Friday, December 23, 2011

December 23: New agency borrowers will pay for payroll tax cut extension; more agency news; catch the wave - move back in with your parents

Wanna save money? Let our professionals show you the benefits of refinancing today! Apply http://globalhomefinance.com/apply.php !



The Census Bureau reports that between 2005 and 2011, the proportion of

young adults living in their parents' home increased. The percentage of men

age 25 to 34 living in the home of their parents rose from 14% in 2005 to

19% in 2011 and from 8% to  10% over the period for women. Realtors and loan

originators pay attention to this stuff, as it impacts their advertising and

pool of potential clients. Similarly,  59% of men age 18 to 24 and 50% of

women that age resided in their parents' home in 2011. (College students

living in a dormitory are counted in their parents' home, so they are

included in these percentages.) In general, the percent of all households

that contain just one person has risen from 13% in 1960 to 28% in 2011.



My Dad, who grew up during the Depression, often wonders, "When will people

stop  blaming others for their own problems?"


[http://r20.rs6.net/tn.jsp?llr=zy6u9cdab&et=1108998861536&s=8721&e=0010NIDNV

5ts8-KFUXc9ZeDDMXxR0vfdGNqR-2COfBZkhkauSLwYMfl6EeBd1N1-i31VKfZicku3PJ9ER3Y9P

DQuhgpgb0aiAZh84doiOOk2oW1Y_RkXfZEq6IHyuVWbRGgpU3wMIzt3tsmveSZiwcD6XV3gO3Ly8

uW]



House Republicans "caved" to demands by President Barack Obama,

congressional Democrats and fellow Republicans for a short-term renewal of

payroll tax cuts for all workers.

The breakthrough almost certainly spares workers an average $20 a week tax

increase January. Not only do we have to watch Congress go through this

thing all over again in two months (by 2/29 - maybe we should put the Super

Committee on it!), but in  a clear problem for the mortgage industry, its

$33 billion cost will be covered  by an increased fee on mortgages backed by

Fannie Mae, and Freddie Mac. (No, I don't know by how much.) I have news for

Congress - new borrowers shouldn't bear  the brunt of paying for this, and

if you jack up agency mortgage costs high enough, there won't be enough

guarantee fee income because borrowers won't borrow - and let Washington see

how that helps our housing sector. I'll get off my editorial soap box now...



Many in the industry believe that Fannie and Freddie start a new program to

shed  the credit risk of the mortgages they guarantee in the private sector.

Folks say it should be simple to understand, not affect the existing agency

MBS market, use existing financial technology, and not need legislative

approval. It should also  factor in that regulators will want to control

loss mitigation and mortgage modification.

Security dealers have suggested issuing GSE unsecured debt whose cash flows

mimic a first loss piece, with some caveats. The coupon of this tranche

comes from the  guarantee fee of the referenced collateral, severities are

fixed to remove uncertainty about liquidation timelines, prepayments are

passed on to keep the structure simple, and the tranche is sold for cash to

remove counterparty risk. The cash flows to existing agency MBS are not

affected; the investor is taking on unsecured GSE credit risk "pari passu"

with existing agency debt. The ultimate goal will be to use this program to

shed credit risk of newly issued agency mortgages. In the dealer's mind, the

economics work for the GSEs to place the credit risk of current

well-underwritten collateral in the private markets - but not the older

stuff.

The American Banker, in a story written by Jeff Horwitz and Kate Berry,

noted that Fannie "has acquired the rights to service hundreds of billions

of dollars of loans and transferred responsibility for managing them to a

select group of large subservicers"

including the August deal with BofA for $73 billion of servicing. "Why the

secrecy?

Fannie is 'under a lot of political pressure, and wants to keep everything'

quiet, says Paul Miller, managing director of FBR Capital Markets. To

Fannie, yanking servicing rights from big banks has other appeal, Miller

says. Fannie executives 'don't like how Bank of America, or any other major

servicer, is servicing the loans,' he says.

'The biggest servicers are totally dysfunctional and putting no resources

into the process.'" The recent servicing transfers are simply the best way

to protect itself from losses resulting from botched loan management, says

Amy Bonitatibus, a spokeswoman for the company.



While bills in Congress aim to wind down Fannie Mae and Freddie Mac, they at

the  same time look to the FHFA to draft industry standards for private

mortgage securitization.

For example, one proposal would have the FHFA establish a U.S. database for

title transfers and create a standard pooling and servicing agreement, and

another would have it develop standards for mortgage servicers, various

classes of loans based  on default risk and qualification standards for

firms that securitize mortgage bonds. (Yet another related bill in the

Senate would offer foreign investors a 3  year "homeowners visa" if they

invest $500k in cash into a home and stay in it for at least 6 months.)



There seems to be a huge number of investor updates this week - I can't list

them all. But here is a smattering of them in no particular order:



PHH told clients that, "Cash Out Refinance transactions involving

installment land contracts are not eligible. When a land contract is being

paid off, the transaction must be considered either a purchase or a rate and

term refinance." In addition,  "for Interest Rate Reduction Loans (IRRRLs),

an appraisal is not required if (various) requirements are met such as if

the existing loan being refinanced is a PHH-serviced loan, and the new

interest rate is lower than the previous interest rate."



Home Savings of America posted the revised VA loan limits on its wholesale


[http://r20.rs6.net/tn.jsp?llr=zy6u9cdab&et=1108998861536&s=8721&e=0010NIDNV

5ts89MY-ipzcoCpAnWjgZo8iTm9Hdw3d-qWsBXardmJs-KfhC76l3ZkJEDqOUwleGr36qp_eVmof

gUD0X0Bthp8jL60ud0XStbdxG-mi9AViLLsw==]

>>Resources>>Miscellaneous, and reminded brokers that the loan limit

>>Resources>>revisions do

not apply to VA IRRRLs ('Loan Limits' means the maximum allowed base

mortgage for a veteran with full VA eligibility benefits and no down

payment. For all VA loans, the sum of the property equity/down payment plus

VA eligibility must be at least  25% of the base loan amount payment.)



U.S. Bank told clients that starting 1/1, "for lenders that close FHA loans

in U.S.

Banks name, certain FHA Streamlined Refinance loan transactions submitted to

U.S.

Bank Home Mortgage Wholesale Division for underwriting will be subject to

special underwriting guidelines.  This change does not impact Correspondent

Lenders utilizing their own DE authority to approve the transaction. The

special underwriting guidelines that will apply are: FHA Streamline

Refinance Applications with borrower FICO scores < 660 will require full

underwriting of income, employment, assets and credit with supporting

documentation.  LP or DU (TOTAL Scorecard) must be utilized to score the

loan and to indicate the Accept or Refer documentation level.  Appraisals

will

not be required.   TOTAL should be processed as a rate and term refinance.

Enter

 the Original Property Value when running TOTAL.  This value is obtained

from the Refinance Authorization Results on the FHA Connection.  Refer

findings will be manually underwritten utilizing FHA manual underwriting

documentation requirements. Borrowers with FICO scores > 660 remain eligible

for FHA Streamline Refinance reduced documentation.

Existing minimum FICO score requirements are still applicable."



Fifth Third Wholesale Lending will "accept a credit report in lieu of a

payoff statement for all FHA loan transactions on loan submissions. The

updated checklist is attached and will be available on


[http://r20.rs6.net/tn.jsp?llr=zy6u9cdab&et=1108998861536&s=8721&e=0010NIDNV

5ts89u81Xsjfg_5WWm3h1158sugWUcAhSCi5cRxpvhWm9lsBpeedH-KMd7qXY876Us3MBaSY5WWO

Mp_dYIjH8aKbbYnWR3objTt2BtyeqIsmlPzTHJhQYnbTSC].

And for all Conforming and Portfolio Products: Combined Fifth Third Liens >

$1MM, two appraisals are required when the combined amount of Fifth Third

liens originated through any Fifth Third entity is > $1million. Subordinate

financing held with a  lender other than Fifth Third is excluded from the

total amount of combined liens

Note: For transactions involving a HELOC, the high credit limit must be used

to calculate the combined loan amount." Lastly, the maximum loan to value

limit is 95% for the LTV/CLTV on all attached housing including PUDs,

Condos, and HARP Programs."

Please refer to the product guidelines for additional restrictions.



On the correspondent side, Fifth Third Mortgage "does not require a cushion

for mortgage insurance escrows. After purchase of the loan, Fifth Third

Mortgage Company's Servicing Division will perform an analysis of the

borrower's escrow account using the aggregate accounting method, and will

provide an Escrow Disclosure Statement  as required by the regulation. The

Initial Escrow Account Disclosure is a required attachment to the HUD-1 on

escrowed loans. A two-month cushion is required by Fifth Third Mortgage

Company on escrowed tax and homeowners insurance unless otherwise  mandated

by state law."



Flagstar reminded its brokers  that, "Effective for VA loans registered on

or after January 1, 2012, if two or more veterans are using entitlement to

obtain VA financing and the veterans' funding fee factors are not identical,

the loan is ineligible for approval, closing and/or purchase by Flagstar. At

this time, Flagstar's systems are capable of calculating only one funding

fee factor for the entire loan, so exceptions cannot be made."



Aurora rolled out a jumbo product this week. Aurora Bank FSB's program

highlights include, "15 and 30 year fixed rates, 5/1, 7/1, 10/1 Hybrid ARMS,

maximum $2,000,000 loan amount, O/O 1-2 units, O/O , 80 % LTV available at

700 Fico Score for a maximum of $1,000,000 loan amount, cash out allowed up

to 60% LTV. In order to participate, all appraisals must be ordered by the

Correspondent through an Aurora Bank FSB approved Appraisal Management

Company (AMC).  The AMC completed appraisal will be subject  to a full

underwrite as a part of the non-delegated Jumbo process - if you have  any

questions, please contact Client Support at



Yesterday we saw that the University of Michigan Consumer Sentiment index

for the end of December rose to 69.9 from the 67.7 reading earlier this

month, up from 64.1 in November, and higher than the 68.0 expected by

economists. The Conference Board Leading Economic Indicator Index increased

0.5% in November to 118.0, following a 0.9% increase in October. Lastly, the

FHFA House Price Index fell .2% in October, and September was revised

downward to reflect a 0.4% increase, rather than the 0.9% increase

originally reported. Mortgage-backed securities (MBS-agencies) had a decent

day.



This morning Durable Goods, always a volatile number, were up 3.8% in

November, but ex-transportation it was only +.3%. November Personal Income

was +.1%, Personal Consumption was +.1%, both a little less than expected.

After that, 9AM CST offers up October New home sales that are expected to

also exceed prior reads. After the news we find the 10-yr at 1.98% and MBS

prices worse by about .125-.250 - but who would lock today?



Three men died on Christmas Eve and were met by Saint Peter at the pearly

gates.



"In honor of this holy season," Saint Peter said, "You must each possess

something that symbolizes Christmas to get into heaven."

The first man fumbled through his pockets and pulled out a lighter. He

flicked it on. "It represents a candle," he said.

"You may pass through the pearly gates," Saint Peter said.

The second man reached into his pocket and pulled out a set of keys. He

shook them and said, "They're bells."

Saint Peter said, "You may pass through the pearly gates."

The third man started searching desperately through his pockets and finally

pulled out a pair of women's panties.

St. Peter looked at the man with a raised eyebrow and asked, "And just what

do those symbolize?"

The man replied, "These are Carols."

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 discusses the time frames for borrowers returning to

A-paper status after a short sale or foreclosure. 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=axmxx9iab.0.epg7qedab.zy6u9cdab.8

721&ts=S0708&p=http%3A%2F%2Fwww.mortgagenewsdaily.com%2Fchannels%2Fpipelinep

ress%2Fdefault.aspx]


[http://r20.rs6.net/tn.jsp?llr=zy6u9cdab&t=axmxx9iab.0.v7uif6dab.zy6u9cdab.8

721&ts=S0708&p=http%3A%2F%2Fwww.thebasispoint.com%2Fcategory%2Fdaily-basis].

For archived commentaries, go to www.robchrisman.com

[http://r20.rs6.net/tn.jsp?llr=zy6u9cdab&t=axmxx9iab.0.fpg7qedab.zy6u9cdab.8

721&ts=S0708&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.)

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

~~~~


 

Chrisman Inc. | 326 Mission Ave. | 326 Mission Ave. | San Rafael | CA |

94901

No comments:

Post a Comment