Remember
HAMP?
What happens to a sizeable portion of HAMP borrowers after their loan resets
from, say 1% to the current market? They re-default, and this article sheds some light
on what servicers like Ocwen and Nationstar are facing.
I
really wish I hadn't read K&L Gates' article covering the lessons learned
from the first 35 CFPB enforcement cases, mainly because of the title "We've Only Just Begun"; not
only do I have that song stuck in my head now, I'm starting to think my musical
library is missing a mixed-tape of The Carpenter's, and the Bee Gees, greatest
hits. Regardless, the article is an interesting read and worthy of a few
minutes. It's framed in three important sections, the first being a look into
the numbers which have been generated since the Bureaus inception; which
include the number of cases, to how many are brought administratively versus in
court, to the frequency with which individuals are named. In the second part
K&L address in detail the remedies and sanctions which have been imposed as
a cost of resolution. Finally, the article makes nine observations about the
current program.
Yes,
most parts of the nation are enjoying some spring weather, but the threat of
flood is still present. The new flood bill was signed on March 24th,
but that doesn't mean home owners are seeing any price relief yet. In fact,
on FEMA's site is only an encouragement to buy flood insurance with
no information on the changes. Lenders are wondering how long it will take to
get relief back to homeowners. Of course the Biggert-Waters Act attempted to
remove the subsidies and have the government sell flood insurance at market
rates; it was a failure: government attempts to issue insurance rates at market
rates (when they're the only market) caused premiums to skyrocket. The private
market has tried to step in to fill the void but the U.S.
Government has decided to jump back in this past
month to address this "injustice". As lenders know, on a relative
basis higher premiums impact low income owners more than high income owners.
On veteran originator wrote, "My client was quoted $7,377/year when the
current owner is paying $458/year. That is a difference of $576/month (or
$117,000 of borrowing power at 4.25% with a 30-yr amortization). Needless to
say, my client is not buying the home at FEMA's current rates.
I'm
confused. What qualifies as "a lot of money" these days? Is $4.3
Billion considered a lot? I'm fairly confident, with $4.3B to swing around, one
could make a competitive bid for the mining rights to downtown LA. According to
a recent OCC study, that's the estimated number which the "Volker
Rule" will cost U.S. national banks, as they comply with legislation which
curbs specific arbitrage/speculation trading. According to the OCC's report, "The
range of our cost estimate primarily reflects the uncertainty of the final
rule's impact on the market value of banks' investments." After
Volcker, the market value "could drop by up to 5.5 percent." Selling
the restricted assets after such a decline could cost the banks as much as $3.6
billion, according to the report. The remainder of the costs would largely come
from as much as $541 million in compliance and reporting burdens.
Let's
catch up with some notable recent state-level changes.
Fannie
Mae has
thrown down the proverbial gauntlet to data ne'er-do-wells; the agency will now
be issuing warning letters to, and assessing compensatory fees on servicers
that submit late or inaccurate reports. In Servicing Notice: Late or Inaccurate
Mortgage Loan Reporting Fannie announced that, effective May 1,
2014, it will begin enforcing the new doctrine. Currently, the agency
sends a Failed Business Rules Report to a servicer that fails to submit its
investor reporting system reports on a timely basis or fails to use the correct
data and formats. After May 1st, a servicer may be assessed fees
which are structured to reimburse the agency for "internal administrative
costs in tracking, reporting, and correcting these errors." So what's the
penalty, you ask? The greater of $250 or $50 per mortgage loan, up to a maximum
of $5,000, for the first instance of late or inaccurate reporting; greater of
$500 or $50 per mortgage loan, up to a maximum of $10,000, for the second
instance of late or inaccurate reporting (if it occurs within one year of the
first instance; and the greater of $1000 or $50 per mortgage loan, up to a
maximum of $15,000, for each subsequent instance of late or inaccurate
reporting.
Will
the U.S. Government ever get around to addressing whether or not MI premiums
should be tax deductible? It has a ways to go, but progress is "USMI
applauds the members of the Senate Finance Committee for voting on a bipartisan
basis today to extend vital homeowner tax relief. We are particularly pleased
that the bill continues to recognize the tax-deductible treatment of mortgage
insurance premiums for low and moderate income borrowers. We look forward
to working constructively with Congress towards enactment of this important tax
relief for homeowners."
In
response to the discontinuation of the Federal Reserve Board CD rates, Fannie
Mae is requiring seller/servicers to use the LIBOR rate as published in The
Wall Street Journal.
Freddie
Mac is
now allowing lenders to submit any missing or incomplete Performing Loan review
documents and will be providing a list of specific documentation that is
missing, incomplete, or otherwise needed to make the final loan decision.
The same process will be used for Non-Performing Loan reviews.
US
Bank will
now allow borrowers to pay off revolving debt to qualify on all loan types
provided that they can supply sufficient documentation in the form of a copy of
the cancelled check, the paid statement from the creditor, or a credit
supplement showing that the balance has been paid to zero as well as evidence
of the account being closed. Accounts that are paid off at closing must
be reflected on the HUD-1, and the file must include an Authorization for
Account Payment/Payoff and Closure form. Underwriters will need to source
and verify all funds used to pay off the debt.
After
Friday's nonfarm payroll excitement, we find ourselves in a lull of
scheduled-market moving news. Nonfarm payrolls increased across most industries
in March, signaling that the recovery is broadening and likely gaining momentum
as payrolls rose by 192,000 while the unemployment rate was unchanged at 6.7
percent but the labor force participation rate and employment-population ratio
both increased. Looking at the whole week, reports on manufacturing, motor
vehicles sales, construction spending, and aggregate hours worked show the
economy bouncing back from weather-induced setbacks earlier this year. The
employment data was in line with expectations that the Federal Reserve will
continue to reduce stimulus while keeping interest rates low. Employment in
January and February was also revised higher, showing that the effect on the
labor force from weather was less significant than previously thought.
This
week we don't have much to talk about until Wednesday's FOMC Minutes from the
previous fed meeting. On Thursday, April 10th, Jobless Claims will product the
number of individuals filing for unemployment insurance for the first time, and
we will also have some import price numbers. Friday finishes the week with the
Producer Price Index (measuring inflation, or lack thereof, at the wholesale
level), and the University of Michigan Consumer Confidence number. In the
early going agency MBS prices are nearly unchanged from Friday's closing
levels, with the benchmark 10-yr. sitting around 2.71%.
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