(Thank you to Nick S. for this one.)
A man returns home a day early from a
business trip. It's after midnight. While in route home, he asks the cabby if
he would be a witness, because the man suspects his wife is having an affair,
and he wants to catch her in the act. For $100, the cabby agrees.
Quietly arriving home, the husband and
cabby tip toe into the bedroom. The husband switches on the lights, yanks the
blanket back and there is his wife, naked as a jay bird, with a man, totally
nude also. The husband puts a gun to the naked man's head.
The wife shouts, "Don't do it! I
lied when I told you I inherited money. HE paid for the Porsche I gave you. HE
paid for your new 25 ft. Ranger Fishing Boat. HE paid for your football season
tickets. HE paid for our house at the lake. HE paid for your golf trip to St
Andrews and your new 4 x 4. HE paid for our country club membership and he even
pays the monthly dues. And because of HIM, I can put an extra $2,000 in our
checking account each month."
Shaking his head from side-to-side, the
husband lowers the gun. He looks over at the cabby and asks, "What would
you do?"
The cabby replies, "I'd cover him with
that blanket before he catches a cold."
In response to a note I had Friday about Domino's Pizza being
required to post all 34 million calorie combinations of its pizzas,
ThomsonReuters' Michael Ehrlich sent along Domino's Nutrition Guide. And you think your pricing matrix
is intricate! Just as complex is the U.S. budget. Even with Congress heading
off on a two-week break, it is nice to hear that no one is talking about, or
threatening, a government shutdown come April 28th.
United Wholesale Mortgage introduced its 'BLINK' Mortgage Portal,
(stands for "borrower link") a consumer-facing web application that
enables borrowers to combine the simplicity and flexibility of mobile
technology with applying for a home loan while equipping Brokers with
All-Inclusive Loan Technology. Borrowers are given the capability to start the
loan application process, pull their credit, e-sign documents, verify assets,
and track the status of their loans - from anywhere.
Changes in fees & expenses
Do regulatory hurdles add to the cost of loans, and
therefore increase the cost to borrowers? Sure they do. Let's see what
various investors and lenders are doing about fees, expenses, and cost
allocation.
A recent Pacific Union bulletin issued a reminder that
the Real Estate Commission paid to Realtors engaged on the Buyer(s) side of the
transaction (such as the Selling Buyer's agent) must be disclosed on the
Buyer's Closing Disclosure. The Closing Disclosure should be completed as
follows: Real Estate Commissions paid to (Provide name - Realtor Company Name
matching the contact page). Paid by Seller should be listed as indicated below.
(Paid by Buyer should display in Section H; Column A).
Effective April 1st, 2017, the fee for 1004D_05 Appraisal
Updates and 1004D_05 Certification of Completion will be $150. The fee
will be noted in Flagstar Bank's Nationwide Flat Fees section of Appraisal
Pricing Matrix, Doc. #4905 and will no longer be separated by state/county.
Ditech is clarifying its policy on the escrow of
funds for the payment of property taxes, and insurance, including hazard, wind,
earthquake, and HO-6 premiums. Generally, an escrow of funds is required
for the payment of these premiums but may be waived in some circumstances. An
escrow of funds for the payment of flood insurance and mortgage insurance
(unless single-premium or lender-paid) is always required.
Effective for all commitments taken on or
after Thursday, April 6th, PennyMac is implementing updates
to the Conventional LLPA for Best Efforts and AOT/DT. No changes will be
made to the rate sheet structure. The LLPA value updates will
specifically apply to the following section: FICO/LTV LLPAs for All Loans
(Mortgage > 15 Year Terms)' grid.
PennyMac
announced the removal of price caps on Conventional and Government Best Effort
loans, for new commitments taken on or after Monday, April 3.
For loans purchased on or
after March 28th, Wells Fargo Funding is removing its
interest rate set date documentation requirements for Higher-Priced Mortgage
Loans (HPMLs). Follow Fannie Mae or Freddie Mac requirements. This change does
not impact the Loan Submission Summary (LSS) form. The interest rate set date
will remain a required field on the LSS.
Effective April 3rd, First Community
Mortgage has updated its wholesale product and pricing guidelines.
After a recent review of Regulation Z and the definition
of Loan Purpose under TRID, Plaza Home Mortgage, Inc. will be
making a change to the "Loan Purpose" field on the Loan Estimate (LE)
and Closing Disclosure (CD) for refinance transactions of property owned free
and clear of any liens. Effective April 10, 2017, for refinance
transactions of property that is owned free and clear of any liens, "Home
Equity Loan" will print on the "Purpose" line on the LE and CD.
Not sure how to calculate Rental Income from the Schedule E of
the Personal 1040s? Plaza's April 10th
class will help you to calculate rental income utilizing FNMAs Form
1037, Form 1038, and 1039 Rental Income Worksheets.
Through a partnership with WFG Lender Services, NYCB
Mortgage Banking's GemstoneSecured program offers "a special package
of benefits designed to mitigate risk while closing loans efficiently. WFG benefits
include reduced re-purchase risk, faster pre-closing reviews, CPL convenience
and fewer missing document hassles and an excellent value with no hidden fees.
Learn more about its platform, Contact your NYCB Account Executive or WFG contact, Bob Wohleber.
Capital Markets
"Rob, on conforming loans there is a risk-based
pricing matrix. How are these numbers determined? They are probably based
on some historical data but things change over time (e.g. less homes in
foreclosure, etc.) so how is the risk translated into a fee to compensate for
the risk (e.g. noo with 25% down, 2.125)? What especially puzzles me is the hit
for 80-10-10. And who are these people that make this chart?" The answer
is that, as capital markets folks know, it often is a result of past performance
of loans with certain characteristics, but that Fannie Mae & Freddie Mac's
risk-based pricing framework is largely managed and controlled by FHFA. Here is the document that describes FHFA's role in setting
and monitoring risk-based pricing.
While we're on pricing, it is good to remember that financial
markets aren't always perfect. The prices of bonds (which determine interest
rates), stocks, and other assets can vary tremendously from where classical
theory says they should be. The reasons stem largely from the overwhelming
complexity of the real world of finance, where information is imperfect, human
beings are sometimes irrational, and situations can change between the time an
investment idea is hatched and when it is acted on. There are countless
complications that make prices so unpredictable and financial markets hard to
fathom. Why are markets subject to boom and busts? Why does gambling usually
not pay off? The list of questions goes on, but a portion of reasoning comes
back to how market participants are averse to risk, and how that distorts
prices. Put another way, the fear of losing outweighs the benefit of winning.
Remember that rates are determined in great part to the
demand by investors for certain products. Taken to an extreme, if every
investor decided they no longer wanted to own Ginnie Mae securities, and
lenders couldn't sell their FHA & VA loans, what would that do to the
market? And in turn, lenders offering that product? Conversely, if mortgage
investors are searching for higher yielding investments, a likely source is non-QM
loans.
ABA Community Bank Mortgage LLC, a subsidiary of
the American Bankers Association, has selected PennyMac Financial Services,
Inc. as a secondary market investor. This selection means that ABA
Community Bank Mortgage LLC owner banks can sell agency-eligible loans on a
servicing-released basis to PennyMac Financial and can access PennyMac's full
line of lending products. "Our new partnership with PennyMac will
provide participating banks with competitively priced conforming and jumbo products
- enhanced by the power of ownership," said Deborah Whiteside, president
and COO of ABA Community Bank Mortgage LLC.
Turning to mortgage rates, the bond markets were jolted by
Friday's nonfarm payroll number, which was weaker than expected. And given that
a weak economy would mean lower rates, bond prices rallied and rates dropped
(the yield on the 10-year hit 2.27%). But that didn't last too long, and
everyone started pointing their finger at the inclement weather which hit the
eastern seaboard during the survey period, and even the "weaker"
number is probably enough to keep the Fed on its path of rate hikes. And
thus, it seems that the market sense is for rate hikes in June and September
with tapering beginning after that and before the end of the year.
Don't forget that the bond markets will be closing early
Thursday and are closed this Friday. We closed last week with the 10-year
yielding 2.37%. And there weren't any major economic data or monetary headlines
out in the last 72 hours. In equity news for this week, Citigroup, JP Morgan
Chase and Wells Fargo all reporting earnings on Thursday.
For thrills and chills this week, today we'll have a $24
billion 3-year Treasury auction. Tomorrow is the February JOLTS (job openings)
number and a $20 billion 10-year reopening. Wednesday, we have the MBA's take
on last week's applications, along with March export prices and a $12 billion
30-year auction. Thursday are March PPI (Producer Price Index), Initial Jobless
Claims, and April Michigan Sentiment. Friday there is no news, and the market
is closed. We begin the week with rates nearly unchanged versus Friday's close:
the 10-year is yielding 2.38% and agency MBS prices are off ever so
slightly.
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