Before we delve into the
agency, lender, and investor news, here is some holiday cheer....maybe. On
December 9th, the Federal Reserve released its Z.1 data revealing that homeowners in the United
States had the value of their home equity increase $417B in the third
quarter and $2.2T over the past year. This is nothing too earth
shattering as analysts have been screaming this from the proverbial
rooftops for weeks now. Homeowners' equity now stands at $9.2T, from a
trough of $6.0T during FY11. Some analysts believe that this increase could
support the issuance of home equity loans by banks, improve the credit
profile of the U.S. consumer, increase the pool of borrowers available to
refinance, and increase the mobility of the U.S. homeowner.
With higher rates comes
talk of ARM business. The MBA's weekly poll of retail applications shows
that 8% of new apps are ARM loans. But the MBA puts out additional
stats, and when one looks at state-level numbers it is easy to see the
differences. For example, in September, when overall ARM applications were
running at 6% of the total, California's ARM percentage was 14.5% versus
Oklahoma's 2.3%. For all of 2012, California's ARM share was 9.7%;
Mississippi's was .8%. As you can guess, there is a direct correlation
between ARM percentage and average loan amount - typically CA and Hawai'i
have the highest state loan amounts.
Speaking of California,
plenty of high income individuals have relocated to other states, such as
Nevada or Texas, due to the increasingly onerous tax burden in The Golden
State. Nationwide, while 43% of the population pays no federal income
taxes, down from 47% in 2010, two-thirds of that 43% pay payroll taxes,
leaving just 14.4% of the population that pay no federal income or payroll
taxes. Of those, two-thirds are elderly with incomes below $20,000/year and
one-quarter are nonelderly with equally low incomes. The remaining 1.3% of
the population includes big givers of charity, those with large medical
bills etc...
As noted in Saturday's
commentary, after some lengthy discussions with the MBA and other
groups, incoming FHFA director Mel Watt agreed to delay the implementation
of fee increases planned for March & April of 2014. (At this
point loan level price adjustment changes are on hold; gfee changes are yet
to be determined: per one well-placed source, "I believe he will delay
all, but more information is being sent to him.") As the WSJ
noted, "Rep. Mel Watt (D., N.C.), the incoming director of the
regulatory agency that oversees Fannie Mae and Freddie Mac, said Friday
night he would delay an increase in mortgage fees charged by the
housing-finance giants, which was announced earlier this month by that
agency. Upon being sworn in, 'I intend to announce that the FHFA will delay
implementation' of the loan-fee increases 'until such time as I have had
the opportunity to evaluate fully the rationale for the plan," he said
in a statement."
The WSJ article noted,
"Executives at Fannie and Freddie said last month that the fees they
have been charging are enough to cover expected losses. But the FHFA, under
the leadership of Acting Director Edward DeMarco, has said that those fees
should rise in order to allow private investors, which target a higher rate
of return, to compete. An FHFA official Tuesday said that even with the
latest changes, Fannie's and Freddie's fees would be considered low
relative to private firms'."
But that was not the only
potentially good news for lenders. On December 6, 2013, the Federal Housing
Administration (FHA) issued Mortgagee Letter 2013-43 which announced FHA's
loan limits for case numbers assigned on or after January 1, 2014 and
through December 31, 2014. The FHA is extending the date for
interested parties to request a change to high cost area loan limits
announced in ML 2013-43 from January 6, 2014 to January 31, 2014. The
MBA did an analysis of the information for the industry, looking at the
impact of the 2014 FHA loan limit change on the 3,000 counties in the US.
"These are broken out by counties that are in metro areas and
divisions, vs. counties that are in non-metro areas and micro areas. Here
are the HUD loan limits files for 2013 and 2014 from the source."
Breaking things down, the
MBA tells us it turns out that 52 percent of counties in a metro area or
division saw no change in loan limits, while 92 percent of counties in a
non-metro or micro area had no change in loan limits. But 43 percent of
the counties in a metro area or division had some reduction in loan limits,
compared to 6 percent in the non-metro or micro areas. And 25 percent of
the counties in a metro area or division had greater than 10 percent
reduction in loan limit (sum of the 3 blue bars on the left side of the
chart), compared to 4 percent of the counties in non-metro or micro areas.
The MBA calculates that, "For the counties with the largest reduction
in loan limits, the median sales price used to determine the limit was
unchanged in most cases, with some increases, but hardly any decreases. It
appears that the biggest impacts to the loan limit reductions were from
using 115% in the calculation, dropping the high cost limit from 729k to
625k, and moving some counties to the floor of 271k."
Returning to the extension
for public comment, one can't merely write to HUD and whine about loan
amounts. "Requests for a change to loan limits for a specific local
area will only be considered for counties for which HUD does not already
have home sale transaction data for the calculation of loan limits. A
request to change loan limits must contain sufficient housing sale price
data, with the request listing one-family properties sold in a specified
high-cost area, and where the sale took place within the look-back period
of January through August 2013. Housing sale price data included in
requests should also: differentiate between single-family residential
properties and condominiums or cooperative housing units, and distinguish
between distressed and non-distressed sales, to the extent possible. All
requests for local area loan limit changes should be submitted by January
31, 2014, and only to FHA's Santa Ana Homeownership Center." Review
Mortgagee Letter 2013-43.
Let's keep playing catch up
with recent company-specific news - some of it is actually good.
But first, a correction.
Last week I noted, "As of January 10th, Chase will apply a
minimum FICO requirement of 60 and a maximum DTI of 45% to all
Chase-serviced DU Refi Plus HPML transactions." No, this doesn't mean
subprime is back. Some folks caught that typo, and I gave a few of them an
all-expense paid trip to Cancun. (That is the last time that will happen,
sorry.) It's 620.
Stonegate Mortgage Corporation announced that it
completed the acquisition of Crossline Capital, a California-based mortgage lender that originates
and services consumer direct mortgages. "The acquisition of Crossline
expands the Company's retail channel and accelerates its geographic
expansion, which is consistent with the Company's acquisition and growth
strategy. Crossline is being operated as a wholly-owned subsidiary of
Stonegate Mortgage. Crossline is licensed to originate mortgages in 20
states (AZ, CA, CO, CT, FL, GA, ID, MD, MA, NH, NM, NC, OH, OR, PA, RI, TX,
UT, VA, and WA) and is an approved Fannie Mae Seller Servicer. In addition,
it operates two national mortgage origination call centers in Lake Forest,
CA and Scottsdale, AZ and also operates retail mortgage origination
branches in seven other locations in Southern California. Crossline
originated $572 million in mortgage loans during the year ended December
31, 2012 and $374 million in mortgage loans during the nine months ended
September 30, 2013.
Speaking of which, Crossline
Capital, being the beneficiary of Stonegate's investment, is building out
its retail channel on the West Coast. It will still operate as
Crossline Capital with the same tax ID, management, warehouse lines,
lenders, policies/procedures, culture, etc. but with Stonegate as its
financial partner to stand behind that growth. As Ryan Boyajian notes,
"We now have the balance sheet power that will dwarf most competitors,
immediate access to Non-QM mortgages, expanded Jumbo products with much
better pricing as well as private labeled jumbo securitization, etc." Any
interested parties (loan officers, branch, area and regional managers)
should contact Mr. Boyajian directly at rboyajian@crosslinecapital.com.
Western Bancorp
announced a new program designed for relief for self-employed borrowers.
The company recently announced a 5/1 ARM for self-employed borrowers using
Alternative Income Verification (AIV). The program also offers an
interest-only option, non-owner occupied and options for first time
borrowers, with loan amounts from $200,000 to $2,500,000. Income is
verified using bank statements to support the borrower's income, with no
tax returns, no P&L, and no 4506T requirement. Western Bancorp lends in
California, Washington, Idaho and Montana.
Wells Fargo Funding (correspondent)will
be aligning its tax returns policy with that of FNMA to require a fully
complete and signed 4506-T for each business tax return used to underwrite
the loan in addition to the 4506-Ts required for personal tax
returns. In cases where an extension for business tax returns has
been filed for the most recent tax year, the loan file must include Form
7004 and 4506-T transcripts confirming "No Transcripts Available"
for the applicable year are required. For self-employed borrowers who
do not use their self-employed income to qualify, the first page of the
most recent personal federal tax return must be provided so that
underwriting can determine whether or not there was a business loss.
This affects all Conventional Conforming loans with applications dated
December 16th and after.
Wells has extended the
deadline by which DU loans with LTV/CLTV/TLTVs over 95% must be locked to
December 23rd. The delivery and purchase deadlines have been
updated as well; all loans must be delivered on or before March 3rd
and purchased on or before May 1st.
As part of its standard
guidelines, Wells is now accepting High Balance VA loans from $700,001 to
$1.5m with DTIs of 41% or less, while all such loans with DTIs over 41%
will be considered for purchase per the existing exception process.
Homeward has
rolled out its new FHA and VA IRRRL ARM products, both of which are now
eligible for purchase from approved correspondents. Both product
matrices have been published to the Homeward website, and as a note, VA
IRRRL ARMs will be offered under the 3/1, 5/1, and 7/1 products.
Homeward has revised its
suspended closed loan policy to state that failure to supply the
information or documentation required to purchase the loan within five
calendar days from the later of the delivery expiration or the last initial
review date will result in late fees. Sellers may be provided with
additional time for an extension or suspense fee or re-pricing of the loan
in question; however, the delivery may also be rejected and/or incur a
pair-off fee.
Congrats to John Hummel,
ex-Citibank, who is now CMG Financial's SVP of Consumer Services.
He will be helping with corporate business development initiatives, and
will now expand his focus to managing all production efforts for CMG
Financial's consumer-facing sales channels, including its traditional
Consumer Services Branch (Retail), Affinity Partnerships and National
Builder Division. "With the continued growth the company expects, it
is important that we have strong, capable leaders that make up our senior
management team. John Hummel fills a vital seat perfectly with respect to
our B-to-C business operations. He brings a level of experience and
expertise that will help take the organization as a whole, to another
level, while fulfilling our expansion objectives in key areas." said
Christopher M. George, President and CEO of CMG Financial.
Well, there won't be a lot
of locks coming in during the next few weeks, and many folks are taking
some time off. The economic calendar is somewhat light this week, but still
has some numbers that can move rates around, especially with lower volumes,
fewer traders, and less liquidity. Today is the Personal Income and
Spending/Consumption duo, a spate of PCE numbers to help us measure
non-existent inflation, and we'll also have a University of Michigan
Consumer Confidence number. Tomorrow is the MBA apps numbers, along with
Durable Goods and New Home Sales; along with folks scooting out early.
Wednesday is Christmas, and then we resume things Thursday with Initial
Jobless Claims and Pending Home Sales. In the early going, the 10-yr,
which closed Friday around 2.89%, is around 2.90% and there is little
change to agency MBS prices.
Joe M., a VP with a major
aggregator, writes:
'Twas the night before
Christmas and all through the shop, the LOs are pushing another loan to the
top.
The processors all running on sugar laced highs, trying to satisfy all
borrowers why's.
The lock desk keeps searching for more YSP, but now they realize that
service is key.
Management still looking to close one more loan, in order for borrowers to
get a new home.
Compliance team ready's for changes to come, just hoping these updates
really are done.
Closing and shipping are running on caffeine, trying to help the American
dream.
So put down your smart phone, your BlackBerry and tablet, give thanks to
your co-workers, and make it a habit.
As we close out the year and look to the next, and look at the clutter that
now fills our desks, we give thanks for our jobs our family our friends,
for that we are grateful so I thank you again!
If you're interested, visit
my twice-a-month blog at the STRATMOR Group web site located at www.stratmorgroup.com. The current blog is, "What
Do We Know About the Future of the Agencies?" 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://www.mortgagenewsdaily.com/channels/pipelinepress/default.aspx.
For archived commentaries, or to subscribe, go to www.robchrisman.com. 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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Nice article. Everyone should have a basic understanding of the Law and their Legal Rights.FHA mortgage lending Solutions offers affordable fixed rate mortgage loans to first-time homebuyers and repeat homebuyers in Ma
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