Fetch your HP 12c - here's some
math magic. Take 259, multiply it by your age, and then multiply that by 39.
You'll see an interesting result. (Kids, an HP 12c is an iPhone-sized thing
that does calculations and is HP's longest and best-selling product - but you
had to punch in the numbers yourself rather than say them out loud.) While
we're on the topic of numbers, a CNBC survey of CFOs at major companies finds cybersecurity
actions they have taken compared to Feb 2015 include: audited or tested
existing infrastructure (92%); replaced or upgraded existing hardware or
software (85%); initiated new IT protocols (81%); increased size of IT staff
(73%); developed or amended corporate response plans (46%); and purchased cyber
insurance coverage (42%).
Lenders have four more days to
close loans in 2015, most which are TRID loans. So some of them will be closed
in January 2016 as lenders, fearing the worst regarding fines, unsaleable
loans, and vague UDAAP violations that will appear years from now, do what they
can to adhere to the correct procedures at the expense of customer service.
Freddie and Fannie find
themselves in the thick of this, of course. As a reminder both have put out
notices on the TILA-RESPA changes (Fannie, Freddie), and
remember that FHA does
as well. (If you have questions about whether or not correspondent investors
are also going along with this, ask them.)
But what garnered the
most attention in recent weeks was the FHFA's release of its 2016 scorecard
for the GSEs (Government Sponsored Enterprises - namely F&F) and Common
Securitization Solutions (CSS) - especially since their activities will impact
rate sheets.
The new scorecard
mandates that the GSEs prepare for the expiration of HARP (end of 2016) by
creating a new high-LTV refinance program that will be implemented in January
2017. (Yes, over a year away - but these things take time.) They are also being
instructed in implementing "Release 1" of the Single-Security
Initiative in 2016. Freddie Mac will start to utilize the Common Securitization
Platform (CSP) to perform activities related to its single-class, fixed-rate
securities. No Single Securities will be issued under this phase of the program.
(In 2018 we can expect to
see "Release 2" of the Single-Security Initiative implemented. Both
Fannie Mae and Freddie Mac will start to issue Single Securities and commingled
re-securitizations.)
F&F are also expected
to transfer the credit risk on at least 90% of the UPB of single-family
mortgages acquired in 2016 for 30y fixed-rate, non-HARP loans with LTVs greater
than 60% (so-called "targeted loans") and explore ways to transfer
credit risk on other types of single-family mortgages outside of this "targeted
loans" category. Along those lines Freddie & Fannie will explore ways
to expand the investor base for credit-risk transfer transactions.
The FHFA is requiring
that the GSEs further increase access to credit for borrowers by removing
impediments that may be preventing qualified borrowers from obtaining a loan.
Supporting this objective, the GSEs are to enhance their rep and warranty
frameworks by completing an independent dispute resolution process for lenders
who do not believe that their loans have breached the GSEs' rep and warranty
policies, as well as provide lenders with feedback on the quality of their loan
originations shortly after the loans have been sold to the GSEs.
Capital markets folks are most
interested in the single security news. "Release 1" is scheduled for
2016 and "Release 2" (the actual introduction of the Single Security)
is scheduled for 2018. The scorecard requires that the market be notified of
the precise implementation date of the Single Security at least 12 months in advance
so that stakeholders can prepare for the change. The FHFA will also develop a
process to evaluate new or updated GSE policies that may affect prepayments and
buyouts on TBA mortgages, as well as monitor issuance and prepayments between
the two agencies to alleviate concerns by some investors that with the
introduction of a Single Security and the ability to deliver either Freddie or
Fannie pools into the same TBA deliverable.
In response to the
Federal Housing Finance Agency (FHFA)'s 2016 Scorecard for Fannie, Freddie, and
Common Securitization Solutions, U.S. Mortgage Insurers (USMI) has said it
will continue to be committed to working with FHFA and the GSEs on steps to
increase the amount and levels of credit risk transferred and to take
greater advantage of the benefits of front-end risk sharing. Lindsey Johnson,
President and Executive Director of USMI stated, "After three years of
largely back end risk sharing transactions, the time is right to move forward
with a more balanced approach."
The American Bankers
Association has renewed its endorsement of Freddie Mac's secondary mortgage
market solutions. ABA's partnership with Freddie Mac will allow member banks to
utilize solutions that provide improved access to credit and enhanced pricing
and mortgage products. Bryan Luke, chairman of ABA's Endorsed Solutions Banker
Advisory Council stated "for more than decade, our alliance with ABA has
helped its members create more opportunities for borrowers and realize new
possibilities for their businesses."
Earlier in December
Fannie Mae updated its Servicing Management Default Underwriter (SMDU) tool to
support a recently announced policy change that helps its servicers provide
foreclosure prevention help to additional borrowers. Read the news release to
learn more.
What have top lenders
and investors been doing in the conforming conventional channel recently?
Flagstar
Correspondent has suspended its My Community Mortgage product line(s).
Wells
Fargo has suspended its MyCommunity product line(s).
And
My Community products are no longer offered in various pricing engines but, for
example, in the Optimal Blue system will be available for 90 days for secondary
users.
Freedom
Mortgage is offering the Fannie Mae HomeReady Mortgage Program (Fannie
Mae HomeReady program replaces the MyCommunityMortgage program which is no
longer being offered). The Fannie Mae HomeReady Mortgage Program gives
qualified Borrowers with low to moderate income more options to obtain an
affordable mortgage.
The Fannie Mae trading
desk spread the word that HomeReady is available for committing and delivery.
Lenders can commingle standard and HomeReady loans into MBS pools and whole
loan commitments. HomeReady has no separate whole loan committing
product/pricing grids. Refer to the HomeReady
product matrix for more information.
Effective Dec. 10, Plaza
will accept locks and loan submissions for Fannie Mae's HomeStyle
program. Refer to Plaza's
HomeStyle Program Guidelines for complete requirements. In
the coming weeks Plaza will be providing training for the HomeStyle Program.
Plaza has also added Fannie Mae's HomeReady program to its product
line. In addition to HomeReady, Plaza's programs have been updated to
incorporate the enhancements offered in DU 9.3. These changes are
effective immediately for loans approved under DU 9.3 on or after Dec. 14,
2015.
Pacific Union
Financial has updated numerous guidelines. For instance, due to Fannie Mae
delivery requirements, loans using the higher LTV/(H)CLTV limits may not close
prior to December 21, 2015. Adjustments to its Jumbo Series O include cash-out
proceeds to be received at closing are not an eligible source of funds.
Rate-Term Refinance Guidelines were updated to reflect that the property value
for the transaction is based on the current appraised value, regardless of
length of ownership. Freddie Mac's announced enhancements effective with
submissions or resubmissions to Loan Prospector (LP) on or after December 14,
2015: the occupying borrower will no longer be required to contribute at
least 5% of the down payment from their own funds when the LTV exceeds
80%. All funds for the transaction, including reserves, may come from the
occupying borrower and/or non-occupying co-borrower.
Fannie Mae High Balance
95% LTV is available at HomeBridge Wholesale. Recent updates include 1
year of tax return to qualify.
As of December 12, 2015, Caliber
Wholesale has adjusted their LTV/CLTV/HLCTV requirements to 95% for
high-balance loans underwritten through DU. This is a result of Fannie Mae's
recent decision to revise high-balance overlays and replace them with a new
policy that requires all high-balance loans to be underwritten through DU.
And Caliber Home Loans
announced its LPMI adjustments for loan amounts over $417,000 have been reduced
to 0.000. In addition, beginning Saturday, December 12 will adjust its
LTV/CLTV/HLCTV requirements to 95% for high-balance loans underwritten through
DU. Click
here to view more information on Caliber's products.
NewLeaf
conventional matrices have been updated to reflect the changes with the Fannie
Mae DU 9.3 release the weekend of December 12, 2015. The changes impact High
Balance eligibility requirements, Non-Occupant Co-Borrower policy changes and
the new HomeReady product that will replace My Community Mortgage which is
being eliminated.
Effective immediately for conforming LP approved loans, PennyMac
is aligning with Freddie Mac updates announced in Bulletin 2015-20. The highlights of the announcement are here.
As of
Monday, December 14, Arch MI's EZ Decisioning and Standard programs was
updated to reflect its alignment with recent Fannie Mae announcements regarding
Fannie Mae's HomeReady affordable program. A summary of the changes is
available on its Credit
Risk Bulletin #3-15-NR.
Sun West, based on
FNMA's announcement to postpone the implementation of the new policies on
qualifying income for self-employed borrowers, is postponing the implementation
of the corresponding underwriting requirements announced in the lender alert
dated March 20, 2015 until further notice. Sun West will continue to monitor
and provide further notification regarding the new underwriting requirements.
Based on the 2016 loan
limits increase in some counties for both FNMA/FHLMC loans as well as FHA, NewLeaf
Wholesale will accept applications at the higher loan limits for FNMA/FHLMC
products effective immediately. A manual lock process will be required until
January 1, 2016.
Shifting our collective
gaze to rates, does anyone remember, or care, what the bond market did last
Thursday morning? As expected not much has happened to yields after the
well-forecast Fed tweak of short term rates, and we closed the 10-year at 2.24%
on Christmas Eve. And frankly there isn't much else to move rates this week in
the U.S. There is no scheduled news today; tomorrow will be the Trade Balance
numbers, October Case-Shiller 20-City Index, December Consumer Confidence, and
a 5-year T-note auction. Wednesday will be November Pending Home Sales & a
7-year Treasury auction. Thursday - New Year's Eve, will have Initial Jobless
Claims and the December Chicago PMI.
It has been pretty quiet,
market-wise, around the world during the last 72 hours. (Of course here in the
U.S. we've seen the terrible toll from the weather in many parts of the
nation.) As mentioned we had a 2.24% close on the 10-year Thursday and this
morning we're unchanged on it and close to unchanged on agency MBS prices.
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