Radian/SEC/BPO Probe, Training and Events, Freddie and Fannie Changes Don't Stop

By rchrisman@robchrisman.com

These are classified ads, which were supposedly placed in U.K. Newspapers:

FREE YORKSHIRE TERRIER.

8 years old,                     
Hateful little ba$tard.
Bites!

 FREE PUPPIES

1/2 Cocker Spaniel, 1/2 sneaky neighbor's dog.

FREE PUPPIES.
Mother is a Kennel Club registered German Shepherd.
Father is a Super Dog, able to leap tall fences in a single bound.

JOINING NUDIST COLONY!

Must sell washer and dryer £100.

 WEDDING DRESS FOR SALE.

Worn once by mistake.

Call Stephanie.

 FOR SALE BY OWNER.

Complete set of Encyclopedia Britannica, 45 volumes.
Excellent condition, £200 or best offer. No longer needed, got married, wife knows everything.

For appraisers, sometimes a simple 3 bedroom, 2 bath tract home can have complications that make things difficult. What about houses that actually "hide"?

Products
DataVerify, a leading provider of risk mitigation and verification services, announced it is an Authorized Report Supplier of eligible verification reports for Day 1 Certainty from Fannie Mae. "Day 1 Certainty from Fannie Mae provides Fannie Mae customers with freedom from representations and warranties on key aspects of the mortgage origination process.  Lenders using DU from Fannie Mae now have access to DataVerify's 4506-T IRS Tax Transcript Verification services through DataVerify Validation Services. 4506-T IRS Tax Transcript Verification services from DataVerify feature the convenience of e-signature backed by the power of DataVerify's revolutionary platform. The platform evolves dynamically through the origination process, providing lenders comprehensive data aggregation with user simplicity. The result is a highly efficient workflow with consistent results. Brad Bogel, Senior Vice President of DataVerify, noted, 'Having a direct integration to Day 1 Certainty from Fannie Mae services ensures our customers a secure and efficient method for evaluating and delivering 4506-T IRS tax transcript information.'"

 Radian's Green River unit, which provides broker price opinions on residential real estate is the subject of a SEC probe. The feds are looking to see if BPOs were inflated on some bond deals where the interest was paid from the REO to rental trade. Brent Nyitray points out that, "BPOs are cheaper than appraisals and are based on 'drive by' evaluations. Many bond ratings agencies haircut BPO values in their assessments. If it turns out BPOs are inflated, it will probably have a dampening effect on bonds used to finance the activity. The plus side is that if private equity firms begin to unwind the trade, it will add some much-needed supply to the market, especially at the lower price points."

 Trainings and Events:

Don't miss the California MBA's Legal Issues Committee's next free webinar on May 16^th. Learn about strategies for defending Homeowner Bill of Rights (HBOR) claims, and find out about a new detailed licensing pamphlet the committee will be releasing soon.

 Registration is now open for Fannie Mae's 2017 QC and Underwriting Boot Camps'. This year, by popular demand, Fannie added a project standards track for lenders who want to increase their depth of knowledge on requirements for condo project reviews. In the latest post in a series of Perspective pieces by Steve Spies, Vice President -- Loan Quality, Spies shares a top ten list of the profit-saving benefits of attending its Boot Camps. Check out the Boot Camp fact sheet, including agenda details, for more information or email the Boot Camp mailbox to request an invitation. Participation is exclusive to Fannie Mae seller/servicers.

 Recently the GSEs completely redesigned the 1003/Uniform Residential Loan Application (URLA) to support changes in mortgage industry credit, underwriting, eligibility policies and regulatory requirements. MGIC will help you prepare for the changes to the 1003 in a webinar featuring David Luna, President of Mortgage Educators and Compliance, a nationwide NMLS approved education provider. Sign up for one of three 75-minute webinars.

 Finance of America Mortgage now offers a Non-Delegated Correspondent program. Join FAM on May 23rd at 11:00 am PST for a live webinar presented by Ginger Bell of Go2Training and Garrett Griffin, National NDC Sales Manager for FAM. This program offers Flexible Closing Solutions, Fast and Straightforward Loan Purchases, Support for the Experienced, Intermediate or Transitioning Non-Delegated Correspondent.

Freddie and Fannie & lenders that sell to them - the changes roll on

As noted above, there is still room for Fannie Mae approved sellers to attend their industry leading training on Quality Control and Underwriting best practices, innovations and current trends. Sign up through Back to School: 10 ways Fannie Mae's QC and Underwriting Boot Camps can help preserve your profits or here. 

 Reuters reports that Boston Fed President Eric Rosengren warned U.S. lawmakers that any reforms that reduce the massive lending presence of mortgage giants Fannie Mae and Freddie Mac in the multi-family real estate market could shock that sector of the economy. Policymakers looking to reform the GSEs might look at the GSEs' large and growing footprint in the market and ask whether this level of government-sponsored exposure is safe, and whether that level of government support is appropriate," he said at New York University Stern School of Business. "A potential and significant shock to this sector of the commercial real estate market could occur if proposals require the GSEs to reduce their holdings of multi-family loans."

Fannie and Freddie are looking at lending to borrowers with manufactured homes. FHFA needs to approve the program which is intended to increase credit to low-income borrowers, especially in rural areas. 

FHFA's Duty to Serve final rule requires Freddie Mac and Fannie Mae to increase the availability of mortgage financing in three underserved markets: rural housing, manufactured housing and affordable housing preservation to serve very low and moderate-income families. Freddie Mac released its proposed Duty to Serve plan, interested parties are encouraged to review the proposed plan and submit comments to the Federal Housing Finance Agency (FHFA) via its web site. For more detail on Freddie Mac's existing activities to help both homebuyers and renters, visit its Duty to Serve page. Fannie Mae submitted its Duty to Serve (DTS) Underserved Markets Plan to the Federal Housing Finance Agency (FHFA) for public comment. Fannie Mae's DTS Underserved Markets Plan can be found on FHFA's DTS Underserved Markets Plan List page. Public input on the proposed Plan can be provided through July 10 onFHFA's DTS Draft Underserved Markets Plans Input page.

 Effective May 1^st, Wells Fargo Funding's non-escrow adjusters are updated periodically and can be found on page 5 of the Wells Fargo Funding Best Effort Rate Sheet and on page 3 of the Wells Fargo Funding Mandatory Rate Sheet. Its non-escrow adjusters however are state-specific and differ between fixed-rate and ARM products.

Effective with all commitments taken on or after May 22, 2017,PennyMac announced the release of Fannie Mae's HomeReady and Freddie Mac's Home Possible programs along with expansion of the Best Efforts program to allow a 75-day commitment period. And PennyMac has aligned with Fannie Mae's student loan payment updates.

 Flagstar Bank offers Texas loans to correspondent customers. In addition, broker customers are now able to originate Texas purchase second mortgage transactions. Also noteworthy, when using Business income for Fannie Mae products, Flagstar Bank no longer requires a written evaluation of self-employment income when the borrower is qualified using income not derived from self-employment and self-employment is a separate and secondary source of income or loss regardless of the percentage of total qualifying income for the loan.

Fannie Mae reported income of $2.8 billion for the first quarter, all of which will go to the government sometime in June. Total equity has fallen from $6.1 billion at the end of last year to $3.4 billion at the end of Q1. This is the problem the government must address with the current regime: sending all profit to Treasury is eroding Fannie's capital. This is one motivation to get the government serious about GSE reform, although it isn't a high priority in Washington now. 

On all conventional loans in the pipeline and new originations, Mountain West Financial announced the following changes: Homebuyers burdened by student loan debt will be able to get more from new Fannie Mae policies. When the credit report indicates a payment amount, that payment amount can be used for qualifying purposes.  If the credit report does not identify a payment amount (or reflects $0), the lender can use either 1% of the outstanding student loan balance, or a calculated payment that will fully amortize the loan based on the documented loan repayment terms. In addition, Non-mortgage debt may be excluded from the debt to income ratio, provided that the debt has been satisfactorily paid by another party for the past 12 months, regardless of whether the other party is obligated on the debt.  Documentation for the most recent 12 months must be provided showing other party paying debt.   Non-mortgage debts include debt such as installment loans, student loans, etc. Note:  This does not apply if the other party is an interested party to the subject transaction (such as the seller or realtor).

 Plaza is aligning with the Fannie Mae updates regarding the favorable treatment of student loan debt by simplifying the options available to calculate the qualifying payment, providing for the exclusion of non-mortgage debt satisfactorily paid by others, and removing the cash-out price adjustment when (only) student loans are paid-off in a cash-out refinance. Additionally, condominium project eligibility review will be waived for Fannie Mae owned loans that are being refinanced to a new Fannie Mae eligible loan. Refer to the Fannie Mae announcement for further details.

Capital markets
Rates have crept higher. There certainly is no flight to quality pushing bond prices up and rate down. The recent treasury selloff has yields reaching their highest levels since late March. The 10-year yield hit an early afternoon high of 2.42%, following a sloppy 3-year auction and a rally in stocks. For the next month we'll hear about the near-certain rate hike in June from the Federal Reserve's Open Market Committee. It is nice to have things quiet overseas, but it does tend to lead to higher rates in the U.S.

 For those playing along at home, yesterday the 10-year note price worsened .250 and closed yielding 2.41%; 5-year Treasury notes and agency MBS prices worsened about .125.

This morning we've already had the MBA's survey of 75% of last week's application numbers (+2.4%, with purchase apps +2% and refis +3%), as well as a measure of inflation: April import prices (+.5%). If you have any spare change on top of the dresser that you'd like to put to work, the U.S. Treasury will conduct the second leg of the refunding when $23 billion 10-year notes are auctioned at 1PM ET. We start Wednesday with rates back to Monday's levels: the 10-year is at 2.38% and agency MBS prices better nearly .125 versus last night.