Some things you just can't make up. Arch West died last week of natural
causes at the age of 97, and when he is buried this weekend, Arch West will
have Doritos sprinkled over his urn. That is because Arch was the inventor
of Dorritos, a staple of road-trips and mortgage banker desk drawers all
over the nation. Doritos were first introduced in Southern California in
1964 and then launched nationally in 1967, and college parties have been
better ever since.
Here's something that hasn't been on the front burner for mortgage bankers &
Realtors for a while: flood insurance. "The federal program that insures
homes against flood damage expires next Friday and is at risk of not being
renewed. Industry executives say that if the National Flood Insurance
Program lapses, it would become all but impossible to get a mortgage in
flood zones across the country until the program is revived." Overnight,
Senate leaders moved some disaster money around and passed bare-bones
legislation to avert a government shutdown at week's end. That measure,
approved by the Senate on a 79-12 vote, would keep the government running
until mid-November. The House appears likely to endorse that measure next
week when it returns from a weeklong recess. So not only can we think about
why they deserve a week's vacation, but we get to do this all over again in
mid-November: RisingHotWater
[http://r20.rs6.net/tn.jsp?llr=zy6u9cdab&et=1107855791361&s=8721&e=0013TLaXS
S0_FQAty6xvJsRlopJNklt6bKzKfnJFluq8VA28Ysa1QAFhlQIl66yQl8OC1g1P_GKGB_BJhxwon
ZtAdz5fPkwD5iC_vjxsKx0jj_nCzm0jsC4Cn9GtffOuU2kVJd4v1f_CcxuqkG81jiI01awPL6r_G
cv5pMYYW5ebq451LTPvvdBow==].
Top Dot - does the company have $9 million to pony up? I hope so - it may
owe just that due to a class action compensation judgment. A federal court
entered a $9 million judgment against Top Dot Mortgage for violations of the
Fair Labor Standards Act.
The class action suit was brought on behalf of 166 loan officers who were
not properly paid minimum wage or overtime by Top Dot Mortgage and its
individual owners. Under the FLSA, employees are entitled to wages for all
hours worked and time-and-a-half pay for all time worked over 40 hours
worked in a work week, unless they are exempt from the Act. Federal law also
requires employers to maintain accurate records of hours actually worked by
employees. "At trial, we proved that Top Dot willfully created a pay plan
which denied its loan officers minimum and overtime wages in violation of
federal law, while its individual owners wrongfully added millions of
dollars to their personal income" said lead trial attorney Ryan Stephan. The
jury specifically found that class members averaged 10 hours of unpaid
overtime each week. Based on the total verdict, each of the 166 class
members was awarded
$54,000 on average - but let's not forget the attorney's cut!
TopDotOwesALot
[http://r20.rs6.net/tn.jsp?llr=zy6u9cdab&et=1107855791361&s=8721&e=0013TLaXS
S0_FQuPEnyz95gtATRtts880aIiUsvtNBwL6ORr6qTkV4mXB2nXd_OpaIhbGP2WS3NzxXF6wYpw-
dhXjrQFPwMSlL6MXIrQs4UFnyBTJwocSgRrT6bF1nkbN-9coCt7o_zVT7w6JEd3CMBXG_RYHqiPf
rmJVrsfBIZ9ku5O4PZ_WZDATytO2UYdUuGOdS_w8E778gKPpCZQwY25MJl73_Axe0tWp7e00idQB
o=].
TBW - the gift that keeps on giving. Most, if not every, mortgage company
has an accounting firm. In what could be a very closely watched case,
Deloitte Touche Tohmatsu, the world's largest accounting and consulting
firm, was accused on Monday of failing to detect fraud during its audits of
Taylor, Bean & Whitaker. Deloitte "certified TBW as a solvent, viable
company with accurate financial statements every year from 2001 to 2008,"
one of the complaints said. "Despite Deloitte's credentials and expertise as
one of the 'Big 4' accounting firms, those statements -- and the rosy
picture they depicted of TBW -- were completely false," it said.
WhereIsTheE&OContract?
[http://r20.rs6.net/tn.jsp?llr=zy6u9cdab&et=1107855791361&s=8721&e=0013TLaXS
S0_FTB_73h3yJyU-dT9PlinIo6Cb9Y5G2FbYH1Sl3kK6PpzkvcLg9VFVAtHQkAgo5BQn9BPnuXJq
yBny0Hb8gbHNspjynSswZuzNnO60y0C_czemsDA217uTlPDzBjQQijKQHjfRZAgKc0t3TIdWzdlW
7MiA2oP8G_0X-qyYSBhciTFPfOeX_tFYwuGPNE2BdqHDc=]
Many have wondered how the rating agencies have escaped punishment in the
mortgage crisis. Well, that may be ending: the SEC is considering taking
civil action against Standard & Poor's for its rating of a 2007 mortgage
debt offering. We all know that the three major agencies (S&P, Moody's
Investors Service and Fitch Ratings) gave high ratings to mortgage
investments that turned out to be worthless. If the SEC charges S&P with
violating securities laws, and it hasn't happened yet, it would mark the
first time it's brought an enforcement action against a top rating agency.
S&P is owned by New York-based McGraw-Hill. Regardless of the outcome of the
S&P case, the entire rating agency industry may be facing enforcement
actions related to the financial crisis.
The Fed's FAQs on its MBS purchases was released yesterday, with few
surprises.
Agency MBS purchases will likely be concentrated in newly-issued agency MBS
in the TBA market. Purchases will consist of fixed rate 30- and 15-year
agency MBS only and that are guaranteed by FNMA, FHLMC and GNMA. The Fed's
FAQ said it would publish on or around the 8th business day of the month,
the tentative amount it expected to purchase between the middle of the
current month to the middle of the following month. For the October 3 to 13
period, it expected to buy around $10 billion in agency MBS. Purchases would
be made "on a frequent basis" over the month. For more information, see
MBSPurchases
[http://r20.rs6.net/tn.jsp?llr=zy6u9cdab&et=1107855791361&s=8721&e=0013TLaXS
S0_FQtCNITjx9_oWzcpwup76vRpyyHcyww6OoBQOdMAP4LtQyotM3ymt6wOsUE_AtADysWA2mLaM
3ODBxd_2nydi5b_KlIndJwrAAZP9h901HFzeZvXhFIVnbEzUQW-EYm5IGbPDaIHjEAvchyjf5nsR
07].
Firms controlled by Lew Ranieri and billionaire investor Wilbur Ross are
partnering to buy Deutsche Bank Berkshire Mortgage, a major lender to
investors in U.S. apartment buildings. Ranieri Real Estate Partners LP and
private-equity funds affiliated with WL Ross & Co. are paying an undisclosed
amount for the unit of Deutsche Bank AG, which makes loans to
apartment-building owners and then sells them to Fannie Mae and Freddie Mac.
It did more than $4 billion a year in mortgage loans at the market's peak
and is the second-largest originator of Fannie Mae-backed multi-family
loans.
Given the increase in renters, this could be a very good play. So we can all
keep track of players, in May 2010, a group led by Orix Corp. bought Red
Capital Group, another Fannie Mae and Freddie Mac multifamily lender, from
PNC Bank. And in June 2010, Fortress Investment Group LLC bought CW
Financial Services, a broader commercial real estate firm that made loans
for Fannie and Freddie. The Berkshire Mortgage unit also services some $28
billion in multifamily loans.
Investors are busy. SunTrust Mortgage is eliminating the Portfolio
Affordable Housing Mortgage Program. Bank of America, starting yesterday,
shifted the adjustment for Conforming 30 Year Fixed Rate High Balance loans
(now 125 basis points - 1.25%) and DU Refi Plus Conforming 30 Year Fixed
Rate High Balance loans (now also 1.25%).
Union Bank alerted brokers of several changes, including debt ratios,
credit, occupancy, EOM, and is allowing higher DTI's if credit score and
reserve profiles are met.
Bankruptcy papers will no longer be required "if the filing and discharge
dates are clearly shown on the credit report and there are no open debts
(collections, charge-offs, etc.) showing on the credit report that the
borrower claims were included in the bankruptcy. Regardless of age, a
letter of explanation will still be required when a bankruptcy shows on the
credit report." Clarification has been made for when certain minor
discrepancies on the borrower's date of birth do not need to be addressed.
And under UB's new policy, for properties that are new construction (where
the existing structure was torn down and rebuilt) or have had a major
remodel, UB will now give the borrower up to 60 days to occupy the subject
property after the close of the loan, subject to certain requirements.
Lenders know that a funding fee is paid to the VA to defray the cost of
administering the VA home loan program. This fee changes on 10/1, and every
lender is notifying clients about it. US Bank's wholesale division got the
word out, and reminded broker clients that, "The funding fee for Interest
Rate Reduction Refinance Loans will remain the same at .50%." And although
earlier this month one of its forms changed, USB reminded folks, "Regardless
of the new funding fee status shown on the COE, lenders must still be sure
to read any and all statements appearing in the "CONDITIONS"
field, which appears near the middle portion of the COE."
GMAC Bank Correspondent Funding and its wholesale channel also reminded
clients of the change starting 10/1. "VA Loans approved with the prior
funding fee amounts that do not close by September 30, 2011 must be
resubmitted for underwriting approval with the new funding fee amounts
effective October 1, 2011."
Wells Fargo's wholesale channel alerted brokers of an update on its HUD
Builder Certificate for FHA new construction. It impacts FHA transactions
for properties less than one-year old (new construction), and effective
with FHA Case Numbers assigned on or after yesterday, so brokers will send
the Appraisal Cover Sheet for Sales Contracts, the Builder Certificate (Form
HUD-92541) and the purchase contract to Web Support. (Continue to include a
copy of the Builder Certificate with the loan submission package.)
Yesterday MBS prices did pretty well, relative to fixed-income Treasury
prices, on lower-than-normal volume. Europe was the primary influence on the
markets with encouraging talk of another plan in the works. As a result,
investors were feeling less risk averse with the Dow up over 2% and
Treasuries selling off: 10-year notes were worse by almost 1 point and up to
a yield of 1.90%, and MBS prices were worse by about .250.
We learned that New-Home Sales Fell 2.3% in August, in Line With
Expectations:
New Single family home sales fell to a 6-month low in August, but the supply
of homes available dropped to a record low. The Commerce Department
reported that sales slid to a seasonally adjusted 295,000 unit annual rate.
This is the lowest since February. Even as sales were weak in August, they
were still 6.1% above the same time last year, when new-home sales were at
an annual rate of 278,000.
Today for excitement we have a $35 billion 2-year note auction at 1PM EST.
We'll also have some yet another set of S&P Case-Shiller Home Price
numbers, and also Consumer Confidence at 7AM PST. Our 10-yr is sitting
around 1.97%, still range-bound, and MBS prices are worse by about .250.
Two Cajuns were waiting at the bus stop when a truck loaded with rolls of
turf went past.
Boudreaux said, "I'm gonna do dat when I win da lottery."
"What's dat?" asks Thibodeaux.
"Send da lawn off to be mowed!"
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 recent news concerning REIT's, and
the possible tax implications. 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
(Check out
[http://r20.rs6.net/tn.jsp?llr=zy6u9cdab&t=bivtvyhab.0.epg7qedab.zy6u9cdab.8
721&ts=S0672&p=http%3A%2F%2Fwww.mortgagenewsdaily.com%2Fchannels%2Fpipelinep
ress%2Fdefault.aspx]
[http://r20.rs6.net/tn.jsp?llr=zy6u9cdab&t=bivtvyhab.0.v7uif6dab.zy6u9cdab.8
721&ts=S0672&p=http%3A%2F%2Fwww.thebasispoint.com%2Fcategory%2Fdaily-basis].
For archived commentaries, go to
[http://r20.rs6.net/tn.jsp?llr=zy6u9cdab&t=bivtvyhab.0.fpg7qedab.zy6u9cdab.8
721&ts=S0672&p=http%3A%2F%2Fwww.robchrisman.com%2F].
Copyright 2011 Rob Chrisman. All rights reserved. Occasional paid notices
do appear.
This report or any portion hereof may not be reprinted, sold or
redistributed without the written consent of Rob Chrisman.)
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