Flying to
Los Angeles from San Francisco the other day, I noticed that the "Fasten
Seat Belts" sign was kept lit during the whole journey although the flight
was a particularly smooth one.
Just
before landing, I asked the flight attendant about it.
"Well,"
she explained, "up front there are 17 University of California girls going
to Los Angeles for the weekend."
"In
back, there are 25 Coast Guard enlistees. What would you do?"
Does
anyone really know for sure what happens in China? With that many
billion people there are a lot of moving parts. For example, the PBOC is easing
some mortgage down payment rules for certain home buyers,
lowering the amount to 20-25%. (In Chile it is the same.)
Jumbo
news? The primary markets are changing.
Parkside Lending recently announced that it has
added the Premier Jumbo to its existing suite of Jumbo products.
"Premier Jumbo offers competitively priced ARMs and 15-year fixed loans
for borrowers with strong credit. We are pleased to offer another product to
help borrowers who need loan amounts greater than $417,000. For more
information on Premier Jumbo or any of our other Jumbo products, contact
your Parkside Account Executive or info@parksidelending.com.
Let Parkside Lending bring the power of caring to your business through
our exceptional customer service supporting this new program and all of our products."
Speaking
of jumbo, there is legislation afoot to eliminate the caps on VA loans,
which will make them much more popular in high cost areas. Basically it will
become a no money down jumbo. It has passed the House, and the prospects are
good in the Senate and the White House.
A
First Community Mortgage recent announcement pertains to its Non-Conforming Jumbo program.
Fifth
Third Mortgage's March communication addresses updates to all Freddie Mac
and Non-Agency Jumbo Products Condominium requirements, its Ineligible Condo
List and an appraisal document delivery reminder.
Flagstar is no
longer requiring the social security number verification form on non-delegated
loans with the exception of Jumbo loans, AUD findings requiring SSA results or
underwriting determination requiring SSA.
Franklin American Mortgage reduced
the minimum required FICO from 640 to 620 for the FHA Standard Fixed and 5/1
ARM products. FHA Standard Streamlines will remain at 640 and there are no
changes to the FHA Jumbo FICO requirements. In addition, Its FHA Jumbo
guidelines have expanded to reflect that there is no limit to the number of
financed properties owned if the borrower's credit score is > 720, and the
DTI does not exceed 45%. Borrowers who do not meet these requirements may not
have any financed properties other than the subject property.
Effective
for loans registered on or after 02.08.16, NYCB Mortgage updated
its underwriting guidelines for the Jumbo Fixed 30 Year product. For complete
product details, visit Gemstone's Jumbo Fixed 30 Year product page.
And
news from the primary markets on flood & weather challenges?
A
TransUnion analysis determined that using court record violation data aids in
predicting homeowners policy claims and losses. The non-weather loss ratio was
two times more for those with the most severe court violations compared to a
clean household. The report identifies that 25 percent of policies had at a
minimum, one criminal or traffic violation based on the primary named insured.
Additional household members were found for 60 percent of the policies analyzed
and the violation hit raised jumped to 34 percent to 25 percent.
The NAMB recently commended the House Financial
Services Committee for taking up HR 2901, the Flood Insurance Market Parity and
Modernization Act of 2015. Sponsored by Reps. Dennis Ross (R-FL) and Patrick E.
Murphy (D-FL) HR 2901 affirms and clarifies Congress' intent in Section 239 of
the Biggert-Waters Flood Insurance Reform Act of 2012 to encourage a vibrant
private market in flood-insurance products that would compete with the
taxpayer-subsidized offerings of the National Flood Insurance Program.
"Whenever private parties are allowed to compete, the consumer
wins," said NAMB President Rocke Andrews, CMC, CRMS. "Allowing
private flood insurance companies to compete for flood insurance business will
bring more options to the consumer and should drive down costs."
Unfortunately, the areas affected by
disasters continue to grow. Lenders are continually posting updates to impacted
counties. For up to date information, view the FEMA website.
The
disaster hits just keep coming. As a result of the Governor of California's
emergency proclamation for the areas affected by the Aliso Canyon gas leak and
the ongoing efforts to contain the leak, Pacific Union Financial, LLC is
monitoring the impact. While it has been announced that the leak has been
temporarily contained, Pacific Union is proceeding with caution for the funding
of loans secured by impacted properties.
Late
last year I had lunch with a group of mortgage professionals. Lumped in with
the requisite underwriters, processors, and secondary folks, was an individual
who assumed a tremendous amount of daily operational risk; however, by his own
admission, he claimed he wasn't "a mortgage guy." The man in question
was the IT administrator (presumably there for the free pinwheel sandwiches and
brownies), and was a little taken aback when I replied that whether or not he
highlighted his mortgage experience on his resume, he was in fact "a
mortgage guy" now. There's no denying the impact Dodd-Frank has placed on
IT departments. Lending institutions have, among other things, been saddled
with the responsibility of data retention and archiving, disaster recovery and
business continuity planning; all areas which were woefully under-addressed ten
years ago.
Mortgage
bankers are notoriously bad at compartmentalizing risk. Ask an executive,
"Who handles credit risk?", and they'll probably give you the name of
their head of underwriting; inquire as to who assumes price risk, and they'll
probably point you to the lock desk manager. I'm reminded of a conversation I
had with a U.S. Navy Captain one time when he said, "regardless of rate
and rank, in the Navy, everyone from the cook to myself, is first and foremost,
a fire fighter." While I know not everyone is in the business of IT,
everyone should be concerned with technology, because according to some,
EVERYONE is in the business of technology. Angel Mendez writes, "At an all-company meeting
last fall at Cisco Systems in Silicon Valley, Chairman and CEO John Chambers
made an important point about Cisco's customers. "In the future, every
company will be a technology company," he said. "Bank of America will
be a technology company specializing in banking." It's an important
point. IT is routinely overlooked in the mortgage business with respect to
risk.
We
hear it all the time now, "real estate values are higher now than they
were back in early 2007." I'm not sure what to make of this, however, what
I do know is that the housing market is currently one (if not the only) bright
spot to a rather dismal economy....but I guess that was the case too back in
the late '00s. If I knew how to use a witty hash tag remark, like the
youngsters are doing these days, I would, but back in my day we called "#
"a pound sign. Wells Fargo writes, "23.5 Percent Probability of
Recession in the Next Six Months. Recent economic and financial
developments have brought talk of recession back into the spotlight. Some
potential sources of the recession talks are volatility in financial markets,
stress in the manufacturing and mining sectors and global factors. For
instance, between January 2015 and January 2016, the ISM-Manufacturing index
(ISM-M) dropped over 10 percent, industrial production (IP) declined 0.7
percent (including negative growth for 8 of the past 13 months) and the
Commodity Research Bureau's Index (CRB Index) declined over 15 percent. The
S&P 500 index dropped over 5 percent during the same time period. In
addition, the index of leading indicators (LEI), one of the most well-known predictors
of the near-term state of the U.S. economy, recently reported negative growth
for two consecutive months (December 2015 - January 2016), which has only
happened one other time (August - September 2011) since the Great
Recession."
Turning
to the markets for Tuesday, we had a spate of potentially market-moving news -
although once again rates barely budged. Retail Sales fell 0.1% in February,
although declining gasoline prices had a lot to do with it. Ex-autos and gas,
they were up 0.3%. The downward revisions to January got everyone's attention
however as the initial 0.2% estimate was revised downward to -0.4%. The
Producer Price Index fell 0.2% in February as well - below the Fed's desires.
Ex-food and energy, it was flat on a month-over-month basis and is up 1.2%
YOY. The Empire Manufacturing Index rebounded smartly to .62 after a
heavily negative start to the year. Lastly the NAHB Homebuilder Sentiment
Index was unchanged at 58 in March. This is a 9 month low, and slightly lower
than expected. The builders are saying there is a shortage of decent lots and
skilled labor. The builders have been able to drive the top line by raising
prices, not by pushing volume.
Today
for excitement we'll have the MBA Mortgage Index, February CPI and Core CPI,
February Housing Starts and Building Permits, February Industrial Production
and Capacity Utilization, and the March FOMC rate decision - don't expect a
change. We wrapped up Tuesday with the 10-year at 1.96% - pretty steady so
far this week!
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