An elderly, but hardy cattleman from Texas
once told a young female neighbor that if she wanted to live a long life, the
secret was to sprinkle a pinch of gunpowder on her oatmeal each morning.
She did this religiously and lived to the
age of 103. She left behind 14 children, 30 grandchildren, 21
great-grandchildren, five great-great-grandchildren and a 40-foot hole where
the crematorium used to be\Our thoughts and prayers go out to the families of those that
lost their lives in storms in the South and East. On the other coast, Los
Angeles has received more rain over the weekend than in all of 2013! And
while we're talking about extremes, the definition of "mansion" can
be relative. Whatever it means, exactly, is unknown, but Bruce Springsteen is selling his.
In broker & AE job news, FundLoans.com is a residential wholesale jumbo non-QM
lender. "At FundLoans.com we take a common-sense approach to
looking at your loan. We don't underwrite like a bank, we underwrite like a
private fund. We thrive in the super jumbo area and love working with
self-employed borrowers. FundLoans.comis looking for experienced Account
Executives who thrive when challenged, inspired to deliver a level of
service unparalleled in the mortgage industry. Come join the nation's
newest Jumbo Non-QM lender as we grow and thrive in this lucrative new space.
We are hiring in the following markets: CA, FL, TX, AZ, CO, WA,
OR." Email your resume today for additional information and
consideration to David
Hidy (760-388-5888).
Mortgage companies in the news? Sometimes, even when it is
good news and helpful to the borrower, the tone of the reporter(s) makes it
disdainful. Take this TV story on Guild Mortgage offering the loan program from Unison that splits the down
payment in exchange for future equity. ("Do you mean, the borrower actually
has to pay something back?")
Quicken Loans received some press over the weekend. The government has
filed a lawsuit accusing Quicken of aggressive FHA underwriting practices.
Quicken denies the charges and notes how it has some of the best credit
performance in the FHA program.
Who can work in the mortgage business without training,
or attending some related events?
Don't miss early bird registration for Lenders One's Winter Conference on March 5 - 8 at the Loews
Sapphire Falls Resort at Universal Orlando. This members-only event will
deliver valuable insights and includes access to brand-new 2017 Lenders One
programs and services. Hear from keynote speaker Kevin Carroll, who has worked
with organizations such as Walt Disney, Nike, ESPN and Starbucks, to learn how
to elevate your business through the power of play. With education session
tracks including leadership & growth strategy, compliance, business
development and operational efficiency, plus multiple networking opportunities
for sharing best practices - this is an event you'll want to attend. Contact
Susan Malpocker
for questions or more information about Lenders One.
Expect a different conference experience at ABA Real
Estate Lending Conference March 29-31st in Orlando. Sessions
have been crafted in close collaboration with bankers and our corporate
partners to provide practical, relevant content. The conference format has been
changed to fully encourage conversations and open exchange of insights and
experiences. ABA has extended its early bird registration deadline to February 1st.
Members will save $200 if they register before the cut-off. Plus, ABA member
banks can benefit from an additional team discount.
FHA's annual recertification deadline is around the corner
and the certification language is new. Are you ready? Join BuckleySandler for a complimentary webinar on
January 31st. Guest speaker from FHA's Lender Approval and
Recertification Division, and BuckleySandler partners Michelle Rogers, Melissa
Klimkiewicz, and Katy Ryan, will help mortgagees navigate this year's FHA
annual recertification.
Politics and lending are intertwined, and we'll see if
that changes much in the next four years. The very first executive action by
the new Trump administration was to, as one newspaper put it, "block an
Obama administration (move) that would have reduced the cost of mortgages for
millions of home buyers." In the first hour of Trump's presidency, the
U.S. Department of Housing and Urban Development sent a letter suspending the
0.25 percentage point premium rate cut for Federal Housing
Administration-backed loans. The FHA published Mortgagee Letter 2017-07, which immediately suspends Mortgagee Letter 2017-01, Reduction of FHA Annual
Mortgage Insurance Premiums (MIP) Rates, until further notice.
One headline read, "In First Act as President, Trump
Raises Mortgage Rates on Struggling Homeowners." HUD's letter implied that
they felt the insurance fund was not yet stable and couldn't afford it, and
suspended the cut "indefinitely ... effective immediately."
But all along, since that January 9 announcement,
Republicans cast the move as hasty and said it threatened to undermine the
stability of the system. And on Friday General Deputy Assistant Secretary for
Housing Genger Charles announced that HUD would "suspend
indefinitely" the rate reduction, saying "more analysis and research
are deemed necessary." Dave Stevens, President of the MBA, conjectured
that the new administration "haven't had their own chance to look at the
state of the reserves, the strength of the fund and make their own analysis. My
view of this is that it is not ideological whatsoever. It is a technical
decision."
On reader asked, "Where do the Mortgage Insurance
Premiums go?" The premiums fund the Mutual Mortgage Insurance Fund, which
would bail out lenders if borrowers default on their mortgages. The balance in
the fund that backs FHA mortgages is just 16% higher than the legal minimum.
One politician noted that, "This strikes me as very little buffer above
the minimum. And after all, as recently as 2013, the FHA needed a
bailout."
There is a reason that FHA insures about 16% of new
mortgages in the United States. Lenders will admit that FHA loans are still a
great deal even with the old MIP rates. The loan amounts can be very high,
depending on county, with 3.5% down, non-occupant co-borrowers allowed, all
gift, seller credit, no termite report necessary, lower credit scores are OK,
and so on.
As one would expect shares of publicly traded mortgage
insurance providers such as MGIC Investment or Radian Group moved higher on
Friday. Recall that on January 9, shares of MGIC & Radian fell 3-5% when
the FHA said it would reduce the annual premiums on mortgage insurance on home
loans agency insures by a quarter point on Jan. 27. But not to worry: both
stocks have been big gainers since the election: Radian is up roughly 36% since
Nov. 8, and MGIC is up about 27%.
"Based on the prior administration's lack of
communication on the FHA premium reduction, we believe the decision to
review such action prior to implementation is prudent. We are confident the
review will support a premium cut," said Scott Olson, CHLA's
Executive Director. "Our hope is the Administration will conduct a
comprehensive review of housing policies and implement changes that will help
millions of Americans who have been left out of homeownership for far too
long."
And the AEI International Center on Housing Risk
applauded the move as well, saying it is good news for both first time
homebuyers and taxpayers. "The fact is that little of the price cut goes
to expand access to new homebuyers not already intending to purchase. Research by the AEI International Center on Housing Risk
has demonstrated that implementing a mortgage premium price cut during a
seller's market (defined as <=6 months of homes for sale inventory at
current selling rate) does little to expand access to new borrowers.
"Suspending the premium cut will benefit taxpayers,
as it will result in additional needed capital accumulation by the FHA. There
is general agreement that the current 2% minimum standard is just that, a minimum... suspending
this price cut may well forestall the usual tit-for-tat responses from the
FHA's tax-payer supported competitors-responses that only serve to fuel a race
to the bottom."
Investors and lenders were, of course, quick to act.
"This is an operational nightmare," one doc drawer sent me. The
MBA sent out a bulletin highlighting the most common
operational and compliance challenges that will arise as a result of this
action.
Franklin American sent out, "...The
MIP Charts that are currently in effect and were published as of 9-14-2015 must
continue to be utilized for all FHA transactions."
Pacific Union sent, "...With this change, all
FHA loans must be disclosed at the current MIP requirement for the program.
Pipeline loans disclosed with the lower MIP will need to be re-disclosed within
the next three business days (1/20/2017-1/25/2017) to reflect current MIP
rates. Announcement of suspension of the MIP reduction is considered a
valid change of circumstance, allowing for re-disclosure within three general
business days. Please note that, upon re-disclosure, a new three specific
business day waiting period will be required if: 1.A CD was already disclosed
on the file; and 2. The new increased MIP
amount causes the previously-delivered CD to become inaccurate (i.e., the APR
increases by more than .125%).
From the primary markets to the secondary markets...
If anyone wants to know what made rates scoot up last week they
have no further to look than Janet Yellen's speech. It seems that the U.S.
economy is closing in on the Federal Reserve's goals: the long-run unemployment
rate is around 4.75%, and inflation slowly inching back towards 2%. Ms. Yellen
suggested that "As the economy approaches our objectives, it makes sense
to gradually reduce the level of monetary policy support... Our foot remains on
the pedal in part because we want to make sure the economic expansion remains
strong enough to withstand an unexpected shock, given that we don't have much
room to cut interest rates."
For actual rates, Friday we prices didn't do much and
ended the day near Thursday's levels. Following the FHA MIP announcement, G2/FN
swaps popped 1 to 3 ticks vs. prior to the announcement. But that was then,
this is now, and let's see what we have for economic news this week. Zip today;
tomorrow will be December Existing Home Sales and a $26 billion 2-year Treasury
auction. Hump Day are the MBA Mortgage Index for last week, November FHFA
Housing Price Index, and a $34 billion 5-year Treasury auction.
Thursday contains the December Advance International Trade
in Goods figure, Initial Jobless Claims, December Leading Indicators, December
New Home Sales, and a $28 billion 7-year Treasury auction. Friday we wrap
things up with the Q4 GDP and GDP Deflator, December Durable Goods Orders, and
January Michigan Sentiment. Friday the 10-year note closed yielding 2.47%. This
morning it is floating around 2.46% with agency MBS prices roughly unchanged
versus Friday end-of-day.
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