Everyone's thoughts and prayers
are with the victims of the horrible shooting in Orlando. But yes, Father's Day
is coming up, and the first presidential proclamation honoring fathers was
issued in 1966 when President Lyndon Johnson designated the third Sunday in
June as Father's Day. There are nearly 75 million fathers across the nation,
over 25 million of whom are part of a "married-couple families with
children younger than 18." And 21% were raising 3 or more children younger
than 18. There were 1.9 million single fathers in 2015 but only16% of all
single parents are men. About 45 percent were divorced, 33 percent were never
married, 17 percent were separated, and 6 percent were widowed. There was an
estimated 199,000 stay at home dads.
Learn everything you need to
know about LO Compensation, MSAs, and RESPA in XINNIX, The Mortgage
Academy's, latest Leadership Lessons webinar on Wednesday, June 15th at 1:00 PM
EDT. During this live webinar, mortgage regulation expert, Mitch Kider,
Managing Partner of Weiner Brodsky Kider PC, will share how to keep you and
your organization within regulatory guidelines. This live webinar is
complimentary, but registration is required. Click here to learn more and register.
The BakerHostetler Financial Services Industry
team is partnering with the Indiana Mortgage Banking Association, the Mortgage
Banking Association of Kentucky, the Ohio Bankers League and the Ohio Mortgage
Bankers Association to host a complimentary,
one-hour webinar with key state mortgage regulators. This webinar will include two prominent members of the
Multistate Mortgage Committee - Kirsten Anderson of Oregon and Jedd Bellman of
Maryland. They will share their insights on current trends in examinations,
coordination between state agencies and multistate enforcement efforts, as well
as best practices for preparing for mortgage audits and examinations.
USDA news? Yup
The rural housing biz is abuzz
over the United States Department of Agriculture (USDA) announcing lower
upfront and monthly fees for its home loan program, starting October 1. Those
who offer the program know that this mortgage type is extremely popular with
first-time home buyers since some of its program require zero down payment. And the Rural Development (RD) loan
program, as it is also known, is a favorite because it comes with cheaper
monthly mortgage insurance fees than do FHA loans.
USDA fees are about
to drop even further by Halloween, and many believe the USDA loan will become
one of the most affordable home loans available, second only to the
veteran-exclusive VA home loan. And of course this will entice renters since a
USDA home loan can make owning a home less expensive than renting one. As the
housing market recovers, the USDA program costs less to operate and sustain.
The savings are passed on to USDA program borrowers.
For those of you who
don't know, the purpose of the USDA mortgage is to promote homeownership in
rural areas. But what is "rural?" Many suburban
neighborhoods are eligible for USDA financing. Buyers often use this program
just outside of major metropolitan areas. The loan offers 100 percent
financing, meaning no down payment is required. Some lenders may have overlays,
but straight guidelines indicate that applicants with credit scores down to 640
are eligible.
Similar to FHA loans, the
USDA mortgage requires two types of fees: an upfront guarantee fee and a monthly fee. The term
"guarantee" simply refers to USDA's loan backing that allows lenders
to issue loans according to its guidelines. The upfront guarantee fee stands at
2.75 percent of the loan amount, and the "annual fee" is
currently 0.50 percent, paid in twelve equal installments and included
in each mortgage payment.
As mentioned above,
however, we learned in mid-May the upfront fee will be reduced from
2.75% to 1.0%. And the monthly fee will also drop from .5% to .35%. Lenders who
do rural loans know that the upfront fee is typically added to the loan balance
so that home buyers do not have to pay it in cash. And the monthly fee rate is
dropping to 0.35 percent annually, or about $30 per $100,000 in loan balance.
The new fees apply to
USDA applications for which USDA issues a "Conditional Commitment" on
or after October 1, 2016. A USDA-issued commitment happens near the end of the
home buying process and as lenders know most home purchases take between 30 and
90 days to complete.
As a result of last
month's Federal Register snipped about the USDA (it announced a qualified
mortgage - QM - definition. As a result, Wells Fargo is removing its
residual income evaluation (RIE) requirements for Guaranteed Rural Housing
(GRH) Loans applicable on conditional Commitments issued on or after June 2nd.
Although the Federal Register also included a USDA Rural Development (RD) final
rule making the Streamline Assist Refinance pilot a permanent program and part
of Rural Development policy, effective June 2; Guaranteed Rural Housing (GRH)
streamlines remain ineligible at this time. As specified in Seller Guide
Section 750.04: Eligible Transactions, Wells Fargo Funding does not currently
purchase RD Streamline Refinances of GRH loans. In addition, Wells issued
a reminder, with the exception of primary residences subject to age-related
resale deed restrictions, Wells Fargo Funding will purchase Conventional
Conforming and Non-Conforming Loans subject to resale deed restrictions only
after Wells Fargo has approved the resale deed. This includes delegated underwritten
loans.
As of Monday, June 6, Pacific
Union's standard state adjusters for FHA, VA, USDA and Agency loans will be
replaced by a new schedule. At this time, all of Pacific Union's search engine
partners are aware of the update and will have the updated price on Monday. In
order to enable customers to prepare their pricing tools, Pacific Union will
provide a sample template of the schedule. This change is only applicable to
FHA, VA, USDA and Agency products. In addition, Pacific Union Financial announced
it is offering USDA sponsorship through the GUS Lender Agent Security
Role. Under the new role, recently announced by USDA, approved Lender Agents will have access
to create applications, order new or reissue existing credit reports, and
complete preliminary GUS submissions.
First Guaranty
Mortgage posted information to assist its clients with the June 2, 2016,
USDA final rule for 7 CFR Part 3555 and the revised technical handbook,
HB-1-3555, which will be effective for all conditional commitments issued by
USDA. To help fully understand the program enhancements and the changes
to its guidance, the Agency has prepared two documents: the 3-Part Rule and Handbook Revision and the 502 Guarantee Refinance Options Job-Aid. These
documents explain in detail the regulatory and handbook changes made to the
sections cited below. If you would like to learn more about First Guaranty and its
slogan, We Know Gus! Click here.
Effective with loan commitments issued on or after June
2, 2016, PennyMac is aligning with USDA Rural Housing's release of the Streamlined-Assist refinance program.
Switching gears, although
they've leveled off somewhat oil prices have fallen quite a bit since last
year. Over the prior two years, crude oil, which saw a high in the summer of
2014 of $110 per barrel, is currently trading at around $50 per barrel. So
what do oil producing countries do when their export income impacts their
budget? They turn to the international debt markets like the rest of us.
Recently Qatar sold $9 Billion in Eurodollar bonds, and encouraged
by the strength of the sale, Saudi Arabia is weighing a sale of at least $10
billion in five-, 10- and 30-year bonds after Ramadan ends in July, according
to Bloomberg.
"Governments in
the six-nation Gulf Cooperation Council, which includes the two-biggest Arab
economies of Saudi Arabia and the United Arab Emirates, are turning to public
markets after the plunge in oil prices punched holes in their budgets. Qatar
last week attracted $23 billion in orders for its $9 billion sale, the
biggest-ever from the Middle East. Abu Dhabi raised $5 billion from the sale of
five- and 10-year securities in April, while Dubai is also said to be preparing
an international bond sale this year." How does this impact the United
States, you ask? Well, geo-politics aside, when countries sell debt instruments
they need ratings agencies, market makers, traders for buyers, traders for
sellers, etc. HSBC, JPMorgan Chase & Co., Citigroup Inc., Goldman Sachs
Group, Morgan Stanley, Deutsche Bank AG and Bank of Tokyo-Mitsubishi UFJ
are all expected to pitch for a role in organizing the bond issue.
How 'bout these rates!
The refi boom just won't dissipate, despite industry experts saying it would be
long over with by now. And even if rates stay here, plenty of areas are
appreciating to the point where cash out refis are becoming popular again.
Using houses as piggy banks... uh oh.
Regardless, rates here in
the United States are attracting investors from overseas. And why not with the
German 10-year Bund now trading at 2 basis points and the Japanese Government
Bond yields negative 13 basis points? Swiss and Japanese government securities,
already carrying negative yields have fallen further, and benchmark US
Treasuries have plunged to their lowest yields since 2013
We have a fresh new week of
titillating economic news from various government departments and private
research firms. The fun never ends! There is nada today, however, but tomorrow
we'll have some NFIB Small Business Optimism number of little consequence, and,
more importantly, the Import Price Index and Retail Sales. On Wednesday we have
the MBA's application numbers from last week, and also the Producer Price Index
series. And let's not forget Empire Manufacturing for June and the Industrial
Production & Capacity Utilization couplet.
The Federal Reserve's Open
Market Committee puts out its rate decision on Wednesday. There will be no
change, but that won't stop all the financial news folks from talking about it
endlessly. There is too much worldwide nervousness, too much nervousness about
the US economy after the poor recent jobs number.
Thursday will be Initial
Jobless Claims and also the Philadelphia Fed Business Outlook, the Consumer
Price Index, Real Average Weekly Earnings, and the National Association of Home
Builder's Index. We wrap up Friday with more housing news in the form of
Housing Starts & Building Permits.
If you're trying to
figure out rate sheets, we closed the 10-year at 1.64% and this morning it
is sitting around 1.63% with agency MBS prices slightly better - but lagging
due to investors wondering about existing loans refinancing.
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