FHA Video; New Apps Dropping; Citi and Flagstar Updates; Rates Improving
Some days the best thing about my job is that my chair spins! (Sad but true.) But then along comes items like THIS. Who would have ever thought FHA compliance and underwriting issues would have made it to mainstream videos - not to be missed!
The MBAA has been busy. First, the MBAA announced that they have formed a panel to make recommendations to HUD regarding the Federal Housing Administration (FHA) - but probably not in response to that video above. Sensing that the mortgage banking industry needs more abbreviations, the Council on the Future of FHA (CFF) will be chaired by Daniel Crockett, President, CEO, and Chairman of Franklin American Mortgage Company. "The council will be comprised of a small group of leaders in the mortgage banking industry, with representatives from large and small companies." One can look at their website for a list of 25 or so "who's who" on the panel. READ MORE
Second, according to the Wall Street Journal, the MBAA is apparently are trying to sell their own headquarters at 1331 L Street in Washington DC. They bought the property for $76 million in May of 2008.
Locks desks across the land saw their third straight week of lower applications. Purchase applications were down about 5.2%, back to May levels. Refi numbers were down about 16.2% and back to August levels. Overall, applications were down about 12.3%, and at this point much of the focus may be on first time home buyers trying to close ahead of the November 30th deadline - whose extension is being debated in Congress.
CitiMortgage, who has been slowly putting correspondent clients back on their roster, came out with several updates. For example, starting Monday they are following the recent FHA changes and updating their policy on analyzing the credit on borrowers doing a short sale/short payoff for their previous loan ("If short sale occurred on a government insured loan it should be considered a foreclosure when a claim has been paid and is subject to the 3-year requirement") In addition, "If a short sale occurred on a conventional loan and the loan was paid as agreed prior to the short sale then it is not considered a foreclosure." Citi's updates go on to address non-purchasing spouses in community property states, borrowers re-entering the workforce ("Borrowers who are re-entering the workforce and have an employment and income history that covers less than the 2 most recent years must be with their current employer for a minimum of 6 months and must have a documented 2-year work history prior to the previous absence from employment"), and self-employed income classification.
Citi also updated their Declining Market list, dropping 56 counties but adding 128, and addressed the fact that, at this point, the temporary loan limits are set to expire on December 31 ("Loans over the Permanent High Cost Limits (i.e. > $625,500 for a conventional 1 unit) must be closed by December 31, 2009 and purchased by January 29, 2010.")
Flagstar announced that, effective immediately, lender paid mortgage insurance (LPMI) is only eligible with Genworth and RMIC. Along those lines, Flagstar Bank updated their LPMI price adjustments on all eligible products for specific LTV and FICO buckets, including conforming fixed, Flex97, and conforming ARM's.
Durable Goods (items lasting longer than 3 years, like my son's toothbrush) has already come out this morning, rising 1% in September as expected. This was the second increase in the last three months, and but compared with a year ago orders are down about 24 percent. The only scheduled news out for later today is New Home Sales, but we had plenty yesterday to chew on - and both bonds and stocks improved somewhat (bonds more than stocks). The Case-Shiller Index saw August as its third straight month of price improvement for the bulk of the twenty cities in its survey and up 1% from July. Dallas showed the smallest drop since August 2008, while Las Vegas showed a 30 percent decrease, the most of any city. The biggest month-over-month gain was in San Francisco, which showed a 2.6% gain. Of course, economists want to see flat-to-rising prices through the winter to be sure that housing is rebounding, but skeptics point to unemployment and commercial real estate as two big hurdles to this happening.
In addition to that news from yesterday, the Conference Board's Consumer Confidence number declined in October from September's levels, which was unexpected and did not help the equity markets. The Treasury sold its $44 billion of 2-yr notes, and is slated to sell $41 billion of 5-yr notes today ($31 billion of 7-yr notes tomorrow). The 2-yr auction went well, with a bid-to-cover ratio of 3.63, much higher than average. The results helped fixed-income securities, and the yield on the 10-yr went back below 3.50% into the 3.40's. Mortgage prices gamely tagged along, with most investor interest being in the lower coupons. This morning the 10-yr yield is back to 3.45% and mortgages are a shade better than yesterday afternoon.
A new teacher was trying to make use of her psychology courses.
She started her class by saying, "Everyone who thinks they're less intelligent than the rest of the class, stand up!"
After a few seconds, Little Johnny stood up.
The teacher asked, "Do you think you're less intelligent, Little Johnny?"
"No ma'am, but I hate to see you standing there all by yourself!"