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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
website, http://www.hsoawholesale.com
[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
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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.)
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Chrisman Inc. | 326 Mission Ave. | 326 Mission Ave. | San Rafael | CA |
94901
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