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As red-blooded American males prepare for the advertising onslaught of
Valentine's Day (2/14), we are reminded that the media is indeed powerful -
just ask Sarah Palin.
(Hey, whatever happened to her?) All this month the public has seen the OCC
foreclosure ads. Supports Independent Foreclosure Review Program with Public
Service Ads. On January 4, the Office of the Comptroller of the Currency
(OCC) announced that it placed print and radio public service advertisements
to inform mortgage borrowers of the Independent Foreclosure Review (IFR)
program launched by the OCC in November 2011. The print feature explains
that borrowers foreclosed upon between January 1, 2009 and December 31, 2010
are eligible to have their foreclosures independently reviewed to determine
if the borrowers suffered financial injury as a result of any errors by
certain large, federally regulated mortgage servicers. The ads will run in
Spanish and English in 7,000 small newspapers and on 6,500 small radio
stations.
For a copy of the OCC announcement with links to the ads, please see
OCCInYourEar
[http://r20.rs6.net/tn.jsp?llr=zy6u9cdab&et=1109130718033&s=8721&e=001MnLPLk
Rwzam1ZLLopyMubKOm_XX9BPamX_fBXgt0eOIB68U79eR0e_6UZO3C-RSY2cbNIqP9yyL5DttioZ
sPo1i3iXIi5kcFBAHO55o83VBCWfjFoav-ncXBHRQrVjIAzwJ8enIqVFDtU5-QH_FimFbWKr42jg
rKxPsr44MpJVjP1IRlesbLuQ==].
Hiring across the country continues for some companies. SecurityNational
Mortgage's Crown Group is hiring retail loan consultants, retail producing
managers, and branch managers for its Retail origination team, and wholesale
AE's who can build their territory through wholesale, correspondent and
retail branch originations. The company is staffing up in the following
territories - Texas (DFW), Florida (Dade, Broward, Palm Beach and Duval
counties), Missouri, Oklahoma, New Mexico, Arkansas and Colorado. (SNMC is
also hiring underwriters and processors in the Dallas area.)
"SecurityNational Mortgage is a nationwide lender offering Conventional,
FHA, VA and USDA loans thru its Retail, Wholesale and Correspondent
business channels."
If you know anyone interested, please send inquiries/resumes to
The other day someone told me that there were actually things on the
internet other than dirty pictures. I was stunned. Seriously, although the
article is a little slanted, here is some chatter on on-line lending
[http://r20.rs6.net/tn.jsp?llr=zy6u9cdab&et=1109130718033&s=8721&e=001MnLPLk
Rwzakd_JE_O6nYpnJXOVFeq-o9AK5u9bw8zXOmbuqIIILgI_bO3wJxyMPdBsOmi4wRVDMhWTMYI0
LFqSRJZJkyVnK6JBssehQ8OPpSmZfnGc0KNUPTiNlNvFfIGrd96rj6ZcIZ9pLq2nQGoMPQdZB0Ti
CGSPT-9sFMycWXzsMOJLssWCBwjMuMGby79x7zYlAa7R-uQQE1w4xX4w==].
The average LO probably doesn't care too much about the proposed settlement
between the states and the servicers. But the large servicers, which are
pretty much the large banks, care, and probably really want to "move on"
from this, which in turn would help return the flow of business. At this
point, supposedly state AG negotiators have reached the final terms on a
settlement deal w/the country's biggest banks, and the preliminary pact is
now being circulated among the 50 AGs. The price tag for the servicers is
around $25 billion, depending on how many states sign on (California and NY
remain on the fence). The tentative agreement still must be approved by all
50 state attorneys-general, and the states will be asked either to agree to
proposals or decline to participate with Bank of America, JPMorgan Chase,
Wells Fargo, Citigroup and Ally Financial. Other banks, such as US Bancorp
and PNC Financial Services, have set aside reserves for such an outcome.
Stay tuned...and remember that the money has to come from somewhere...
Speaking of which, the FHFA noted that forgiving mortgage debt on Fannie Mae
and Freddie Mac loans would cost F&F almost $100 billion. Freddie & Fannie
guarantee nearly 3 million mortgages on single- family homes that are
underwater, but almost 80% of these borrowers are still current. Principal
forgiveness would increase the size of the government's bailout of the
companies, which have cost taxpayers more than $153 billion since they were
taken under government control in 2008. One can almost hear Mr. DeMarco
thinking, "First you made us raise our g-fees, and now this...don't complain
when we lose more money..." For the letter go to: TaxPayerDeepPockets
[http://r20.rs6.net/tn.jsp?llr=zy6u9cdab&et=1109130718033&s=8721&e=001MnLPLk
RwzambhxVBt6bXTAvlW_JDYw1KU5VmmxRv4I3B6W7zMCfRajhlPJdSOA3LN7V8MUVgQCRn9MFwy_
fBhtSXOtVkYjMX3b8-mQiwjWwb-GrD_M2gu5tSqcuEXvogDoYEiEcU-ocoIXbIjUCH8rPeHJpmlD
4qE-k9pq4aWejIqaoa-2FVEw==].
And for more on government mortgage agencies, late last week HUD released
its final rule to improve and expand the risk management activities of the
FHA. It was pretty much as expected but a few things should be noted. First,
HUD will seek to force indemnification for "serious and material"
violations of FHA origination requirements.
For those cases not involving fraud or misrepresentation, HUD will require
indemnification within five years from the date of the mortgage insurance
endorsement. Second, the proposed rule will also require delegated FHA
lenders to continually maintain an acceptable claim and default rate, both
to gain special lender status as well as to preserve it. HUD will require
that the claim and default rate for a lender be at or below 150% of the
average rate of all of the states in which it does business.
Specifically for indemnifications, HUD says that lenders may need to buyback
loans if they failed to verify and analyze the creditworthiness, income,
and/or employment of the borrower, verify the source of assets brought by
the borrower for payment of the required down payment and/or closing costs,
address property deficiencies identified in the appraisal affecting the
health and safety of the occupants or the structural integrity of the
property, or ensure that the property appraisal satisfies FHA appraisal
requirements. HUD may seek indemnification irrespective of whether the
violation caused the mortgage default. Clearly, the rule change should
result in more putbacks to lenders going forward.
What does this mean? Since HUD will be requiring a buyback only if the loan
has seasoned less than 5-years (unless there is fraud), similar to GSE
loans, this may lead to a reluctance from lenders to refinance existing FHA
loans due to the fear of resetting the seasoning on the loan. Further, this
impact is not restricted to loans that are seasoned more than 5-years as the
seasoning is reset on all loans.
Although this change points towards a general tightening in underwriting and
a potential slowdown in prepays, experts are uncertain how putbacks will be
implemented for loans that go through FHA streamline refinancings. For these
loans, FHA does not require an appraisal or income/asset verification and
hence it is not clear what criteria will be used for the putback. That said,
most believe that lenders will be more careful in refinancing borrowers
once this rule goes into effect. Since lenders will be assessed on the
credit performance of their overall FHA book, this should also lead to lower
delinquencies and defaults on newly originated FHA loans going forward.
And put another way, the FHA's rule makes it tougher to qualify for loans
insured by the agency. To qualify for mortgage insurance, lenders must offer
up evidence that their seriously delinquent and claim rates remain at or
below 150 percent of aggregate rates in home states. And the rule authorizes
more extensive examination for lenders in order to ensure that they are able
to meet the FHA's new qualifications.
It requires that certain lenders indemnify HUD in claims over loans. And
let's not forget that many believe the FHA fund is insolvent - perhaps this
will help.
The government has trouble not interfering with home lending in the U.S.,
and in fact HUD has come out saying it would like to see FHA lenders relax
their credit score minimums allowing more borrowers to qualify for FHA
loans. But lenders are telling HUD officials the agency must first change
FHA's lender/monitoring system ("Neighborhood Watch") so they aren't
stigmatized for making loans to borrowers with lower credit scores.
Neighborhood Watch ratios are used by everyone to measure performance in
relation to other lenders in a certain geography, and a high default and
claim rate can trigger audits by FHA or the HUD Inspector Generals, and
these audits often lead to indemnification demands for actual and future
losses. Because of the Neighborhood Watch "triggers", many lenders are only
comfortable originating high credit score FHA loans. Other lenders are
interested in venturing a little down the credit quality curve, and will
often bring in outside help in making sure their originations, operations
and quality control procedures can withstand the scrutiny of the HUD's
Quality Assurance Division, Mortgagee Review Board and the Office of the
Inspector General. The Collingwood Group LLC has been partnering with
lenders in navigating these issues to unlock this valuable product
development opportunity in ways that are responsible and defensible.
Inquiries should be directed to Brideen Gallagher at
(And nope, this is not a paid ad.)
For news moving rates, the two-day FOMC meeting begins today and concludes
with a news conference Wednesday. It is expected that the Fed will maintain
its rock-bottom policy rate, so the anticipation lies in the new decision to
publish rate forecasts of each district bank out to 2015 to show greater
transparency. Any hint of QE3 from the FOMC tomorrow "will send mortgages
off to the races." And tonight's State of the Union Address has been known
to move markets.
Yesterday MBS prices were nearly unchanged whereas the 10-yr T-note lost
nearly
.375 in price and closed at a yield of 2.07%. Today for excitement we have a
$35 billion 2-yr note auction at 11AM MST. In the early going the 10-yr is
down to 2.04% and MBS prices are a shade better.
(Parental discretion advised.)
A woman asks her husband, "Would you like some bacon and eggs? A slice of
toast and maybe some grapefruit and coffee?" she asks.
He declines. "Thanks for asking, but I'm not hungry right now. It's this
Viagra,"
he says. "It's really taken the edge off my appetite."
At lunchtime she asked if he would like something. "A bowl of soup, homemade
muffins, or a cheese sandwich?"
He declines. "The Viagra," he says, "really trashes my desire for food."
Come dinnertime, she asks if he wants anything to eat. "Would you like a
juicy porterhouse steak and scrumptious apple pie? Or maybe a rotisserie
chicken or tasty stir fry?"
He declines again. "Naw, still not hungry."
"Well," she says, "would you mind letting me up? I'm starving."
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 residential lending and mortgage programs
around the world. 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=r9kpv5iab.0.epg7qedab.zy6u9cdab.8
721&ts=S0720&p=http%3A%2F%2Fwww.mortgagenewsdaily.com%2Fchannels%2Fpipelinep
ress%2Fdefault.aspx]
[http://r20.rs6.net/tn.jsp?llr=zy6u9cdab&t=r9kpv5iab.0.v7uif6dab.zy6u9cdab.8
721&ts=S0720&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=r9kpv5iab.0.fpg7qedab.zy6u9cdab.8
721&ts=S0720&p=http%3A%2F%2Fwww.robchrisman.com%2F].
Copyright 2012 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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