New Warehouse Lender, Credit Companies Penalized, FHA & VA Lender Changes

By rchrisman@robchrisman.com

I wonder what my parents did to fight boredom before the internet.

I asked my 17 brothers and sisters and they didn't know either.

 Any LO looking for opportunity should look no further than this statistic: there were 189,100 multifamily rental units completed between the fourth quarter of 2015 and the third quarter of 2016 across 54 U.S. metropolitan areas. Of those units, 84 percent were "luxury," which seems ridiculous. If everything is luxury, is anything luxury? Snide comments aside, I bet the security deposit and rent on many of those is more than the monthly cost of financing a house.

   In warehouse lending news, Wilshire Bank finalized its merger with BBCN Bank and its systems conversion was completed in November - the new combined bank is known as Bank of Hope. With over $13 Billion assets, Bank of Hope is the 6^th largest bank headquartered in Los Angeles, CA.  Bank of Hope Warehouse Lending offers warehouse lines up to $100 million, competitive pricing, innovative programs, streamlined funding process and late cutoffs. With the completion of the merger, Bank of Hope has also updated their bailee letter with new wire instructions. Richie Walia and Mike Tenkerian from Bank of Hope Warehouse Lending will attend the Independent Mortgage Bankers Conference in Palm Springs, California from January 23-26, 2017. To schedule a meeting with Bank of Hope at the conference, please contact Richie at (213) 637-5285 or for more information on the lines contact WL.Sales@bankofhope.com.

  In personnel news, the former Deputy Chief Counsel for the Office of the Comptroller of the Currency (OCC), Daniel P. Stipano, has joined BuckleySandler as a Partner in its Washington, DC office.  Stipano has been involved in virtually every significant enforcement case brought by the OCC for the past 20 years and has been a key participant in numerous Bank Secrecy Act/Anti-Money Laundering (BSA/AML) milestones.

 And yesterday's commentary discussed news from the CFPB, but this one slipped by me. Equifax and credit reporting agency TransUnion were sanctioned by the CFPB and between them hit with a $17 million penalty. The CFPB announced it yesterday, but TransUnion revealed the news in an SEC filing late last week that it will take just under $17 million to settle a CFPB probe of its advertising and marketing practices. TransUnion said the CFPB made a "civil investigative demand" in September about what the company said were "common industry practices" related to the marketing of credit reports and credit monitoring products.

 As a reminder, TransUnion sells scores based on a model from VantageScore. Per the CFPB, "Although TransUnion has marketed VantageScores to lenders and other commercial users, VantageScores are not typically used for credit decisions." Meanwhile, Equifax sells scores to consumers based on its own proprietary model, called the Equifax Credit Score.

 The investigation resulted in not only an agreement to repay millions of dollars to consumers, but a pledge from TransUnion & Equifax to change its advertising practices. TransUnion will pay $13.9 million for "redress" to eligible consumers, and an additional $3 million to the CFPB. TransUnion has also agreed to develop "more robust" disclosures about the credit scores it provides, and confirm consumer consent if the product it's selling is being sold through a "negative option" feature.

 TransUnion will also be required to submit a comprehensive plan on how it will address each action required by the CFPB, along with deadlines to implement the changes.

 Did Equifax and TransUnion lie to consumers, as the public press states? "TransUnion and Equifax deceived consumers about the usefulness of the credit scores they marketed, and lured consumers into expensive recurring payments with false promises," CFPB Director Richard Cordray said in a statement. Equifax's portion of the settlement is $3.8 million in consumer restitution and $2.5 million in civil penalties.

 Change doesn't stop, certainly not in the residential lending channel. Let's see what's new in FHA & VA land.

 FHA published the quarterly update to its Single Family Housing Policy Handbook This update incorporates previously published Mortgagee Letters into both the online and portable document format (PDF) SF Handbook. This update does not include any new policy. The SF Handbook's December 30^th Transmittal, available in FHA's Online Housing Policy Library, provides additional details. In conjunction with today's update, FHA published a revised FHA Single Family Housing Claim Filing Technical Guide that updates several hyperlinks within the document.

 PennyMac has updated VA and FHA overlays.

 Effective for loans locked on or after December 28^th, Mortgage Solutions Financial has updated the loan level price adjustments for FHA, VA, and USDA loans.

 Effective January 2, NewLeaf Wholesale will allow the new FHA loan limits for loans with case numbers assigned on or after January 1.

 Freedom Mortgage is providing the timeline and dates needed to close Refinance Loans for the month of January 2017. All Refinances: Last day to close 1/26/17. FHA loan are now permitted to disburse on the last day of the month if the following requirements have been met: payoff must be good through January 31st.Wire requests must be completed prior to midnight on the day before day of disbursement. The Closing Agent must agree to take responsibility for the disbursement of the current mortgage on January 31st; with possible wire receipt of 3:00PM EST or after. If netted escrow payoff, Closing Agent must ensure that the current mortgage is paid in full prior to any tax or insurance disbursements.

 An important note to consider: due to the change with GNMA seasoning requirements, it is required that all brokered VA IRRRLs and Rural Development Streamlines & Super Streamlines that do not meet the new requirements close by 12/31/2016 and disburse no later than 01/06/2017. Wholesale Correspondent loans will need to be purchased no later than 01/06/2017. Any affected loans that disburse in January will need to have a first payment of 02/01/2017.

 From the primary to the secondary markets...

 Issuance of mortgage-backed securities at FNMA soared last month, driving up overall agency issuance. Fixed-rate MBS issued on behalf of FNMA, FHLMC and GNMA came to $156.852B during the final month of 2016. Agency securitizations leapt from November, when the total was nearly $133 billion, and skyrocketed from $87.273B in December 2015.

 Freddie Mac announced its final Agency Credit Insurance Structure (ACIS) transaction of 2016, "an insurance policy providing up to a combined maximum limit of approximately $285 million of credit losses on single-family loans and transferring a significant portion of mortgage credit risk on a $16 billion reference pool of 15-year mortgages purchased during the first nine months of 2016. This is the second ACIS transaction not linked to Structured Agency Credit Risk (STACR) debt note bonds. Since the program's inception in 2013, Freddie Mac has placed over $6 billion in insurance coverage through 24 ACIS transactions."

 But these rates won't help future issuance, nor did the market activity Tuesday. To no one's surprise Tuesday's retail volumes, per Tradeweb, were well below the recent holiday-impacted levels. Any lender claiming "business is great" is far out of the norm, and could be viewed suspiciously.

 U.S. Treasuries ended lower on average in a curve-flattening trade but at least rebounded sharply from their morning lows. There was a very positive ISM Manufacturing report for December, rising to its highest level since January 2015 last month. December marked the fourth straight month that the index was above 50.0, the dividing line between expansion and contraction. It is not ordinarily a market-moving number, but combined with the news that U.S. construction spending grew faster than expected in November, and inflation data from France and Germany showed consumer prices rebounding, well, it didn't help. The 10-year note, 5-year note, and current coupon agency MBS prices were all worse .125-.250.

 This morning we've had two weeks of application (not lock) data from the MBA's survey of 75% of retail originations. No LO should be surprised to hear that applications fell 12%, with refis dropping 22%, over the holidays. Purchases only dropped 2%. The refinance share of applications was around 52 percent over the last two weeks, the lowest level since July 2015.

 Coming up are December vehicle sales, the Redbook Weekly Same-Store Sales Index, the December ISM-New York Business Conditions Index, and the minutes from the December 13 and 14 FOMC meeting. Ahead of those, but to start the day, the 10-year's yield is nearly unchanged (2.45%), as are agency MBS prices, versus Tuesday's close.