Here's
an interesting interactive map showing home price appreciation by state
during different time periods. (Pass your cursor over the time period or
state desired. Thanks to Brian Larrabee, founder of Estate of Mind, Inc.,
New York, for passing this along.)
There is a lot of
transition and uncertainty out there with LOs and companies. Speaking of
which, Strategic Growth Partners 360 LLC just celebrated its first
year as a business entity, and Chris Meyer, Managing Partner of SGP360, shared
that 28 companies reached out to him throughout 2013, all looking for the
same thing: mortgage professionals that could add value and volume in
growth markets. Chris said that "as he evaluated potential
clients he was able to identify upwards of a dozen of the best platforms
in the industry, companies that had the right combination of leadership,
integrity, culture, product, pricing & operations and all with the
dedication and resources to grow and support new hires. Further adding to
SGP360's value proposition, each quarter SGP360 added a new recruiter
(Dan Greenwood in Missouri in Q2, Kent Montavon in Colorado in Q3 and Tom
Courts in California in Q4).
Narrowing down the job focus,
in Northern California Landmark Mortgage Group (a division of Opes
Advisors) has expanded its footprint in the East Bay with the opening of
a Danville location. Landmark is looking for experienced mortgage
advisors seeking "a full service banking platform with
competitive rates and exceptional comp plans." Landmark Mortgage Group
currently has locations in Pleasanton, Livermore, and Santa Cruz, and
interested parties should contact Branch Manager Audrey Boissonou at aboissonou@lmglending.com
or Todd Allen at tallen@lmglending.com.
Yes, transition is not
confined to independent mortgage banks looking for partners, or banks
looking to merge. These folks say that we can expect a wave of M&A
inside the financial advisor industry.
And for the same reasons that we're seeing it with residential lenders:
reducing costs, increasing efficiencies, and strength in numbers.
And maybe February
fundings won't be as bleak as many are expecting. This morning we learned
from the MBA's poll of 75% of retail lenders that residential mortgage
applications in the U.S. rose last week as refinancing activity
climbed by the most in two months. The overall index was +2.6%, the first
advance in a month, although the MBA also released data for the week
ended Dec. 27, which showed the index decreased 4.2 percent to the lowest
level since December 2000. The gauge of purchase applications fell 0.5
percent after rising 2.4 percent the week before. The measure of
refinancing climbed 4.6 percent after decreasing 8.9 percent in the
previous period. (Refi biz is still running at about 63% of total apps.)
Yup, three days until
QM - and hopefully it will be a non-event for lenders since we've had
so much advance notice. Senator Elizabeth Warren, in fact, believes that
the new rules will help buyers. But
lenders remain unconvinced, and time will tell.
The MBA is certainly
keeping an eye on it, as is the National Association of Realtors. It is
hoped that we'll see "homebuyers access safer mortgages that meet
strong underwriting standards." Or so spoke Consumer Financial
Protection Bureau Director Richard Cordray at an event held by
NAR. (Not NRA!) "The Ability-to-Repay rule is straightforward. It
puts behind us once and for all the kind of irresponsible lending that
disrupted the housing market and so badly damaged our economy, and it
provides strong new consumer protections while preserving needed access
to mortgage credit," he said of the rule and its Qualified Mortgage
standard. To echo that, NAR President-elect Chris Polychron observed,
"These regulations will go a long way to protecting consumers from
receiving loans that may be inappropriate for them and gives them
additional legal protections. NAR supports these changes and has provided
input throughout the rulemaking process."
Not so fast, however.
Cordray acknowledged concerns that the new rules could further constrain
credit in an already tight lending environment. "Importantly, our
rule also takes careful account of these access-to-credit issues,"
he said. "Those lenders that have long upheld strong underwriting
standards have little to fear from the Ability-to-Repay rule. Qualified
mortgages cover the vast majority of loans made in today's market, but
they are by no means all of the mortgage market." Cordray explained
the basic criteria for Qualified Mortgages, which cannot be made to a
borrower with a debt-to-income ratio greater than 43
percent. "They also cannot have certain risky features, such as
paying interest only or even negatively amortizing so that each month the
consumer owes more than they did before and loans must have relatively
reasonable points and fees," he said. (Remember that F&F
have not, at this time, modified DU & LP regarding DTIs.)
The rule includes a 3
percent cap on points and fees, which NAR believes unfairly discriminates
against affiliated lenders who have to count many more items toward fees
and points than large retail financial institution, such as title
insurance charges and escrow for homeowner's insurance. "The
problem is that under this rule, affiliated and non-affiliated firms are
treated differently," said Polychron. "It's NAR's view that
this would be a disadvantage to many real estate affiliated lenders and
reduce the choices available to consumers of where they can get a
mortgage, and because the unaffiliated lender must still use a title
company, the consumer pays the same amount either way."
At the event, Lawrence
Yun, NAR's chief economist, explained the future of homeownership depends
on greater access to credit. "Over the past eight years,
homeownership in the U.S. has decreased while many in the growing
population have turned to renting instead of buying a home. We need to
ensure that good, creditworthy renters can someday have the
appropriate access to credit so they can build equity through
homeownership." But Barry Zigas, the director of housing policy for
the Consumer Federation of America, applauded the CFPB for listening to
stakeholders across the country to create a meaningful rule to protect
consumers. "Consumers are finally going to be in an environment
where their ability to repay a loan will be the fundamental determining
factor about whether they'll get a loan or not. This is a terrific week
for Americans," he said.
Let's see what those
clever lenders, investors, and vendors are up to - nothing ever remains
the same, right?
California's Mountain
West Financial alerted clients to its Compliance Resource Portal.
Mortgage Grader
announced the US Patent and Trade Office granted it a patent that
describes various features of a lender compliance testing and measuring
system. "On the heels of the Consumer Financial Protection Bureau's
2014 Ability-to-Repay (ATR) and Qualified Mortgage (QM) Rule
requirements, Mortgage Grader will soon offer its lender compliance
testing and measuring system. Mortgage Grader will offer independent,
fact-based loan file reconstruction, proving that lenders accurately
qualified borrowers, accurately priced loan terms to borrowers and
accurately matched and offered the lender's best available credit terms
with ATR and QM in mind. Borrower data is analyzed to calculate income
and debts. Nothing is assumed. Pricing data and the lender's
eligibility/underwriting guidelines from the same date and time are used to
determine approvals or denials as well as the actual pricing for those
approved loans. Just like a math proof, there may be no better way
to demonstrate whether lenders are accurately qualifying borrowers except
when the reconstructed loan file figures match exactly with the original
terms that the lender provided." For more information contact Jeff
Lazerson at jlazerson@mortgagegrader.com.
New York Mortgage
Trust announced the pricing of its public offering of common stock.
As mentioned in this
commentary earlier this week, members of the $16 billion PenFed will now be able to change their
mortgage rate without refinancing through software developed
by Mortgage Harmony.
And now Wells
Fargo has created a "Swat Team" to keep its loans in-house in
response to QM. In a Bloomberg story by Dakin Campbell and John
Gittelsohn, Wells Fargo has assigned about 400 underwriters to originate
mortgages for the bank to hold, with as many as 40 percent of the loans
likely to fall outside government guidelines taking effect this week.
"The bank is training the group as a way to increase lending without
losing control of quality, according to Brad Blackwell, head of portfolio
lending for the San Francisco-based lender. The group will review loans
including those with terms that prevent them from qualifying for
protections provided by the Consumer Financial Protection Bureau, or
CFPB, under new rules, he said...pushing the initiative to compete for
wealthier clients seeking non-conventional loans such as those with
interest-only payments."
The article goes on to
say, "Wells Fargo wants to give its clients more loans that can't be
sold to the government-backed firms. The bank is confident the new
underwriting group, which will make both qualified and non-qualified
mortgages, will allow it to originate debt that doesn't meet the CFPB's
safe harbor, said Blackwell. Non- qualified mortgages could be about 5
percent of the bank's total mortgage production, he said. The approach
represents a change for the bank, which long made loans with the
intention of selling them all. 'In the early days of our history, we were
a mortgage bank: our primary responsibility was to originate and sell,'
Blackwell said. 'Today we are originating for our portfolio. These are
loans that we will hold for their lifetime.'" Hey, Wells, or any
lender, isn't in business for their health - every bank or
servicer should be doing the same thing. Here's the link.
BAML has
updated its Non-Conforming guidelines to cap maximum loan amounts at
$1.5m for 2-unit properties and $1m for 3-4 unit properties for purchase,
rate/term, and cash-out transactions; to require nine months' reserves
for loan amounts of $1m or les, 12 months' for loan amounts of$1-2m, and
24 months' for loan amounts over $2m; and to no longer consider co-ops
eligible for secondary financing. The maximum CLTV adjustor for
properties in AZ, FL, and NV has been changed to 5.0 for all loan amounts
up to $1.5m, and the cap structures across all ARM products will remain
at 5/2/5 to align with the retail bank. In addition, all CA ARM
transactions will be subject to an additional pricing adjustment of -.25.
Green Tree has
updated its guidelines to state that it will not purchase loans to
principal owners or majority shareholders (25% or greater ownership) of
Business Lending clients. Additional revisions stipulate that
investment property borrowers have a two-year history of rental property
management within the last three years, that the LTV/CLTV/HCLTV be based
on the lesser of the sales price or current appraisal value, that a
Lender Full Review be provided for all primary residence existing Florida
condo projects, that seller contributions to high balance primary
residence and second home transactions are subject to a 3% maximum, that
all foreign assets used for down payment and closing costs be deposited
into a US bank account prior to closing, that all second home and
investment property transaction must be arm's length, that desk reviews
will not be permitted in place of appraisals, that all AUS Approve and
Manual Underwrite transactions require two reported credit scores, that
all disaster-related repairs be completed as required by the appraiser,
and that a year-end profit and loss statement be provided if the borrower
has not filed prior year tax returns. In addition, Green Tree has
clarified that written VODs and VOEs cannot serve as standalone
documentation and that one month's bank statement/paystub is required for
all loans regardless of AUS decision.
No one seems to be
wringing their hands over Europe anymore. In fact, Ireland has
re-entered the bond market for the first time post bail-out.
But why should anyone here care about "shadow banking"
in China? Well, no one doubts the size of China's economy - but what
about its strength? If China's economy is weaker than we thought, then
the world's economy could be in the same shape - which would lead to
lower rates. But I doubt anyone is hoping for a world economic slowdown.
Turning to the markets,
following Monday's improvement Tuesday did not disappoint anyone waiting
to lock in rates. The Fed's buying is "more than a match", as
Thomson Reuters pointed out, for the originator supply that continues to
be less than $1 billion per day. "This led to spreads holding
tight," and helped agency MBS prices to rally about .250.
We've had the December
ADP employment numbers, which have varying degrees of relevance and
predictive ability. They were expected to show an increase of 200k, and
came in at +238K. Later today we'll have a $21 billion 10-yr note
auction, and the minutes from the December 18-19 FOMC meeting and
investors will find out more on the discussion to taper and possibly how
it will proceed. For numbers, yesterday the 10-yr closed at 2.94%, and
in the early going today we're at 2.98% and MBS prices are worse .250.
I went to the dentist
yesterday and he said, "I'm afraid your molars will have to come
out."
"Why?" I asked,
"There's nothing wrong with them."
He replied, "Yes I
know, but I need to buy a new car."
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 2014 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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