Two shepherds lean on their crooks at the
end of a long day. The first asks the second, "So, how's it going?"
The second one sighed and shook his head,
"Not good. I can't pay my bills, my health isn't good, my kids don't
respect me, and my wife is leaving me."
The first replied, "Well, don't lose
any sheep over it."
FormFree spread the word that, "Four of the most critical
pillars of the loan are income, identity, asset, and employment. Now that
Fannie Mae has weighed in on using automated verification technology for three
of these four pillars (i.e. asset via AccountChek and Employment/Income via
Equifax) through the Day 1 Certainty Initiative, the savvy lender will be
turning their attention to bundling and automating all four pillars to create a
true straight-through process environment in underwriting. This is an area to
which FormFree has turned its attention in recent months, and we
anticipate bringing to market an integrated verification platform called
Passport, which we previewed at the SourceMedia Digital Mortgage Conference in
San Francisco. The platform securely leverages both direct-access data and
records from trusted third-party consumer information repositories to bundle
and deliver this critical verification information
into one easy report."
The FHFA continues to push Fannie & Freddie on credit-risk
sharing. A regulatory 2017 scorecard for Fannie Mae and Freddie
Mac calls on the firms to transfer a significant portion of credit risk to
third-party private investors on at least 90% of unpaid principal balance of
newly acquired single-family mortgages. And legislation pops up occasionally.
Moody's: Privatizing Fannie Mae, Freddie Mac Would Cost
"Hundreds of Billions". According to a new report
from Moody's Investors Service, privatizing the GSEs is not only unlikely to
happen any time soon, it's also hugely cost-prohibitive, and it would be a
negative for bond investors as well.
The Federal Housing Finance Agency (FHFA) issued Final
Rule on Fannie Mae and Freddie Mac Duty to Serve Underserved markets. The statute requires
Fannie Mae and Freddie Mac to serve three specified underserved markets:
manufactured housing, affordable housing preservation, and rural housing, by
improving the distribution and availability of mortgage financing in a safe and
sound manner for residential properties that serve very low, low, and
moderate-income families.
Freddie Mac issued the following Statement on Duty
to Serve Final Rule. "We look forward to working with the Federal Housing
Finance Agency (FHFA) and stakeholders to implement the Duty to Serve
provisions. We're proud to responsibly increase our activities involving
manufactured housing, affordable housing preservation and rural housing to help
more American families. This is an opportunity for the entire mortgage industry
to work together to address some of the toughest issues in housing, including
the distribution and availability of both mortgage financing and affordable
rental housing for working families. The Duty to Serve provisions align with
our mission to build both a better Freddie Mac and a better housing finance
system for this country."
Fannie Mae, Freddie Mac Offer New Loan Modification Program.
Fannie Mae and Freddie Mac announced new programs to provide relief for distressed
borrowers. The Flex Modification programs will replace the Home Affordable
Mortgage Program, the government mortgage assistance program developed in 2009
in the wake of the subprime loan crisis. HAMP is set to expire Dec. 31.
There were "only" 243,000 Fannie & Freddie
residential loans that were refinanced in October of this year, which also saw
the slowest HARP month on record. Mortgage Daily reported, "GSE Refinances Fall, Slowest HARP Month on Record." Just
a month after surging to a three year high, refinances of government-sponsored
enterprise loans fell, with federally funded transactions falling to an all
time low.
Fannie Mae updated its Servicing Guide to reflect
changes in Verifying Master Project Insurance, Maximum Allowable Foreclosure
Attorney Fees for Judicial States, and Servicing Fees for Redeemable Mortgage
Loans and Third-Party Foreclosure Sales. Read the Announcement for full details. Fannie
Mae's Servicing Management Default Underwriter™ (SMDU™) Version 7.1 has been
implemented. The SMDU Version 7.1 Release
Notes supports the retirement of four modifications (HAMP, Mod24, MyCity
Modification, Principal Reduction Modification). In addition, to create more
efficiency, servicers can now utilize SMDU for additional case management
functionality.
The Freddie Mac Flex Modification foreclosure
prevention program, which is designed to help America's families by offering
significant reductions in their monthly mortgage payments, replaces Freddie
Mac's version of the Home Affordable Modification Program (HAMP), which is set
to expire at the end of this year. The new program was developed in alignment
with Fannie Mae at the direction of the FHFA. The Flex Modification
incorporates input from a wide range of industry participants as well as
lessons learned from earlier programs. It's expected to provide a 20 percent
payment reduction for eligible borrowers. A high percentage of those who are at
least 60 days' delinquent would be eligible; the modification could also be an
option for those who are current or less than 60 days' delinquent in certain
situations. Servicers must implement the new program by Oct.1, 2017. In the
interim, while HAMP expires on Dec.30, Freddie Mac's Standard and Streamlined
Modifications will remain in effect until the new program is implemented. Visit
Freddie Mac Flex Modification web page for additional
information, including reminders and a link to the fact sheet. FHFA's statement
about the Flex Modification is available here.
Desktop Underwriter (DU) has been updated with new
features and functionality to help you enhance your business. Fannie Mae
has implemented all components of Day 1 Certainty including: DU validation service for
income, employment, and asset validation; Enhanced Property Inspection
Waivers (PIWs) on eligible refinance transactions; and Certainty on
appraised value powered by Collateral Underwriter®
(CU™). Incorporated the updated HomeReady eligibility guidelines.
Day 1 Certainty provides lenders enforcement relief from
representations and warranties, as well as efficiencies by bringing some
quality control processes upfront with the DU validation service. The Quality Control
Considerations job aid provides the information you need to adjust your
prefunding and post-closing QC when using the optional DU validation service
for income, assets, and employment.
Fannie Mae and Freddie Mac have announced the Uniform Loan
Delivery Dataset (ULDD) Phase 3, along with updates to each GSE's specification.
ULDD Phase 3 will include approximately 30 new data points and updates to
existing data (see Appendix D for a complete list). Nearly
half of the new data consists of borrower demographic information in support of
the HMDA rule (effective January 1, 2018). More information on the Phase 3 implementation
timeline is forthcoming in Q1 2017.
Fannie Mae has implemented CU Version 4.0, which provides
a new, easy-to-use CU web application design and layout. The new CU was
designed based on customer feedback to enhance and simplify the appraisal review
process. It delivers the dynamic functionality and cutting-edge analytics
you've come to expect from CU in a new, attractive, streamlined format. Here's
a short introduction video.
Fannie Mae recently announced the elimination of the $75
Property Inspection Waiver (PIW) fee. To accommodate this change, Pacific
Union's Correspondent channel will discontinue the assessment of the $75
fee for loans purchased on or after December 16, 2016. Pacific Union will
continue to audit the use of a PIW or appraisal and will rely on the Lender's
Reps and Warrants as to impact of the PIW fee change to the Loan Estimate
and/or Closing Disclosure.
Rats? Uh, I mean rates? Not doing much, given no economic
news and some market participants are done for the year so hopefully we just
sit around here through the end of December. Since nothing is going on here,
let's look overseas. Investors in China are becoming more worried about wealth
management products, financial products that were used to circumvent low bank
deposit rates. Many of those WMPs borrowed money from short-term money markets
to buy stocks, bonds, or bank loans. With the People's Bank of China now
tightening liquidity in money markets to slow down China's credit expansion,
some of which has been filtering into the property sector, and that tightening
has caused unwinding in these WMPs as they have lost access to cheap financing.
Tuesday agency MBS closed unchanged to a touch lower in
price. The New York Fed was in doing its usual buying, which knocks off next
week for the holiday week. But the 10-year note sold off .250 in price to yield
2.57% and 5s worsened .125.
Today we've seen the MBA's weekly update on mortgage
applications (+2.5%-3%, purchases & refis). November Existing Home Sales
will be released at 10AM ET. To start the day the 10-year is yielding 2.56%
and current coupon agency MBS prices are unchanged versus last night's close.
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