Flood Insurance Program Not Extended; FHA MIP Reminder; Wells Fargo Jumbo Rollout; PIMCO Hiring; Bank Failures
Do you live in a flood plain, or have borrowers that do? Be forewarned that the Senate adjourned Friday without extending the National Flood Insurance Program. Language that would have kept the program in place until April 30 was part of a more comprehensive House bill that extended a variety of federal programs was stalled in the Senate. Personally, I have not heard exactly what will happen to transactions whereby flood insurance is required but unavailable. READ MORE
All investors (Citi, Chase, BofA, Flagstar, etc., etc.) are reminding their clients that, as a result of January's FHA's Mortgagee Letter 2010-02, the Upfront Mortgage Insurance Premium (UFMIP) will increase to 2.25% effective for all case number assigned on or after Monday, April 5, 2010. This applies to FHA purchase transactions and all refinance transactions including FHA-FHA Streamline credit qualifying and non-credit qualifying loans. Even ordering case numbers late this week may not get in under the deadline - best to do it as early as possible. (Title 1, HECM's, Hope for Homeowners, Hawaiian Homelands, and a few others are exempt.) At this time, there is no change to the annual (monthly) mortgage insurance premium factors.
"FDIC", "Friday", and "four banks" all start with the letter "F". Four U.S. banks were seized Friday by state regulators, two in Georgia (McIntosh Commercial Bank and Unity National Bank, taken over by CharterBank and Bank of the Ozarks, respectively), one in Florida (Key West Bank, assumed by Centennial Bank of AR), and one in Arizona (Desert Hills Bank, assumed by New York Community Bank), bringing the total number of bank failures since the beginning of 2008 to 206 and to 41 this year.
The FDIC announced that when the FDIC is appointed receiver and simultaneously announces a sale of the failed bank's assets, that does not mean that these assets are automatically transferred by state law, nor does it mean that the buyer can be deemed a "successor" to the failed bank. The "conveyance of all assets, including real and personal property interests, purchased by the assuming bank under this agreement shall be made, as necessary, by receiver's deed or receiver's bill of sale... The FDIC is prepared to execute releases, deeds of REO, assignments, etc. as receiver." The FDIC will commonly grant a power of attorney to certain individuals at the failed bank, at the buyer bank, or internally, to enable the execution of these instruments, and the institution is responsible for ensuring that the power of attorney complies with state law requirements for the recordation of these instruments.
Wells Fargo joined other lenders in offering a "new" jumbo product on a risk-based approval system to broker and correspondent clients who have solid past performance. The program goes up to $2 million, LTV's of 80% (no subordinate financing), fixed rate and ARM's, purchases and rate/term refinances, primary residences, with a 720 minimum FICO. It starts today.
Starting next Monday, SunTrust will be implementing changes to the DU Refi Plus loan program. Changes include a revision to the LTV/TLTV/HTLTV requirements for Non-STM to STM Agency Plus DU Refi Plus transactions, updating the maximum debt-to-income ratio for non-STM to STM Agency DU Refi Plus loans, and revising the minimum credit score requirements for Non-STM to STM Agency Plus DU Refi Plus transactions. And with a nod toward changing energy sources, SunTrust also updated its "Key Loan Program" whereby modular homes with geothermal heat pumps are now eligible and updated its list of ineligible properties for this program.
SunTrust also reminded clients that starting Monday the last HPML/Section 35 requirement takes effect and applies to all first lien transactions with that date or later: all such loans must have escrows for taxes and required property insurance. "As of April 1, 2010, escrows for taxes and required insurance are mandatory on any first lien transactions which are classified as HPML. The Servicer may permit the borrower to cancel the escrows after one year but is not required to do so."
More jobs continue to become available in the "mortgage space".
PIMCO is looking for people to work in its distressed asset fund: "experience in managing and resolving distressed residential real estate assets, the pricing and acquisition strategy of the pools, significant knowledge of the workout/liquidation process." Anyone looking to run the program should contact Paul Conway at (919) 833-4800 or e-mail pconway@conwaygreenwood.com . In Northern California Plaza Loans (retail) is looking for DE underwriter - contact bonnie@plazaloans.com, and Parkside Lending (wholesaler) is looking for additional operations managers and other operations positions as it is expanding its wholesale operations: Matt@parksidelending.com.
What are the smart folks out there saying about the HAMP changes that were announced last week? The new FHA program will take underwater borrowers, write them down to 97.5%, and the borrowers will then be refinanced into a new FHA loan. Apparently any second liens don't have to be extinguished, borrowers don't have to show hardship, and the new program is from the US Treasury so it probably falls under servicer safe harbor jurisdiction. Previously modified loans will be eligible. Borrowers must be eligible for FHA loans (not a high bar) and have to provide documentation. From an investor point of view, apparently the news is good. READ MORE ABOUT THE DETAILS
Last week was not the best week for interest rates (including mortgage rates). Overall a combination of the increasing US Government budget deficit, continued problems with Greece and European debt were the primary culprits, along with some signs that our economy is picking up a little steam (stocks are hitting 18-month highs). Two out of the three auctions did not go well, and gee, what will the Fed do with the $1+ trillion of agency Fannie/Freddie product it has purchased? This week brings the end of the Fed's buying program - and who is going to buy mortgages? Smart money is betting that the same institutions that invested in mortgages prior to the Fed will take up the slack: pension funds, insurance companies, hedge funds, money managers, and banks. Besides, origination is supposed to drop, right? And if rates go up too high, our housing market will get smacked - something that the Federal Government doesn't want to see happen. READ MORE ABOUT THE INTEREST RATE OUTLOOK
Unfortunately departments within the Treasury Department (OCC and OTS) said the percentage of current and performing mortgages fell to 86.4% at the end of the fourth quarter of 2009, falling for the seventh consecutive period. This means that serious delinquencies rose: a 21.1% increase in mortgages 90 or more days past due to 4.7% of all mortgages in the portfolio at the end of 2009. The increase in seriously delinquent mortgages was most pronounced among prime borrowers, which account for 68% of all mortgages. To continue the "good news", home sales are slumping, with New Home Sales falling to an all-time low and Existing Home Sales dropping for the third consecutive month, and homebuilder sentiment has dropped.
What do we have to look forward to this week? Besides Easter coming up next Sunday, today we have Personal Income & Consumption and the PCE Price Index, Tuesday the S&P/Case-Shiller Home Price Index & Consumer Confidence, Wednesday the Chicago Purchasing Managers Index, Thursday we have Initial Jobless Claims, Construction Spending, and the ISM Manufacturing data, and then on Friday we'll see the employment data - expected to show a pickup in jobs. THE WEEK AHEAD
Personal Income was expected at +0.1% but came out as unchanged for February. Personal consumption expenditures were expected to rise, and did, coming out at +0.3%. After the data, bonds and stocks didn't do much. The 10-yr seems happy for the moment around 3.85%, and mortgage prices are about unchanged from Friday's closing levels.
Three sisters, ages 92, 94 and 96, live in a house together.
One night the 96-year-old draws a bath. She puts her foot in and pauses. She yells to the other sisters, "Was I getting in or out of the bath?"
The 94-year-old yells back, "I don't know. I'll come up and see." She starts up the stairs and pauses "Was I going up the stairs or down?"
The 92-year-old is sitting at the kitchen table having tea listening to her sisters. She shakes her head and says, "I sure hope I never get that forgetful, knock on wood."
She then yells, "I'll come up and help both of you as soon as I see who's at the door."