Friday, October 21, 2016

Credit Unions Paid How Much To Attorneys?

The first-time flier was very nervous as he buckled his seat belt before takeoff. He turned to the woman in the next seat and asked, "About how often do jetliners like this crash?"

She thought a moment and replied, "Usually, just once."

As thousands of folks prepare to head to Boston for the MBA's conference, they may be asking, "What's in my wallet?" Maybe a little less. The average cost of an out-of-network ATM fee in the U.S. is $4.57, making this the tenth consecutive year of increases. (The surcharge from the ATMs themselves accounts for $2.90 of that total, while the charge from the customer's own bank for using an out-of-network ATM accounts for $1.67.) Heck, it's more expensive than a no-cost home loan!

And for lenders looking for a new marketing product, Equifax (EFX) continues to develop its offering of SmartZip solutions in the mortgage lending marketing space. Recently, EFX started selling the SmartTargeting Platform Powered by SmartZip. SmartTargeting allows a lender to leverage Pre-Mover Scores along with its automated online and offline marketing capabilities to acquire new purchase loans and retain existing customers. Pre-Mover Scores use predictive analytics to enable a lender to score their database or to source a list of homeowners likely to move within the next six months. Lenders can segment their top prospects based on Pre-Mover Scores and allocate their marketing and sales efforts for maximum impact. SmartTargeting is a fully integrated marketing platform which includes Pre-Mover Scores, Targeted Online and Facebook Ads, and Personalized Direct Mail. Contact your EFX sales representative for further information or

 Quick congratulations to Ben April. VidVerify, a mortgage industry video communications provider, announced that Mr. April is its new Chief Executive Officer.

 Before going on, I wanted to clear up some name confusion. Yesterday I wrote about a settlement that First American Mortgage Trust, which does business as, had with the DOJ over FHA loans. This is not the "First American" that is First American Financial Corporation (parent company of First American Title, First American Trust, First American Mortgage Solutions and a variety of other companies). So it is First American Mortgage Trust, which does business as, and CEO Barry Polack, who will pay $1.025 million to settle charges brought by the Department of Justice, not First American Financial Corp!

 As Will Rogers said, "Well, what shall I talk about? I ain't got anything funny to say. All I know is what I read in the papers." The National Credit Union Administration (NCUA - the top U.S. credit union regulator) said it had paid more than $1 billion in legal fees to two law firms to pursue lawsuits against various banks over their sales of toxic mortgage-backed securities before the 2008 financial crisis. NCUA said the contingency fees represented 23% of the $4.3 billion the agency recovered in settlements with banks over their sale of faulty securities to five credit unions that later failed.

 NCUA Board Chairman Rick Metsger said, "Without this fee arrangement, which shifted most of the risk of these legal actions to outside counsel, there would have been no legal investigation of potential claims, no litigation, and no legal recoveries."

 So who ponied up? In no particular order, Morgan Stanley, Bank of America, JPMorgan Chase, Barclays, and last month the NCUA announced a $1.1 billion deal with Royal Bank of Scotland Group. The payouts went to two law firms, Korein Tillery LLC and Kellogg, Huber, Hansen, Todd, Evans & Figel PLLC, which pursued lawsuits against the banks.

 The Federal Housing Finance Agency, which has acted as conservator for mortgage funders Fannie Mae and Freddie Mac since their government takeover in 2008, in September 2015 disclosed paying two other law firms $406.7 million. Reuters reports that, "The sum, which reflected around 2 percent of the $18.7 billion it obtained through settlements and judgments against 16 banks, has likely grown since then amid ongoing litigation by FHFA against RBS."

 Training and events?

 Avoid an application blow up, register for Plaza's webinar on October 25th.

 Alight, Inc. is hosting its second annual warm-up to the MBA's Accounting and Financial Management Conference. Taking place on November 14th in San Diego, this year's event, Alight Mortgage Innovators 2016, will welcome over 100 firm owners, CEOs and senior finance executives for an afternoon of innovation-themed sessions to help supercharge the independent mortgage banking business. Alight will cap the event with a yacht cruise around San Diego Bay, including food, cocktails and a great chance for networking. Mortgage industry pundit Dave Lykken, host of Lykken on Lending, will broadcast the event live. If you're a firm owner, CEO, or senior finance executive, register now at or contact Sandee McCready.

 And if you're planning out 2017, next September in Chicago MORT is an "unprecedented and transformational mortgage industry event that will evolve attendees' perspective on how they lead their companies. MORT is specifically designed for executives at smaller and mid-tier mortgage companies. Best-of-class speakers from many different disciplines, and customized coaching following MORT will ensure that participants are implementing the vision, systems and tools they experienced there. MORT is assembling an accomplished and distinguished group of 12-15 speakers who will convey new ways of thinking to drive a shift in the attendees' paradigm on how they navigate through industry turmoil and change, while installing long-term sustainable thinking into their business that will optimize their success and enable them to attain maximum capacity. Participants will learn to embrace and leverage change as a competitive advantage, while guiding their companies to prosperity in the new mortgage era." For more information on attending MORT or on corporate sponsorship opportunities, please contact

 Turning to capital markets, one of the big issues that lenders have been faced with in the last eight years are buybacks. Even though they've dropped off since 2012, they're expensive, and often lead to problems leading back to the LO who did the loan. Fannie Mae, according to American Banker, is preparing to offer immediate representation and warranty relief to lenders that use its suite of automated quality-assurance technology. Watch for it in a marketing campaign dubbed "Day 1 Certainty." That name will serve as an umbrella brand for a variety of Fannie Mae tools, including Desktop Underwriter, Collateral Underwriter and EarlyCheck, according to sources familiar with the initiative.

 What lender doesn't want a waiver or an end to a representation or warranty obligation in an electronic mortgage loan system? Lenders want to know, of course, what the price for this will be. And the circumstances under which representation and warranty waivers will be granted are not completely clear. AB reports that the Federal Housing Finance Agency (FHFA, which oversees both Fannie & Freddie) is said to have approved the plan only this week, and an official announcement is expected next week.

 As background, the GSEs created a "representation and warranty framework" that took effect in 2013 and lets lenders off the hook for repurchases three years after eligible loans are acquired. That framework was amended in 2014 to clarify certain guidelines and again in 2016 to include an independent dispute resolution process. The first group of loans eligible for the rep and warrant sunset period just recently matured to the point where lenders can take advantage of it.

 From an LO's perspective, if any government agency can create more certainty in the lending environment, it is a good thing, and could lead to better borrower pricing. Theoretically lenders have to put aside less money for unseen liabilities in the future. "Just give us the rules and a level playing field, and we'll take it from there" is something that CEOs generally say.

 Over at GNMA (aka Ginnie Mae), heads turned with the announcement from GNMA in limiting "outlier refinancings" - impacting lenders that churn their production. It addresses, in part, originators' (and the industry knows who they are) practices that needed to be reined in. Remember that when an investor buys a pool of loans they want them on their books for a long time - not three months - especially if they're paying a premium. It is not a money-making venture to pay 104 for a loan that pays off at 100 five months later. The purpose of the Ginnie Mae Mortgage-Backed Securities (MBS) Program is to attract funding from capital market investors in support of government-insured and guaranteed housing programs, and to provide lower-cost financing for the homeowners those programs are designed to serve. Investor participation in the MBS program depends, in part, on a level of confidence that investment returns can be expected to be reasonably aligned with market conditions.

 Put another way, the APM 1605 memorandum that Ginnie Mae issued is in response to ongoing concerns of elevated prepayment speeds. Effective February 1, 2017, streamline refinance loans will only be eligible for inclusion in Ginnie Mae I single-issuer pools and Ginnie Mae II multi-issuer pools if, at the time of refinance, at least six consecutive monthly payments have been made on the existing loan. Streamline refinances that do not meet this seasoning requirement may only be delivered into Ginnie Mae II custom MBS pools. This requirement will apply to all government-insured or guaranteed streamline refinance programs. This change was made in response to concerns from investors about unusually fast speeds on newer-production GNMA pools, particularly VA.

 Keeping on with capital markets, not much happened price-wise in the bond markets Thursday despite a decent chunk of news. The usual folks were buying MBS (the Fed and banks) and the usual folks were selling MBS and hedging pipelines (lenders); the 10-year ended Thursday yielding 1.75% and agency MBS prices unchanged versus late Wednesday. The same entities will be doing the same thing today, i.e., selling and buying MBS.

 For scheduled news today we have...none. And if you liked the mortgage rates for most of this week, you'll like today's. We find the 10-year wallowing around 1.75% with agency MBS prices unchanged versus yesterday.

Thursday, October 20, 2016

Vendor Announcement Mania

Flying to Boston for the MBA's conference? Here's a view you won't see. But probably a more important question is, "Is your cyber secure?" The FFIEC just published some frequently asked questions about cybersecurity worth a read for anyone who has a computer.

 Another week, another settlement with the DOJ over FHA loans. First American Mortgage Trust, which does business as, and CEO Barry Polack, will pay $1.025 million to settle charges brought by the Department of Justice, which accused the mortgage lender of submitting false claims on mortgages insured by the Federal Housing Administration. Allegedly First American ignored the FHA's due diligence requirements and falsely certified that First American loans qualified for FHA insurance when they actually did not - all at Polack's direction. The settlement also resolves allegations that Polack falsely certified to the FHA that First American complied with quality control requirements, and failed to report known loan defects. The company joins Wells Fargo, Franklin American, Walter Investment, First Tennessee, First Horizon National, M&T Bank, Freedom Mortgage, Regions Bank, BB&T...

 Vendor news is alive and well heading into the MBA's Boston conference next week.

 Set your loan officers up for success in 2017. Lenders One is launching a one-of-a-kind participative workshop designed exclusively for its members to increase production and "set your LOs up for success in 2017. With best practices from several top 200 originators and sustainable sales strategies led by key industry veteran, Steve Scanlon, originators will participate in dialogue driven, action-oriented experiential exercises designed to transform their work culture. Attendees will not only walk away with the mindset of a world class originator, but also a business plan focused on increasing production in the new year. Click here to secure a spot for this December 8-9 workshop in San Diego! Interested in learning more, stop by Trident Bookstore next Monday or Tuesday during MBA in Boston to meet with the Lenders One team, or contact Susan Malpocker. Interested in membership with Lenders One? Contact Michael Kuentz.

 STRATMOR has just released the October Issue of its STRATMOR Insights Report, which is filled with interesting stuff like a piece by STRATMOR Senior Partner and founder Dr. Matt Lind that quantifies the value of customer (borrower) retention. Dr. Matt's analysis shows that successful borrower retention efforts can increase the servicing value of a new mortgage by one-and-a-half to three times the usual value lenders ascribe to servicing. This increase can then be used to fund price concessions and/or service improvements, which can improve overall competitiveness and, in a positive feedback loop, further increase the probability of retention and the ability to fund additional price concessions and/or service improvements.

 Based on its recently completed Spotlight Survey, Appraisal Process and Turn-Times, STRATMOR also reports in the October Insights issue that, since TRID went into effect a year ago, appraisal fees have increased by nearly 16% along with 79% and 81% increases in appraisal turn-times for purchase and refinance loans respectively. STRATMOR, however, cautions that sharply increase origination volumes coupled with shortages of qualified appraisers undoubtedly account for much of these increases.

 Finally, STRATMOR reports on data from its industry-leading MortgageSAT Borrower Satisfaction Program that revealed that the ways in which mortgage lenders stay in touch with borrowers throughout origination plays a large role in determining satisfaction. When borrowers have to take the initiative, e.g., calling the lender for status updates, satisfaction falls precipitously - to a score of 61 out of 100, the lowest among all of the communication methods polled. Logging into a website, which also requires the borrower to take the initiative, also scored relatively low (84 out of 100).  Conversely, methods in which the lender takes the initiative, e.g., calling the borrower, sending an email, texting or updating status via a mobile application, all resulted in scores above 90. You can view and download STRATMOR's October Insights Report for free by clicking here.

 Vantage Production LLC and Insellerate LLC have teamed up to introduce LoanCurve which combines the power of InSellerate's advanced consumer direct lead and pipeline management system with Vantage Production's VIP loan presentation and marketing automation tools, readily enabling lenders to succeed while minimizing costs. Vantage Production CEO Sue Woodard noted, "Consumer direct lending is very different from traditional retail. The customers are different, the tactics are different and the sales people and their needs are different. With the technology provided by LoanCurve, lenders of all sizes can now serve origination channels using industry-leading automation equipped with interfaces suited to each set of unique end users."

 Alight spread the word that it has more than doubled its customer base since the start of 2016. Industry leaders like Guild and First Guarantee have begun using its SaaS-based financial forecasting solution and in recent news, the firm announced American Pacific Mortgage and Midwest-based Cornerstone Mortgage joined as customers. "Why have more than 30 mortgage banks jumped on board? With Alight, firm owners and CEOs have immediate visibility into the financial implications that decisions and sudden market changes will have on firm financials - cash and P&L - before those decisions are made. Alight's cloud-based solution provides this visibility anytime, anywhere and on any device." And if you're a mortgage bank firm owner, CEO or senior finance professional attending the MBA's AFM conference in San Diego, Alight invites you to be their guest at the 2nd Annual Alight Mortgage Innovators event on November 14 - the day prior to the AFM conference - for an afternoon of interactive sessions focused on innovative ways to supercharge your firm. Visit to register and get the details. 

 Seroka, providing brand development, marketing and PR services to the mortgage industry, announced its new division, Seroka Digital. The division will focus on the mortgage industry's need for true NextGen digital communications leadership. "The buyer path to choosing a company to work with is much more complex than it used to be. And, Millennials have raised the bar, expecting more from brands than ever before," said John Seroka, Principal. "Many companies are not properly leveraging online channels to target their audiences. Seroka Digital is their answer for driving real engagement and, most importantly, conversions."

 Optimal Blue's robust enterprise mortgage pricing service is now accessible to banks and mortgage originators nationwide that utilize Roostify's innovative technology to deliver a streamlined home lending experience to their borrowers and partners. This strategic alliance of two technology experts will further accelerate and demystify the home loan and closing experience. The combination of Optimal Blue's expertise in pricing, along with the transparency and step-by-step guidance in Roostify's loan application and closing processes, provides increased efficiency and profitability through accurate and precise tools.

 Sindeo announced the launch of its newest technology, SindeoOne. Homebuyers and homeowners looking to refinance can shop and compare over 1000 loan programs by filling out a single application in just 5 minutes - saving them time as well as money, thanks to the ability to find the loan that best suits their unique needs. "SindeoOne guides borrowers through each step of the application process, complete with tips to help them navigate each question and understand how their choices impact their mortgage. Once the application is complete, Sindeo automatically generates a credit report and initiates the underwriting process, instantly verifying eligibility. Gone are the days of completing endless "one off" applications -- Sindeo's integrated process generates a single application that fulfills the needs of multiple lenders and can be completed in as little as 5 minutes, from any device."

 Snapdocs announced a new signing agent verification feature to give mortgage lenders and title companies confidence in the third-party vendors with whom they choose to work. "Pillar 4 of ALTA's revised Best Practices establishes standards for managing and engaging third-party signing professionals, including the requirement of keeping critical documentation on file for an organization's entire signing agent vendor database. infrequent notary searches. For companies without access to the premium Snapdocs online platform, a free online resource has been launched to assist with infrequent notary searches. The online search portal will identify notaries who have gone through Snapdocs verification and satisfy the requirement of being able to produce proof of Errors and Omissions insurance and a state license. In addition, Snapdocs is offering companies a complimentary scan of their notary database to identify notaries who may not satisfy the new ALTA Pillar 4 revisions."

 Turning to the capital markets, most doubt that Congress will actually act and remove Freddie and Fannie from under government conservatorship in 2018. But there are moves afoot that are shifting the risk away from the Agencies, and therefore away from taxpayers, to those who will pay for it. Risk sharing, however, isn't for everyone... just ask Fannie Mae.

 The private mortgage insurance companies in the United States are keenly aware of risk sharing. USMI (acronym self-explanatory?) USMI submitted some documents to the FHFA, which oversees Freddie and Fannie, on its front-end CRT request for input. Here we have the comment letter, press release, and fact sheet on the comment letter.

 People in capital markets know a little something about mitigating risk. Interest rates are back to the "steady as she goes" path, with little exciting news from overseas and even less here. As a proxy for all rates, the yield on the 10-year T-note, which a few days ago was sitting around 1.80%, is back to the mid 1.70% range closing Wednesday at 1.75%, and Wednesday agency MBS prices closed a shade higher.

 Overnight we've had, from Europe's Central Bank, no rate change and nothing new out of its meeting. Here we've had weekly jobless claims from last week (+13k to 260k, higher than forecast) and the Philly Fed Manufacturing Survey (down to +9.7). Coming up are September's Existing Home Sales at 10AM ET, as well as September Leading Indicators. After the ECB meeting and the U.S. initial volley of numbers, the 10-year is at 1.75% with agency MBS prices a tad better than late Wednesday.

Wednesday, October 19, 2016

Freddie's Single Security Proposal

There are some clever marketing people out there. Throw in a T-Rex, a car, and an Irish accent, well... a sweet commercial.

The management teams at residential lenders across the nation have begun forecasting for 2017. Of course no one wants to tell their boss that they expect a 20% decline in volume, as some are estimating volume to be next year versus this year, so in some areas, and for some companies, grabbing residential market share will be the name of the game.

  For lenders looking for a new sub-servicer, RoundPoint Mortgage Servicing Corporation spread the word that, "Size does matter. RoundPoint is a top 20 servicer, so clients should feel very comfortable facing off with us as a counterparty. We are not so large, however, that we are unable to meet the custom needs of our clients.  If you are looking for an alternative, if you want to avoid risk concentration with a single, mega sub-servicer, if you want a sub-servicer that gives you the attention you deserve, then contact Allen Price, Head of Business Development, at 704.426.8846. We make the entire process much simpler than you might imagine."

 Speaking of Radian, New American Funding and Alterra Home Loans, two national mortgage banks, announced that Radian has been named as the preferred private mortgage insurance provider for Your Path, a new loan program that makes affordable homeownership opportunities available to the changing demographics of U.S. homebuyers by incorporating criteria not used in traditional underwriting. Teresa Bryce Bazemore, President, Radian Guaranty, said, "We continually strive to better understand and remove the barriers that prevent many potential homeowners from obtaining a mortgage. The Your Path program will help address some of those issues and serve as an important support to our ongoing efforts to make sustainable homeownership a reality for qualified borrowers who have limited down payment savings."

 Banc of California, owner of Banc Home Loans, was in the press yesterday, and not for the right reason. A Seeking Alpha contributor wrote a post on the stock claiming ties with fraudsters. The contributor, "Aurelius," says that most of the senior officers at BANC as well as the company's board members have extensive relationships with a man known as Jason Galanis. According to the post, Jason Galanis is known as a fraudster. In fact, SA said that he has a "long history of gaining control of lenders via front men and looting the assets." But at this point no one knows that there has been any wrong doing on the part of BANC.

 On its behalf the Banc of California, Inc. (NYSE: BANC) announced it is aware of allegations posted in a financial blog. "The Company's Board of Directors has been aware of matters relating to Jason Galanis including certain claims he had made suggesting an affiliation with members of the Company, its Board, and/or its Executive team. The Board, acting through its Disinterested Directors, immediately initiated a thorough independent investigation...Mr. Galanis' claims to be affiliated with COR Capital were fraudulent." The impact of all of this on Banc Home Loans, and its broker clients, remains to be seen.

 While we're talking about banks, with or without a "k", research by the Fed finds compliance costs amount to 8.7% of non-interest expenses at banks with assets <$100mm vs. only 2.9% for banks with assets $1B to $10B.

 In the last week or two several mergers and acquisitions were announced. In Pennsylvania Dollar Bank, FSB ($7.4B) will acquire Progressive-Home FSLA ($51mm). In Missouri Enterprise Bank & Trust ($3.7B) will acquire Eagle Bank and Trust Co. of Missouri ($928mm) for about $130.6mm in cash (20%) and stock (80%). In New England Salem Five Cents Savings Bank ($3.9B, MA) will acquire Georgetown Bank ($300mm, MA) for about $49mm in cash or roughly 1.48x tangible book. In the home of the Packers Stratford State Bank ($110mm) will combine with Heritage Bank ($105mm) in a merger of equals (MOE) transaction. And it isn't confined to banks buying banks: Berkshire Bank ($8.0B, MA) will acquire wealth management company Ronald N. Lazzaro PC for about $10.2mm.

 "Makes you wanna build a 10-percent down, white picket fence house on this dirt." So sang Florida Georgia Line. A big chunk of lenders follow developments with the USDA rural development program. For those that don't, here's a good place to see recent news.

 Lenders involved in rural housing noticed that Fiscal Year (FY) 2017 funding for Rural Development's Single Family Housing Guaranteed Loan Program is now available. The funding is authorized by the Continuing Appropriations and Military Construction, Veterans Affairs, and Related Agencies Appropriations Act, 2017, and Zika Response and Preparedness Act (P.L. 114-223, H.R. 5325).

 Requests that received Form RD 3555-18E, "Conditional Commitment for Single Family Housing Loan Guarantee" (aka Conditional Commitment), contingent upon the availability of an appropriation, will be obligated in the Agency's financial system over the next 2-3 business days. An updated Conditional Commitment will be electronically generated by the Agency to remove the "contingent upon" language. Lender receipt of the updated Conditional Commitment will signal the request has been successfully obligated by the Agency. Closing transactions are not eligible for submission to USDA until a loan is successfully obligated.

 Lenders are adjusting. USDA announced its temporary lapse in funding for the Single Family Housing Guaranteed Loan Program effective with the start of the new fiscal year October 1, 2016. During this time, Rural Development will issue Conditional Commitments "subject to the availability of commitment authority" for purchase and refinance transactions. Please note that this will NOT affect Plaza's ability to fund/purchase USDA Guaranteed Rural Housing program loans. Click here for a link to the notice from the USDA.

 Plaza is reminding its clients that for USDA Guaranteed Rural Housing Conditional Commitments issued on or after October 1, 2016, both the upfront guarantee fee and the annual fee (collectively the "fee schedule") for purchase and refinance loans will decrease. The upfront guarantee fee is being reduced from 2.75% to 1%, and the annual fee is being reduced from .5% to .35%. Refer to USDA's latest announcement for more information.

 NewLeaf Wholesale provided its brokers with the following information: USDA-Guaranteed purchase and refinance loans obligated on October 1, 2016 through September 30, 2017 are subject to the following fee schedule: Upfront guarantee fee: 1.00% and Annual fee: 0.35%. A loan is considered obligated when the USDA approves a complete loan application package and issues Form RD 3555-18 "Conditional Commitment for Single Family Housing Loan Guarantee" to the USDA-Approved Lender. Loan guarantee requests submitted to the USDA on or before September 30, 2016, are subject to the Fiscal Year 2015/2016 fee structure ONLY if a Conditional Commitment has been issued before the state USDA field office close of business on September 30, 2016. The Broker must notify the Borrower when Form RD 3555-18 "Conditional Commitment for Single Family Housing Loan Guarantee" is not received prior to September 30, 2016, since the Borrower's loan may be subject to the new fee schedule and require re-disclosure. The Broker may originate loans with the new fee structure ONLY if the loan is not submitted to USDA for conditional commitment prior to October 1, 2016.

 Disaster news continues to come from residential lenders.

 FCMKC posted Wholesale Product and Pricing Bulletin 2016-15 FUNDING RESUMED regarding loans in areas impacted by hurricane Matthew (Florida, Georgia & South Carolina).

 AmeriHomes' previous announcement delaying loan funding due to the anticipated landfall of Hurricane Matthew in the states of Florida, Georgia, North and South Carolina; purchasing has resumed subject to any disaster re-inspection requirements that may apply for those states.

 Counties located in Florida, Georgia, South and North Carolina declared disaster areas as a result of Hurricane Matthew will require re-inspection. Please click here for a copy of Plaza's Natural Disaster Policydetailing re-inspection procedures by loan type.

 In response to Hurricane Matthew in North Carolina and the Federal Disaster Declaration, M&T Bank will enforce the Disaster Re-Inspection Policy for all properties located in affected Parishes for the counties of Counties of Beaufort, Bladen, Columbus, Cumberland, Edgecombe, Hoke, Lenoir, Nash, Pitt, and Robeson.

 On October 11th, U.S. Housing and Urban Development Secretary Juli├ín Castro announced HUD will speed federal disaster assistance to the States of North Carolina, Florida, and Georgia and provide support to homeowners and low-income renters forced from their homes due to Hurricane Matthew.  This week, President Obama issued a disaster declaration for the following counties: North Carolina:  Beaufort, Bladen, Columbus, Cumberland, Edgecombe, Hoke, Lenoir, Nash, Pitt, and Robeson. Florida: Brevard, Duval, Flagler, Indian River, Nassau, St. Johns, St. Lucie and Volusia. Georgia: Bryan, Camden, Chatham, Glynn, Liberty, and McIntosh. The President's declaration allows HUD to offer foreclosure relief and other assistance to certain families living in this county. HUD is Assisting the affected states and local governments in re-allocating existing federal resources toward disaster relief, Granting immediate foreclosure relief, Making mortgage insurance available, Making insurance available for both mortgages and home rehabilitation and Offering Section 108 loan guarantee assistance.

 Good capital markets staff, although focused on the tiny details of making a basis point here or there, are also interested in the big picture. One item being discussed is a single security - why have different securities for both Fannie and Freddie products, given their similarities - especially if borrowers can benefit from the added liquidity and reduced complexity? Freddie Mac published a proposal to outline the security conversion mechanism it expects to offer to holders of its PC once the single security (UMBS) goes live in 2018. It also poses several questions on which it is soliciting feedback from market participants, beginning on page 8. 

 Keeping on with capital markets, we had a little rally in prices Tuesday after core consumer price index growth for September fell short of expectations. It likely that the Fed will raise rates two months from now - but that is two months from now. We also had some spillover gains in bunds and gilts: Parliament would likely get a final vote on Brexit, thus lowering the fears for a hard-Brexit. One big global economic village... But the 10-year closed at 1.75%.

 This morning the MBA reported its survey results for last week's apps: -.6%, purchases +3.0% but refi -1.0%. We'll also have the housing duo of Housing Starts and Building Permits. Later we have the October Fed Beige Book - the status of the economies of the various Fed districts. In the early going the 10-year is at 1.75% with agency MBS prices close to unchanged versus Tuesday night.

Tuesday, October 18, 2016

Freddie and Fannie News

(Thanks to Stephen S. for this one.)

College Education:

I'd been working on my business degree for about a year when I finally got to take a popular finance course. I went to the bookstore to buy the text and was shocked to find out that it would cost me $96. I asked how much it was worth if I sold it back at the end of the semester.

"You'll get $24," said the clerk.

"This is insane," I protested as I wrote out the check.

"I know," replied the clerk sympathetically. "I've always thought that a person who buys a book for $96 and then sells it back for $24 should fail the course."

Stephen Covey said, "The key is not to prioritize what's on your schedule, but to schedule your priorities." Catchy. Speaking of schedules, my cat Myrtle saved me an internet search by telling me that Daylight Savings Time doesn't end this year until November 6. (We change the clocks again in early March, so we have four months of it.)

Capital markets folks are always looking for a new outlet for loans. Michael Lima, managing director of Whole Loan Trading at Mid America, writes, "We launched our Whole Loan Trading division in December 2015 because we saw an opportunity to provide an outlet for smaller independent mortgage bankers to offload troublesome loans, either as a stand-alone purchase or in pools that might be too small to attract other investors. Having started by purchasing performing government-insured loans and then moved into defective TRID loans and delinquent FHA/government-insured loans, we've been able to provide much needed liquidity to market players while also improving our own position. As the saying goes, 'A rising tide floats all boats,' and we intend to continue seeking out niche opportunities for investment that can provide mutually beneficial opportunities for us and the market at large."

 In-between the primary and secondary markets are operations, and Jim Boghos, President of Boghos Search Group, writes, "Loan Originator chief concerns today continue to center on the lack of operational capacity. Lenders who truly offer better service have a tremendous window of opportunity for retail growth in today's market. The war for processors and underwriters is as intense as I have ever seen it. The capacity issues are plaguing service levels and therefore keeps the door wide open for nimbler service-oriented companies to move into new markets and capture proven people and market share." Jim will be in attendance at the MBA Conference Oct 23-26 in Boston. If you would like to schedule time with him to discuss your recruitment and growth strategy, contact him at or call his office direct at 407-790-7500 ext. 100.

 The training and event possibilities just keep coming!

 Data Facts is hosting a webinar tomorrow, 10/19, at 11AM ET, 8AM PT, on the trends that will affect lending practices throughout 2016 into 2017. Grabbing the headlines for residential lenders, there are plenty of issues lenders must watch. I am privileged to help host this webinar where we will discuss interest rates, the election, "Know Before You Owe" issues, the merger and acquisition environment, marketing service agreements, the continuing QM versus non-QM discussion, measuring borrower satisfaction, and MORE! Loan officers, closers, lending compliance officers, processors, and mortgage managers can all benefit.

 This week's complimentary webinar from National Mortgage Professional Magazine titled "The Future of Mortgage Marketing" will show you how to create, deploy and measure powerful marketing plans that the top lenders are using. TagQuest will share proprietary marketing strategies they've seen grab the attention of "ready-to-buy" borrowers. Everyone wants their business to thrive with new and repeat clients. From baby boomers to millennials, the strategies used today are effective ways to grow your business. The webinar takes place on Thursday, October 20, at 2PM EDT.

 HomeBridge Wholesale is hosting a webinar on October 21st titled "Grow your business through expanded plus product". Register now to learn more about Non-Agency Loans.

 Plaza is providing a webinar designed to teach the basics of evaluating a self-employed borrower. Join MGIC on October 24th for this comprehensive workshop that will help you dig deeper through today's tax returns to develop a clear picture of your self-employed borrowers' monthly cash flow and overall financial standing.

 Learn about Plaza's FHA 203(k) Standard and Limited loan programs on October 20th via its webinar. These renovation loan programs enable borrowers to purchase a home that may need repairs or refinance their existing home for the purpose of remodeling. Join us for this informative webinar for an overview and comparison of Plaza's FHA 203(k) Standard and Limited programs.

 If you're in Utah November 17th and 18th, or want to be in Utah then, there are two conferences, back to back, at the same hotel about an hour outside of Salt Lake City. Mortgage Star's Leadership & Strategy for Professional Mortgage Women is November 16th-17th at the Zermatt Resort in Utah, and the next day is the Utah Association of Mortgage Professionals event.

 Training and development is crucial for the success of your recently-hired MLOs. Beginning November 29th, MBA's SOLO Course I offers the background context, real-world examples and a unique learning experience that will set your MLOs apart and play an important part in their loan production capabilities.

 Join MBA and a panel of legal experts on December 14th in North Carolina for a new workshop:  Regulatory Impact of HMDA on Fair Lending and CRA Lending. This workshop will go over all aspects of this new rule, including the compliance and risk management challenges, and its regulatory implications for both Fair Lending and the Community Reinvestment Act (CRA).

 If you are looking to buy, sell or grow your business, or you're simply exploring your options then MBA's Mergers & Acquisitions Workshop 2017 may be of interest. Taking place February 22-23 at the Intercontinental Dallas in Dallas, TX, this workshop will equip you with the knowledge you need to make strategic informed decisions considering today's business and regulatory environment.

 The Mortgage Collaborative's Winter Lender Member Conference will be held March 1-4, 2017 at the Omni Scottsdale Resort & Spa at Montelucia in Scottsdale, Arizona. "The conference provides The Collaborative's lender members a unique opportunity to interact with top industry leaders and to attend and participate in compelling educational and peer-to-peer networking sessions."

 Speaking of the Mortgage Collaborative, it recently added twelve new lenders to its national network of originating members, and yes, they're all located in the United States: Admirals Bank, Bank of England Mortgage, CIS Home Loans, Equity Prime Mortgage, Holland Mortgage Advisors, Home State Bank, One Trust Home Loans, Pacific Trust Mortgage, South Pacific Financial, Southwest Funding, US Mortgage Corporation, and Weichert Financial. The addition of these companies increases the aggregate origination volume of The Mortgage Collaborative's lender members to over $125 billion annually.

 And you can bet those companies are selling to Freddie Mac and Fannie Mae, as is everyone else - even if through large correspondent investors. Employees from F&F aren't allowed to comment on news about them - or much else. So go ahead and tell them that their mother wears army boots! Seriously, what's new with those rascally agencies and others offering conventional conforming products?

 Fannie Mae and Freddie Mac have proposed sharing more risk with insurance companies, prompting concerns from bond investors and industry groups. "People have memories of the crisis, when state regulators shut down monolines," said Chris Killian, head of SIFMA's securitization group.

 Recently the MBA submitted comments in response to FHFA's RFI on the GSEs' credit risk transfer programs. Its comment letter can be found here, and "emphasizes the need to maintain a level playing field in executing these programs, urges the GSEs to improve transparency and consider borrower impact, and advocates for more experimentation to find products that less volatile and simpler to use than the current structures."

 Eight years since Fannie Mae and Freddie Mac were put into government conservatorship, and DSNews interviewed The Collingwood Group President, Brian O'Reilly for his insight on the GSEs.

 All Citi Correspondent credit package submissions as of November 1, 2016 will require the Appraisal and the Fannie Mae and Freddie Mac Submission Summary Reports in addition to the existing required documents. To view/print this bulletin, CLICK HERE.

 Fannie Mae is reminding Servicers that, for the servicer to offer a Fannie Mae MyCity Modification Trial Period Plan, the first Trial Period Plan payment due date must be on or before December 1, 2016. 

 Ditech is expanding the guidelines to now permit Second Home and Investment Property loans not serviced by ditech in the Fixed Rate DU Refi Plus product. Also note all LPMI (ditech paid) products that support Manufactured Homes are restricted to a 30 year only loan term.

 Effective for all Conventional loans with application dates on or after October 3, 2016, Sun West will calculate the Self Employed Borrower's Income or Loss per updated Fannie Mae handbook: income analysis of the S-Corporations and income analysis of Partnership business.

 As a result of widespread damage from Hurricane Matthew, United Guaranty has initiated a disaster policy and will work with mortgage lenders and servicers to provide flexibility for borrowers in declared disaster areas who are experiencing severe property damage and interrupted employment. Forbearance measures to prevent foreclosure actions on those coping with storm damage should follow the procedures for dealing with homeowners affected by disasters, natural or otherwise, found in the guidelines established by Freddie Mac and Fannie Mae. Areas of Florida, Georgia and the Carolinas have been declared disaster areas due to damage from Hurricane Matthew and related storms.

 Wells Fargo is updating its owner-occupancy requirements for cooperative (co-op) properties to align with Fannie Mae guidelines by requiring 50% of the total stock or shares, and not the total units, be owner occupied. It is also correcting the policy for single-entity ownership to be based on units, as Fannie Mae requires, not stock shares/occupancy rights.

 Franklin American announced the expansion of its Conventional High Balance Fixed Product to include 20 and 25 year terms. These changes are effective immediately. Also, USDA/Rural FICO Changes are in effective with locks beginning Oct. 14th.

 Jumbo and non-conforming news? Only a little that I have seen.

 NYCB now offers a new Jumbo 30 Year Fixed solution featuring LTVs up to 85% and no mortgage insurance requirements. Visit Gemstone to review the new Jumbo Fixed 30 Year Program Guide (WSL: 1195).

 Due to implementation of the new Non-Agency loan program, administration fees have been updated for Pacific Union Financial 's Correspondent loans based on channel, product and property state. Non-Agency loans include all loans previously called labeled Jumbo or Non-Conforming. Effective November 1, 2016, Correspondent Non-Agency admin fees will be automatically determined based on channel, product and property state.

 Updated eligibility guidelines will be applicable for new NYCB Jumbo Portfolio (ARM & Fixed) loans registered only in Alameda, San Francisco and San Mateo counties in California on or after 10.16.16. Please see Gemstone's Product Page for the updated guidelines for the NYCB Portfolio ARM (5/1, 7/1, 10/1) and NYCB Portfolio Fixed 15 Year. A loan level price adjustment (LLPA) will apply to new loan registrations on 10.16.16 specific to these three counties.

 Loan Stream Wholesale has No Doc 3/1, 5/1 and 7/1 ARM's up to $2,000,000 with interest only options available. For details, contact Loan Stream Wholesale at 800.760.1833 or

 Angel Oak offers Non-Warrantable Condos options which include up to 90% LTV/CLTV (Single or Combo loans), up to 100% Investor Concentration, No MI, Credit scores down to 500. For more information, contact Bob:

 And where would the primary markets be for lenders & borrowers if it weren't for the secondary markets setting the demand for loans?

 Banks were the largest supporter of MBS (not counting the Fed which is still buying about $2 billion a day) through Q3 according to recent earnings statements. Other domestic real money and relative value accounts have turned sellers of late. Analysts are quick to point out that it is important to note that the 10-year rate is about 45 basis points off its summer lows, but that primary mortgage rates have risen only 15 basis points! That being said, however, many think that much of the slack has been taken out of the primary-secondary spreads, and that further sell-offs could be transmitted to retail borrowers more directly.

 The U.S. Treasury market rallied (e.g., rates dropped) Monday as we had softer-than-expected manufacturing data. (Industrial Production was +.1% for September, and was -.5% in August; Capacity Utilization fell slightly.) By the end of the day the yield on the 10-year was down to 1.77% and agency MBS prices had improved a couple ticks - less than .125.

 But the press is focused on the Federal Reserve's Open Market Committee. The markets are now looking past November to its December meeting, and there are enough data releases scheduled between now and December 13-14 that Fed speakers are unlikely to move the rate hike probability needle much.

 This morning we've had the September Consumer Price Index and Core CPI (+.3% and +.1%, about as expected - strong inflation hasn't been a concern for many years). Later is the October NAHB Housing Market Index. We find the 10-year sitting around 1.76% with agency MBS prices unchanged versus yesterday's close.