising about 36% of all originations. Reporting credit unions granted 160,746 first mortgage loans Jan-Mar with an average loan balance of $161,549. Originations during the first three months of 2012 exceeded $72 billion, up 25% over the same time period last year.

Here are some somewhat recent investor/M&A/training/agency updates, providing a flavor for the environment. They just don’t stop. As always, it is best to read the actual bulletin.

Hey, here’s a thought – with all the shadow inventory and foreclosures in the market place, it’s good to have a 203(k) program to handle those fixer-uppers, so hats off to the MBA for promoting that – it will be needed. As HUD gets increasingly strict with GFE disclosures, institutions are tightening up their own measures accordingly.  One of these is Guild, which will be intensifying its monitoring efforts of the GFE activities of loan originators, processors, and their supervisory staff to ensure that the GFE is disclosed within three business days of the application and that, if it isn’t disclosed within that time frame, the relevant column of the comparison chart on the final HUD-1 is completed with all zeroes.  Guild is also revising its definition of when a GFE is necessary.  A GFE was previously required when the borrower’s name, monthly income, and Social Security Number to obtain a credit report, along with the property address, estimated property value, and loan amount are all received; a completed Fannie 1003 form has been added to this for all properties in Washington.  With regards to non-compliant files, the 2010 RESPA Reform made the GFE a binding disclosure in the sense that all known fees must be disclosed and that the only fees that are allowed to increase after the initial estimate are those resulting from a valid changed circumstance.  In cases where the GFE isn’t issued within the three-day time period, the lender is required to disclose all zeroes in the relevant column of the HUD-1 and reimburse the borrower for any resulting tolerance violations. Bank of Montreal (BEMO) said it will close 24 branches in the U.S. in early Oct., as it integrates Marshall & Ilsley (which it acquired about a year ago). At the end of the 2Q, BEMO had 672 branches in the U.S., so the closures represent about 3.6% (most of which will be in Wisconsin). As per Regulation B, GMAC will issue an Adverse Action Notice to the applicant on any wholesale or correspondent loan that is submitted for underwriting and denied.  This applies to all loans submitted on or after June 1st. Mountain West Financial updated its termite report policy, which states that for conventional, FHA, CalFHA, and USDA transactions where the purchase contract indicates that either the buyer or seller will pay it, a termite report and clearance is required.  It also states that once MWF has received a termite report on the property, it cannot be waived.  The policy requires major infestations, dry rot, fungus, or termites that affect the property’s soundness be taken care of, as well as conditions that aren’t visibly evident but that are predicted to lead to infestation or infection.  

Interbank reminded clients of its relock/renegotiation policy. For loans pre-locked/forward-locked, a submission package must be uploaded within 10 days or the lock will be cancelled. Lock extensions cost 0.125 per week.  Free relocks are available for expired locks for the same amount of days as the original lock as long as the current price is the same or better than the locked price.  Moreover, if the price is worse by only 0.125, then a shorter lock term is permitted for free (for example if pricing is worse by only 0.125, and the lock term was 45 days, then a free relock is available for 30 days). The relock policy does not apply to loans locked for just 15 days. (Contact Phil Grossfield pgrossfield@interbankwholesale.com.)

It’s good to know about the Federal Home Loan Banks’ “Mortgage Partnership Finance Program” that offers participating financial institutions free training delivered by AllRegs. “Through the MPF Program Training Curriculum, employees of PFIs will be able to access, free of charge, 26 online, self-paced AllRegs Academy courses designed to expand their knowledge of the mortgage industry…The AllRegs Academy curriculum covers topics such as appraisal, closing, compliance, origination, processing, quality control, servicing and underwriting.” To participate in the MPF Program, a financial institution must be a member of an FHL Bank that offers the MPF Program and is a PFI. For more information about other training opportunities offered by the MPF Program, visit www.fhlbmpf.com, click on MPF Education (left margin) and click on Webinar Training Calendar. You can also visit your local Federal Home Loan Bank website for additional scheduled training.

An updated FAQ on Streamline Refinance Transaction Indemnification is up on the FHA-HUD website; see it in full at http://portal.hud.gov/hudportal/documents/huddoc?idúQRW061112.pdf. Lenders seeking to become FHA-approved should be aware that, beginning June 20th, their application packages must be submitted through https://www5.hud.gov/FHALender/ and that paper applications with a June 20th postmark will not be accepted. The FHA has clarified that, if the lender is able to document that rental income is stable through a current lease, an agreement to lease, or a 24-month rental history without any gaps of more than three months, a borrower’s rental income is eligible for an FHA Insured Mortgage. Fannie Mae updated its Notice of Data Breach and Incident Response Policy.  Servicers are required to maintain a response program that complies with the rules laid out in the Interagency Guidance on Response Programs for Unauthorized Access to Customer Information and Customer Notice.  In the case of a data breach, the servicer must notify the borrower, Fannie Mae, the National Servicing Organization’s Servicer Solutions Center, and any other relevant governmental agency.  The full policy can be viewed on the Fannie website. All loans with a foreclosure sale date of January 1, 2012 and after are subject to updated guidance from Fannie and Freddie on compensatory fee assessment and appeals. Compensatory fees, which are charged in circumstances where the foreclosure sale date exceeds the maximum number of allowable days, will be determined using the unpaid principal balance of the mortgage loan, the applicable pass-through rate, and the number of days the loan was over- or under-standard.  Fannie has also updated its policy on allowable foreclosure time frames, increasing the maximum number of allowable days for properties in Arkansas, Connecticut, Delaware, Florida, Idaho, Maryland, New Jersey, New Mexico, New York, North Dakota, and Puerto Rico. Fannie has revised its policy to allow restructured or modified loans to be refinanced provided that the borrower has a minimum of 24 consecutive months of timely mortgage payments before closing the new refinance transaction or that the new refinance transaction meets the DU Refi Plus HARP requirements.

For the golfers. Wife’s Diary: Tonight, I thought my husband was acting weird. We had made plans to meet at a nice restaurant for dinner. I was shopping with my friends all day long, so I thought he was upset at the fact that I was a bit late, but he made no comment on it. Conversation wasn’t flowing, so I suggested that we go somewhere quiet so we could talk. He agreed, but he didn’t say much.  I asked him what was wrong; He said, ‘Nothing.’ I asked him if it was my fault that he was upset. He said he wasn’t upset, that it had nothing to do with me, and not to worry about it. On the way home, I told him that I loved him. He smiled slightly, and kept driving. I can’t explain his behavior I don’t know why he didn’t say, ‘I love you, too.’ When we got home, I felt as if I had lost him completely, as if he wanted nothing to do with me anymore. He just sat there quietly, and watched TV.  He continued to seem distant and absent. Finally, with silence all around us, I decided to go to bed. About 15 minutes later, he came to bed. But I still felt that he was distracted, and his thoughts were somewhere else. He fell asleep; I cried. I don’t know what to do. I’m almost sure that his thoughts are with someone else. My life is a disaster.                    Husband’s Diary: A five putt…who the heck five putts?

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.)