To celebrate American Indian
and Alaska Native Heritage month (November), the U.S. Census Bureau tells us
that in 2013 there were 5.2 million American Indians and Alaska Natives, and
the projected population for this group is 11.2 million by 2060. The median age
for American Indians and Alaska Natives in 2013 was 31 years old, which is
lower than the median age of 38 for the U.S. population as a whole. There were
1.7 million American Indian and Alaska Native households in 2013 and only
53.9% of these householders owned a home, which is below the national average
of 64%. Unfortunately American Indians and Alaska Natives have the highest
poverty rate of any race group at over 29% versus the national poverty rate of
16%.
In
New York, the New York Mortgage Bankers
Association's website is now live. The group is functioning and has
already had meetings with DFS, so lenders looking for things to be done on an
"industry vs. company" level should reach out to the NY MBA to make
their industry issues known. And by visiting the site one can read comments
about Benjamin Lawsky stepping down from the NY Department of Financial Services
post he now holds.
Speaking
of which, the NY MBA spread the word to members that the NYDFS proposed
regulation of force-placed insurance. "Under the proposed regulation,
insurers and servicers are prohibited from: obtaining insurance in access of
borrower's last known amount, unless that amount did not comply with mortgage
requirements, issuing force-placed insurance on mortgaged property serviced by
a servicer affiliated with the insurer, receiving compensation with respect to
the force-placed insurance, including the cost of insurance tracking in the
insurance premium, providing tracking services to the servicer at no cost
or at a reduced fee.
It
also posted information on proposed NMLS changes to the Mortgage Call Report. The National Mortgage
Licensing System (NMLS) has issued a proposal that would make significant
changes to the Mortgage Call Report (MCR). The NYMBA has signed on to a letter
urging a postponement of the proposed changes.
And
New York is considering a "borrow and save" pilot program as
an alternative to high-cost mortgage programs. President Jim Bopp writes,
"Although this pilot program is not directly related to mortgage loans,
the NY MBA would support any program that helps NYS residents establish
traditional credit histories that would enable them to build a credit rating
that would help them qualify for the most competitive rates and terms available
based on an established or improved credit score. This program executed
correctly could result in more people being able to purchase a home and for the
borrowers to realize the American dream of homeownership and all of the
benefits related to achieving it."
Turning
to agency news, Fannie Mae and Freddie Mac announced significant revisions
to their respective rep & warrant frameworks. These revisions provide
lenders with greater clarity concerning the post-sunset enforcement of Life of
Loan exclusions, as well as certain other reps & warrants. Look for
higher thresholds for "Life of Loan" breaches with numerical triggers
for misstatement & misrepresentation and data inaccuracy. Perhaps the
reduction of uncertainty to Life of Loan breaches will encourage lenders to
expanding lending with larger players likely unmoved by the clarity with
smaller ones set to fill the void. Fannie Mae's announcement can be found here; Freddie Mac's can be
found here. FHFA Director Watt's
statement concerning these revisions can be found here.
As
this commentary has mentioned many times, lenders say, "We can play by the
rules - just tell us what they are." This is an effort to do that by
F&F, and may lead to an expansion of the credit box. For example, under the
new rules seen by clicking on the links above, if there is a defect but the loan
still would have qualified for purchase by F&F, the lender will have to
cover the difference once the loan is re-priced but will not face a repurchase
request. Dave Stevens of the MBA writes, "These changes build off the
revisions announced earlier this year and are intended to provide lenders with
clarity regarding R&W enforcement after a loan qualifies for repurchase
relief. Life of loan exclusions concerning misstatements, misrepresentations,
& omissions and data inaccuracies have been revised to state that the GSEs
will only issue repurchase requests for significant violations that reflect a
pattern of activity involving multiple parties to the transaction."
The guidelines require that the same lender has 3 or more loans with qualifying
misstatements, misrepresentations, or omissions prior to a life-of-loan R&W
kicks in and the threshold is higher for data inaccuracies as the same
lender/entity must have 5 or more inaccuracies before triggering the
life-of-loan R&W.
For
purposes of the life of loan exclusions, the definition of fraud has been
revised to clarify the distinction between fraud and misstatement under the
Guides. These revisions are applied retroactively to loans delivered to a GSE
on or after January 1, 2013. The GSEs will lengthen the expected foreclosure
timelines in 47 out of the 55 covered jurisdictions effective for all
foreclosure sales completed on or after November 1, and will temporarily
suspend compensatory fee assessment in four states (New York, New Jersey,
Maryland and Massachusetts) for at least six months until more data can be
gathered to determine an appropriate timeline effective for foreclosure sales
completed on or after January 1, 2015. In addition, both GSEs have raised
the de minimis exception- a threshold where there will be no compensatory fee
invoice-from $1,000 per month to $25,000 per month, effective for foreclosure
sales completed on or after January 1, 2015. This will provide significant
relief for smaller servicers. Changes to both of these frameworks could not
have occurred without the diligent work put in by MBA staff and a number of
very engaged MBA members."
"There
are qualified borrowers who are not being served in today's market,"
Andrew Bon Salle, a Fannie Mae executive vice president, said in a statement.
"With this clarity, lenders should have greater confidence in lending to
Fannie Mae's full credit standards and making mortgages available to more
borrowers."
Bankers Advisory
writes, "The changes to the framework are effective retroactively for
whole loans purchased, and mortgage loans delivered into MBS with pool issue
dates, on and after January 1, 2013, except that these changes do not apply to
any loans for which Fannie Mae has issued a repurchase request prior to
November 20, 2014. The changes to the Selling Guide provisions regarding
compliance with laws are effective for whole loans purchased on and after
November 20, 2014, and for mortgage loans delivered into MBS with pool issue
dates on and after December 1, 2014. It is Fannie Mae's expectation
that any future modifications to the framework will apply prospectively.
"In addition to the above
changes to the framework, Fannie Mae is also updating the Selling Guide,
A3-2-01, Compliance with Laws, which among other things requires lenders
to comply with applicable federal, state and local laws. These changes are
effective for whole loans purchased on and after November 20, 2014,
and for mortgage loans delivered into MBS with pool issue dates on and after
December 1, 2014, without regard to whether the loan has obtained relief under
the framework."
Fannie
Mae is
offering sessions designed to help servicers understand Fannie Mae's updated
(Property) Hazard and Flood Insurance policy. This course explains the new
guidance for handling insurance losses based on the mortgage loan status at the
time the servicer receives notification of damages, regardless of the cause.
The sessions are scheduled on December 9th and 10th, to
register, click here.
It
becomes harder and harder to argue that housing is still in a slump. Yesterday
we learned that Existing Home sales rose (+1.5%) in October for the second
straight month and are now above year-over-year levels for the first time in a
year, according to the National Association of Realtors. Sales are at their
highest annual pace since September 2013. The median existing-home price for
all housing types in October was $208,300, which is 5.5 percent above October
2013. This marks the 32nd consecutive month of year-over-year price gains.
Rate Market Report:
US
stocks are roaring early this morning on reports frm the ECB and China. Mario Draghi saying, he European Central Bank can’t hold
back in its fight to revive the economy. “We will do what we must to raise
inflation and inflation expectations as fast as possible, as our
price-stability mandate requires.” Some inflation expectations “have been
declining to levels that I would deem excessively low,” he said. The take away,
the ECB may now be willing to take the steps necessary after moving too slow in
the past to drive inflation higher in the region that is edging closer to
deflation as the EU economies falter. The ECB is trying to boost the size of
its balance sheet to early-2012 levels, signaling an increase of as much as 1
trillion euros ($1.24 trillion).
Overnight China
announced it would cut its base lending rate for the first time since July
2012. The one-year lending rate was reduced by 0.4%
to 5.6%, while the one-year deposit rate was lowered by 0.25 percentage point
to 2.75%, effective tomorrow, the People’s Bank of China said on its website
today. China is now lining up with the ECB and the BofJ in adding additional
stimulus to bolster its economy that has lost about half of its growth over the
last two years. “This interest rates adjustment is a neutral operation and
doesn’t mean any change in monetary policy direction,” the central bank said in
a statement on its website explaining the rate cuts.
Those two announcements
have fueled a strong open this morning in the US stock indexes. The DJIA opened +152, NASDAQ +43, S&P +16. At 9:30
MBS price holding small gain, up 8 bps while the 10 yr note at 2.33% was down 1
bps. That the bond and mortgage markets are holding nicely with the stock
market roaring ahead, is because both the ECB and China today have added more
evidence that the level of inflation is not likely to increase quickly. With
the Fed now outwardly concerned that it has been unable to move the level of
inflation to its 2.0% target and saying in the FOMC minutes the progress is
likely to take longer than most Fed officials had thought. No inflation
concerns has a quieting effect on traders.
There are no scheduled
economic reports today.
Nothing new in the bond
and mortgage markets; the 10 is still in “the range”. The 20th day and not likely to exit it today. As long as
the 10 trades in the narrow range we are reluctant to float overnight on the
reality we would take on risk with little potential reward. No one is
interested in selling their bonds and no one is willing to buy; how long that
will last is hard to predict. A good thing really, lenders have more certainty
about closings as long as there isn’t a significant improvement. For traders
like us, it is extremely boring however. Traders need volatility to put food on
the table, no movements means less opportunity.
PRICES @ 10:00 AM
10 yr note: 4/32 (12 bp) 2.33% -1 bp
5 yr note: +2/32 (6 bp) 1.62% -1 bp
2 Yr note: unch 0.51% unch
30 yr bond: +12/32 (37 bp) 3.04% -1 bp
Libor Rate: 1 mo 0.155%; 3 mo 0.231%; 6 mo 0.324%; 1 yr
0.562%
30 yr FNMA 3.5 Dec: @9:30 103.59 +8 bp (+4 bp frm 9:30
yesterday)
15 yr FNMA 3.0 Dec: @9:30 103.88 +2 bp (-3 bp frm 9:30
yesterday)
30 yr GNMA 3.5 Dec: @9:30 104.35 +3 bp (unch frm 9:30
yesterday)
Dollar/Yen: 117.81 -0.40 yen
Dollar/Euro: $1.2424 -$0.0115
Gold: $1202.50 +$11.60
Crude Oil: $76.48 +$0.63
DJIA: 17,866.58 +147.58
NASDAQ: 4736.00 +34.14
S&P 500: 2069.72 +16.97
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