What are political ads like in Texas? Check out DonkeyWhisperer
[http://r20.rs6.net/tn.jsp?llr=zy6u9cdab&et=1108110369130&s=8721&e=001x-CBdt
f_KoBC-lv6asxUYEQMJY2vEep-vVVdbKr639rzvD7cHcxI1q-yjijxDJjqmc9oWdjCaTP8Zec9AE
IYCFnYkTBk_G-Iq7oBlQRfcJeIUIAocXLc-YOHRwwPhh49rTdi1Xuzm0aQe44xbl586MNuq1KxFT
9Rtlr90XNnUN9cS7LNv1TFJ5SwnnMgoxES3sL9yKP13e8=].
As was noted in yesterday's commentary, one of the questions that folks in
the mortgage
conference hallways were asking was, "With BofA leaving correspondent, is
someone
like Chase going to be next?" There is a big difference between hallway
chatter
and headlines of "MetLife May Sell Mortgage Business" in Bloomberg! "Chief
Executive
Officer Steven Kandarian, who took the job in May, is planning to exit a
business
that expanded in June when it replaced Bank of America Corp. as the
preferred lender
of builder KB Home...Keeping the mortgage unit could divert "resources away
from
MetLife's primary focus on its global insurance and employee benefits
businesses,"
the New York-based company said in a statement. The company, the largest
U.S. life
insurer, plans to keep a so-called reverse-mortgage business that issues
home equity-backed
loans to people age 62 or older and jumped to No. 2 in the U.S. this
year...MetLife
will continue to originate mortgages as it seeks a buyer for the business,
it said.
MetLife Bank made about $4.4 billion of residential home loans in the first
quarter
of 2011, accounting for 1.5 percent of total mortgage originations...Today's
uncertain
marketplace and regulatory environment require a tremendous amount of
resources."
Check it out at MetLife
[http://r20.rs6.net/tn.jsp?llr=zy6u9cdab&et=1108110369130&s=8721&e=001x-CBdt
f_KoCpxgoeJcilvJeyaETccnNMKtz7cofdvWjxeM--QQOYnpGLRpPuyLX-EOML4zbEqK1Uuy3N7l
B0F1TUSMj4IBF_S24S8QtN6_8Yoe0vqOFuKniqfZ29KRjVZbKnt6T1AoWbqMZGGjHczcSLMHjAON
zGKPrFGrlSlnBe3ioTWeohHil-nt_K9qe8nQXC9QBHhnJpNDB-nyxyTy1JaE3PbqFg].
Let's sum things up, given the investor scuttlebutt from the conference and
general
rumors, possible half-truths, and outright misstatements. MetLife is/was a
solid
competitor for wholesale broker business in many parts of the nation -
maybe someone
like Fortress will buy the mortgage group. Bank of America will soon be
strictly
retail, and only in some states. Chase does not buy third-party originated
production,
i.e., broker business, from clients. GMAC, PHH, and SunTrust have varying
degrees
of operational hurdles, and only buy loans on a mandatory basis one at a
time or
not at all, and have varying degrees of tolerance for buying loans from
smaller
companies offering correspondent relationships. Are they ready for all this
volume?
Looking at the top correspondents, volume-wise, so we have Wells Fargo,
which is
grappling with purchase turn time days into the teens, CitiMortgage, U.S.
Bank,
Flagstar, Franklin American, and BB&T. Rumors of higher capital
requirements for
correspondent sellers are rampant. Too much competition is one thing, but
does the
industry really need fewer players? Besides making things easier for pricing
engines,
will the borrower be better off? Let's ask the protesters about unintended
consequences.
"Recap of 4 days in Chicago: 'All investors suck because of repurchases and
all
AMCs suck because they overpromise and under deliver. But isn't Chicago a
great
place to have this conference?'" So wrote an attendee to me yesterday. But a
fair
amount of news came out of it, one piece being that, "Fannie Mae and Freddie
Mac
are increasingly demanding sellers repurchase mortgages that default years
after
they were made and buy back recent loans that aren't even delinquent,
according
to PHH." "They're casting the net wider," Luke Hayden, head of PHH's
mortgage unit.
Read all about it
[http://r20.rs6.net/tn.jsp?llr=zy6u9cdab&et=1108110369130&s=8721&e=001x-CBdt
f_KoBmfhJ9X9RaNGjXiepkbquDrLCYGmhdqfSd6QktHNiglm8Xy8FQAptYoOZ5E0ZyGFKPkvMsja
qMrZBpAsrCGSFM2ZZzZzn_GC1MDmI0mCYwE_8Xjl13JSx4RtmJ6R5e_yiZ2Msm2_81c-ELGCeRPJ
SXgBPvdBbuI6AuPa0twhXsT_Oc0tTSWxr9BphALWOCynl3lUZv7HhIoEHBUxFeOTtS-t7xtTayYW
o=].
People like lists, just like Wall Street likes FICO scores, and Forbes came
out
with its list of most dangerous cities. Taking MSA's with populations of
greater
than 200,000, Forbes used the FBI's numbers for four categories of violent
crimes
such as murder and aggravated assault. (Interestingly, in the past crime
tends to
rise when economic conditions worsen, but that has not been in the case in
the last
four years.) Detroit leads the list ("We're #1, we're #1") followed by
Memphis,
Springfield (where Wells Fargo is a top employer), Flint, and then
Anchorage.
HUD announced that it is immediately suspending Michael Primeau, former
president
of Lend America, from doing any business with HUD following his admission
that he
engaged in a wide-scale mortgage fraud scheme. He is guilty of directing
employees
of Lend America, a former FHA-approved lender, to divert mortgage funds
intended
to pay off borrowers' first mortgages at refinance closings in order to pay
company
operating expenses. Two years ago, HUD found that Ideal Mortgage Bankers,
doing
business as Lend America and Lending Key, repeatedly violated the FHA's
origination
and underwriting requirements, including submitting false certifications and
failing
to document borrower income and creditworthiness. HUD withdrew the company's
FHA
approval, and Lend America closed the doors of its Melville, N.Y.
headquarters.
Recently Federal Reserve Governor Raskin gave a speech on the challenges in
the
foreclosure process, specifically related to PSAs and reps and warranties,
providing
a summary on how the Fed views the foreclosure issues. (About two-thirds of
the
loans made since 2005 have been securitized. As most know, securitization is
a process
that involves gathering hundreds of loans into one package and selling that
package
in the secondary market. Often the purchaser is a trust, and trusts are
comprised
of investors. After the loans are pooled and sold, the trust hires a service
provider
to collect monthly payments and distribute that money to the investors. That
securitization
agreement is called a pooling and servicer agreement or PSA.)
Ms. Raskin noted that the PSA aligns the incentives of borrowers, servicers,
and
investors reasonably well when mortgage defaults are low, but does not in
stressed
environments. So Raskin suggested the following: It is imperative to
reconsider
the compensation structure so that servicers have adequate incentives to
perform
payment processing efficiently on performing mortgages, and to perform
effective
loss mitigation on delinquent loans. After the compensation structure is
reconsidered,
the PSAs need to be amended or renegotiated in order to facilitate more
workouts.
Finally, PSAs should clarify the situations in which loan modifications and
other
mitigation strategies should be pursued. One tool that could aid in
providing such
clarity, and has received substantial attention over the last few years, is
the
net present value model. Requiring servicers to take mitigative actions that
are
net-present-value positive to the investor could encourage the fair and
consistent
treatment of borrowers.
Investors still in business are busy. Chase has revised the Funding Request
Form
and Submission Checklist to include proof of payment of the VA Funding Fee
as a
required document, when applicable.
FHA 203(k) loan transactions delivered to Chase must comply with the revised
Seasoned
Loans policy, namely FHA 203(k) loan transactions are limited to a maximum
seasoning
period of 7 months from the date of the Note, allowing a maximum of 6 months
to
complete rehabilitation and 1 month to deliver the loan to Chase.
Are depositories promoting more ARM's? Fifth Third correspondents are facing
a new
rate sheet. Starting today, the pricing grid for Agency Jumbo loans will be
updated,
with the fixed rate adjustments worsening by .375 and the arm adjustments
are improving
by .375.
In the heartland of the U.S., First Financial will buy Freestar Bank for
$47mm,
or 1.66x tangible book. The move gives First Financial 13 branches and
expands its
footprint in Illinois. Freestar specializes in agriculture, single family
and business
lending.
GMAC Bank Correspondent Funding (GMACB) Approved Delegated Clients please
note that
GMACB has increased the Underwriting Fee from $225 to $400 on all
conforming, conventional
loans underwritten through GMACB's Prior Approval Department starting 11/1.
The
underwriting fee for HomePath and Jumbo products will remain at $225. An
explanation
must be included with the file as to the reasoning for using the Prior
Approval
process. Please note that under current reps and warrants, the client is
held responsible
to alert GMACB if the loan may not be eligible for sale to the agencies.
Starting yesterday Bank of America made changes to its VA loan amount
adjustments
- for anyone still sending loans BofA's way, it is best to consult the
schedule
of fees.
At least the markets seem to be behaving themselves - somewhat. Any good
news out
of Europe tends to push our rates higher: the yield on the 10-yr is over
50bps higher
than the low of 1.71% posted on 9/22. Mortgage primary-secondary spreads are
tightening
in here as new locks are slowing down and capacity constraints are becoming
less
of an issue, at least at the retail level. And the Fed is continuing to buy
agency
mortgages. Wednesday 10-year Treasury notes ended lower by 19/32s (2.23%),
but the
lower prices and lower volumes in MBS's were welcomed by the various
investor groups.
Money managers and insurance companies were noted to be actively buying
certain
low coupons, as were banks.
Today the Fed will announce how much money it will have to reinvest into the
MBS
market from mid-October through mid-November. Estimates are around $22
billion
which translates to about $1.1+ billion per day. This scenario with mortgage
banker
supply holding in the $1.5 to $2.0 billion area equates to the Fed taking
between
73% and 55% of daily supply. This is a more favorable demand dynamic versus
last
week when supply hit between $2.5 and $3.0 billion in a couple of sessions.
This morning we'll have Jobless Claims and some trade numbers, and a $13
billion
30-yr bond auction. With that in mind the 10-yr is sitting around 2.22% and
MBS
prices are roughly unchanged.
Once upon a time there was a very handsome male camel with two huge camel
humps.
He fell in love and married a beautiful female camel who had one perfect
camel hump.
As time progressed, they became the proud parents of a wonderful baby camel
who
had no humps.
They contemplated long and hard on what to call their beautiful little boy.
They finally decided on...
'Humphrey'!
If you're interested, visit my twice-a-month blog at the STRATMOR Group web
site
located at www.stratmorgroup.com
[http://r20.rs6.net/tn.jsp?llr=zy6u9cdab&et=1106435366068&s=4179&e=001SVt-lj
bp53436QjxD9vbwURtIPPjV05jEcEKyBN3SjS2forXe0C_foO8RjEV-Uye0N7Z_Sh1il0SRXPx6P
jQauayNXQjni-Hc9Sseu-hhZcR1ujeZyAEpw==]
. The current blog takes a look at Fannie & Freddie & the FHFA, and the
changes
they have in the hopper. 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://r20.rs6.net/tn.jsp?llr=zy6u9cdab&t=klymiaiab.0.epg7qedab.zy6u9cdab.8
721&ts=S0678&p=http%3A%2F%2Fwww.mortgagenewsdaily.com%2Fchannels%2Fpipelinep
ress%2Fdefault.aspx]
[http://r20.rs6.net/tn.jsp?llr=zy6u9cdab&t=klymiaiab.0.v7uif6dab.zy6u9cdab.8
721&ts=S0678&p=http%3A%2F%2Fwww.thebasispoint.com%2Fcategory%2Fdaily-basis].
For archived commentaries, go to
[http://r20.rs6.net/tn.jsp?llr=zy6u9cdab&t=klymiaiab.0.fpg7qedab.zy6u9cdab.8
721&ts=S0678&p=http%3A%2F%2Fwww.robchrisman.com%2F].
Copyright 2011 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.)
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