One week until Thanksgiving - time flies. What's in a name? Plenty. For
example, the name of the Athletic Director at the University of Texas is
DeLoss Dodds. (That first name would be tough to overcome.) And occasionally
I am asked, "Where did the name 'OCWEN' come from?" OCWEN is New Co. spelled
backwards. Newt Gingrich has a pretty odd name also, but that didn't stop
him from reportedly earning $1.6 million from Freddie Mac, and in fact
probably helped.
The F&M Bank & Trust Company is searching for LO's in the Central Region
(Tulsa, Oklahoma City, and Dallas) and a Sales Manager for its Dallas
Branch. And in case you haven't heard of it, F&M Bank & Trust has been in
business for 65 years, and is a "locally owned" $2 billion bank founded in
Tulsa in 1946 (www.fmbanktulsa.com
[http://r20.rs6.net/tn.jsp?llr=zy6u9cdab&et=1108647610758&s=8721&e=001MjWdKZ
NHh6majF5ZntnkDGY2PVPHUhQcw8BdV9se0-3GA9oPDk9H962znlv7ASYgd_pzP-wtlZQvOXy75m
F-AYHJtNYV9oXeaxxu7I_LJjyWLJ5Yv7sMnQ==]).
The bank itself has been primarily a commercial bank but its growing
mortgage operation has offices in both Oklahoma and Texas. It is a
correspondent lender selling 100% of its production, and "prides itself on
professionalism, high touch service, creative solutions and competitive
pricing. We avoided the sub-prime mess and stayed more main stream with our
product offering." If you know someone who might be interested, they should
contact the president Mark Revard at MRevard@fmbanktulsa.com
In addition, earlier this week I noted that Southern California's Carrington
Mortgage Services, a retail and wholesale lender in 37 states, is looking to
staff up. The contact e-mail address is indeed RobCresponce@carringtonms.com
Just to clarify, the MBS Live product mentioned yesterday (MBSSignUp
[http://r20.rs6.net/tn.jsp?llr=zy6u9cdab&et=1108647610758&s=8721&e=001MjWdKZ
NHh6m0eSc0_FQmITWyhDtDIYQ2Uj_yNOzCxiqqArDnBHm9Lw_rn_-_5fNj6uv-qXHYTwwp7JRTWI
Pb7hDgyqNhNM__eA_RFZPtXS67up5pK2WycA==])
is designed for loan originators. For secondary marketing managers who are
looking for real-time back month TBA levels from Tradeweb along with
in-depth analytics, ThomsonReuters Eikon is the preferred platform.
Contact Michael Ehrlich for more information on that at
Many believe that, as of yet, the rating agencies have been pretty much left
out of the blame game for the financial crisis in the mortgage sector.
("Why did they rate those lousy bonds AAA, who paid them to do it, and did
they continue tracking the performance after they were issued?") But their
fees seem to be increasing:
PricierRatings
[http://r20.rs6.net/tn.jsp?llr=zy6u9cdab&et=1108647610758&s=8721&e=001MjWdKZ
NHh6kbcy3YxAbDuZZOt_Q4pQSH42mt3a6R53idfPQqQ59rM5SA37qLXmVIyJgVm3qapFSy-N4ye5
tFeAAq_sdSzgFTrMipQfjpJbvIo_hBGJrf0aNkAzhIOXMC8e1y8by9LRZAoROtU0JH_42Po_0rcY
3uUISNKS-stMral3D-q0fApu_ux45EZ3zdCyjy_-fUwQNt7jo121vrD3wLBb1WKcY9X-aTIxmY7G
VBwrzRwqsaTg==].
The recent HARP 2.0 announcement was largely in line with expectations,
though perhaps the biggest surprise was Freddie's maintaining of reps and
warrants on the original loan file for <80% LTV loans. But the press has
been pointing out issues with the overall program
[http://r20.rs6.net/tn.jsp?llr=zy6u9cdab&et=1108647610758&s=8721&e=001MjWdKZ
NHh6lluOxL31YpXVBUtwfh07Wyyc4H2mqY8yr2A-SzMDT4aMuKEoO_E_-bl_SCmUExv7IXV5OW0s
ncGaF68mVW4JnNY6k_kni5-OjaWDSGBtwFWxU1GyYdm5uWEwv8Gc8Nrm7nJKXguBOSSJdb0oht97
IvffjrnISPLAj2cAPZ2usaZzQ77z3W-enti8GcZOIek19JnbA0S4T5dQ==].
Common to both Fannie and Freddie are several elements. It eliminates the
125% LTV cap for HARP - this increases the universe by 3%, and 10-15% for
high coupon 2006-08 vintages. It extends HARP through December 31, 2013 -
this should make servicers more willing to invest in HARP because it is no
longer simply a one-year program.
Both programs will become effective on December 1 (although LP won't be
ready until early next year, and many companies are running into problems
not being able to manually underwrite conventional conforming loans - see
notes below). It allows up to one delinquency in the prior 12 months, as
long as it was not within the last six months - this increases the number of
borrowers eligible for Freddie HARP by 3-5%, no change for Fannie. HARP 2.0
caps LLPAs on >80 LTV 30-year fixed rates at 75bp (previously, high LTV
mortgages were capped at 2 points) - this reduces costs for high LTV
borrowers, though they were already deep-in-the-money. For low LTV 30-year
mortgages, the cap will continue to be at 2 points - this is unchanged.
And it eased rep and warrant language, although this is still Fannie and
Freddie specific.
There is apparently Fannie Mae specific language. For example, for DU Refi
Plus (Fannie's desktop underwriting system, used mainly for cross-servicer
refis) the lender is not held responsible for any of the reps on the
original loan. HARP 2.0 clarified exactly which reps remain on the old loan
file under Refi Plus (the more streamlined approach, used mainly for
same-servicer refis), the lender must rep to basic standard reps on the
original loan such as: 1) it doesn't violate Fannie's charter (e.g. it's not
a condo hotel which would be a commercial property); 2) it doesn't violate
the law; and 3) there is no collusion among borrowers to commit fraud.
Solicitation may be done on >80% LTV loans as long as it is done across both
Fannie and Freddie, and cannot target only loans that the lender doesn't
own. Pooling for the highest LTV loans (>125%) will be in a new CV prefix
beginning June 2012.
These will be non-TBA eligible. And it is expected that the AVM coverage for
Fannie Mae will go from about 30% currently to as high as 80% to match
Freddie, though this is not specifically outlined in Fannie's announcement.
There is also still Freddie Mac specific policy. For loans >80% LTV, Freddie
will no longer hold the lender responsible for the original loan file. For
loans <80% LTV, the lender will actually still hold the original reps and
warrants. (This won't help refinancing low LTV Freddie pools.) Lastly, if
the borrower is under 80% LTV on the first lien, there is a cap on the total
first plus second lien of 105% LTV.
As always, it is best to consult the actual announcements from Fannie &
Freddie, as it is with other investors!
What impact is this expected to have on existing pools - something near and
dear to MBS investors? Servicers may have an incentive for Fannie MBS and
for high LTV
(>80%) Freddie loans to refi into the easier reps relative to the old loan.
Second, a greater AVM coverage by Fannie will allow servicers to target more
than twice as many borrowers as before. Third, HARP 2.0, in combination with
more AVMs, will give servicers the confidence to refi high LTV borrowers,
since there is no fear of accidentally exceeding a 125% LTV cap. And to
encourage high LTV refinancing, the GSE's are lifting existing restrictions
on borrower solicitation for >80% LTV loans which should increase volumes.
And for other miscellaneous observations that I have read...for loans being
processed through Refi plus (manual underwriting), the lender will represent
and warrant that the original loan being refinanced by a Refi Plus mortgage
loan was not originated or sold pursuant to any scheme or pattern of fraud
that involved two or more mortgages and two or more perpetrators acting in
common effort with respect to such mortgages.
Also, the lender must represent that the loan being refinanced was eligible
for sale in accordance with Fannie Mae's charter. Apart from loan size
restrictions that may vary based on the units in a home, this restriction
can potentially apply to loans that were falsely reported to have an LTV
less than 80%. Per the charter, these loans would have required MI. The
Fannie Mae release made no mention of automated appraisals. However, it did
state that the lender is responsible for reps and warrants on the new loan
if an appraisal is obtained. Aside from the reps and warrants relief due to
the likely increase in the usage of automated appraisals, the release did
not provide any reps and warrants relief on appraisals. According to one
analyst, about 80% of Freddie HARP refinancings are already using automated
appraisal whereas the number is only 30% of Fannie HARP refinancings. The
general market perception was that as HARP 2.0 is rolled out, Fannie Mae
will allow lenders to use automated appraisals on a much larger percentage
of HARP loans. Since the automated appraisal is provided by the GSEs, this
would reduce the appraisal related reps and warrants risk on the new loan.
But Fannie Mae will only allow automated appraisal for DU Refi Plus. For
Refi plus
(manual) - which is much more common for same servicer refinancings since
the loan does not need to be re-underwritten - the lender can either use the
original appraisal (if they can represent and warrant that the property
value is not less than the original appraised value) or use a new appraisal
or exterior-only inspection. In other words, automated appraisals cannot be
used for Refi plus (manual). This would mean that originators would need to
use DU Refi plus but in this case they would need to re-underwrite the loan
by gathering the income/liabilities/asset information.
Through this all mortgage rates continue to be relatively stable, and in
fact seem to be trending down slightly. Wednesday MBS prices were up/better
by .125-.250, and the 10-yr T-note closed at 2.02%. Homebuilder confidence,
as represented by the NAHB Housing Market Index, unexpectedly rose in
October by 3 points to 20 and is at its highest level since May 2010. The
markets will be moved by European news and scheduled & unexpected economic
news - as usual. This morning we've had Initial Jobless Claims. Expected to
remain below 400k, it dropped to 388k from a revised 393k. Housing Starts
for October were -.3%, and Building Permits were +10.9% at 653k. After the
news rates are nearly unchanged with the 10-yr at 1.99% and MBS prices
perhaps better by .125.
Part 2 of Men Teaching Classes for Women at THE ADULT LEARNING CENTER
REGISTRATION MUST BE COMPLETED By Sun, April 30, 2012 (Part 1 yesterday)
NOTE: DUE TO THE COMPLEXITY AND DIFFICULTY LEVEL OF THEIR CONTENTS, CLASS
SIZES WILL BE LIMITED TO 8 PARTICIPANTS MAXIMUM.
Class 7
Can a Bath Be Taken Without 14 Different Kinds of Soaps and Shampoos?
Open Forum...
Monday at 8:00 PM, 2 hours.
Class 8
Health Watch--They Make Medicine for PMS - USE IT!
Three nights; Monday, Wednesday, Friday at 7:00 PM for 2 hours.
Class 9
I Was Wrong and He Was Right!--Real Life Testimonials.
Tuesdays at 6:00 PM Location to be determined.
Class 10
How to Parallel Park in Less Than 20 Minutes Without an Insurance Claim.
Driving Simulations.
4 weeks, Saturday's noon, 2 hours.
Class 11
Learning to Live--How to Apply Brakes Without Throwing Passengers Through
the Windshield.
Tuesdays at 7:00 PM, location to be determined Class 12 How to Shop by
Yourself.
Meets 4 weeks, Tuesday and Thursday for 2 hours beginning at 7:00 PM.
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 the impact of HARP 2.0 and the
differences in the agency's programs. 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
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