Friday, August 9, 2013

Job Report

http://globalhomefinance.com

What happened yesterday?

The benchmark FNMA 3.5% August coupon gained +13 basis points from Wednesday's close which gave a very small improvement to pricing.

Initial Jobless Claims dropped lower and slightly beat the consensus estimates (333K vs 336K). This is a nice level and is generally negative for MBS. But offsetting that headline data snippet is the fact that the prior week was revised upward and the Continuing Claims were worse than expected. As a result MBS rallied (better pricing for you).

We reached our best levels of the day +30BPS at 11:45EDT. Many of you received a reprice for the better after that point.

But MBS started to retreat from their highs after the 30 year Treasury bond auction results were released at 1:05EDT. The bid-to-cover ratio (a key measure of demand) fell from the recent average of 2.55 down to 2.11 for this auction. This was negative for MBS and the benchmark FNMA 3.5% August coupon pulled back -21BPS from our highs as a result (worse pricing for you).

MBS still closed in positive territory for the day but clearly our rally has "topped out".

Remember that today is the monthly bond coupon rollover from August to September.

Thursday, August 8, 2013

State Level Lending Changes

http://globalhomefinance.com

Watching loan officer ads is a full-time job. The Mortgage Bankers

Association of the Carolinas wrote up this compliance tidbit: "Are lenders

required to retain web page advertisements?" Yes. The Mortgage Acts and

Practices Rule requires lenders to retain commercial communications,

including web pages, for a period of 24 months from the date a person makes

or disseminates the communication. Don't take my word for it, check out at

FederalRegulations

[http://r20.rs6.net/tn.jsp?e=001tkriJUZCpRojgpUpCuaNHHGN2ufLDRyV8eeqUnjk6eFP

waFbl1BEVulgKB0LzVFxmJbl2u6Pef3emnEDmk2go7BKrK4jQjy4U3kEtry5mTU=],

Title 12 (Banks and Banking), section 1000-1099 (CFPB), and the section

1014, section

5 (Record keeping requirements). Or you can try going straight to

AdRecordKeeping

[http://r20.rs6.net/tn.jsp?e=001tkriJUZCpRpxqxkGYN3Np1E9CiDniHUHaNl7A23yanV8

twnUnBMHpGuv4IeF3nn9am1sd5pnAVkz1HuGL3Th0VbMR99TVzbcb1sT6lxJHme_29E_OvOAxrQr

TwDVHoeCDutdf0Ta8wp0ML-6SXg5LzJOmOS-X9zBZ7O9-R6N8gJwgLT5ALsGVHS52LR4wALxQZa9

O2YEan-viecFuWTF7CP8Nngkn5Z14Uyrexg-uPJm8Txz9tkyFcFRiX-bxgLNOqFfXepvCSdfAylm

ZOV00_xaGJF4kNJm].

I don't know much about marketing practices, but occasionally I am asked

about marketing software. In this case, in June Guild Mortgage selected

Vantage Marketing from Vantage Production, and I know that Vantage keeps

marketing materials for at least the required amount of time: GuildMarketing

[http://r20.rs6.net/tn.jsp?e=001tkriJUZCpRpNQeXlk3_9P1C_PxqCYzdR5CxPGmq4Akss

0qSd6_GnwgY4u5YSRYrrhC1LPWABKvPpuQlIoVb4fwiwwvQHI_6yx7r6Bi0dVkXPqHCpOl0jXNMc

LlDELu_nxIacNzhIHcfDXuAY-fxxbb6HRumOsRdzZ_-XYe_Paoc=].

When a broker directs a loan to a particular wholesaler, often times the

borrower never quite knows where they will be sending their payments in a

couple months.

There has been a transition in servicing: 4-5 years ago, the top five

servicers held 60% of the servicing, but now the top five hold 49%. And

there are a couple "upstarts" that have broken into the top ten, ranked

Wells Fargo, Chase, Bank of America, Ocwen, Citi, Nationstar, US Bank, and

PHH, per Inside Mortgage Finance.

Why are more companies holding on to servicing? "Economics/revenue" and

"wanting to keep the client" are often cited, although for some it seems

that they are just going along with the natural evolution of residential

lending.

That revenue reason is a big one - after all, who wants to leave money on

the table?

Not the United States Government, thus many tongues are wagging about

yesterday's profit numbers from Freddie and about whether or not the

government is really going to give that up by shutting Freddie down. Freddie

will pay $4.4 billion to the Treasury Department as a result of its seventh

consecutive profitable quarter (this time of $5 billion). Freddie Mac

finished the second quarter with net worth of $7.4 billion and is required

to pay everything above $3 billion to Treasury in return for the taxpayer

aid it has received under conservatorship. F&F received about $190 billion

in assistance, and have paid back about $132 billion - which counts as a

return on the U.S. investment in the firms and not repayment of their debt

to taxpayers.

Yes, the government can't stay away from housing. It is good to be aware of

what the President said Tuesday in Phoenix, and also what is on the table

in Congress.

In the ongoing "who's looking out for us more" race in D.C., House Financial

Services Committee Chairman Jeb Hensarling (R-TX), along with subcommittee

chairs Scott Garrett (R-NJ), Randy Neugebauer (R-TX), and Shelley Moore

Capito (R-WV), unveiled the Protecting American Taxpayers and Homeowners

(PATH) Act of 2013. This act provides for comprehensive reform of the

government's role in housing finance. Chairman Hensarling introduced the

bill, "The PATH Act creates a housing finance system that's designed for

homeowners so every American who works hard and plays by the rules can have

opportunities and choices to buy homes they can afford to keep. It creates a

housing finance system that's designed for hardworking taxpayers so they

never again have to bail out corrupt financial government enterprises like

Fannie Mae and Freddie Mac, whose top executives engaged in accounting

shenanigans to trigger huge bonuses for themselves." With all due respect to

the Chairman, I don't really find the above quote that note-worthy, but I

never turn down the opportunity to squeeze in the word 'shenanigans'. See

ThePathToWhere?

[http://r20.rs6.net/tn.jsp?e=001tkriJUZCpRrVgHhWXlg-Pav1v3xTPAxt8m8G7WHvbF9l

zZAW_LhAzzSIfJFJVjUxcOdEjnTcKbpZHrMxMOXdjz7r49hYQLg7kEM8qkmTl2TLKfMz-6ju0Fdl

fEygIl6EeXu_zFPvI9BJVUxnFws1NO-p0eTyNMiSMnd7lRoNy0zuf6mZoInA6uC3mHbbGbpHVD0T

yKCDrrM=]

But who cares about what is going on at the Federal level when it is so

darned hard to keep track with what is going on at the state level? This

condensed list is just a smattering of recent activities - fun for lenders

making home loans in a multiple of states!

North Carolina's General Assembly amended a number of NC SAFE provisions

related and applying to applications for the licensure of transitional

mortgage loan originators filed on or after September 1, 2013. The

amendments allow mortgage originators holding out-of-state licenses to apply

for a limited term license, so that they may continue lawfully conducting

business while transitioning between or working within multiple

jurisdictions.

Michigan has revised its mortgage modification program, and adopted

provisions under the federal loss mitigation program, effective immediately.

Complete and full details can be found compliments of Bankers Advisory here

[http://r20.rs6.net/tn.jsp?e=001tkriJUZCpRrlNeaIjEqvOjft_LWkeAHEL4-NB6p50c2M

ScXX3ZAAWwZGvFeDazJO7aNFfkKN5Jqi38IwI-E1Klxme_Ce3qczBRN59dmgR2WWoLcu1PuYvSGU

0wZWBVlURBijUfgM61a-T-2cgHsFYeMFSJ-0MMu10PZNeCBxP5rXlByuyPZboSCALrBIvyp6kU10

0SWFBGhB7SM9boM0Kw==].

Hawaii recently adopted the Uniform Mediation Act in order to address a

number of different issues related to the mediation process. The rules

adopted will govern mediation agreements and referrals made on or after

July 1, 2013. As of January 1, 2014 all mediation agreements, whenever

made, will be governed by the Uniform Mediation Act. Eight states already

have enacted the Uniform Mediation Act, led by Nebraska in May 2003.

Illinois followed nearly a month later, while New Jersey, Ohio, Iowa,

Washington, Indiana, and the District of Columbia all enacted it during the

last two years.

Delaware has amended its "Clean Credit and Identity Theft Protection Act."

Under the new provisions a consumer reporting agency may no longer charge

consumers for a one-time reissue of the personal identification number;

however, charges for any subsequent re-issuance are considered valid.

Victims of identity theft, having filed valid incident reports, may not be

charged any fee for placing a security freeze on their credit reports.

Consumers have the right to bring a civil action against anyone who violates

his or her rights under the credit reporting laws.

Oregon legislature recently passed Enrolled Senate Bill 574, amending

statutes relating to security freezes on protected consumers' consumer

reports. The Act provides procedures for requesting security freezes and

protective records for "protected consumers".

Under the revisions, a representative may request a security freeze be

placed upon a protected consumer's consumer report or protective record.

Also, the Act provides procedures for requesting security freezes, temporary

lifts of security freezes, and deletion of protective records

Indiana has recently updated their lending regulations, effective on July 1,

2013.

Consumer credit sales, non-supervised loans, and supervised loans are all

affected by the regulatory changes. More details can be found here: Hoosiers

[http://r20.rs6.net/tn.jsp?e=001tkriJUZCpRrqr8XxF3UnGDPK6rgpBy2IxSzfzYX6ZtS_

a66YbkPC1eQ5_c7DasJk-mGwiSaA89yrV52DDN7jUTInGqCOCBHD4HczjCtH0lqsS_giad56LSH4

_2OW5JjdfYkhQI4qFIHdb2VFA3YC8CC2_7wu98oBjXApqCIxLa-nH0HiZxdKdgNdomwt1B9jhY1U

kjEQpvJwSv0ua4_jqw==].

Louisiana has modified their provisions regarding seizures and sales of

property provisions. The new provisions focus on: the notice to judgment

debtors in money judgments after the seizure, the type of service and timing

of the notice, notice of scheduled sale date plus any changes, and the

information to be included in the notice.

Texas Supreme Court issued an opinion on June 21, 2013 which addresses three

different issues raised in regard to home equity loans; home equity fees and

interest, loan closing requirements, and notice requirements. Here is the

bottom line for Texas

lenders: all fees-including fees paid to the lender-are capped at 3

percent, all aspects of the loan closing process must occur at the office of

the lender, an attorney, or a title company, and lenders are entitled to a

"rebuttable presumption" that homeowners received required notices on the

third day after mailing.

Nevada has modified several provisions regarding the foreclosure of owner

occupied property, effective October 1, 2013. Under current law, the trustee

of a deed of trust has the power to sell the attached property, subject to

certain restrictions.

Current law also allows judicial foreclosure to recover debt, or to enforce

a right secured by another lien on the property. The new bill requires at

least thirty days before recording a notice of default and election to sell,

prohibits the recording of a notice of default and election to sell, or the

commencement of a judicial foreclosure action involving a failure to make

payment, until the servicer makes contact with, or attempts to contact the

borrower.

North Carolina made modifications to its Consumer Finance Act

[http://r20.rs6.net/tn.jsp?e=001tkriJUZCpRrZHqtLqjnFUHmADIRYC9b5tIChbSBfDaPL

v6pnVlCjOxLGoOXD8YKTYFbqw5oz2ttd14jURRa9-Q53ZtSVPB21MTEKaBXELRhlgAhRDp3PSnKz

4VkYeM911kPzJ2iiHJTBN4KaXU9JK8jQLewOl17VZpXYJc1xKQhtLQdHHDcFKAffVKkygEs01uKv

UJ7Soc4=]

to include an increase the minimum amount of loans authorized by the CFA

from $10,000 to $15,000, and requires a license from the Commissioner of

Banks; authorizes licensed lenders, for loans up to $3,000, to charge

interest rates of 36 percent on outstanding balances up to $1,500, and 15

percent on the remainder of the unpaid balance, whereas existing law

authorizes 36 percent interest rates on outstanding balances up to $600;

authorizes licensed lenders, for loans up to $15,000, to charge 30 percent

interest rate on outstanding balances up to $5,000, 24 percent on

outstanding balances up to $10,000, and 18 percent on the remainder of the

unpaid balance, whereas existing law authorized 30 percent interest rates on

outstanding balances up to $1,000 and

18 percent on the remainder of the unpaid balance. The amendments have been

criticized in North Carolina by levels of government officials and consumer

protection groups for allowing consumer finance lenders to charge more

interest and higher fees to those consumers that already cannot afford the

heavy financial burden.

The Missouri General Assembly recently passed a new bill (ShowMe

[http://r20.rs6.net/tn.jsp?e=001tkriJUZCpRrAjUPxrdKKUzaa5A0R8OX5dzQRDDcb1kxY

bpBrFK9Ffc-Qo-tSgW2c5sVCf16o3UdzqPXGi68L1wavjmZSMYgIk6YpRZATK0y6i4twZB_6W116

eT-zTOY5a8UR_jhVtakfbzfzpVCGAGDc7e4ZcritzrsGeq02XXRHpSvigV7ADiMLuO6rZNJW])

amending a statute regarding real estate loans. The statute, found at

Section A.

Chapter 443, is amended to now include a new section 443.454. The new

section precludes local laws from affecting the rights associated with

secured real estate loans.

Enforcement and servicing of such loans are now specifically governed by

only state and federal law.

New York's Department of Financial Services has issued additional guidance

on the interpretation of state banking laws. This is in response to recent

readings of section 6-m of the New York Banking Law, which have resulted in

a number of loans being incorrectly deemed sub-prime. Section 6-m defines

the term "sub-prime" (not to be confused with Mayor Bloomberg's section 6-n

which defines "big gulp") as "a home loan in which the fully indexed annual

percentage rate exceeds by more than one and three-quarters percentage

points for a first-lien loan, or by more than three and three-quarters

percentage points for a subordinate-lien loan, the average commitment rate

for loans in the northeast region with a comparable duration to the duration

of such home loan, as published by the Federal Home Loan Mortgage

Corporation as posted in the week prior to the week when the lender receives

a completed application."

The increase in interest rates, combined with lenders usage of the closing

date to determine the "fully indexed rate," has caused a fear that recently

originated loans now fall into the sub-prime definition. This amendment

provided lenders with more specific dates to use when determining the fully

indexed rate.

Many people in our industry are Notary Publics, and if you're one doing

business in North Carolina, this story is of some interest to you. In June,

North Carolina's General Assembly ratified amended the Notary Public Act.

Traditionally, notary publics will perform signature acknowledgements,

administer oaths and affirmations, and verify or prove signatures presented

on security instruments. The amendments take effect for all notarial acts

performed on or after July 1, 2013, and retroactively validate acts-having

been duly recorded and accompanied by a seal or stamp-dating back to

December 2005, as well as, most minor or typographical errors regardless of

when the act was performed or recorded.

There still isn't much going on with rates - much to the delight of many.

Yes, a little up, a little down, but no great volatility. (Tradeweb

reported mortgage-backed securities volume remained below normal at 88

percent of the 30-day average - about

$1 billion from mortgage-backed security sellers.) The 10-yr closed

Wednesday at a yield of 2.60%, and MBS prices were slightly better.

Today we wrap up the quarterly refunding with the Treasury auctioning $16

billion in 30-year bonds at noon Central time. We've had Initial Jobless

Claims (+336k was expected from +326k previously, it came in at 333k, up

from a revised 328k - no big deal). Rates have crept higher - the 10-yr is

at 2.61% and MBS prices a shade lower.

Part 3 of 4 of some trivia...

In ancient Greece, tossing an apple to a girl was a traditional proposal of

marriage.

Catching it meant she accepted. (Or she didn't want it to hit her in the

face.)

Warner Communications paid $28 million for the copyright to the song Happy

Birthday.

Intelligent people have more zinc and copper in their hair.

A comet's tail always points away from the sun.

The Swine Flu vaccine in 1976 caused more death and illness than the disease

it was intended to prevent.

Caffeine increases the power of aspirin and other painkillers, which is why

it is found in some medicines.

The military salute is a motion that evolved from medieval times, when

knights in armor raised their visors to reveal their identity.

If you get into the bottom of a well or a tall chimney and look up, you can

see stars, even in the middle of the day.

If you're interested, visit my twice-a-month blog at the STRATMOR Group web

site located at www.stratmorgroup.com

[http://r20.rs6.net/tn.jsp?e=001tkriJUZCpRqmmq_d9a0elHL6JIQ0HIic55xvSB77udCk

i_cRCCIc_0xkTmWd5MOP0srcCSrYoUQ9Weqg4kz9L1KfgRUVqRIW_MLLsSepBpw3tht8uwp8B8v0

k7gST4-S].

The current blog is, "A Little Primer on Reverse Mortgages"." If you have

both the time and inclination, make a comment on what I have written, or on

other comments so that folks can learn what's going on out there from the

Trade Balance

http://globalhomefinance.com

What happened yesterday?

The benchmark FNMA 3.5% August coupon lost -13 basis points from Monday's close and traded in a fairly narrow range that was only -34BPS wide from our highs to our lows.

The stock market, as measured by the DOW lost -93 points AND MBS are trading lower at -14BPS. This once again demonstrates that stocks and bonds are more often moving in the same direction.

Our Trade Balance was a smaller deficit than expected. This does show some additional economic improvement and normally would have pressured MBS more but did not materially impact MBS pricing.

The Economic Optimism Index was 45.1 vs est of 47.9, this is another report that doesn't usually impact pricing.

We had a 3 year U.S. Treasury note auction. Results: $32 Billion at 0.651% with a bid-to-cover ratio of 3.21. That measurement of demand was lower than our last 10 year auction at 3.44.

Talking "Feds":
The President of the Chicago Fed, told reporters he expects growth in the second half of the year to accelerate to a 2.5% annual growth rate, from a paltry 1% rate over the past three quarters, and reach over 3% growth rate in 2014. Based on this forecast, the central bank is “quite likely” to slow down its $85 billion a-month asset purchase plan “starting later this year,” Evans said.
The Chicago Fed president said he could not predict exactly at which meeting the central bank would start to taper. “I couldn’t tell you exactly which month that will be,” Evans said.
“We need stronger evidence of accelerating growth, a little more momentum,” he added. “We’re not far from that.”

As we have discussed several times, the market fully expects some sort of taper by the end of the year. The only question is: Will it be September or December?
From a technical perspective, MBS have now traded below our proprietary ceiling of resistance for the tenth consecutive trading session.

Tuesday, August 6, 2013

Benchmark

http://globalhomefinance.com

What happened yesterday?

The benchmark FNMA 3.5% August coupon lost -16 basis points from Friday's close which was negative for mortgage rates. MBS traded in a narrow range that was only -25BPS wide from our highs to our lows.

We had a fairly boring day which was very welcome after all of last week's volatility.

MBS opened the day downward, retreating from Friday's rally which was clearly overbought.

MBS received additional downward pressure from the much better than expected ISM Non-Manufacturing report (56.0 vs est of 53.0). A reading above 50 shows economic expansion.

From a technical perspective, MBS have now traded below our proprietary ceiling of resistance for the ninth consecutive trading session.

Monday, August 5, 2013

Bernanke's Replacement

http://globalhomefinance.com

What do you hear about Bernanke's replacement?" First off, most of the

"news" articles are merely editorials - don't expect anything before

September. The Fed chairman talk is focused on three people: Janet Yellen,

Larry Summers, and Donald Kohn.

Investors and the bulk of Congress would prefer Yellen while the White House

wants Summers - Kohn is a distant third. Overall, most of Europe is on

vacation, Congress is on a 5-week recess without finishing funding the

government and resolving the debt ceiling, and the earnings announcements

for the 2nd quarter are pretty much over. So this week could be uneventful -

we could all use that.

That doesn't mean companies are sitting on their hands. Due to an internal

promotion, Colorado State Bank and Trust has a unique opportunity for a

seasoned Mortgage Branch Manager with a strong originating team - this

Denver Metro team has a proven track record of producing over $200 million

in loans over the past three years and comes with a strong support staff.

CSBT is forecast to fund $3.5 billion in production this year, and has a

servicing portfolio of nearly $14 billion dollar portfolio.

"We offer a wide variety of products for nearly every borrower's need,

process and underwrite locally, and encourage those relationships in order

to close loans quickly.

We are the largest bank in the country not to accept TARP money." If

interested please contact Meagan Douat at MDouat@BankofTexas.com

[mailto:MDouat@BankofTexas.com] and the position is posted on the career

center at CSBT

[http://r20.rs6.net/tn.jsp?e=001ftL-gZ3YgobGhIBmgfHIKExKnGYWdTWkQdpylils0toX

2hlCnScYnCdocO2ft7v2xvQbiVpt4iNyJkFdrgqHzLcs2HHLRLobP35xh8aK3IU=].

And Affiliated Mortgage Company's Wholesale/Mini-Correspondent Division, led

by industry veteran Jerry Alred, is now expanding and developing this

channel throughout Texas and beyond. Jerry explains that Affiliated is

pursuing seasoned Wholesale Account Executives for the Austin, Houston, San

Antonio and Dallas markets. Ideal applicants should embody the

customer-first approach which exemplifies Affiliated's business model as

well as being professional, responsive and motivated. AMC offers a variety

of in-demand wholesale products including Texas Veteran's Land Board, Fannie

Mae Flex 97, Texas Cash Out, Libor ARMs, USDA, VA, FHA, My Community

Mortgage and more. Affiliated Mortgage Company is a wholly owned subsidiary

of Benchmark Bank of Plano, Texas and is comprised of Retail, Correspondent

and Wholesale/Mini-Correspondent divisions. The Mini-Correspondent channel

has a warehouse program available to clients who qualify and the Wholesale

and Mini-Correspondent divisions are licensed in 28 states and continue to

grow. For more information about the wholesale channel, please visit

AffiliatedTPO

[http://r20.rs6.net/tn.jsp?e=001ftL-gZ3YgobRB-r1ERzCExcrxzCPiZyy16zdXmoLvGFB

HaB5VzjxSDxY5AMjJVpZ0lkWQ2JhuW3fKUi1isybRuJKLkx9-tTDr3_s0PvApqW_K1Bs3pw-_8Vg

QT8NjH5d].

If you would like to further you career with a secure, dynamic company,

submit your resume to jobs@affiliatedmortgage.com

[mailto:jobs@affiliatedmortgage.com].

Compliance is the name of the game. There are a lot of compliance training

firms, and I am asked about it often, since now compliance education is not

the trend but the reality. I can't list every compliance vendor, but for

example a search shows the 10-yr old Praedo Institute provides "very cost

effective compliance education that is robust and track-able. Its compliance

education catalog consists of 11 core courses including: RESPA, TILA, LO

Comp, SAR/AML, Fair Housing, Privacy Laws, Ethics and Fraud, QM, Advertising

and GFE, and for $1,665 your company can buy the annual subscription for

unlimited users. (Sniffing around a little farther, if you follow the link,

you can take advantage of a 10% discount on any of Praedo's courses,

including the compliance catalog, and an additional 15% off any continuing

education, pre licensing education, UST or even the compliance catalog. The

user should use the coupon code "celebrate" when prompted at checkout.) If

you have any questions write to Chris Maturo at chris@praedo.com

[mailto:chris@praedo.com]; the site is Praedo

[http://r20.rs6.net/tn.jsp?e=001ftL-gZ3YgoZE3BuhpW6Qa85EBBmu_jVIeXSeEZsv0irD

9Jem9zzkk-GQnXzCmk_KqCTxUcE2ZLHB4LdtgxVEzsc6w3DspO8yzPeDDtx8OZ_Az7dB1p-N6MLl

-3fwSL55yubrIvEwtTUAzMUptWl1vQdcIsQGIbjOfWUmR5X82WU10xPUVrdBbRJtCbn0w4oKQB5a

QuqDonKbOPGdMuob1w==].

Compliance is one thing, fraud is another, and if you think the residential

lending industry is done with its public relations nightmare, and paying for

the sins from years ago, think again. Fraud is still plaguing us. "Steven

Pitchersky, 64, of Rancho Mirage, was charged Friday, Aug. 2, in an

indictment with one count of wire fraud for his role in an alleged mortgage

refinancing scheme that involved the creation of shell companies and

fictitious players to defraud Ally Financial of about $5.3 million.

Pitchersky operated Nationwide Mortgage Concepts, a California-based

mortgage lender that recruits customers through direct mail and has been

licensed to conduct business in about 40 states." Here you go: GoodRiddance

[http://r20.rs6.net/tn.jsp?e=001ftL-gZ3YgobE8675T_cNMtCVt-Fsz6LvX8hNdnAFlaCT

KSboyMbIVaUWKhASAINpbDKaKc64yWRSVWINY2NCtiuq4caB8iUYDet3LdWGDdHym_GQZt2rPn7P

d-f1LiUlJFft4EKvx5lya6FXWQUvZmsoSBOq9M1QKUoyxBZtQvYCOEnQSc_EKoAxzekHaEF4weqD

90YHipV3oo7OqzHCbmhj2qaSA-3Zb1eSdQv8jceT1ED8Lmx0vV9hOX373DYZ].

"What the devil is going on with flood insurance? A recent bill was passed

before Sandy, and one of the sponsors is Maxine Waters so the thought may be

to redistribute the wealth of those who can afford to live near water to

those who cannot - any truth to that?" I don't know about the Maxine Waters

angle - she did co-write a bill (see a few paragraphs down), but it appears

that the government subsidy is going away. There are five companies approved

by FEMA to write flood policies through National Flood Insurance Program.

The premiums are subsidized by feds, and that subsidy is going away and thus

the premiums will be going up. Although it is scheduled for October, lenders

are already seeing rate changes. There are other insurance companies, such

as State Farm, etc., that write their own policies and those premiums were

always much higher than NFI. They aren't in business for their health -

companies are going to cover the loss of any subsidy, so in theory if one

owns a house on the sand on the Gulf Coast, and it could be wiped out by a

hurricane every other year, the owner will pay the cost, not the taxpayer.

There is another rumor that the government re-did the flood maps so many

people are in flood zones who were not in the past, and that storm and flood

activity has increased rates across the country just based on claim

activity. There are reports of potential buyers being declined after the

cost of flood insurance was factored into the future monthly costs and

pushing ratios beyond qualifying.

Sovereign (Santander) sent out a note to clients in early July saying, "The

Federal Emergency Management Agency (FEMA) will be suspending some MA

communities from being able to participate in the NFIP beginning on July 16,

2013 because of non-compliance by these communities with FEMA's floodplain

management requirements. If any of these communities can document compliance

before July 16, that community will not be suspended.

For properties that are in Special Flood Hazard Areas within these

communities, this could impact your ability to originate new loans secured

by such properties because flood insurance will not be available unless and

until they address any non-compliance with the FEMA requirements. It is

important that you review your current pipeline and identify any loans so

that the consumers can be alerted if and when insurance becomes

unavailable. Go to OurFriendTheFederalRegister

[http://r20.rs6.net/tn.jsp?e=001ftL-gZ3YgoZI5-an-C6JC2IT9pRnj1t2HBB2rkqvcFEF

kgvXhXQFD9SiimJEAaAfO3420DQSxb3tcAcaqtwIG7_xOWhu0XA-_wEJQ-OcZd5zfRIFOwwuKH5p

7gBPdKN0kFWtQpPKcW3qqaWMVefh8dD3-Iy3MIcamn25Xo2bFTCEcXLLnwK0Vg==]."

(Look for the "Department of Homeland Security" section in the right-hand

column).

The memo went on. "Some of your policyholders soon will receive letters

announcing rate increases that will phase out or eliminate subsidized rates.

Companies will send the letters to policyholders at least 60 days prior to

the policy renewal date to announce rate changes effective October 1, 2013.

The changes will affect certain pre-FIRM properties, which are older

buildings constructed before the community joined the National Flood

Insurance Program and adopted its first Flood Insurance Rate Map (FIRM).

These include properties in most high-risk A and V zones, as well as

undetermined-risk D zones. The letters explain that the Biggert-Waters Flood

Insurance Reform Act of 2012 (BW-12) requires the phase-out and removal of

subsidized rates. Two types of rate changes will be announced: a 25 percent

rate increase will be applied at renewal for business and other

non-residential properties, properties that have experienced severe or

repeated losses, and non-primary residences (this increase began in January

2013), and a direct move to full-risk rates will be applied at renewal for a

building purchased - or a newly purchased policy with an effective date-on

or after July 6, 2012, the date the law was signed. Lapsed policies

reinstated on or after October 4, 2012, also will move directly to full-risk

rates. The policyholder will be asked to submit a renewal application with

additional information, including an Elevation Certificate, so that the

building can be elevation rated.

"Agents should expect questions from policyholders. FEMA's rate guidance is

available in the June 27 WYO Bulletin. Additional guidance for renewing new,

lapsed, and assigned policies can be found in the July 10 WYO Bulletin. Fact

sheets and other materials are available at FEMA

[http://r20.rs6.net/tn.jsp?e=001ftL-gZ3Ygob5TEeCTk_TspDbbXOJ0WoI8BZjlr__z8jH

Of6j9jxWQcHOpl-J9VT7ctBp2PyskQmjUs7JKuU-y66MX_jHYoxW2FzrcyEvCCpfeXoZK1YldA==

]."

How about some upcoming events of interest?

Hey, this might be interesting (and timely given my jokes on Thursday &

Friday).

Given that there are 90 million Millennials (born between 1980 and 2000),

the Ohio Mortgage Bankers Association (OMBA) is offering a FREE webinar on

"Capturing the Business of the Millennial Generation," presented by

Kymberlee Kaye Raya of Big Shot Marketing. The webinar will be presented

this Thursday, August 8, from 10:30AM to 12PM CST PM. To register, please

respond to omba@ohiomba.org [mailto:omba@ohiomba.org].

A log-in will then be emailed back to you. Attendance is limited, so please

respond as soon as possible.

Next week I am fortunate enough to be "the warm up band" for Dave Stevens at

the Michigan Mortgage Lenders Association's annual conference. Check it out

at MMLAShinDig

[http://r20.rs6.net/tn.jsp?e=001ftL-gZ3YgoZmlWtmnSrnHfHCPgbTE_SZTp3176na9MEW

wIjrjRzovfp_BJpSlFamZqaimPMDkJiiD6y1XobFrt6j_knIOavGw5Ano8QsPHfQb0zlFXWPYQKp

zZ-4bKVINBO96a1yaBxG7MEOPpYyFg==].

Down in the Carolinas, the MBAC 58th Annual Convention "The Art of Lending"

is attracting registrants from across the country. With a heavy focus on

effective communication and current compliance issues, an expanded trade

show and a diverse roster of presenters they are expecting record

attendance. The dates are September 21-23 and the location is Hilton Head

Island, SC. Check it out at www.mbac.org

[http://r20.rs6.net/tn.jsp?e=001ftL-gZ3YgoZMQZZDIHUODCm7D-Jq2f2liM3uthTwTtdd

OIzFpoLSD3NrDWXckt3INrKi2GSilL40x_wu0pDiv2Fqwt7hwEp0D2g0cpjgA0dqdUK87d4QpQ==

]

at Upcoming Events

[http://r20.rs6.net/tn.jsp?e=001ftL-gZ3YgoYJ7u81swZOKHHCUrYqhlwsEz0dYqjIah7d

Cistdx9Z7SVVMqAH2KlH86XdcCyzLfr6la3Vkxg66cOXd67SBtlch26VcHcoxuHX3zgnPS1hxK8n

QURlKzXPpjoUWoC8KXJh2lomm-21wu4LC2GGn3ELG1EyjshzDy14QDJkGO47f00Lcca7HHUE_ZNW

cwAIDqmioht6pd6LD5XqyhunNz9dB6lm6kG-_-Kvn9nXI9tzPw==].

Reps from the FHA's Santa Ana Homeownership Center will be offering a

two-day classroom training in Phoenix, AZ on August 7th and 8th. (Thank

goodness for air conditioning!) Recent program changes and announcements,

comparison of AUS vs. manual underwriting, feedback certificates and

documentation, income and asset calculations, refinance transactions,

Post-Endorsement Technical Reviews, insuring deficiencies, and underwriting

FHA appraisals all feature as discussion topics. Although it is aimed

primarily at operations professions, loan officers and real estate agents

are also encouraged to attend. Registration is available at PopsiclesAtLunch

[http://r20.rs6.net/tn.jsp?e=001ftL-gZ3YgoYrtAh3dkZqCopqCgdG3PrQ1yCsVRuTFMGb

4jWBzglTRad-kCjRyvAkUtUdj5I_chJviGTlW9Wdkjeturpr4v2HaDrvzjWdwzQrnw9PtftedGYX

27ORUyCOpRIhrzrapwEzw39tC3-y60e07eJPAkskr8sxbx9feEP5Aj0UXAGuHnU8PkKMiF_ywcMi

C_MNXUJiHiYBMPkEzoiM2QExU0R8].

Also available from the FHA is an on-site loss mitigation training in

Indianapolis, IN on August 21st. Designed for HUD-approved counseling

agencies, servicing lenders, and non-profits, this particular session will

address the changes on the FHA loss mitigation retention waterfall as

outlined in Mortgagee Letter 2012-22 from earlier this year. To register, go

to TheBrickYard

[http://r20.rs6.net/tn.jsp?e=001ftL-gZ3YgoYhL-KmFqGAU0siQy2EvcxUNTEh3x4EqRn9

VgTLAKX4v-mSCeBKNLPzBwk6XnWAY-rapBtM1icBdZ26vUym2dc5sRmJLZDEQeTduri-ktPPjfrw

LSJ18VpX2sFtHX0AxITQ17XURoc_GBSrUakFWCAYj1xI7xh3WgCf3qiGQ7HmEezNnAfMnFzydAU_

S_Cs68ScYt5Bjn0h4VF9wM6y1Aui].

The same training will be offered the following day in Albany, GA; to

[http://r20.rs6.net/tn.jsp?e=001ftL-gZ3YgoYA1WN-2_bi4HHrbP65DD2dNRkvAwJuj1eT

es3pE8Pk4uWxP43OL7J1Ra9kOJ2jH_4qIndw1Y68J53B6DfyvXnCqUGjFBFGTIhXDdHRYrk_bnoe

aW9ZkW3ryeAxRmKrpjB0KS-t_5H41cqoW5UWr7EB0C9rpKtI6rHm0L4bJzV25YfxEb63H5LvKW1r

50BxR7mnL1SQXR1MYLV6MqzurGQS].

For those with a fondness for crab and planning well in advance, the

Maryland Association of Mortgage Professionals is hosting its annual crab

feast in September (date and location TBD) and its holiday party in Columbia

on November 21st. Check the official calendar at Don'tForgetTheButter

[http://r20.rs6.net/tn.jsp?e=001ftL-gZ3Ygobs0Zt_1N6SEZe3FZU-IdfPMxsTx3ZW9M_0

HDGdsYCklS5F0VgsjwYKf3xRYAuxJV_l84LO_6JiZuhYZzoKGkOrN5jwPqjW2lwN_xyNY4rEpjuB

7laka0EVyKjnITsaRkSjqz3kXlATGQ==]

for further details.

After Friday's numbers most analysts agreed that anyone believing that any

tapering off of QE3 in September is going to have a very tough sell around

the FOMC table in 6 weeks. In fact, last week's economic data undoubtedly

gave the Fed a few more things to ponder on their summer vacation. From a

broad economic standpoint, growth is slower than previously thought, with

the latest year-to-year real GDP growth clocking in at just 1.4 percent, and

July's employment data was also on the soft side with payrolls adding just

162,000 new jobs and previously reported gains for May and June revised

slightly lower.

That being said, although things seem slow, the downside risks to the

economy also appear to have diminished. The unemployment rate has fallen to

7.4 percent, as layoffs continue to dwindle. Weekly first-time unemployment

claims fell to just 326,000 in late July, which is the lowest it has been

since January 2008. Consumer confidence has picked up and more consumers are

moving forward with purchases of motor vehicles, household durables and even

homes, which were put off when job prospects were less certain.

As mentioned in the first paragraph, perhaps August will be quiet. We'll

need it, since we can "look forward to" Congress returning in September, and

arguing about the debt ceiling and funding the government, along with the

next FOMC meeting. So we'll take the nice gains in agency MBS prices on

Friday, which almost brought us back to "unchanged" for the week,

price-wise. And don't look for much this week:

today we have ISM Services, a trade balance number tomorrow, Jobless Claims

on Thursday, and Treasury auctions on Tuesday, Wednesday, and Thursday.

Speeches from Fed officials may also receive some attention from investors.

For rates, the 10-yr closed Friday at 2.60%; this morning it is sitting

around 2.61% and MBS prices are about unchanged.

Is romance dead? If so, is texting possibly the reason?

A middle-aged couple had finally learned how to send and receive texts on

their cell phones. The wife, being a romantic at heart, decided one day that

she'd send her husband a text while she was out of the house having coffee

with a friend. She

texted:

If you are sleeping, send me your dreams.

If you are laughing, send me your smile.

If you are eating, send me a bite.

If you are drinking, send me a sip.

If you are crying, send me your tears.

I love you.

The husband, being a no-nonsense sort of guy, texted back:

I'm on the toilet. Please advise.

(Brings a tear to the eye, doesn't it?)

If you're interested, visit my twice-a-month blog at the STRATMOR Group web

site located at www.stratmorgroup.com

[http://r20.rs6.net/tn.jsp?e=001ftL-gZ3Ygoa7HJTK9b24_uWmP6B9r17x8zzt-pUMnMhI

sGe5AUv7nX3GEJiV1cVkjx2CsLYxI9KHCSAIS6Z9vrnpBIne8maX6eW5uH9hyimpSFt4gQ_zDlc-

FRlw5wLf].

The current blog is, "A Little Technical Knowledge About REITs." If you have

both the time and inclination, make a comment on what I have written, or on

other comments so that folks can learn what's going on out there from the

Friday, August 2, 2013

August Coupon Lost...

http://globalhomefinance.com

What happened yesterday?

The benchmark FNMA 3.5% August coupon lost -99 BPS from Wednesday's close.

We received more jobs data yesterday. Initial Jobless Claims were much lower than expected and dropped 19K from the previous week. The more closely watched 4 week moving average dropped 4,250. This coupled with Wednesday's strong ADP Private Payroll report once again had traders thinking that Friday's Non-Farm Payroll Report will be stronger than previously expected. As a result, MBS sold off (worse pricing for you).

ISM Manufacturing was much stronger than expected (55.4 vs est of 52.0). This added fuel to the fire as traders speculated that Friday's employment data would improve.

Construction Spending was down and that would have normally pressured MBS and helped mortgage rates but the prior reading was revised upward and so it was a wash.

Thursday, August 1, 2013

August Coupon Gained...

http://globalhomefinance.com

What happened yesterday?

The benchmark FNMA 3.5% August coupon gained +33 BPS from Tuesday's close.

We had a very volatile day for pricing.

MBS sold off -52BPS (higher rates for you)on stronger than expected ADP Private Payrolls (200K vs 182K Est) and then we got hit with a much better than expected 2nd QTR GDP number (1.7 vs 1.2 estimate).

We had a decent Chicago PMI report but it was less than market expectations and helped MBS to climb off of our lows for the morning and stay above our newest support level.

There were no surprises with the FOMC meeting. They left their key interest rate unchanged and reaffirmed their previous guidance that they could continue to purchase $45 billion of U.S. Treasuries and $40 billion of GSE MBS each month. They also reaffirmed that they would increase or decrease the level of monthly bond purchases if they thought the economic data would support it. You can read the Fed's policy statement here: http://www.federalreserve.gov/newsevents/press/monetary/20130731a.htm

As a result, MBS rebounded and rallied and moved back into positive territory. The FNMA Benchmark 3.5% August coupon moved from -30BPS at 2:00EDT to +30BPS by 3:15EDT...that is a +60BPS swing (better rates for you).

This rally is not to be trusted though. As we stated, there was no new information yesterday and most likely their statement was prepared prior to baking in yesterday's ADP Private Payroll report. IF, Friday's Non-Farm Payroll report mirrors that of yesterday's ADP report, MBS will give up all of yesterday's late rally...so that is your risk vs. reward.