With the holidays upon us, I would like to
share a personal experience with you about drinking and driving, as I know some
of you have been known to have brushes with the authorities from time to time
on the way home after a "social session" with friends.
Two days ago, I was out for an evening with
friends and had several cocktails followed by some rather nice red wine.
Feeling jolly, I still had the sense to know that I may be slightly over the
limit, so I took a cab home. Sure enough, on the way home, there was a police
road block. But since I was in a cab, they waved me through.
I arrived home safely without incident.
This was a real surprise as I had never driven a cab before, I don't know where
I got it, and now that it's in my garage I don't know what to do with it.
So don't drink and drive!United Shore Financial Services will pay $48 million to settle allegations brought by the Department of Justice, which accused United Shore of violating the False Claims Act by "knowingly originating and underwriting" mortgages that did not meet Federal Housing Administration standards, the DOJ announced. The settlement makes United Shore just the latest in a long line of mortgage lenders that settled with the DOJ over alleged FHA lending violations.
As a refresher, the False Claims Act is a popular catch-all law that is used to persecute dozens of mortgage companies. If you want to look it up it is 31 U.S.C. §§ 3729-3733, and is also called the "Lincoln Law". It imposes a liability on persons and companies (typically federal contractors) who defraud governmental programs. It is the federal Government's primary litigation tool in combating fraud against the Government.
It is called the Lincoln Law since it was enacted during his presidency in 1863 by a Congress concerned that suppliers of goods to the Union Army during the Civil War were defrauding the Army. The FCA provided that any person who knowingly submitted false claims to the government was liable for double the government's damages plus a penalty of $2,000 for each false claim. It's been amended, and in 1986, there were significant changes to the FCA including increasing damages from double damages to treble damages and raising the penalties from $2,000 to a range of $5,000 to $10,000.
Less than a month ago, a jury found Allied Home Mortgage and its CEO Jim Hodge liable for Civil Mortgage Fraud and there were $92 million in damages. It turns out there was more than a decade of misconduct, and they will also face the trebling of damages and additional mandatory penalties for fraudulent conduct.
In October, Primary Residential Mortgage Inc. (PRMI) and SecurityNational Mortgage Company have agreed to pay the United States $5 million and $4.25 million, respectively, to resolve separate allegations that they violated the False Claims Act by "knowingly originating and underwriting mortgage loans insured by the U.S. Department of Housing and Urban Development's (HUD) Federal Housing Administration (FHA) that did not meet applicable requirements."
I could go on and on, and I am sure that there is a list somewhere, but suffice it to say that a) it has earned the government a lot of money, and b) there will be plenty more fines. The industry is watching Quicken Loans' legal maneuvers with the Department of Justice. The DOJ alleges that from September 2007 through December 2011, Quicken "knowingly submitted, or caused the submission of, claims for hundreds of improperly underwritten FHA-insured loans." And that Quicken instituted and encouraged an underwriting process that led to employees disregarding FHA rules and falsely certifying compliance with underwriting requirements in order to reap the profits from FHA-insured mortgages.
Where does the mortgage settlement money go? Since the 2008 housing crisis, federal regulators have touted billion-dollar settlements, which, by giving certainty to investors, are often accompanied by a jump in the bank's stock price.
With millions of borrowers having 30-year loans in the 3% range, they're pretty happy. So, what about 2nd mortgages? Certainly the field is dominated by lenders and investors such as US Bank, TCF Bank, Mountain West, Ditch, and Acopia. (You can always enter the state and then the 2nd program at www.mortgageelements.com to see who is doing what in what state.)
PRMG Product updates and announcements are only a click away and it is now offering Closed End Second Liens.
In addition to 10, 15 and 20 year terms, Ditech's Piggyback Home Equity Closed Product is now available in 25 and 30 year terms.
We all know that the bond market, and therefore interest rates, changes every day. But there are structural pricing and fee changes that lenders & investors are making that impact smaller lenders and their borrowers.
PennyMac announced expansion of the Best Effort grids to include specialized base pricing for loan amounts less than 200K. Commencing with locks on or after Dec 12, 2016, PennyMac expanded the Best Efforts pricing grids for certain programs into seven loan amount buckets.
AmeriHome Mortgage announced its Secondary Market will be offering a new AOT option beginning January 3rd, 2017. Sellers currently approved for direct trade commitments will be automatically approved for the AOT commitment option.
Fannie Mae is starting the new year by eliminating the $75 Property Inspection Waiver (PIW) fee, effective January 1, 2017. Enhanced PIWs offer freedom from representations and warranties on property value, condition, and marketability on certain refinance transactions at no cost. Discontinuance of the fee applies to all loans delivered with SFC 801 on or after January 1, regardless of when the PIW offer was issued.
Fannie Mae's AAA Matrices have been updated to reflect the changes to the maximum allowable foreclosure fees for Fannie Mae mortgage loans secured by properties in various states. The updated versions will be available on the Fannie Mae business website on December 22nd.
While we're talking money, higher mortgage rates will probably force buyers to purchase lower-priced homes, according to a survey of realtors by Redfin. Almost half think that homebuyers will be forced to lower their price range, while another 15% think it will cause buyers to walk away. The rest either see no effect or think that sellers will decide to sit tight. Homebuilders will probably shift their production to lower price points, and builders like D.R. Horton and Pulte could be situated best. And as mentioned in the commentary earlier this week, demographers are also seeing a migration of younger families from the coasts to the heartland, where real estate and the cost of living is much lower.
Yes, rates have gotten a little better as of late, including mortgage-backed securities. In fact, the 10-year yield now the lowest since before the FOMC hiked rates on December 14. Risk aversion briefly pushed the 10-year note yield to an overnight low of 2.47%. By the end of Thursday, the 10-year had rallied .250 in price, and the 5-year note and agency MBS prices improved by .250 also - somewhat unusual.
The only news today will be the Chicago Purchasing Manager's Index for December at 9:45am, projected lower to 57 from 57.6. The bond market closes early today, and one can figure that lock desks will as well...or back pricing off accordingly. The 10-year is at 2.48% and agency MBS prices are unchanged versus last night.
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