Jeff’s Mortgage Blog – November 16, 2011 – Get Ready for HARP 2.0

Fannie Mae & Freddie Mac release guidelines for HARP 2.0

HARP 2.0 is President Obama’s latest try to stabilize the US housing market. The Home Affordable Refinance Program has been with us since 2009 and has allowed about 900,000 families refinance their home loans even though they did not currently have 20% equity in their property (the minimum amount of equity to avoid Mortgage Insurance). The problem with this program is that it only helped those how had a loan to value up to 125% (105% with Fannie Mae’s version – DU Refi Plus).

The new HARP 2.0 is designed to help all of those who’s loan to value is more then the 125% maximum. How high will the program go? Unlimited! This should help many more people then the current program. Many people have lost at least 50% of the equity in there home. There are many homes out there where the value is half as much (or more) the the home is currently worth or 200% loan to value.

This will allow many underwater borrowers with their choices limited to paying on a high interest rate loan, short sale, modify or walk away. With HARP 2.0 Millions of underwater home owners will be able refinance their loan into a low rate (low 4.00%’s currently) 30 yr, 20 yr or 15 yr fixed.

The new HARP 2.0 program will roll out December 1, 2011 and end December 31, 2013.

HOW DO I KNOW IF I QUALIFY?

  1. First you must see if your loan is owned by Fannie Mae or Freddie Mac?
  2. Was your loan originated before May 31, 2009?
  3. Have you paid your mortgage payments on time (no more than 30 days late) during the last 6 months, and no more than 1 late in the last 12 months?
  4. Is there at least one of member of the household who is on the loan that has a source of income?

If you can answer yes to all 4 of these questions that chances are you qualify for a fixed, low interest home affordable refinance.

HOW DO I GET QUALIFIED?

Visit our website at: HP Investments, Inc

Call us toll free: 866-677-4FHA (4342)

HP Investments, Inc is licensed to do loans in California
Department of Real Estate License Number: 01840548
Nationwide Mortgage Licensing System & Registry: 248531

Jeff Phillips

HP Investments, Inc
Phone – 415-867-6488
Fax – 415-962-0474
jeff@hpinvestmentsinc.com
DRE – 01879516
NMLS – 242083
HP Investments, Inc
View our Blog- http://www.northbayrl.com/blog/
Visit us on Facebook – http://www.facebook.com/HPInvestments
Follow us on Twitter – http://twitter.com/hp_Investments

Jeff’s Mortgage Blog – June 1, 2011

Google to Charge up to $10k per Year for MLS Maps!


Click the post title above to see today’s video! Catch all your real estate news, mortgage news and a little entertainment with Frank Garay and Brian Stevens here at www.TBWSDailyShow.com! And don’t miss your sales tips at www.RealEstateMarbles.com!

DAILY MARKET REVIEW

June 1: Mortgage jobs in the west; Ginnie issuance continues strong; investor underwriting & program changes; gotta like these rates

by Rob Chrisman

The north Atlantic hurricane season begins today and lasts through Nov. 30. Per the U.S. Census Bureau nearly 37 million people in the US live in areas most threatened by Atlantic hurricanes: the coastal portion of states stretching from North Carolina to Texas. (Approximately 12%) of the nation’s population live in these areas.) This compares to 14 million who lived in that hurricane path in 1960, a 163% increase.

Can anyone out there lend Ginnie Mae a hand in the IT department? Ginnie may want to put a few new quotes on its issuer page, and not lead off with a glowing recommendation from Countrywide: GinnieIssuerPage. Regarding Fannie & Freddie’s distant cousin, Ginnie Mae guaranteed more than $26.4 billion in mortgage-backed securities in April. That compares to about $24 billion in March and $26 in February. Remember that unlike F&F, Ginnie doesn’t buy mortgages. Ginnie Mae, which raises capital from investors in the global credit markets, guarantees the P&I payments to investors of MBS’s while the FHA or VA usually insure the underlying loans. And Ginnie’s numbers, nearly $1.5 billion per day, include single-family pools, HECM MBS’s, and multi-family.

A good portion of Pacific Union Financial’s focus is on FHA or VA loans, and it is expanding its wholesale footprint. Pacific Union is looking for new AE’s with an existing book of brokers in 7 Western states (AZ, CA, ID, NV, OR, WA, TX). It “believes the market is entering a 5 year purchase cycle” and offers to its brokers FHA, conforming, high balance, and jumbo products. PUF is “unique in that it doesn’t ‘overlay’ the programs extensively and take full advantage of the Ginnie Mae product allowing purchases to borrowers with a 560 mid score. AEs can expect between 20 and 30 basis points depending on production.” If you are interested, or know someone out looking, contact Joe Stretch at joe.stretch@loanpacific.com.

Someone who probably doesn’t care about jobs is Minnesota’s Troy David Chaika. A jury in federal court in St. Paul has convicted him of conspiring with others to bilk buyers and mortgage lenders out of more than $43 million. And once again it is easy to see how the public, and Congress, continues to view the real estate & mortgage business in the press: MinnesotaFraud.

Other personnel news of interest seems to be focused on Pennymac. The company, known for both buying older distressed loans and also for opening up a new conduit for jumbo loans, is rumored to have hired Doug Jones. Mr. Jones is a long-time Countrywide-Bank of America mortgage executive. But this is a rumor only…I am usually the last to hear these things.

Turning to the investor world, Wells Fargo spread the word to its correspondent clients that Wells Fargo Funding is now a division of Wells Fargo Bank. Effective last week, Wells Fargo recently executed assignments for each Loan Purchase Agreement from our former entity (Wells Fargo Funding, Inc.) to our new entity (Wells Fargo Bank, N.A.), and will require that contracts be re-executed under the new entity name, Wells Fargo Bank, N.A. starting today. Business card printers everywhere are thrilled… In addition, Wells has observed condominium interior hazard insurance policies with inadequate replacement coverage. “As a result, we are clarifying that walls-in or HO-6 replacement coverage must be sufficient to repair the interior of the condominium unit, including any additions, improvements and betterments, to its original condition in the event of a loss…when the HOA Master Policy does not provide sufficient coverage of the interiors of the project units, an HO-6 (or its equivalent) policy for the individual unit is required.” “The Seller Represents, Warrants and Covenants the following to Wells Fargo as to each Loan offered for sale under the Program Documents: Pursuant to the terms of each Loan, hazard insurance policies meeting Wells Fargo’s and Agency’s minimum requirements insure all buildings or other improvements upon the Mortgaged Property…”

Wells, like other major lenders, continues to spread the word that sellers had better prepare for the changes contained in the Uniform Mortgage Data Program (UMDP) and its three components: Uniform Appraisal Dataset (UAD), Uniform Collateral Data Portal (UCDPSM), and Uniform Loan Delivery Dataset. (Fannie Mae recently published their May UMDP Yardstick to help lenders take the necessary steps for successful implementation of the UMDP initiatives.)

Chase recently issued a “Lending Suspension” for the ZIP codes affected by the Mississippi River flooding in Louisiana. The investor also told correspondents that starting last week it is allowing the assignment of odd lot AOT commitments in $1,000 increments above the minimum commitment amount. Over in the best efforts side, starting yesterday “Chase Correspondent Lending is revising the Verbal Verification of Employment (VVOE) policy for all Non-Agency loans and any Agency transaction submitted through ZiPPY. This change does not impact VVOE requirements for DU or FHA/VA transactions.” And it is implementing “new derogatory credit policies for FHA, VA, and Conventional transactions. These policies will be Chase overlays to derogatory credit requirements detailed in FHA, VA, and Conventional guidelines.”

Bank of America’s correspondent group issued a disaster declaration and update for Missouri, as are other investors, but also retired several programs yesterday including Conforming Energy Efficient Mortgage (EEM) / Loan Prospector® A-minus Mortgage, DU Expanded Approval (EA) 1 Fixed 15, DU EA1 5/1 ARM, DU EA1 7/1 ARM, DU EA1 10/1 ARM, MyCommunityMortgage 5/1 ARM, MyCommunityMortgage 7/1 ARM, MyCommunityMortgage 10/1 ARM, and USDA Rural Housing Direct. (Clients should have been well aware of these cuts prior to yesterday.)

GMAC reminded its clients that the temporary high-cost loan limits are set to expire Sept 30, and that this will impact its suite of high balance conventional, FHA, and VA products. GMAC also announced the addition of a 7/1 Hybrid ARM to the FHA and VA standard and High Balance product offerings, along with the removal of numerous conforming loan underwriting guideline overlays. Lastly, due to Section 1100F of the Dodd-Frank Act, on 7/21 it will require that creditors disclose additional information on FCRA adverse action notices when the creditor uses a credit score in taking adverse action

SunTrust let clients know about an update on investment property transactions permitted outside of the borrowers primary state of residence, announced a first-time homebuyer tax credit language removed from FHA product description, and released an announcement on agency affordable HELOC requirements.

US Bank Home Mortgage and MGIC have teamed up to offer Webinar training on evaluating self-employed borrowers income. There will be two sessions on June 14, Webinars: 9:30-11:30AM or 1:30-3:30PM PST. RSVP: www.mgic.com/seb14, or contact: Necia Manchas at (206) 363-4009, necia.manchas@usbank.com.

Flagstar Bank now has a Jumbo Fixed Program open to brokers. 30-year fixed, loan amounts from $417,001 up to $2,000,000, manually underwritten, maximum 40% DTI, all assets listed on the 1003 must be verified, etc. As always, best see the actual bulletin for details. “Flag” also improved the price adjustments on Government loans with FICO greater than or equal to 740, changed the way its administrative fee will be assessed on delegated loans at new levels beginning 6/10, made price adjustment changes (improvements) to certain FICO/LTV and subordinate financing in its Freddie Mac Relief Refi and Open Access programs. And, as with other lenders, the 5/1 and 7/1 LIBOR ARMs are being suspended in the MyCommunityMortgage Program.

Few people are complaining about rates, although, given the low mortgage rates, there are some concerns about pull through and having too much MBS coverage on for mortgage banks. Yesterday we saw another improvement as the Case-Shiller index came in about as expected and then we had disappointing prints in the Chicago PMI and Consumer Confidence. It was a day where both stocks and bonds rallied, and traders reported seeing “solid domestic real money buying come through the desk, focused mostly in the front end of the curve for the month end trade.”

Today we’ve already had a fair amount of news. The MBA reported it sample of mortgage applications fell for the first time in five weeks as refinancing cooled, falling 4% last week. Purchases were unchanged, but refi’s were down almost 6% and now account for less than 66% of apps. We’ve also had the ADP Employment change, always of dubious predictive ability for Friday’s employment data. ADP numbers only showed a gain of 38,000 jobs, with an April revision downward. We also have ISM Manufacturing and Construction Spending at 7AM PST. Currently, given the poor ADP number and (now) the declining hope for a decent number Friday, we find the 10-yr yield at 3.02% (!) and MBS prices better by .250.

Jeff Phillips

HP Investments, Inc
Phone – 415-867-6488
Fax – 415-962-0474
jeff@hpinvestmentsinc.com
DRE – 01879516
NMLS – 242083
HP Investments, Inc
View our Blog- http://www.northbayrl.com/blog/
Visit us on Facebook – http://www.facebook.com/HPInvestments
Follow us on Twitter – http://twitter.com/hp_Investments

Chance to vote on the new combined GFE-TIL and more Jeff’s Mortgage Blog May 19, 2011

Are Dual Agency Realtors Acting Ethically?


Click the post title above to watch today’s video! Catch all of your real estate, and mortgage news with a little entertainment with Frank Garay and Brian Stevens here at www.TBWSDailyShow.com. And catch some sales tips at www.RealEstateMarbles.com!

DAILY MARKET REVIEW

May 19: Voting on disclosure forms; implications of upstart correspondent programs; Do you like your LOS?

by Rob Chrisman

Rob, I continue to hear rumors about rumors of large established correspondent investors possibly questioning their practice of buying closed loans from smaller lenders who are also buying loans through newly established correspondent channels. Is this true, and will it impact the market for us little guys?” As an answer, let me say that I have heard similar “rumors about rumors” but I have seen nothing definite come out of any of the Big 4 investors. That being said, it is well known in the industry that a) many smaller lenders have begun correspondent or mini-correspondent channels, b) many of the 2nd or 3rd “tier” of investors/lenders are actively adding servicing or begun servicing their own loans, and c) the value of servicing to these smaller institutions appears to be more than it is by selling it to the larger servicers. Therefore, even if a smaller lender begins a correspondent channel, it may be to feed its own growing servicing portfolio and therefore a larger investor buying, or not buying, those loans may not be material.

For you “little guys,” it should have little negative impact, and in fact could benefit you if the mid-sized investors actually pay higher prices for servicing. But keep in mind that investors, large and small, are focused on compliance, and the risks associated with failure to do so. The farther the end-investor/servicer is away from the loan source, the harder it is to monitor the entire chain of compliance, yet regulators will hold the end-investor ultimately responsible for the loan meeting all compliance guidelines. We could spend days discussing where the liability rests when a loan goes bad or a class-action lawsuit arises after, “Investor A’s correspondent channel buys a loan from Company B, who bought it through its correspondent channel, who in turn agreed that it was in compliance with all rules and regulations but who funded the loan through its broker channel where the broker agreed that it was in compliance… and wasn’t.” And remember – this is a rumor, nothing more.

Switching topics, Loan Origination Systems are something that every mortgage lender has, to one degree or another, if they do more than a few loans a month. And it seems that at any given time, lenders are constantly updating their LOS or are moving from one to another. As one veteran LOS expert mentioned to me, “An LOS is like a beast that never sleeps.” Most IT folks agree that when it comes to preserving flexibility in the LOS used by a lender a key factor is whether the software’s architecture is strong enough to support variation in features and functions among many client-lenders who share the same code base.

I am not an IT expert, but LO users occasionally write in to say that “not all Software-as-a Service (SaaS) LOS vendors have done a great job of supporting flexibility and/or providing a functionally complete solution.”  Marketers are blurring the lines between the terms “Cloud” and “SaaS”, but lately “Cloud Computing” has come under increased scrutiny with the latest security breaches and how the financial industry might be impacted, such as FinancialCompanySecurity. Len Tichy with STRATMOR wrote, “Cloud and SaaS are more like two sides of the same coin and have mainly to do with how software is deployed and maintained. What’s more important for business executives to worry about are your LOS provider’s and your own IT organization’s competencies, how well they work together as a team, and how clearly and logically they both communicate their ideas and action plans with you in business terms.”
He goes on to say, “If your LOS needs to be quickly built-out or enhanced in order to fill a critical functional gap, whether the software is hosted in your data center, or remotely in specified locations, or somewhere in the Cloud will only indirectly affect LOS flexibility.  Preserving LOS flexibility is, by far, more a function of the software’s design than it is of where the software is physically hosted.  It matters whether your LOS was well-designed by an experienced and qualified enterprise systems architect, or a programmer with an opinion. Too often it is the latter.” (If you want to get ahold of Len about IT business solutions, he can be reached at len.tichy@stratmorgroup.com.)

Redwood Trust was in the news, “…the illiquid private securities market would come back if the government winds down government-seized housing giants Fannie Mae and Freddie Mac.” Redwood&Agencies

In keeping with American Idol, the public has the chance to vote on new disclosure forms, as mentioned in the commentary earlier this week. The two finalists can be found until 5/27 at DisclosureVote. I doubt if Steven Tyler or J Lo will be weighing in.

GMAC also let clients know it updated some jumbo guidelines through its “Market Portal Update” system: Second Home transactions are not required to be submitted to the Market Portal tool and are not eligible for a market upgrade, two full appraisals are required only if the loan amount is greater than $1 million when using the Market Upgrade, and the appraisal report expiration date has changed from 90 days to 120 days of the Note date. It is best to check the actual guidelines for all details.

Stearns Lending updated its Lock Policy, offering a 7 calendar day free extension for 30, 45 or 60 day locks, and 3 calendar day free extensions for 21 day rate locks. (14 days locks are not eligible.) There are certain terms that must be met for the extension, all extension requests must be received PRIOR to the lock expiration date, and extension requests received after the lock expires will be subject to the worst of either current market or initial lock.

Back across the country, New Jersey’s Real Estate Mortgage Network launched its Menlo Park Funding Branch Division, a new branch opportunity for select independent brokers and bankers. Menlo Park Funding will be the fourth business channel in REMN’s existing wholesale, retail, and consumer direct divisions. Recently, REMN has opened eight Menlo Park Funding branches in the Northeast with more offices slated to open across the country during the second and third quarters of 2011. Those interested in branch opportunities can email Joe Amoroso directly at jamoroso@menloparkfunding.com.

Out in California Parkside Lending allows for broker/owners to select individual compensation plans for each of their branch offices.  This means one branch could be at 1.0% monthly comp contract while another is at 1.5% monthly comp -and so on, as long as they are under separate branches as recognized by DRE.

Southwest Funding, LP has rolled out a new website on the subject of its compensation program targeting branch managers and loan officers. The site is www.325bps.com and is about how to earn up to 325 basis points on a funded loan. One can also contact their business development manager Stuart Blend at sblend@southwestfunding.com for additional details.  They are headquartered in Dallas and are approved in 14 states.

After “behaving themselves” for quite some time, rates headed higher Wednesday. Markets never go in the same direction forever. In fact, about half the e-mails I received yesterday afternoon were investor intra-day price changes. In spite of the post-FOMC news conference after its meeting April 26 & 27, when its minutes were released at 2PM EST they showed discussion regarding “the process of removing accommodation.” In other words, a potential exit strategy from accommodative monetary policies at some point in the future, but not right now. But markets always try to be 2-3 steps ahead of things. The editor of Mortgage News Daily questions whether or not the Fed can unload its holdings of MBS’s ahead of rates actually going up at MNDMBSPortfolio and suggests that the Fed may just hold onto its MBS’s.

So, in a nutshell, although no one expects the economy to pick up steam in the near future, the suggestion that it may sometime next year by the Fed pushed rates higher. The 10-yr dropped nearly .5 in price, closing around 3.17%, and current coupon MBS prices worsened .250-.375 on above-average selling. Today we have a full platter of scheduled news to chew on. We’ve already had Initial Jobless Claims, which dropped 29k to 409k with the 4-week moving average inching higher. At 7AM PST we’ll have Existing Home Sales (Apr.), Philly Fed Survey (May), and Leading Economic Indicators (Apr.) We also have the Treasury announcing details of next week’s auctions of 2, 5s and 7s – estimated at $99 billion. The 10-yr is up to 3.22% and MBS prices are worse by about .250.

Jeff Phillips

HP Investments, Inc
Phone – 415-867-6488
Fax – 415-962-0474
jeff@hpinvestmentsinc.com
DRE – 01879516
NMLS – 242083
HP Investments, Inc
View our Blog- http://www.northbayrl.com/blog/
Visit us on Facebook – http://www.facebook.com/HPInvestments
Follow us on Twitter – http://twitter.com/hp_Investments

High balance pricing improving, Freddie Mac Homesteps summer sales promotion – Jeff’s Mortgage Blog May 17, 2011

It’s the End of The World as We Know it Come August 2nd.


Click on the post title above to see today’s video! Catch all your real estate news, mortgage news and a little entertainment with Frank Garay and Brian Stevens here at www.TBWSDailyShow.com. And catch your sales tips on the “B-Side” at www.RealEstateMarbles.com!

DAILY MARKET REVIEW

May 17: Quicken comp issue still in courts; amazing list of Fannie & Freddie pending bills; why the rally in high balance agency pricing?

by Rob Chrisman

Sometimes you think things are one way, and they turn out to be different. (Just ask Maria Shriver, who found out about Arnold Schwarzenegger and a longtime female member of their household staff had a child together more than a decade ago.) The compensation issue involving Quicken Loans is in the news again as “the U.S. Supreme Court asked the Obama administration for its views Monday on a case that examines when mortgage lenders can be sued for charging fees to borrowers when the lender offers no service in return.” The case centers on a group of lawsuits from Louisiana (the Freeman, Bennett and Smith families) alleging Quicken Loans Inc. charged loan-discount fees to borrowers but did not provide them with reduced interest rates on their loans. HUD has already issued relevant regulations and policy guidance that appears to support the plaintiffs’ contention that “Section 8(b) forbids the paying or accepting of any portion or percentage of a settlement service – including up to 100% – that is unearned, whether the entire charge is divided or split among more than one person or entity.” But does this apply to all transactions involving one or more parties, or is it limited to cases with third-parties and fee-splitting situations? Quicken

What does the House Speaker think about “fixing” the housing industry? “…Government programs aimed at preventing mortgage foreclosures have failed, adding that the only real solution is to wait until we get our economy moving again.” HouseSpeaker

Realtors listen up! In a sign of the times, Freddie Mac’s real estate sales unit HomeSteps is launching a nationwide sales promotion for its inventory of foreclosed homes. Operators standing by! “The HomeSteps Summer Sales Promotion is offering up to 3.5% buyer’s closing cost and a $1,200 selling agent bonus for initial offers received until July 31 and escrows are closed on or before September 30. This offer is valid only on HomeSteps homes sold to owner-occupant buyers.” There is a potential two-year Home Protect limited home warranty, along with discounts on appliance purchases. Check out SmartBuy or HomeSteps.

There are companies that still like “the mortgage space.” Nationstar Mortgage Holdings, a unit of Fortress Investment Group, said it intends to raise as much as $400 million in an initial public offering. Nationstar’s servicing portfolio doubled in 2010 to $64 billion, giving it a ranking of #17. You may recall the name of Fortress’s CEO: Daniel Mudd. He held the same position at Fannie Mae from 2005 to 2008, when it was brought under U.S. government conservatorship as mortgage defaults soared. Fortress has roughly $43 billion of assets under management.

JPMorgan Chase is the lead underwriter on the latest commercial mortgage offering: $2.9 billion of CMBS’s backed by debt tied to skyscrapers, offices and shopping centers. The details aren’t public yet, but supposedly consist of 42 loans on 84 properties. Wells Fargo and Royal Bank of Scotland are also selling $1.45 billion of bonds linked to office, mall and hotel loans. Folks must like those yields, as 2011′s commercial pace is already way ahead of 2010′s: $8.6 billion so far versus $11.5 billion in all of 2010. Commercial

In a story from the Financial Times, “New York’s attorney-general has opened an investigation into the way mortgages are securitized and sold to investors, and has requested meetings with at least three US banks to discuss the industry’s practices.” Bank of America, Goldman Sachs and Morgan Stanley were mentioned in the article. This inquisition appears to focus on how past non-agency residential mortgage-backed securities received AAA-ratings even though they were backed by high risk loans.

Reuters reports that seven new measures have been added to the eight bills already approved by the U.S. House of Representatives’ panel that oversees Fannie & Freddie. It is doubtful that any will sail through, but is more indicative of the confusion surrounding the mortgage industry that seems to be prevalent in Congress (editor’s opinion.) Anything approved by the panel goes to the House Financial Services Committee, and then the full House, and then the Senate, and then to the president. The fifteen bills include preventing a dividend payment increase, require F&F to disclose certain information in response to requests from the media and the public under the Freedom of Information Act, dispose of non-critical assets such as patents and data, cap the dollar amount of government support, prevent the future creation of agencies like F&F, stop the legal burden from falling on the taxpayer, eliminate the Affordable Housing Trust Fund, pay the employees of F&F on a government worker pay scale, raise the guarantee fees, speed up the reduction in F&F’s portfolio (now at $1.5 trillion), increase the oversight power of FHFA, require F&F to abide by risk retention rules, prohibit debt issuance by F&F, curtail any new business activity for F&F (taking the decision out of the hands of FHFA), abolish affordable housing goals of F&F.

(Take note, however, that HR 1859, introduced to eliminate Freddie Mac and Fannie Mae while still keeping a government presence in the housing finance marketplace by using 5 or more private institutions, would extend current loan limits until Fannie and Freddie are no longer in conservatorship. The proposed bill states that FHFA has six months to provide a transition plan to wind down the GSE’s and must determine within one year after five associations have been chartered whether the GSEs can be safely placed into receivership.)

In spite of the potential mentioned above for loan limits being extended, investors have be wondering, “Is every well-underwritten agency high balance loan going to be on my books forever, mostly ‘un-refinance able,’ so why not pay up for them now?”

Bank of America rolled out several price changes that will filter down to originators. Starting yesterday, the “Agency Price Guide for Conventional and Government loans is updated to reflect the following changes: Conforming – the adjustment for Conforming 30 year fixed rate High Balance loans is decreased from 0.95% to 0.625%. The adjustment for Conforming 15 year fixed rate High Balance loans is decreased from 0.95% to 0.25%. The adjustment for Conforming Adjustable Rate Mortgage (ARM) High Balance loans is decreased from 1.25% to 1.00%. (The changes do not apply to DU Refi Plus loans.) Government – The adjustment for Government 30 year fixed rate High Balance loans is decreased from 0.90% to 0.625%. The adjustment for Government 15 year fixed rate High Balance loans is decreased from 0.90% to 0.25%. The adjustment for Government Adjustable Rate Mortgage (ARM) High Balance loans is decreased from 0.90% to 0.75%.”

GMAC made some changes to its price adjustments starting last week. GMAC made changes to its Jumbo Fixed and ARM LLPA’s and Maximum price: “2 Unit adjustment for LTV <=70 is changing from -.500 to -.250, Site Condo Adjustment for LTV <=70 is changing from -.500 to -.250, Max price for loan amounts >1 Million and <=1.5 Million is changing from 101.625 to 101.750, and Max price for loan amounts >1.5 Million is changing from 101.375 to 101.500.” The investor updated its “Comprehensive Risk Assessment Worksheet for Manual Underwriting” – clients are best advised to look at the actual bulletin. Lastly, “GMACB is establishing a $2000 limit on the amount of principal curtailment allowed on FHA, VA & USDA loan transactions. This curtailment limit applies to Purchase and Refinance government loans purchased by GMACB.”

Chase reminded its correspondent clients that Dodd-Frank clarifies state preemption standards for national banks and requires national banks (and other federally regulated institutions) to comply with state consumer financial laws that are no longer preempted by federal law; as of the Designated Transfer Date (DTD) of July 21, 2011.

SunTrust Mortgage reminded its correspondent lenders that “the maximum loan-to-value (LTV), the total loan-to-value (TLTV), and the high total loan-to-value (HTLTV) for Arizona (AZ), Florida (FL), Michigan (MI), New Jersey (NJ), and Nevada (NV) is 90% on DU Refi Plus transactions.”

Bank of America sent the word out to its correspondents that “For California only, Correspondent Lending will purchase loans with LTVs less than 90% which do not have escrow/impound accounts.” In addition, due to guidance from FHFA/Fannie/Freddie on the Uniform Mortgage Data Program (UMDP), BofA told its clients that the following report forms will require UAD terminology as of September 1, 2011: Uniform Residential Appraisal Report (Form 1004/70), Individual Condominium Unit Appraisal Report (Form 1073/465), Exterior-Only Inspection Individual Condominium Unit Appraisal Report (Form 1075/466), and Exterior-Only Inspection Residential Appraisal Report (Form 2055/2055). Both Fannie Mae and Freddie Mac have indicated that appraisers may use UAD terminology on existing appraisal forms prior to September 1, 2011 provided the appraisal (or addendum) contains clear definitions/explanations of the new UAD terminology.”

For the bond market, we saw a bit of an improvement yesterday. Rate-sheet MBS prices ended the day better by about .125 and the 10-yr closed around 3.15%. There was no startling news, but instead a combination of weak economic data (Empire State), continued European debt worries, and “hedge unwinds” related to some corporate pricings. Mortgage banker selling remained in the $1+ billion area.

Last month Housing Starts and Building Permits came in stronger than expected, but not so this time around. Housing Starts were -10.6% for April versus up nearly 13% in March. Permits were down 4% in April versus up 7.5% in March. Housing Starts have certainly not followed the growth in the job market – probably due to the high overhang in existing homes. Starts for multi-family units dropped 24%. Later on at 9:15AM EST are Capacity Utilization and Industrial Production for April, called respectively at 77.6% and +0.4% compared to 77.4% and +0.8% in March. No Fed speakers are scheduled. The 10-yr is down to 3.12% and MBS prices are better by nearly .250.

Jeff Phillips

HP Investments, Inc
Phone – 415-867-6488
Fax – 415-962-0474
jeff@hpinvestmentsinc.com
DRE – 01879516
NMLS – 242083
HP Investments, Inc
View our Blog- http://www.northbayrl.com/blog/
Visit us on Facebook – http://www.facebook.com/HPInvestments
Follow us on Twitter – http://twitter.com/hp_Investments

Difference between Freddie Mac & Fannie Mae portfolios – Jeff’s Mortgage Blog May 11, 2011

The Next BIG Thing In Real Estate


May 10, 2011 – Have you ever held an open house and felt like it was a waste of time? We reveal the best real estate tool since the online mls. Of course, no one is talking about this just yet, but we got it straight from the source to take your business to the next level. See exactly what we’re talking about (fyi- it’s not qr codes or anything like that). You’ll be shocked with just how simple and easy to use this new online tool is to use! Plus, we’ve got a cheat sheet for you in case you’re wondering how long a person has to wait after a foreclosure, short sale or bankruptcy. Catch all of your real estate and mortgage news with Frank Garay and Brian Stevens at www.TBWSDailyShow.com

DAILY MARKET REVIEW

May 11:Webinar today on FHA lending & regulation; more chatter on the agencies & life in the biz; volatility & hedge cost

by Rob Chrisman

Regardless of what my kids say, this commentary hasn’t been around long enough to have ever been written by candlelight. But starting next year I will be able to say I used incandescent light. On Jan 1, 2012, the 100-watt incandescent light bulb will cease to exist by law, which should help save energy given that 90% of its energy is given off as heat rather than light. The 75-watt goes away 1 year later, followed by the 60-watt and 40-watt versions in 2014. I can visualize a run on them at Home Depots across the country in about 7 months…

A quick note for anyone interested in FHA lending’s pitfalls, the recent filed lawsuit against Deutsche Bank, and the enforcement tools regulators are using – there is a webinar today on those subjects.  The webinar’s discussion will review the charges in the case and potential implications for FHA lending, and participants will be able to submit questions to be answered during the hour-long session from 3-4 EST, 12-1 PST. Webinar Presented by BuckleySandler LLP: “The False Claims Act and FHA Lending: What Does U.S. v. Deutsche Bank Mean for You?”Webinar topics include a summary and analysis of legal theory and corresponding charges in U.S. v. Deutsche Bank AG, et al., pitfalls in FHA Lending, avoiding False Claims Act liability, and beyond, how and when are False Claims Act violations triggered, what other enforcement tools are regulators using, what you can do now to position and protect your company, and insights on where the government and private plaintiff’s bar will go from here. Clickheretoregister. After registering you will receive a confirmation email containing information about joining the webinar.

Lawsuits seem to be omnipresent in mortgage lending and banking. Here is the latest list of “Professional Liability Lawsuits” from the FDIC – another list you probably don’t want you or your company on: FDICSuits.

Yesterday the commentary mentioned one attribute of Fannie’s portfolio (a large number of Countrywide loans) which contributed to the difference in earnings between Fannie & Freddie. I received some notes, summed up by one Secondary exec in New York. “Fannie’s grappling with Countrywide loans, but remember that Freddie also has a glut of Taylor Bean Whitaker loans. And although both FNMA & FHLMC purchased mortgages down the credit curve several years ago, including subprime mortgages, it was primarily because HUD mandated that they do so. And regarding your Cato Institute quote about abolishing those agencies, readers should know that some people at Cato also support an end to HUD.”

“Freddie’s portfolio isn’t quite as awful as Fannie’s, according to Anthony Sanders, Mercatus Center scholar and a real estate finance professor at George Mason University. He says that Fannie had a larger share of subprime mortgage-backed securities and Alt-A mortgages. Consequently, its losses were more severe last quarter than Freddie’s losses.” TheAtlanticAgenciesP&L

Along those lines, one reader wrote, “I do believe EVERYONE in the Real Estate industry has played some part….big or small, in why we are here.  The Realtor, the Lender, and the Appraiser – everyone was looking to make a dollar – since that was each one of those people’s jobs. Keep in mind that the lenders were given ridiculous products to sell and push, that the Realtors loved to sell and push homes, that the appraisers loved to do more appraisals and sell and push values to keep making money (vicious circle), and let’s not forget our government’s beautiful speeches on how ‘Everyone deserves Home Ownership.’ No one deserves anything – you EARN the right for homeownership – it is not your American Right – how that got clouded in the discussion is beyond me. Basically what my point is to stop the finger pointing at each other and start fighting back at the true source of this” Our Overreaching, Overbearing Government…”

And on the indiscretions, past and present, another wrote, “At my previous employer – a top 5 investor & originator – some of us ‘decent producers’ were allowed to solicit preferred realtors to be on the REO List for properties. Well once this occurred we were pushed by management to tell the realtors that if anyone wanted to buy that REO they must push, steer, the potential buyer to go with the LO who helped get them on the list or assigned agent. I was personally told by my manager that if we did not get a majority, if not all, of the deals from those assigned REO’s that the realtor would be in jeopardy of taking us off that list. But here we are in 2011 and ‘compliance’ is important, right? Yesterday my buyer’s agent calls me and say’s we need a cross qual with —- or the buyer’s offer will not be accepted. So I have the borrower qualify with —-. But then the listing agent tells my buyer’s agent that they will not accept a Pre-Approval letter from any other —- loan consultant other than the preferred LO who is on the MLS  since they don’t know if the other LO’s are qualified to give a pre-approval  and that —- will only accept the preferred lender’s pre-approval. Can you say ‘Strong Arm’?”

Do you ever wonder what happens to math and statistics majors? The grab jobs at places like the Dallas Fed, writing missives on the housing market, suitable for anyone who needs information on a speech. DallasFedHousingResearch.

Some math majors end up calculating hedge costs. A week or so I mentioned those costs, which are important to minimize for any company’s hedging effectiveness. It is important to be reminded that market volatility impacts hedging costs: increased volatility means an increased hedge cost. Secondary Marketing departments usually have to contend with a wider bid/ask spread for hedge securities in volatile markets as Broker Dealers widen their prices slightly. Loan sellers may have to contend with a slight time difference between when a block of whole loans are sold and when the hedge is bought back, which may work for or against the P&L. Keep in mind, however, that volatility impacts the spread between best efforts loan sale prices and mandatory prices – namely the price spread between the two increases, helping those companies that hedge. Investors are expecting that their hedge costs will increase and therefore they reduce what they are willing to pay for unclosed loans to offset the increased cost.

But from an originator’s angle, increased market volatility (rate sheet prices going up and down during the day) also has adverse effects on pull through (typically decreasing) and renegotiations (typically increasing). So although the factors listed in the paragraph above may be somewhat foreign to an originator or underwriter, they may impact rate sheet pricing – ask your “Secondary Dude (or Dudette)” about what they mean for your daily pricing.

Yesterday’s fixed-income markets saw some volatility yesterday, but unfortunately for lenders the direction was toward lower MBS prices and higher rates. The news primarily consisted of a higher-than-expected print on import prices, the IMF’s preparations for another bailout to Greece (to replace the last one), and the Treasury’s $32 billion 3-yr note auction. Current coupon MBS prices worsened between .125-.250 on average volume while the 10-yr Note dropped nearly .5 and closed at a yield of 3.20%. Traders are definitely seeing the MBS production mix shift from 4.5′s and 5′s down to primarily 4′s (which include 4.25%-4.625% conventional mortgages) although origination is extremely light (barely making $1 billion per day over the past few weeks).

Today we’ve already had mortgage applications for last week, which the MBA said increased 8.2%.  The refi number was +9%, hitting its highest level since mid-March, and purchases were up nearly 7%. The 4-week moving average is up nearly 3%, and refi’s account for over 63% of all applications. We also had the March Trade Deficit clock in at $48.18 billion, up from $45.44 billion in February. At 11AM MST the Treasury auctions $24 billion in 10-year notes, which currently is sitting around 3.22% and MBS prices are worse by about .125.

Jeff Phillips

HP Investments, Inc
Phone – 415-867-6488
Fax – 415-962-0474
jeff@hpinvestmentsinc.com
DRE – 01879516
NMLS – 242083
HP Investments, Inc
View our Blog- http://www.northbayrl.com/blog/
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Sheila Bair stepping down from FDIC, Freddie shows profit, Fannie shows loss – Jeff’s Mortgage Blog May 10, 2011

Real Estate Blogging Put in Perspective..


The internet is our biggest friend if we know how to take advantage of it. Do you realize how much energy is consumed by the internet? A strong web presence is important, but where do we start? Catch all your real estate news and mortgage news with Frank Garay and Brian Stevens here at www.TBWSDailyShow.com.

DAILY MARKET REVIEW

May 10: MNMLS licensing for Federally regulated lenders; Aventur in the jumbo lending space; Cato’s opinion of Freddie & Fannie

by Rob Chrisman
Yesterday I went through denial, anger, bargaining, depression, and acceptance – which are now the 5 stages of buying gas.

Incidents of mortgage fraud dropped from 2009 to 2010. Either that, or incidents rose – it depends who you ask. FRAUD. Regardless, Florida took the “top” honors, followed by New York, California, New Jersey, and Maryland (No. 5).

The FDIC’s chairman Sheila Bair will indeed be stepping down when her term expires, as has previously been announced. Cake and soda pop will be served in the FDIC’s cafeteria on July 8th – no gifts please.

Out in California, First California Mortgage is looking for someone to lead its new Multi-Family division. The person will be handling the full range of processing and monitoring activities associated with the multi-family housing program, along with cultivating new and enhancing established relationships with realtors, builders, community groups/clubs and associates resulting in new loan originations and referrals. In addition, the person will be securing new Agency lending opportunities, working primarily with Freddie and Fannie. (The complete list of duties and requirements is too lengthy for this commentary.) If you’re interested, or know someone who is, contact Shannon Thomson, Director of Human Resources, at sthomson@firstcal.net.

Fannie & Freddie recently released results that appear to point to the different focus in the past of their two companies. One reader wrote, “Freddie Mac reported its first true net profit in almost two years, earning $676 million in the first quarter and not asking the taxpayer for more money. But Fannie reported at $6.5 billion loss for the quarter, and asked Treasury for $8.5 billion in taxpayer money. From my vantage point, the difference rests in the amount of Countrywide business that Fannie bought in the past – CW was Fannie’s best customer for several years, selling Fannie a variety of A-paper, alt-A, pay option ARMs, and other products. I bet that if you take Countrywide out of the equation, Fannie would show similar results to Freddie. But last year Fannie agreed to one lump sum from BofA to settle the bulk of buyback claims – good for BofA, bad for Fannie.”

Last month the Cato Institute published its opinion of the agencies, and it is making the rounds. “Foremost among the government-sponsored enterprises’ deleterious activities was their vast direct purchases of loans that can only be characterized as subprime. Under reasonable definitions of subprime, almost 30 percent of Fannie and Freddie direct purchases could be considered subprime. The government-sponsored enterprises were also the largest single investor in subprime private label mortgage-backed securities. During the height of the housing bubble, almost 40 percent of newly issued private-label subprime securities were purchased by Fannie Mae and Freddie Mac. In order to protect both the taxpayer and our broader economy, Fannie Mae and Freddie Mac should be abolished, along with other policies that transfer the risk of mortgage default from the lender to the taxpayer.”

Who is going to teach your staff about NMLS? Be sure to scroll down a little for news on NMLS and Federally regulated institutions! NMLSTraining

For any jumbo mortgage fans, here is some chatter: Jumbo

Aventur Partners & Aventur Mortgage Capital appear to be turning some heads in the jumbo world. Led by the former co-founder and CEO of Thornburg Mortgage (Larry Goldstone) is developing a new mortgage company specializing in jumbo lending. Past and current legal nightmares aside, Thornburg-style companies certainly have their fans in the business, and the former vice president of Thornburg, David Akre, is the serving COO at Aventur. http://www.aventurpartners.com/

By the way, at this point the conforming loan level in the higher-priced areas will indeed drop to $625,500 from $729,750. Although it is not set in stone and could be subject to some political wrangling, few doubt that it will drop. Here is Fannie’s memo stating the loan limits Fannie along with the FHFA‘s.

“Soldiers do not march in step when going across bridges because they could set up a vibration which could be sufficient to knock the bridge down.” Fortunately not every housing market moves in exactly the same direction and in the same magnitude, but Zillow posted some housing numbers that certainly would make a bridge shake a little. There seem to be dozens of house price indices, but the one from Zillow yesterday showed that home values posted the largest decline in the first quarter since late 2008. Home values fell 3% in the first quarter from the previous quarter and 1.1% in March from the previous month, and Zillow reports prices have now fallen for 57 consecutive months. Our economy needs job & housing, housing and jobs, to truly recover, and although mortgage rates continue to be low, the expiration of the housing tax credit and the continued flow of foreclosures hitting the market aren’t helping prices. Detroit, Chicago and Minneapolis posted the largest declines during the first quarter of the top 25 metro areas tracked by Zillow, while Pittsburgh, Dallas and Washington posted the smallest declines.

As an interesting side note to this, housing is certainly more affordable than any time in a few decades, but credit, appraisal, and documentation standards remain tight (many would say they should, and if they were in place 5 years ago we wouldn’t have these issues). One report mentioned that the average credit score on loans backed by Fannie Mae stood at 762 in the first quarter, up from an average of 718 between 2001-2004.

Franklin American relaxed its conventional condominium guidelines to allow established condominiums with 200 units or more to be approved through DU Limited Review or CPM. FAMC also tweaked its policies for “Purchase of a short sale/foreclosure or REO – Appraisal Requirements” (added the requirement for a full appraisal if the borrower is purchasing a property sold under a short sale in addition to transactions where the borrower is purchasing a foreclosure or REO), required that utilities must be on at time of appraiser’s inspection, and revised the income documentation guidelines for borrowers employed by an interested party to require a written VOE in addition to the most recent 30 day paystub. FAMC announced the introduction of the Conforming Fixed Rate 97 product which allows loans up to 97% through DU, with certain restrictions.

GMAC Bank Correspondent Funding, echoing FHA Mortgage Letter 2011-11 on the subject of Refinance Transactions, refined its stance on the use of FHA TOTAL Scorecard to underwrite Credit Qualifying Streamlines (will continue to be eligible) and determining the mortgage basis on a Cash-out transaction when a borrower is buying out ground rent. GMAC also reminded clients that the Freddie Mac Relief Refinance Open Access product has been discontinued, and after tomorrow several of its loan program codes will no longer be available. GMACB will not purchase loans where LP feedback states Open Access.

Wells’ wholesale notified brokers about changes to its “Compensation and Anti-Steering: BYTE Fee Details Now Accepted, Compensation and Anti-Steering: Appraisal Fee Reimbursement, and Best Practices to Avoid FHA Case Number Cancellation. WF’s broker clients were also reminded not to delay in learning about the NMLS Federal Registration*, given a new address for the “Change of Servicer” notifications, updated the processing fee for Guaranteed Rural Housing loans and curing TIL material disclosure errors, and reminded of the final documentation delivery address for VA loan Guaranty Certificates and Rural Development Loan
Note Guarantees.

(*Three months ago the Board of Governors of the Federal Reserve System, Farm Credit Administration, FDIC, National Credit Union Administration, OCC, and OTS announced the
opening of the Nationwide Mortgage Licensing System and Registry for Federally Regulated originators. “All originators (company and loan level) who are federally regulated will have 180 days to complete the SAFE Act requirements and register with the federal S.A.F.E. registry. One should not delay, as at the end of July all federally regulated originators will be required to provide their NMLS Loan Originator and LO Company ID’s: FederalNMLS.

Parkside Lending, a west coast wholesaler, reminded its brokers that it will fund Non-owner high balance purchase loans up to 80% LTV up to $625,500 through its Freddie Mac Super Conforming product line and subject to other restrictions. Parkside also allows broker/owners to select individual compensation plans for each of their branch offices.  “This means one branch could be at 1.0% monthly comp contract while another is at 1.5% monthly comp -and so on, as long as they are under separate branches as recognized by DRE.”

Wall Street continues to see good interest by investors in mortgage products, “…buying from all investor types…Japanese, Real Money and Central Banks have been the largest – the market continues to under estimate the short base…,” which is another way of saying that Central Banks and investment firms have an enormous amount of cash to be put to work. And specifically for mortgages, banks have been very large buyers of MBS (per the H8 data). Monday was very quiet, with the 10-yr yield closing at 3.14% and MBS prices a shade better/higher as there is still a flight to safety bid on continued worries about European debt issues – particularly related to Greece.

This morning we learned that April Import Prices were +2.2%, higher than expected, and Export Prices were +1.1% – neither of which are really market-moving numbers. At 10AM EST Wholesale Trade for March is reported, also not a market-moving number, but at 1PM EST we have a $32 billion 3-year note auction by the Treasury, and this can shift rates somewhat. Currently we find the yield on the 10-yr slightly higher at 3.17% and MBS a tad lower.

Jeff Phillips

HP Investments, Inc
Phone – 415-867-6488
Fax – 415-962-0474
jeff@hpinvestmentsinc.com
DRE – 01879516
NMLS – 242083
HP Investments, Inc
View our Blog- http://www.northbayrl.com/blog/
Visit us on Facebook – http://www.facebook.com/HPInvestments
Follow us on Twitter – http://twitter.com/hp_Investments

Who is hiring retail loan officers?, NASA offering 100% financing mortgage and more Jeff’s Mortgage Blog – May 9, 2011

Barney Frank Looks to Cause Even More Controversy within our Industry.


Barney Frank want’s to change the way things are with the Federal Reserve and give power over to the President when it comes to appointing it’s board members. Good idea? Maybe yes maybe no…. what do you think? Catch all your real estate new and mortgage news with Frank Garay and Brian Stevens here at www.TBWSDailyShow.com!

DAILY MARKET REVIEW

May 9, 2011: Mortgage jobs; 100% loans for NASA? HUD & Fannie reducing paperwork? Signs of life in commercial & multifamily; lots of investor updates

by Rob Chrisman

Today the village of Plato, Mo., (population 109) will celebrate its selection as the “2010 Census Center of Population” at 1PM CST with a little party. “The mean center of population is the point at which an imaginary, flat, weightless and rigid map of the United States would balance perfectly if all 308.7 million residents are counted where they live and all weigh exactly the same.” (Pass the Twinkies so that I can shift it west.)

Don’t do the crime if you can’t do the time. Former mortgage broker Michael Pahutski was sentenced in federal court Friday to 19 years in prison.  It is not a funny topic, although in this fellow’s mug shot it looks like he just remembered certain prison-movie scenes. 19YearsinaBunkBed

The largest banks, which are also pretty much the same as the largest servicers, are sitting on huge amounts cash. There are various reasons for sitting on cash, but one of them is, “Citing potential fines and penalties related to its mortgage practices, Wells Fargo raised its reserves for legal expenses by 42 percent to a maximum of $1.7 billion, according to a filing with the SEC. Lawyersaren’tCheap

These larger investors have also been either laying off or shifting employees into servicing roles to handle legacy loan issues. But there are companies that are indeed expanding, especially in the retail sector. As an example, National Residential Mortgage (NatRes) is looking for retail LO’s from Illinois down to Texas and west to the shores of the Pacific Ocean. NatRes is a part of Heartland Financial USA Company, a publicly held company with $4 billion (yes, with a “b”) in assets which owns ten banks and has a successful retail mortgage platform that’s in the midst of a major expansion. NatRes’ LO’s are able to lend in all 50 states with no licensing requirements. The company offers the standard agency products – but with a twist. It will soon be a GNMA issuer, which is interesting, and also offers a jumbo product through a Wall Street conduit. If you’re interest or know someone who is, contact Richard Pierce at rpierce@natresdirect.com.

It is not often that lenders have the potential of less paperwork. Small lenders noted that HUD recently waived the requirement that they submit annual audited financial statements to HUD. The requirement states that supervised lenders seeking FHA lender approval or renewal must electronically submit audited financial statements to FHA within 90 days of their fiscal year end.  The waiver which goes through next April and which NCSHA sought in comments to HUD, suspends the requirement for a calendar year only for supervised lenders that possess less than $500 million in assets. Supervised lenders that qualify for this waiver must complete all other approval and renewal requirements, including submitting the online certification and paying the renewal fee.  In addition, the waiver does not apply to the requirement that supervised lenders submit an independent auditor’s opinion of internal control and compliance with HUD programs. FHAFinancials

Fannie Mae also announced that effective June 1 servicers are no longer required to submit Form 571 requesting payment of incentive fees for eligible pre-foreclosure sales and deeds-in-lieu of foreclosures closed in HSSN. Instead, servicers will receive payment of approved incentive fees once per month during the month following the pre-foreclosure sale or deed-in-lieu of foreclosure. Fannie Mae also announced that it is modifying the Servicing Guide to account for an extension of the expiration of stay of foreclosure proceedings and other legal proceedings pursuant to the Helping Heroes Keep Their Homes Act of 2010. Until December 31, 2012, foreclosure and other legal proceedings on eligible mortgage loans must be stayed for nine months following the termination of a service member’s active duty. Here is the announcement: Form571

Fannie Mae also announced that it will seek $8.5 billion in Treasury Department aid to balance its books after reporting a $6.5 billion loss in the first quarter. Fannie Mae is requesting the money to eliminate a net worth deficit of $8.4 billion for the three-month period that ended March 31. The first-quarter loss was partly attributable to a $2.2 billion dividend payment to the Treasury, along with credit losses and expenses for bad loans totaling $11 billion.

My Mom always told me that I should be an astronaut. NASA Federal offers 100% LTV mortgage with no private mortgage insurance. Don’t believe it? Here you go: NASA.

If one’s town had 1 foreclosure in 2009 and then 2 foreclosures in 2010, statistically foreclosures were up 100% (doubled). Increases in commercial and multifamily loan originations is a fine thing, but keep in mind where the numbers were a year ago. MBAACommercial

As announced in 2008, Wells Fargo’s Mark Oman is talking retirement. If anyone is interested: MarkOman

Fifth Third, echoing the FEMA website mentioned in the commentary last week, noted Disaster Areas in over 60 counties in five states: Alabama, Tennessee, Arkansas, Mississippi, and Georgia.

Flagstar (#10 lender in the 4th quarter with a 1.7% market share) recently told brokers that Florida properties are exempt indefinitely if the NMLS application was submitted prior to 12/31/10. (Proof of NMLS status and date is required to be provided with each file when submitted to underwriting.) The investor also reminded brokers of its pre-funding QC review process implemented last July. “On a daily basis, Flagstar Bank randomly selects loans that have reached a Final Approval Clear to Close status and will review these loans.” Flagstar Bank is making several updates and pricing adjustments to the Guaranteed Rural Housing program, LO comp-related policy & system enhancements, Calyx-related changes since it has released its latest update to Point, Loantrac changes regarding submitting a TBD loan to underwriting where a GFE and TIL were not disclosed to the borrower, etc. Flagstar continues “to require FHA Sponsored Originators (TPOs) and FHA Authorized Agent correspondents who are not approved for appraiser independence compliance to order all new FHA appraisals through Loantrac Appraisal Management. Lenders were pleased a few weeks ago when “Flag” lowered its minimum credit score requirements for VA transactions to 600.

Flagstar is also embarking on an FHA training program, mandatory for those who are applying for FHA Sponsored Originator approval with Flagstar. “Customers who were converted from FHA-approved Brokers or Correspondents to FHA Sponsored Originators on January 1, 2011, are not required to take this class.” Live Webex classes have been scheduled for May 11 and May 23 – check with your rep for registration details. Flag also recently sent out notices reminding brokers & correspondents that it is their responsibility to warrant the subject property is in an acceptable condition at the time of delivery, improving the price adjustments on the Fannie and Freddie 10-Year and 20-Year products, and stated that “all loan fundings will be temporarily suspended for properties in Memphis and Millington Tennessee. When funding resumes, a property re-inspection will be required for loans with appraisals dated on or before May 6.”

Bank of America correspondent clients were notified that, due to HUD Mortgagee Letter 10-36 which eliminated the requirement that the sum of all liens not exceed the geographical maximum mortgage limit for both purchase and refinance transactions, for BofA’s clients only FHA-insured first liens are subject to FHA maximum mortgage limits.

SunTrust Mortgage (#11 in the 4th quarter of 2010) is revising the non-permanent resident alien guidance to include additional visa classifications, additional requirements for an expiring visa or an expiring I-797 Notice of Receipt/Notice of Approval, and alternative income documentation requirements for clients who do not have to file US tax returns. The investor is also releasing a series of bulletins associated with internal Quality Assurance audit results in an effort to show clients a “best practices” way of (this month) handling AUS loans closing but not consistent with the final AUS run with the investor, income calculation/documentation for non-verbal VOE, and limited denial participation and general services administration verification.

On to the markets and interest rates! For market-moving scheduled economic news this week, today we will have zip, tomorrow are import & export prices, Wednesday are some trade figures, Thursday things pick up with the Producer Price Index, Retail Sales, and Jobless Claims, and on Friday the 13th is the Consumer Price Index. That all being said, eyes appear to be more on volatility in commodity prices, especially after the killing of Osama bin Laden which helped trigger the commodity selloff. Commodity prices were already poised to fall, reflecting recent interest rate hikes in China and India, designed to cool those economies off, as well as higher margin requirements on certain metals trading, most notably silver.

Friday’s Non-Farm Payrolls was a surprise with 244k jobs (268K in the private sector) but the unemployment rate did tick up by .2%. Recently 10-yr Treasury notes hit their lowest yields of 2011 (3.13%) and agency MBS prices are indeed good. But this week is a new week, with the economic news listed above along the refunding supply starting tomorrow with $32 billion in 3-yrs, $24 billion 10′s, and $16 billion 30s. The 10-yr is at 3.17%.

Jeff Phillips

HP Investments, Inc
Phone – 415-867-6488
Fax – 415-962-0474
jeff@hpinvestmentsinc.com
DRE – 01879516
NMLS – 242083
HP Investments, Inc
View our Blog- http://www.northbayrl.com/blog/
Visit us on Facebook – http://www.facebook.com/HPInvestments
Follow us on Twitter – http://twitter.com/hp_Investments

Unintended 5% retention issues; lots of agency & servicing news. Jeff’s Mortgage Blog May 2, 2011

DAILY MARKET REVIEW

May 1: Unintended 5% retention issues; lots of agency & servicing news; misc. bank & lender updates

by Rob Chrisman

Occasionally I receive e-mails that are worth saving. Like the one where someone wrote, “Your vocabulary is as bad as, like, whatever.” And some websites are worth saving, like this one that tells the viewer what states/counties have been declared disaster areas by our government: FEMAUpdates.

Happy Asian/Pacific American Heritage Month, which was originally 3 days that extended from May 7th (the arrival in the US of the first Japanese immigrants in 1843) and May 10th (the completion day in 1869 of the transcontinental railroad built with large numbers of Chinese immigrants). Lenders shouldn’t ignore this demographic. There are 16 million U.S. residents of Asian descent, per the census bureau, over 5 million of them in California. (NY is #2 at 1.5 million, Texas #3 at 1 million; Hawaii’s population is 53% Asian.) This estimate includes those who said they were both Asian alone or Asian in combination with one or more other races. Population estimates at Census.

“Here’s one for your readers to contemplate. When a seller securitizes a pool of loans, can they book the gain on the whole thing, or just 95% of it? As part of risk retention requirements, the regulators are trying to prevent the gain on sale from ‘funding’ the 5% risk retention value so the seller has ‘cash’ skin in the game.  The idea here is put any ‘premium’ earned by the originator/seller into a performance account and somehow make that account available to other investors if the bonds perform poorly. Banks’ traditional origination channels are most affected, since the premium recapture account may make it difficult for banks to get true sale accounting treatment. The fact that this does not take into account costs that push a bank’s basis in originating the loan to above par means that the bank may be left paying out of pocket to fund the premium recapture account, which is worse than just holding the loan on portfolio.

“And ‘perhaps the most fundamental aspect of a sale is the transfer of risk and reward associated with an asset. If I transfer a mortgage on Blackacre to Prince William, but bear risk on the performance of the mortgage, it’s questionable whether I have sold the mortgage to him or merely loaned or leased it to him. The federal risk retention requirements make this issue hairier.  If I am on the hook for the first 5% of the losses (or 5% of the total losses), could a bankruptcy trustee come after that mortgage as an asset of the estate? The fact that the 5% stake (vertical or first loss) is mandated by federal securities law strikes me as irrelevant to the true sale question, which is not a securities law issue, and on which Dodd-Frank takes no stance. If the transaction involves too much risk retention for whatever reason, regulatory requirement or voluntary deal design, there might be problems with the sale treatment. RetentionGame‘”

There was some servicing news at the end of last week. The Federal Housing Finance Agency (FHFA) directed Fannie Mae and Freddie Mac to “align servicing guidelines in four key areas: (1) borrower contact, (2) delinquency management practices, (3) loan modifications and foreclosure alternatives, and (4) foreclosure timelines.” Wrapped up in the “Servicing Alignment Initiative,” the components provide monetary incentives for servicers that perform well and compensatory fees for those that do not. In other words, the goal is for consistent mortgage loan servicing and delinquency management requirements for the companies servicing the two GSE’s delinquent mortgages. Here is the actual press release: FHFA and if you are servicing any loans for Fannie, or have any friends or family servicing those loans, they should check out FannieServicing. And for Freddie Mac servicers: FreddieServicing.

Fannie also recently sent out notice of the release notes for the DU for government loans release occurring on June 18, incorporating a recent HUD announcement: FannieHUD.

(Freddie also released The Phase I ULDD requirements include delivery of the ULDD data point equivalents for data we currently require at loan delivery plus 53 additional ULDD data points, which starts up in December for delivery dates in March. FreddieULDD

Not wanting to be left out of the flurry of agency updates, HUD came out with a Mortgagee Letter providing FHA guidance regarding the financing of homebuyer transaction costs for homebuyers who acquire HUD REO single-family properties under a specially-authorized sales incentive that requires only a $100 minimum cash investment. “Homebuyer acquisition costs that may be financed for eligible homebuyers are limited to Upfront Mortgage Insurance Premiums (UFMIP).” In addition, another Mortgagee Letter came out focused on removing the one percent origination fee cap for standard FHA insurance programs, except for the 203(k) Rehabilitation Mortgage Insurance and Home Equity Conversion Mortgage programs. Check all letters out at MortgageeLetters.

As this commentary mentioned a while back, GNMA announced that starting June 1, all loans pooled into its mortgage-backed securities must be current at the time of issuance. Most dealers think this new requirement is unlikely to affect GNMA valuation, but instead are keeping a careful watch on the high re-default rate of re-pooled loss-mitigation loans and the lack of ways to identify them.

FHA lenders know all about the “TOTAL Scorecard,” which has also had some clarification lately. “If the credit report reveals that the borrower is disputing any credit accounts, Manual Downgrade of a TOTAL Scorecard Approve/Accept recommendation is not required if: 1. The disputed account has a zero balance, 2. The disputed account is marked as “paid in full”, or “resolved”, 3. The disputed account is both a. less than $500, and b. more than 24 months old, based on the date of dispute. FHAOutReach.

In addition, a company must send in FHA single family claim-related remittances using the “Claim Remittance” feature in FHA Connection. “This feature can be accessed through the FHA Connection by selecting Single Family Servicing, Claims Processing, and Claim Remittance.   Banking information can be entered securely during the one-time cash flow account setup using the Cash Flow Account Setup module in FHA Connection.” For more instructions it is best to visit HUD.

It appears that The Leaders Group, out of Oak Brook, Illinois (and owners of Leaders Bank) reached an agreement late last week with the Federal Reserve Bank of Chicago.

On the other hand, in Florida Premier American Bank, National Association (including Florida Community Bank), took over the banking operations and deposits of First National Bank of Central Florida, and Cortez Community Bank. Bank of the Ozarks (Arkansas), acquired the banking operations, including all the deposits, of First Choice Community Bank, and The Park Avenue Bank, both of Georgia. And way up in Michigan, Community Central Bank, Mount Clemens, was closed and operations assumed by Talmer Bank & Trust, formerly known as First Michigan Bank.

Friday the commentary mentioned several things. One was a story about Zillow offering gift cards at Lowe’s to mortgage applicants, up to $1,000. It turns out that Zillow and Century 21 Real Estate LLC have teamed up “to provide CENTURY 21 brokers and agents with exclusive discounts on Featured Listings on Zillow. These Featured Listings will appear on the Yahoo!/ Zillow Real Estate Network” NewPartnership.

Another was the cost of regulation, warranting this note: “I am no fan of more regulation and any time you start making decisions that run counter to market forces, you are going to get some irrationality. However, it remains to be seen what the true cost of regulation is. Like all edicts, some will be good and some bad. Every day we hear that a $300mm bank can’t survive and must merge to stay competitive, but that may be a fallacy. For starters, while the cost of banking has increased with Dodd-Frank, so far it is not prohibitive. Like SOX, DFA may require a bank to add another full time person, but at the end of the day, the change in the cost of regulation will not be material to drive a bank out of business. The biggest killer is the tighter controls on leverage.”

GMAC’s (#5 lender for the 4th quarter with about a 4% market share) correspondents continue to see refinements and adjustments on underwriting guidelines, using an easy-to-read but lengthy “current policy to new policy” format. GMAC has recently clarified criteria such as Community Land Trusts, installment land contracts, interested party contributions, Texas equity loans (need to certify that the borrower received those documents!), monthly housing expenses, verbal VOE’s, principal curtailments, living trusts, removing the MIP form from the list of required FHA documents, reminding clients of the expiration of case numbers, net tangible benefit definition, and so on.

Mountain West Financial updated its policy on multiple financed properties for the same borrower on Conforming Loan Amounts only ($35,000 – $417,000), including: “If the mortgage is secured by the borrower’s principal residence, there are no limitations on the number of properties that the borrower can currently be financing. If the mortgage is secured by a second home or an investment property, the borrower may own, or be obligated on, up to ten financed properties (including his or her principal residence). The financed property limit applies to the borrower’s ownership of one-to-four unit financed properties or mortgage obligations on such properties and is cumulative for all borrowers.  These limitations apply to the total number of properties financed, not to the number of mortgages on the property.”

With many Secondary Marketing folks attending the conference here in New York, things may be a little slow. The news that Osama bin Laden has been killed impacted foreign currency markets slightly, but has little real impact. Last week, for the week, 10-year T-notes gained nearly 1 point and the yield dropped to 3.30%, and current coupon agency mortgage prices improved about .75 in price. We finished Friday with prices better by .125 after Personal Income was +.5%, Personal Consumption was +.6%, and Consumer Confidence rose – all slightly better than expected.

Economic news this week bolts right out of the gate with Construction Spending and the ISM Index today. Tomorrow is Factory Orders, Wednesday some Challenger and ADP jobs numbers, and Thursday Jobless Claims and some productivity statistics. Friday we’ll see all the unemployment, uh, I mean employment data.

Jeff Phillips

HP Investments, Inc
Phone – 415-867-6488
Fax – 415-962-0474
jeff@hpinvestmentsinc.com
DRE – 01879516
NMLS – 242083
HP Investments, Inc
View our Blog- http://www.northbayrl.com/blog/
Visit us on Facebook – http://www.facebook.com/HPInvestments
Follow us on Twitter – http://twitter.com/hp_Investments

Are short sales better for your credit than foreclosures? Jeff’s Mortgage Blog April 27, 2011

Real Estate Market Improves With Industry Pro’s Conversations

Looking back it would appear that the real estate market did improve in 2010, but why? We can’t trace it back to anything but the conversations that were going on to motivate people during the time of the tax credit. This leads us to believe that we as industry professionals have the power to turn the industry around with nothing more than positive conversations. Catch all your real estate news and mortgage news with Frank Garay and Brian Stevens here at www.TBWSDailyShow.com.

DAILY MARKET REVIEW

April 27: Freddie & Fannie chatter; NMLS & Federally regulated institutions; a bill introduced in CA does what?

by Rob Chrisman

Huh? Maybe Freddie and Fannie are not going to evaporate, which many in the industry were not looking forward to anyway: MSNBCAgencies

One servicing manager from a large institution wrote to me and said, “If you look at the delinquencies at the agencies versus the market, Freddie & Fannie are a much smaller percentage. If FNMA and Freddie ‘own’ half the mortgages, but their delinquencies are much lower than other institutions during that time period who were buying loans, what does that say?”

A security, backed by mortgages, is not a bad thing, and, if properly constructed, is a very good thing. Many will argue that the market was working well until 2002, when the residential mortgage backed security market (RMBS) began to experiment with non-traditional structures, AND non-traditional mortgages. CDO’s (collateralized debt obligations) and synthetic CDO’s were rolled out, taking pieces of higher-risk RMBS tranches and securitizing them… but we digress. The plans that the Treasury presented, focusing on the phasing out of Fannie and Freddie, may not fully consider the implications to our housing market. Lew Ranieri recently spoke out on the issue. “…why we created the mortgage security in the first place, ’cause it can’t fund housing on a balance sheet because it requires too much equity-you can do some, but you can’t do most…The government has to make a decision that all be it we want to transition to a more public market, a non-government market…In the meantime if you have the only source of current credit being the government, tight, like this, you just keep the overhang going, prices go down, more people become under water-it becomes a vicious circle…the core problems are still there, despite all the good new regulations and rules…Until the people in the chain have responsibility and will be held to those responsibilities, just like we are when we sell stocks, you won’t fix this.”

“MLOs employed by federally regulated institutions have until July 29 to become actively registered on NMLS. Even though the individual MLO is responsible to register, the employing institution must also complete a number of steps in order for the MLO to become actively registered. These steps include creating the institution’s account, submitting the Form MU1R, and confirming each MLOs’ employment within NMLS.” But is your company required to go through NMLS training? Here’s a site to find out: NMLS

All I can do is shake my head and stare out the window. A new bill written up by a California Assembly member calls for a $20,000 fee to be charged to banks for every foreclosure they carry out in the state, with the aim being reducing foreclosures. (One would think that the goal is to make lending less attractive for lenders in California, but I’ll hold my comments.) Assembly Bill (AB) 935 would fine mortgage lenders or loan servicers $20,000 per foreclosure in the form of a “foreclosure mitigation charge,” creating incentives to offer loan modifications or refinance alternatives. The bill would supposedly generate up to $16 billion over the next two years, as nearly 800,000 foreclosures are expected in the Golden State. Someone had better tell Assemblyman Blumenfield about how changes in servicing released premiums factor into pricing for mortgages for potential new homeowners.

More reader input. “As an appraiser, I read with great interest your notes from Friday, saying, ‘One of the more troubling Realtor strategies is to threaten the business relationship with a LO if a loan does not go through, or is not on time, regardless of whether or not the loan makes sense for the buyer. (If I couldn’t do the loan) they would find another lender who would do it and they would make sure that no other Realtors used my company in the future.’ I would like to point out that up until recently, appraisers heard the same thing from LO’s everywhere: ‘If you can’t bring this in near value, we’ll find someone who can.’ Have LO’s forgotten that phrase?”

“Those thinking QRM underwriting rules are similar to GSE underwriting guidelines, need to reconsider. ‘Guidelines ‘are flexible to some extent & penalties for mistakes (buybacks) can be expensive, but rarely are. ‘Rules’ are enforced rigidly by regulators with expensive penalties, license actions, felonies, and private action. People in the industry should realize that a whole new world of mortgage credit tightening is coming.”

As most Lock Desk folks know, there was little to cheer about last week. The MBA reported that its application index dropped 5.6%, with refi’s dipping slightly, and “The seasonally adjusted Purchase Index decreased 13.6 percent to its lowest level since February 25, 2011, driven by a 26.6 percent decrease in government purchase applications.”

ING reminded brokers that, “For all Purchase Transactions, your Good Faith Estimate MUST include an estimated cost for Owner’s Title Insurance in Block 5. An amount must be provided regardless of who is selecting or paying for it.  If your GFE Block 5 is not complete, your application will not be accepted regardless of your ability to cure this charge at closing.  You may re-submit the application with a corrected GFE after 60 days.”

To the surprise of no one, the S&P Case-Shiller HPI (Home Price Index) declined 3.3% in February from a year ago on the 20-city composite, and the 10-city composite was down 2.6% YOY. From a year ago, only Washington DC reported appreciation at 2.7%, while Phoenix and Minneapolis experienced the largest declines at over 8%. 10 of the 20 cities recorded new lows. Economists believe that with already weak home values declining further, refinancing activity will remain limited and keep prepayment speeds relatively slow – a positive with much of the market trading at a premium. At the same time, while affordability holds near record highs, homebuyers may be hesitant to purchase just yet with prices still sliding lower.

Looking at the markets, things aren’t too bad, and Tuesday both stocks and bonds did well. This surprised some, given that we’re still grappling with rising oil, gold, and commodity prices, a raging deficit, and problems overseas. The 10-yr Treasury closed at 3.32%. On the mortgage side, agency MBS prices improved by about .125 – .250 and one trader commented, “High price and low yield levels have relegated REITs and banks mostly to the sidelines, while other investors were mixed. In general, hedge funds and structured desks were buying…”

This morning we learned that March Durable Goods were up 2.5% versus +.7% in February. The markets seem to believe that the highlight of Wednesday’s session will be the first ever post-FOMC press conference beginning at 2:15 EST with Chairman Bernanke discussing the Committee’s “current economic projections and to provide additional context for the FOMC’s policy decisions,” as stated in the press release. We also have a $35 billion 5-yr auction. Across the Atlantic, things don’t look so good in Greece as their 2-yr note yield climbed to 25%. Investing in that is not for the timid. And after 3 consecutive up days Treasuries are down this morning due to some profit taking: the 10-yr is at 3.35% and MBS prices are worse a smidge.

Jeff Phillips

HP Investments, Inc
Phone – 415-867-6488
Fax – 415-962-0474
jeff@hpinvestmentsinc.com
DRE – 01879516
NMLS – 242083
HP Investments, Inc
View our Blog- http://www.northbayrl.com/blog/
Visit us on Facebook – http://www.facebook.com/HPInvestments
Follow us on Twitter – http://twitter.com/hp_Investments

What is the next big change for TILA? Jeff’s Mortgage Blog, April 22, 2011

DAILY MARKET REVIEW

April 22: MetLife consolidating wholesale fulfillment centers, ability to repay – the next change in TILA

by Rob Chrisman

For anyone out there who thinks the mortgage biz in the US has become confusing, spend 15 seconds scrolling down this story on establishing the mortgage business in Saudi Arabia. “The Saudi government target is for 80 percent home ownership by Saudi citizens by the year 2024…” Sound familiar? SaudiMortgageProposals

MetLife Home Loans has recently been increasing its market share, especially in the wholesale channel, so yesterday’s announcement that it was “consolidating” its fulfillment centers and making some structural changes was viewed by great interest, and some surprise, by brokers. “…we are overhauling and redesigning our Fulfillment Centers and processes…Create a single point of contact for communication, limit the number of team members that will handle your loans…MLHL has consolidated its previous nine Wholesale Fulfillment Centers into six primary Fulfillment Centers; two in each of our three divisions.”

One question that agents are often asked about is, “Do you still make loans on condos?” Especially if the borrower has less than 10% to put down, this almost automatically puts them into running for an FHA loan. The HUD site that agents turn to first, to see if the project is even approved, is CondoLook. Select the state, zip code/city, and then “send.” You’ll receive a list, and keep an eye on the expiration date to make sure that it is farther out than the lock period.

I have received a fair amount of reader feedback recently on various topics, with various opinions:

“Lending and compliance procedures have become incredibly complex. When is a major lender or two just going to say, ‘No’? Just make a public announcement. ‘Based on new regulations enacted in (whatever jurisdiction), we will no longer accept home loan applications and fund mortgage loans in (whatever jurisdiction). We appreciate our past customers and regret having to make a business decision that impacts them to protect the interests of the bank. If at such time in the future (whatever jurisdiction) repeals this new regulation, we will be happy to once again accept mortgage applications in (whatever jurisdiction).’ Barney Frank would have a stroke if that happened.” (Editor’s note: What tends to happen, of course, is that a lender drops their pricing in that area, often through the servicing value, making their product less attractive. Does that help the borrower?)

“It seems the industry is so tired from the comp issue that lenders are not seeing the next big issue staring them in the face: the Fed issuing a proposed amendment to Reg. Z (TILA) to require creditors to determine a consumer’s ability to repay a mortgage before making a loan, and to establish minimum mortgage underwriting standards. We have until 7/22 to comment on it, at which point the CFPB takes over. These “ability to repay” requirements will impact all consumer purpose mortgages except home equity lines of credit, timeshare plans, reverse mortgages and temporary loans. The proposal indicates that creditors will have four options to comply. The first is the “general ability to repay standard”, where the creditor would consider income or assets, employment, size of the borrower’s monthly payments and other debt, and credit history. The second option would be to originate a “qualified mortgage,” (no Neg Am, IO, balloon, or a term longer than 30 years AND if: total points and fees do not exceed 3% of the total loan amount, income or assets are verified, and underwriting of the mortgage is based on the maximum interest rate that may apply in the first five years, uses a payment schedule that fully amortizes the loan over the loan term and takes into account any mortgage-related obligations). The third option and fourth options involve rural/underserved areas not being subject to the balloon loan issue, or refinancing someone out of a non-standard mortgage with risky features into a standard mortgage that has limits on loan fees and that does not contain ‘risky’ features. Your readers should watch this carefully, as it is full of potential ‘unintended consequences’.”

Daniel Shlufman, president and general counsel for FCMC Mortgage, writes, “There are changes that I believe need to be required by real estate agents.  For real change there will need to be some requirements and disclosures placed on the sale of real estate (which are unlikely to happen). No blind bidding, i.e. each bidder should know what and who they are bidding against to avoid the farce of “highest and best offer” (this practice is prohibited in most other Western countries). Enforcement of conflict rules against Realtors vis-à-vis owning title companies and mortgage companies. ‘Dis-incentivizing’ agents from stifling competition and selling their own listings. Training on qualification (i.e. affordability), and responsibility on ability to repay, which would involve financial training on ratios similar to mortgages underwriting.”
“Regarding the comment that real estate commissions are split 4 ways and a Realtor gets around 1.25% to 1.5%, that is as false as the belief that LO comp is good for the consumer.  I own a real estate company and my Realtors get 100% commission with a flat $695 taken out per deal.  There are many companies that now compensate this way. In my area, the average purchase price is $225,000 and the average commission is still close to 3%, giving my agents an average net commission of $6,055 in their pocket on each deal. The average deal takes about 20 hours of showing homes and another 20-30 hours of paperwork to the close.  That is a max 50 hours of actual time working on a deal or $121 per hour for a job that requires no college degree, you can set your own hours and just 1 closing per month puts you at $72,000 take home pay per year.  Please do not feel that Realtors are in the same boat or even ocean as loan officers.”

“I have been in lending for 25 years and have seen both bad LO’s and bad Realtors come and go over the years. One of the more troubling Realtor strategies is to threaten the business relationship with a LO if a loan does not go through, or is not on time, regardless of whether or not the loan makes sense for the buyer.  During the mayhem of rising property values, I received many calls indicating that if I was unwilling to do a stated income/state asset loan for someone who clearly did not make the income ‘stated’, they would find another lender who would do it and they would make sure that no other Realtors used my company in the future.  I know I’m not the only manager to have ever received that call.”

“Are borrowers really better off with the decline in mortgage brokers? Mortgage brokers have access to wholesale mortgage rates, which are priced below those offered by retail banks. They’re able to offer lower mortgage rates because they don’t need to pay a sales team to sell those rates, as mortgage brokers run their own businesses and earn money off of commissions. Many borrowers are able to get a better deal if you work with a mortgage broker as opposed to walking into your local bank branch since mortgage brokers have the ability to ‘shop the rate’ with multiple mortgage lenders simultaneously, meaning more options for the borrower.”

“The mortgage banking profession is no different than others, in that the majority of the people in the mortgage industry are hardworking, honest individuals that do treat their borrowers with respect, honesty and fairness.  Whoever doesn’t believe that may not want to believe it. Some companies did go way over the line and did commit fraud and these individuals and companies should be punished, but don’t punish the entire industry for the wrong doings of a few.”

“I remember being at a state ethics meeting I chaired in 1999, speaking with our state’s head mortgage lending regulator who attended our meetings and discussing what we needed to do to establish a more ‘professional’ mortgage loan officer in our state. I suggested $100,000 individual bonding, strong testing, licensing with background checks, brick & mortar in the state, and personal liability for wrongdoing in statute for the loan officer. The regulator told the audience that lowering competition like that, and the creation of high barriers to entry, would harm the state’s borrowers in restricting their choices, and that we needed as much competition as possible to keep rates and fees down for its citizens. For many borrowers ‘Stated’ income documentation was acceptable, as was ’100% or higher LTV,’ ‘Neg Am,’ and loans for ‘low credit score’ borrowers all had their place. But layering on risk and combining 2-3 of these factors was poor judgment; combining all 4 was irresponsible. We had our cake, and ate it too, for decades. Now they’ve taken away most of the cake and put us on a big FRB diet of how much we can eat.”

To get to the point, yesterday the markets did not move much, although for the week we had some nice price improvement. The fixed-income markets closed early, and are closed today (usually leading to, if an investor is even offering rate locks, conservative pricing). Traders reported very light mortgage selling yesterday, suggesting that next week’s MBA application index will be on the light side. In fact, it has been a quiet week in mortgages for several reasons: vacations, high price and low yield levels keeping buyers on the sidelines, and limited data and events. Yesterday both agency MBS prices and the 10-yr closed nearly unchanged (3.40%), so we’ll see where they come in Monday morning after this 3-day (for the markets) weekend.

Jeff Phillips

HP Investments, Inc
Phone – 415-867-6488
Fax – 415-962-0474
jeff@hpinvestmentsinc.com
DRE – 01879516
NMLS – 242083
HP Investments, Inc
View our Blog- http://www.northbayrl.com/blog/
Visit us on Facebook – http://www.facebook.com/HPInvestments
Follow us on Twitter – http://twitter.com/hp_Investments