Lead Gen System, The Ceaseless Lender and Investor FHA, VA, Fannie, Freddie Program Changes

By rchrisman@robchrisman.com

A woman is on trial for beating her husband to death with his guitar collection.

The judge says, "First offender?"

She replies, "No, first a Gibson, then a Fender!"

 FHA announced that it is reducing its annual Mortgage Insurance Premium (annual MIP) rates for most Title II forward mortgages with Closing/Disbursement dates on or after January 27, 2017. These annual MIP rate reductions will expand access to mortgage credit, and are expected to lower the cost of housing for the approximately 1 million households that use FHA annually. This FHA Mortgagee Letter provides detailed information about the annual MIP rate reductions, including a reduction of 25 basis points (bps) in the annual MIP rate for most new FHA-insured mortgages. The new annual MIP rate for mortgages that fall into this category is 60 bps.

FHA issued Mortgagee Letter 2016-25: 2017 Nationwide Forward Mortgage Limits - Correction for Special Exception Areas to provide official notification of the previously announced correction to the ceiling limits for calendar year 2017 in the special exemption areas of Alaska, Hawaii, Guam, and the Virgin Islands.

Pacific Union Financial, LLC announced the release of the FHA Section 203(h) Mortgage Insurance for Disaster Victims loan program to the Correspondent channel.  Section 203(h) loans are available to victims whose previous residence (owned or rented) was in a Presidentially-Declared Major Disaster Area (PDMDA) and the property was destroyed or damaged to such an extent that replacement is necessary.

FAMC has modified its FHA FICO/DTI overlay with new policy as follows: FICO < 640: DTI cannot exceed 45%, regardless of AUS results and FICO > 640: DTI per AUS.
 
Mortgage Solutions Financial will be implementing the "Auto-Lock" functionality within its pricing engine for all FNMA, FHLMC, FHA, VA, and USDA lock requests. Loans will be locked immediately upon lock request.

Plaza Home Mortgage will align with FHA annual MIP changes announcing a 25-basis point reduction in the annual MIP rate for most FHA Title II forward mortgages with closing/disbursement dates on or after January 27, 2017.

Paramount Residential Mortgage Group's Resource Center in FastTrac has been updated with PRMG Appraisal Guidelines and the addition of the VA 2017 Calculator Tool.
 And let's not ignore the continued conventional conforming (Freddie & Fannie, for the most part) tweaks that lenders and investors are making to start the new year!

 First off, no one at either agency is ever allowed to talk about the future. But the WSJ says a Fannie/Freddie reform bill modeled on the Crapo/Johnson legislation from '14 stands the best chance of passing through Congress. That bill would wind down Fannie/Freddie, transfer their securitization infrastructure to a new cooperate owned by the banking industry, and wrap mortgages w/an explicit gov't guarantee issued by an FDIC-like agency.

 Yes, envisioning a Fannie and Freddie endgame has turned into a pastime. The question of what to do with Fannie Mae and Freddie Mac has bedeviled investors and politicians ever since their crisis-era bailout. Donald Trump's election, and comments by his pick for Treasury secretary, have raised hopes of a solution.

 The future of Fannie & Freddie under Trump is up in the air. By many measures, the housing market is the strongest it's been since the lead-up to the Great Recession. Home prices have returned to pre-recession levels nationwide. The foreclosure rate has fallen significantly, and mortgage rates are still low by historical standards.

 Wells Fargo Funding has removed its overlay for tax return transcripts on Loans originated by Sellers opting to use Desktop Underwriter® (DU®) validation service for income and employment.as of January 10^th. In accordance with Fannie Mae's removal of PIW fees for loans delivered to Fannie Mae on or after January 1, 2017.  Wells is making system enhancements to accommodate the change. However, until system support is available, Wells Fargo Funding will apply post-fund adjustments to refund the PIW fee.

 U.S. Bank Home Mortgage is enhancing its conforming LPMI Fixed Rate and Lender-Paid MI Programs. Qualifying ratios will be determined by LP or DU, the maximum debt-to-income ratio of 45% has been eliminated. Funds to close/reserves will be determined by LP or DU, the greater of either the standard FHLMC required reserves or two months PITI in reserves has been eliminated.

 Fannie Mae'sLender Letter states updates regarding the approval of the acquisition by Arch Capital Group Ltd. of United Guaranty Corporation and its affiliates and updates to forms. In addition to the guidance related to United Guaranty, the list of Fannie Mae's Approved Mortgage Insurance Forms has been updated to include some newly-approved forms for Essent Guaranty and Radian Guaranty. This document lists the respective customer service numbers for Arch MI and United Guaranty.

 Wells Fargo Funding has reinstated Prior Approval underwriting option on conventional Conforming Loans for Sellers that have delegated underwriting authority. Effective for Best Effort Registrations, Locks, relocks, and renegotiations on and after January 5, 2017.

Arch MI and United Guaranty are now one company. For now, Arch MI's and United Guaranty's systems will continue to look and operate as they currently do. In December, 2016, United Guaranty announced changes to our Underwriting Guides in response to changes to conforming loan limits. These changes became effective January 3, 2017. Underwriting Requirements Guide and all supporting documents are available on the UG website.
Have you integrated with the Desktop Underwriter (DU) validation service? Fannie Mae's validation service uses third-party data vendors to independently validate borrower income, assets, and employment data, providing our lenders Day 1 Certainty on validated loan components. Visit the DU validation service web page to view a list of DU validation service vendors and other resources. 

 Fannie announced M.I. updates. Last week Arch Capital Group Inc. announced that it completed the acquisition of United Guaranty Corp. from American International Group Inc. Fannie Mae approved the acquisition of UGC and affiliates United Guaranty Residential Insurance Co. and United Guaranty Mortgage Indemnity Co.

Origin Bank has added eMortgage warehouse financing to the bank's product offerings. The technology of eMortgages, mortgages for which documents are created, transferred and stored electronically rather than by using traditional paper documentation methods. The bank is partnering with Fannie Mae, a leading source of financing for mortgage lenders, and is one of only a handful of companies offering this service. The digital technology provides benefits such as faster liquidity in the secondary market, operational efficiencies, quicker warehouse inventory turn times, increased data quality, and consistency and accuracy in the closing process. The bank began offering eWarehouse financing for loans sold to Fannie Mae on January 1, 2017. (For more information contact Ken Johnson or Kim Cates.)

 In terms of rates yesterday, Tuesday fixed-income securities like agency MBS or U.S. Treasuries barely budged and decided to focus on declining oil prices despite a steady equity market and a surge in positive sentiment at small U.S. businesses. WTI (West Texas Intermediate) crude fell 2.14% to $50.85/bbl., a multi-week low. We even had a decent $24 billion 3-year note Treasury auction. The 10-year note spent most of the session in a 6-tick range with the yield closing little changed across the curve.
 
Today the only scheduled news is the non-market-moving MBA application index for last week. Are consumers adjusting to higher rates? Probably: apps were up almost 6% last week with both purchases and refis showing nice pickups. We also have a $20 billion 10-year T-note auction, but garnering more press will be Donald Trump's first news conference since July, slated for 11AM ET today. For numbers today we find the 10-year note yielding 2.38% after closing last night at 2.38%. And current coupon Agency MBS prices are nearly unchanged.