A woman
went into a hardware store to purchase a bale of peat moss. She gave a personal
check in payment and said to the clerk, "I suppose you will want some
identification."
He
replied, without hesitation, "No ma'am, that won't be necessary."
"How
come?" asked the woman.
"Crooks
don't buy peat moss." answered the clerk.
The post office lowering postage rates this weekend is good.
Student loan performance is not: more than 40% of student loan borrowers are either not
making payments or are delinquent. (Thus the move to refinance student debt
& cut debt burden through companies like SoFi.) And at the other end of the age spectrum America's
65-and-over population is projected to nearly double over the next three
decades, ballooning from 48 million to 88 million by 2050. Worldwide, the
65-and-over population will more than double to 1.6 billion by 2050, according
to "An Aging World: 2015." For those of you who like
demographics, check it out. In 2015, 15% of the U.S. population was 65 or over.
Reverse mortgage lenders know that baby boomers began reaching age 65 in 2011
and by 2050 the older share of the U.S. population will increase to 22%.
The changes in conforming conventional loans run the gamut and
don't just stop.
First we'll start with an opinion piece titled, "Why Fannie and Freddie Cannot Be Recapitalized."Building
capital with earnings would take decades, and in the near future "the
chances of the companies being released from conservatorship is extremely
low." A far more probable outcome is that the companies eventually get
wound down and replaced by a new system, perhaps along the line of the National
Mortgage Reinsurance Corporation recently outlined in a paper.
And then another proposal: "Fannie Mae and Freddie Mac: If You Can't Kill Them, Merge
Them?" A group including some of the chief architects of the Obama
administration's housing policy released a paper outlining a new proposal for how to deal with mortgage-finance giants Fannie Mae and Freddie
Mac. The key takeaway: Instead of winding down Fannie and Freddie,
the companies would be merged into a government-owned corporation that would
take over the responsibilities of buying mortgages, wrapping them into
securities and guaranteeing investors against default.
The CMLA released its new policy on GSE reform. "The time has come to
move ahead on GSE reform. The flaws that led to conservatorship have been
identified in the GSEs' business and operational models, and we know how to fix
them. Collectively we need to take the necessary steps to transform the GSEs
into well-regulated utilities providing liquidity equally to lenders of all
sizes, to serve the mortgage financing needs of homebuyers," said Brooke
Anderson Tompkins, CMLA Chair.
Certainly Mel Watt is going to have a decision on
principal mods for conforming loans held by the government somewhat soon.
Politically the left has been pushing the FHFA to do this for years, and now
that the FHFA House Price index has now recouped practically all of its losses
from the bubble years this will be an issue. Could HARP be replaced with a
high-LTV refi? Stay tuned.
Fannie Mae's new Marketing Center is a free online
tool providing lenders and other housing professionals access to a variety of
customizable marketing materials including HomeReady mortgage, HARP, and more.
Add your logo, company colors, product names, contact information and choose
images from our photo gallery to brand and make these materials your own. With
its Marketing Center, you get the benefits of professionally designed materials
while saving the time and money required to develop them yourself. Learn more.
Fannie Mae'sMultiple
Financed Properties Checklist job aid has been updated with the addition of
a reserves calculation table and examples of reserves calculations. The
checklist can help lenders determine whether a transaction meets the additional
requirements applicable under Fannie Mae's guidelines for borrowers with
multiple financed properties. As a reminder, Desktop
Underwriter (DU) Version 10.0, to be implemented the weekend of June 25,
2016, will reflect a simplified policy that will apply to loans for borrowers
with multiple financed properties. The updated policy will require fewer
eligibility overlays and updated reserve requirements, which will be automated
by DU. Until the DU update, lenders may use the checklist to help apply the policy
requirements.
This Announcement
describes Fannie Mae updates to its Selling Guide policies that
support expanding access to mortgage credit and bringing certainty and
simplicity to doing business with Fannie Mae. These changes include HomeStyle
Energy Mortgage loans, multiple financed properties, update to Texas section 50(a)(6),
and other misc. updates.
Fannie Mae and Freddie Mac have developed
standardized Condominium Project Questionnaire forms in response to industry
feedback. The new forms streamline the process by providing lenders with a
clear and consistent approach to collecting information when determining
eligibility for mortgages secured by units in condo projects. Fannie Mae Forms 1076 (full) and 1077 (short) are available on
the Guide Forms page for optional, but encouraged use. Find out more about this
effort in the Announcement.
Check out all the resources available on Fannie's HomeReady page, including: The
HomeReady Income Eligibility
Lookup tool, an easy-to-use lookup tool that provides HomeReady income
eligibility by property address or by Federal Information Processing Standards
(FIPS) code - now mobile friendly for web browsers on Apple®, Samsung®, and
Android™ devices. Customizable marketing
materials in English and Spanish, available to help you promote HomeReady
to your customers and business partners. HomeReady income flexibility fact
sheets, including sample scenarios for extended-income households, rental and
boarder income, and non-occupant borrowers. The eLearning course, based on the
live webinar, available 24/7 for your convenience.
Wells
Fargo has removed its 120-day seasoning
requirement for Rate/Term Refinance on Conventional Conforming, Manually
Underwritten Loans to follow the more restrictive standard of Fannie Mae or Freddie
Mac guidelines. Rent Loss Insurance for Cooperative
Properties that are less than 70% owner occupied on Conventional Conforming and Non-Conforming Loans will now
adhere to Fannie Mae guidelines. Letters of Explanation for Credit Inquiries
has been updated to require LOE's within 90 days on Conventional Conforming
Loans. Additional Policy Expansion's regarding Investment Property Maximum
LTV/TLTV/CLTV and Super Conforming Mortgage Program Maximum LTV/TLTV/CLTV have
also been updated.
Wells Fargo Funding is removing
its Borrower Authorization for Counseling Form requirement, pertaining to post
purchase delinquency counseling, for Home Opportunities Program Loans and
aligning more closely with Fannie Mae HomeReady. Its risk advisory bulletin
noted as part of Wells Fargo Funding's pre-purchase review, the consummation
date, for both escrow and non-escrow states, is determined using the latter of
Note date or Notary Date, as evidenced on the Security Instrument. The Closing
Disclosure (CD) provided to the borrowers at consummation should be accurate; a
CD provided after consummation is considered a post-consummation CD, and
borrower-paid amounts can only increase on a post-consummation CD due to a
valid post-consummation event.
M&T Bank will adhere to the updates regarding alimony, child
support and separate maintenance income per Agency Underwriting Eligibility
Standards (UES). The Agency UES serves all Fannie and Freddie registered loans
but does not include M&T Treasury product. The new policy requires documentation
of no less than six month of the full payments, copies of bank statements or
canceled checks showing payment are required. Effective with all loan
applications dated 4/6/16, the updated guide will be posted to the MEME and
Empower Info Centers.
Ditech is aligning with Freddie Mac recent updates
to the LTV/CLTV/HCLTV for Super Conforming Mortgages and 1-unit Investment
Property Mortgages. The LTV/CLTV/HCLTV requirements for super conforming
mortgages are being aligned with requirements for mortgages subject to the base
conforming loan limits. The maximum LTV/CLTV/HCLTV ratio for rate and term
refinance mortgages secured by a 1-unit investment property will align with
purchase transactions.
Plaza Home Mortgage's Freddie Mac Programs have
been updated to align with the Super Conforming and 1-unit Investment Property
LTV/CLTV changes announced in Freddie Mac Bulletin 2016-3. Super Conforming Fixed and Super Conforming ARM Program Guidelines: Section 3: Updated
(expanded) the LTV/CLTV ratios to align with base conforming loan limit
LTV/CLTV ratios. Section 17: Added 3% max interested party contributions for
LTV > 90%. Freddie Mac Retained Conforming Fixed and Conforming ARM Program Guidelines: Section 3: 1-unit
investment property rate/term refinance LTV/CLTV updated to 85%.
FAMC
Correspondent National Bulletin
2016-07 includes information on Product and Guideline Updates, Clarifications
and Reminders including removal of overlays. Information includes the removal
of the requirements on accessory units for the
comparable sales that previously applied to both DU and LP for conventional
products, lenders should follow standard agency requirements. The private roads
requirement on conventional products for the recorded road maintenance
agreements that previously applied to both DU and LP has been removed. In
addition, FAMC has removed the requirement for an Attorney Opinion Letter for
inter-vivos trusts on delegated loans only. The requirement for prior
approval loans (loans underwritten by Franklin American) remains unchanged.
Pacific Union Financial posted its conventional
product update regarding Continuity of Obligation. It will no longer required
for Fannie Mae or Conventional Fixed Rate (CC) products. Desktop Underwriter
(DU) messaging will be updated at a later date to align with the policy.
Until that time, DU messaging related to Continuity of Obligation may be
disregarded. However, there is no change to the Freddie Mac Continuity of Obligation
requirements; Loan Prospector (LP) loans must continue to meet Freddie Mac
guidelines.
NewLeaf 1 Conventional guidelines were updated to
reflect the Freddie Mac alignment of the Super Conforming/High Balance
LTV/TLTVs with Conforming for both Fixed and Hybrid ARMs. The LTV/TLTV for the
DU/LP High Balance product in now aligned with the Conforming requirements. In
addition, the LTV for 1-unit Investment properties is increased. The changes
impact the NewLeaf 1 DU/LP Fixed & Hybrid ARM matrices.
Turning to the bond markets...
When the Fed's Open Market Committee raised overnight rates in
mid-December the yield on the 10-year was 2.29%. Thursday it closed at 1.69% -
60 basis points lower in yield! If that isn't proof that the Fed doesn't set long
term rates, including mortgages, I don't know what is. Yesterday U.S.
Treasuries continued their spring rally as the Japanese yen touched a fresh
17-month high amidst another bout of global risk aversion. There wasn't much
news but the sense of fear and pessimism was enough to send the 30-year
Treasury yield to its second-lowest close (2.52%) since April of 2015, with the
one exception being February 11.
There is nothing of substance for scheduled news today. As
noted above we closed the 10-year at 1.69% and in the early going we're at
1.72% with agency MBS prices worse about .125.
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