I want one of those jobs where people ask, "Do you
actually get paid for
doing this?"
Most folks involved in lending or real estate rarely hear
that, however, and
in fact unfortunately those originating FHA & VA
loans are seeing their
production in many markets drop more than expected. It
seems that we're
seeing a "triple whammy"
in that sector. Rates have gone up, which have impacted
refinancing. But in
addition to that, the lifetime MIP, which will help HUD
and the
capitalization of FHA, is
hurting pricing and putting a dent in production.
Lastly, many of the markets that lend themselves to FHA
borrowers are seeing
the all-cash phenomenon play itself out.
But if you're a seasoned, successful, purchase-oriented
Loan Officer or Loan
Production Office, West Town Savings Bank wants to hear
from you. Since
1922, West Town Savings Bank's progressive customer
service and professional
national lending team have been providing successful
lending solutions to
generations of clients...and is still growing strong! So
if you're
highly-motivated, interested in joining a
well-established name in the
banking industry, and want to play an integral role in
our continued
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ur_K_wyy]
for more information. West Town Savings Bank is an Equal
Opportunity
Employer (EOE).
Remember 203(k) loans? They're back! Jim Bopp with
Platinum Home Mortgage
writes, "I do believe that more banks doing FHA
loans (203(b)) should be
thinking about and in fact embracing the FHA 203(k)
program. I think one of
the things that stop them is that they do not have the
servicing expertise
to handle these loans and may also not be aware that
there are many
excellent non-bank secondary market outlets for the
product."
Indeed, although we saw some stability last week, there
has been rapid
increase in rates over that last 45 days and many refi
shops are hurting for
loans. Many are trying to reinvent themselves into a
purchase shop and they
are finding that
many LOs don't have anything to talk about when they go
into offices. But so many times people forget about
selling the 203k and the
HomeStyle renovation products which allow a convenient way for borrowers to
make renovations, repairs or improvements to existing
residential
properties: a purchase loan that will allow that REO
which may have been
neglected over the years come back to life and improve
value before they
move into the home.
Banks have started to offer "construction to perm"
loans again which shows the economy and property values
are improving and
this is a great way for LOs to capture new business where
few play today.
Building your rolodex
is the only way to survive the ups and downs in the
crazy space we play in.
Lenders are turning to Standard and Streamlined 203(k) as
refinance volume
erodes.
Many lenders have used the Streamlined 203(k) but there
is a new push to
have both products. Finding and working with good FHA
consultants is the
key. Experience and execution are the most critical
elements in a good
renovation program, and the consultant is one of the most
important assets.
While this product is higher maintenance than most, a
dedicated group can
make this a profitable endeavor with the right investor.
Jim B. did put in a little sales pitch. "Platinum
has a dedicated team and
resources to work with lenders from starting the process
through the
completion of the project.
As a Direct Endorsement lender working with Platinum, you
can choose how you
want to structure your business with options that work
for your company.
With training, pre-closing review, communication and a
commitment to 'same
day, next day' turnaround on purchase reviews and draws,
Platinum can be the
solution to your renovation needs."
At the first of every month, FHA publishes a list of all
the endorsements of
203(k) loans by lender and Field Office for the whole
country. Through June
30, there have been 14, 562 Standard 203(k) and
Streamlined 203(k) loans
done nationally. While
the annualized number is slightly lower than in the
last couple of years, the slowdown in refinance volume
should lead to an
increase in 203(k)'s for the last quarter.
You can find out
more on the "Computerized Homes Underwriting Reporting
System"
(CHUMS) at
NotTheSharkBait
[http://r20.rs6.net/tn.jsp?e=001N5DGR2Om2Esx0zb8ZOPMsnaiXGZxRo1xpgHDrzLlHywU
yYNfPLqFQIZ7JlT3V4gHYMdyaYxLN1hkQtw7hondNHVctjJ_wAH91U1k21YiiP71Ov1OkfHUQPVt
aWOAl5GMt0GRJxZvzSsSy4-OWkL_hw==].
Those who specialize in these types of loans believe that
many mortgage
banks do not want
to sell these loans to some investors due to the high
level of contact
that takes place with the customers after the closing (the
3 to 6 month draw process that an investor takes over).
But the truth is
that banks should look into these products not only for much needed or
desired loan volume and profits but they are excellent
"community banking"
and lending tools that help transform neighborhoods,
raise real estate
values in markets that need them and also have possible
CRA Lending benefits
to the bank by putting money back into communities that
need it most.
Contractors, suppliers, and municipalities all benefit by
properties being
improved and back on the tax rolls.
Jim's advice is, "When looking for those sources
they should be careful to
interview, screen and select their end investor by
evaluating the length of
time the investor has been actively involved in
purchasing 203(k)'s in the
Secondary Market, the overall experience of not only the
sales and marketing
support side but also and more importantly the loan
review/audit, draw
management and loan servicing personnel. Even non-bank lenders who have
recently become GNMA Issuers should look to find
investors that not only
understand the 203(k) product and its underwriting
guidelines but also ones
that have the knowledge, experience, and operating systems
in place to
handle the additional investor accounting, IRS Reporting,
and GNMA reporting
that goes along with the servicing of these loans. In
addition to these
factors they should also look for investors that are
flexible and provide
choices for the bank in the level of loan structuring,
pre-closing reviews,
underwriting and draw management options that best suit the bank based on
their level of staffing, expertise and desire to be involved with their
customers."
Mr. Bopp continued, "Last but not least, banks and
non-banks should look to
offer both the Standard/Full and Streamlined FHA 203(k)
programs in order to
ensure they are putting their customers into the very
best loan program
based not only on the borrower's ability to repay but
also to make sure that
any and all repairs that are either required or desired
by the homeowners
are included in the loan and address any and all HUD
Minimum Property
Requirements and/or local and state building codes.
By offering both
products banks will be giving their underwriters not only
access to proceeds over the $35,000. Streamlined limits
but also adding the
benefit of the FHA 203(k) consultant and the expertise
and safeguards they
bring to the program to protect both the customer and the
bank.
"With all of the shadow inventory, foreclosure
inventory (bank, tax,
municipal etc...) and refi volume going away, many
lenders typically have
and will gravitate towards the FHA 203(k) product as it
has always been
countercyclical and is not as interest rate sensitive as
other loan types.
The programs can also be used to get people out of slightly underwater and
minimal equity positions when they desire some home
improvements. If
rising rates slow down values again this will continue to
be
a viable source of loans (customers doing home
improvements 'fix up, instead
of moving up'.)" Thank you Jim!
And as you might expect, companies have begun offering
related services, for
example, I received this note from Brian Mingham.
"C.F.S.I. Loan Management
reduces construction project risk for lenders nationwide.
We manage project
feasibility, fund control
and lender reporting for financial institutions,
mortgage bankers and funds. Our high touch, customer
centric approach allows
lenders to concentrate on originating construction loans
while we manage the
construction phase from beginning to end."
(No, this is not a paid announcement, but if you want
more information
The markets were relatively quiet yesterday, and Capital
Markets folks hope
that it carries
through all week. Last week the focus was on the Fed. One
question people have is, "What about all that
interest income after QE 1-3?"
While the Fed's balance sheet has mushroomed from $800
billion in 2008 to
$3.3 trillion today, and still counting, these holdings bring in
considerable amounts of interest. Because the Fed must return all residual
earnings to the Treasury, in 2012 the Fed paid Uncle Sam
$89 billion! In
2011, it was $77 billion.
Bernanke painstakingly clarified the relationship of
tapering to data and to
rates in his remarks last week. "I emphasize that,
because our asset
purchases depend on economic and financial developments,
they are by no
means on a preset course"
and "The
Committee has said it intends to maintain a high degree of
monetary accommodation for a considerable time after the
asset purchase
program ends and the economic recovery strengthens."
Following his
testimony, many economists still believe large scale asset purchases would
be reduced beginning at the September meeting and ending
in March as they
are projecting a faster decline in the unemployment rate
than the Fed is.
Perhaps of more interest to lenders is uncertainty about
whether Watt would
extend the HARP cut-off date to pre-June 2010
originations from pre-June
2009 if he becomes director. Is the industry looking at
another HARP?
Regarding the general trend in the economy, which should
influence rates,
Wells Fargo's economics group wrote of last week,
"Most of the economic data
pointed to a soft patch in economic growth in the second
quarter. Retail
sales ticked higher in June but less than many analysts
expected, while
consumer inflation rose more than expected for the month. Housing starts
data also pointed toward a downshift in the pace of new
construction and
permitting activity, likely due to temporary factors. Given the data this
week, we have downwardly revised our economic outlook.
We now expect second quarter GDP growth to come in around
1.2 percent, with
growth accelerating in the third and further quarters of
this year. Another
disappointing piece of news this week came from the
housing market. Housing
starts in June fell
9.9 percent to an 836,000 unit pace. The pullback in the
pace of starts was
concentrated in the volatile multifamily component, which
posted a 26.2
percent decline for the month. Building permits also fell
for the month,
declining 7.5 percent, with the multi-family component accounting for the
decline. While the housing starts numbers were
disappointing, there were
likely some temporary factors related to the heavy rain
in the South that
impacted the pace of starts for the month. Taking a step
back and looking at
the big picture, housing starts are still up 10.4 percent
from last year."
NAR told us yesterday that June's Existing Home Sales
slipped (no inventory
and lack of first time home buyers!), but that prices
continue to move
higher. Existing-home sales unexpectedly fell 1.2%, but
still had the
second-highest level of sales since November 2009, and
are 15.2% higher from
a year ago. The national median existing-home price was
$214,200 in June, up
13.5% from June 2012, making for 16 consecutive months of
year-over-year
price increases. The median time on market for all homes
was 37 days in
June, down from 41 days in May, and is 47 percent faster
than the 70 days on
market in June 2012. Short sales were on the market for a
median of 68 days,
while foreclosures typically sold in 39 days and
non-distressed homes took
35 days.
Forty-seven percent of all homes sold in June were on the
market for less
than a month.
Rate-wise yesterday, the 10 year was flat and closed at a
yield of 2.49%,
and MBS prices barely budged although were helped by a
very light mortgage
origination volume (less than $1 billion). Mortgages have
rallied over the
last 11 trading sessions, and current coupon Fannie MBS
prices are now
better by 2.25 points versus the lows we saw on July 5.
(During the same
period the 10 year is better by 1.875 in price, moving
down from its high of
2.71%.) This morning the 10-yr is at 2.52% and MBS prices
are .125-.250
worse.
A rancher needed a bull to service his cows but had to
borrow the money from
the bank to do so.
The banker who lent the money came by a week later to
see how his investment is doing. The farmer complained
that the bull just
eats grass and won't even look at the cows.
The banker suggests that a veterinarian have a look at
the bull.
The next week the banker returned to see if the vet had
helped.
The farmer looked very pleased. "The bull has
serviced all my cows, broke
through the fence, and has serviced all my neighbor's
cows too!"
"Wow," says the banker, "what did the vet
do to that bull?"
"Just gave him some pills," replied the farmer.
"What kind of pills?" asked the banker.
"I don't know," says the farmer, "but they
sort of tasted like peppermint."
If you're interested, visit my twice-a-month blog at the
STRATMOR Group web
[http://r20.rs6.net/tn.jsp?e=001N5DGR2Om2EuGc_MZt2u13DEa5ZmWpQLrkD3fhLQxwd0i
q5zIG_HUBzkyjc_GCYR3c5PArUn7uzFud4d6_zNU8XIyybGhRiLSe_EK5ery-UTAVWPmaDrtsEg_
iL-ZsoJc].
The current blog is, "A Little Technical Knowledge
About REITs." 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
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Q500ypG1JdmSy5RMei3J-jOd_VAHHON5Y7xKlzE5-jQdjMm1Fei6WYmLNytP1E92hemthS4vrzvH
KjmK2kTh39RWFygEPHtXjmVaBE0PqtaXAPcwpBZd6IYBdyq_D-j1jjh9jP3jzQ==]
[http://r20.rs6.net/tn.jsp?e=001N5DGR2Om2EsvnwD_TFJNOHBUPDJ8K1aaf9dsyHGFBhBB
RtOEVbXp0Zc00mjtessOWVrHMa_vdj88wuQE3lbhwMx_teB1R5QQ5oVDC0c3ckBiTbSP5b7cXDl1
btfzOceZft93W7vMerdQZPQwB8R3iz9y2xBy74ac].
[http://r20.rs6.net/tn.jsp?e=001N5DGR2Om2EvcIFAh1K86zQtytkh033huVhRFcJWykvyo
9M6FoDdQbbSyoDarPLi_lL_uvvmOL3dRbLXHgtqhLlY_y9J78i6SdMAo-Ov6ukCH4vqgdSzOePk9
kmPk0lTp].
Copyright 2013 Chrisman LLC. All rights reserved.
Occasional paid job
listings 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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