Daughter: "Mommy, where did I come
from?"
Mom: "Sweetheart, you came out from
Mommy's body."
Daughter: "How exactly?"
Mom: "Well, your head came out first,
then your arms, followed by your legs."
Daughter: (thinking about what she just
heard) "How did you assemble them?"
Bank of America has opened 3 completely automated branches
without any employees. Customers can use ATMs or have video conferences with
employees at other branches, and the branches are about 25% the size of a
normal branch. Bank of America indicates that since 2009 it has reduced its
branch footprint by 23%, as the percentage of customers doing automated
transactions has jumped 94%. What about if you rely on some holographic gal
in your house for companionship more than actual humans? Check out this disturbing short video...competition for Siri?
Merger & Acquisition news.
For various reasons (age of owners, shifting business
models, cost of compliance) the mergers and acquisitions situation has been off
to a strong start, and expected to continue. The latest example is Realogy
Holdings Corp, a full-service residential real estate services company, and
Guaranteed Rate, an independent retail mortgage company, announced a new joint venture, Guaranteed Rate
Affinity, which is expected to begin doing business in June 2017. The twist
with this deal is that it involves a company that has been scaling back: PHH.
As Guaranteed Rate moves in to work with Realogy, PHH announced it is exiting
its existing joint venture with Realogy.
Under the agreement, Guaranteed Rate Affinity will originate and
market its mortgage lending services to Realogy's real estate brokerage and
relocation subsidiaries, respectively NRT and Cartus, as well as to other real
estate brokerage and relocation companies across the country. With PHH pulling
out, Guaranteed Rate Affinity will acquire certain assets of its mortgage
operations, including four regional mortgage origination and processing
centers, its relocation division and employees across the United States.
(And in other news regarding divvying up the still living
body, LenderLive Network, LLC announced that it has reached a definitive
agreement with PHH Mortgage Corporation to assume its private label fulfillment
operations in Jacksonville. In late 2016, PHH announced that it would exit
the private label fulfillment business, and this agreement is expected to
facilitate a smooth transition for both PHH employees and clients.
Mergers and acquisitions activity in the mortgage industry
has significantly increased since the financial crisis. Most of these deals
involve the acquisition of assets, which includes the data on all loans the
acquired lender has originated or was in the process of originating at the time
of purchase. However, what often get overlooked are the systems in which that
data is housed. If the acquired lender was using a different system than the
acquiring lender, there will be some significant issues and costs in
maintaining access to that data. The newest whitepaper from MetaSource tackles these challenges.
In depository bank M&A news, this week it was
announced that Heartland Financial USA ($8.3B, IA) will acquire Citywide Banks
($1.4B, CO) for about $203mm in cash and stock. Gulf Coast Bank and Trust Co.
($1.5B, LA) will acquire SBA lending company CapitalSpring SBLC (TX). In
Alabama Progress Bank and Trust ($730mm) will acquire First Partners Bank
($274mm) for about $41.9mm or roughly 1.37x tangible book.
It's not all rainbows and unicorns. Research by BankRate
that looked at the largest branch closures from 2010 to 2015 finds the top 5
were: Bank of America (closed 1,177 branches or about 20% of its total), Wells
Fargo (350, 5%), Citizens Bank (273, 24%), SunTrust (253, 15%) and HSBC (251,
52%). Not in the top: Chase.
Chase has made a well-publicized move away from FHA
lending due to potential liabilities. Certainly the FHA & VA changes
that other lenders and investors make continue, however, as does Ginnie Mae, so
let's see what's new in that lending sector.
NAR took a look at the aspiring homeowner in
its latest survey. Affordability was the #1 reason for people
not owning a home, followed by flexibility concerns. That said, 88% of
non-owners eventually do want to own a home. There still seems to be a disconnect
between what people think they need (as far as a down payment) versus what is
actually required. FHA loans remain the best way to get these people their
first home.
Curious about FHA average credit scores on new
endorsements? While the average credit score on new FHA endorsements has
fallen as the agency has withdrawn from its counter-cyclical role during the
crisis, the changes have been uneven across products and loan purposes. A
recent MBA chart depicts the average credit scores on new FHA mortgage
endorsements between 2010 and 2016. There is a clear drop in the average credit
scores for all products following policy changes in 2012 and 2013 that
increased the effective mortgage insurance premium (MIP). At the height of
the refi boom in 2012, average credit scores were higher for refinances than
for purchase endorsements, while average purchase credit scores have recently
been a bit higher than refinances.
The MBA's team tells us that with the subsequent reduction
in the annual MIP rate introduced in January of 2015, there was a tripling in
FHA refinance activity over the short term, and a more persistent upward shift
in FHA purchase endorsements over the longer term. The MIP reduction also
had the impact of stabilizing the credit profile of the FHA book by drawing
stronger credit borrowers to FHA via conventional to FHA refinances. On the
home purchase side, the typical credit score for home purchases following the
MIP decrease did not change compared to 2014.
Renovation projects funded in the Fannie Mae HomeStyle
product at M&T Bank are given up to nine (9) months to complete
work, as opposed to a six-month renovation-term cap in FHA 203(k)
products. Larger size projects will benefit from this, and should the
customer need even more additional time, extensions are always considered for
viable, documented reasons.
Ginnie Mae is informed its users of changes that
impact the web addresses (URLs) that are used to access Ginnie Mae's disclosure webpages.
NationStar Mortgagehas updated its Seller Guide. This update includes
information that effective with new loan registrations on and after June 20,
2016, its newly expanded credit offerings are available, which includes
expanded lending parameters for Government (FHA/VA/USDA) and Conventional
(FNMA/FHLMC) deliveries.
PennyMac
is updating overlays for VA full doc and IRRL
loans.
HomeBridge Wholesale allows VA IRRRL's with less
than 6 payments on its 30-year fixed product. For details, contact Justin Smith.
M&T Bank issued an FHA 203(k) LTV Calculation
Reminder: The lender must calculate two (2) LTVs for an FHA 203(k) transaction.
1. MIP LTV to determine MIP factor, and 2. CASE LTV (a/k/a/ Loan LTV), which
represents the overall LTV of the loan. The CASE (Loan) LTV is what should
appear on the Transmittal (HUD-92900-LT) under "Qualifying Ratios,"
on the AUS Findings, and must also match Step 5-B from the 203(k) Online
Calculator. Lenders are reminded that Step 5-B (Case LTV) has instructions
printed on the 203(k) Calculator screen demonstrating how to calculate the Case
LTV. These instructions are not located in the FHA 4000.1 Handbook. M&T is
seeing many loans with an incorrect and/or mismatched Case LTVs and as a
reminder, please note that the Case LTV involves the LESSER of two
calculations. The published M&T FHA 203(k) Product Page (located on MEME) lists
the formulas used by the online calculator for lender convenience.
PennyMac Correspondent posted a new
announcement regarding VA student loan payment calculation.
Franklin American Mortgage Company's overlay which capped
Real Estate Commissions to 8% has been removed. Its conventional, FHA, VA
& USDA product chapters have been updated.
Lenders using Prior Approval process for VA loans or for
one-off prior approval submissions should be aware, effective February 13th,
all VA prior approval loans must be submitted electronically through the VA WebLGY system instead of being mailed in overnight
packages.
Mountain West Financial's latest bulletin informed lenders that effective immediately, VA has
confirmed clarification and new guides for Student Loan Debts and Obligations.
The clarification will apply to deferred student loans and the new policy will
provide guidance for student loans in repayment or, to begin repayment within
12 months of a VA loan closing. This policy will apply to all
student loan repayment types.
Pacific Union's Non-Delegated
Correspondents should not that it is revising the seasoning requirement for VA
IRRRL transactions to require a minimum of six consecutive monthly payments
prior to loan closing date. If the credit report does not reflect six
consecutive monthly payments, the required payment history must be obtained
from the servicer. If the credit report/payment history does not reflect
six consecutive monthly payments when the loan is underwritten, the loan will
be conditioned for an updated payment history and a Clear to Close will not be
issued until the required payment history is provided. This is the removal of a
previous overlay as the GNMA seasoning requirement refers to "at the time
of the refinance".
AltiSource announced a specialized Federal Housing
Authority (FHA) offering, taking advantage of its end-to-end product suite to
assist in improving controls and mitigating risk throughout the lifecycle of
servicing an FHA asset. FHA loans represent a growing share of many
Servicers' portfolios and require specialized processes to comply with complex
servicing guidance.
Rates...
U.S. Treasuries and MBS traded lower (down in price)
Wednesday as data for January showed headline consumer price inflation
accelerating to a four-year high of 2.5% year over year, retail sales growth
exceeding expectations, and the Empire State Manufacturing Index showed
improving sentiment among purchasing managers in New York state. And all the
Fed speakers appear to be laying the groundwork for three short-term-rate hikes
this year. On the good news side of things, Fed Chair Yellen has said that the
Fed does not intend to sell MBS (preferring natural runoff instead); remember
that the NY Fed is buying $1-2 billion a day using money from its holdings that
pay off early.
For numbers, the 10-year yield hit a session high of 2.52%
after all those numbers showed our economy is doing well, and inflation is
nearing the Fed's target. But its price bounced and the 10-year closed yielding
2.50% while 5-year T-notes and agency MBS prices worsened about .250.
This morning we've already had weekly Initial Jobless
Claims (+5k to 239k), Housing Starts for January (-2.6%, permits +4.6%), and
the Philadelphia Fed Survey (43.3, topping forecasts) - and that about does it
for scheduled market-moving news. We find the 10-year T-note yielding 2.48%
and MBS prices a shade better than last night's close
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