National Flood Insurance Program Extended; Originator ID Requirements; Electronic Loan Apps; NAMB Call to Action

The Senate has passed H.R. 5569 which extends the National Flood Insurance Program until September 30th. The House passed this bill last week so now all we need is for it to be signed by the president. Why the heck didn't they extend it for five years? So we have the pleasure of dealing with this all over again after Labor Day, but until then investors like USBHM will conduct business as usual regarding flood insurance policies. The program was made retroactive as of May 31. Bring on Hurricane Alex?

Don't ask me why "NAMB" stands for National Association of Mortgage Professionals (is "broker" a bad word?) but that organization is asking folks to watch THIS VIDEO and then write to their Senator before the Senate reconvenes July 12th. READ MORE

Who doesn't want to save energy out there? Say it ain't so - Fannie & Freddie are threatening to "derail" energy efficiency efforts by warning that they might not accept loans for homes that take advantage of the special financing? The answer is "yes". The confusion has caused... confusion. State governments and investors seem to have frozen their programs, thus holding up the retrofitting of houses with solar panels and other energy saving devices. FULL STORY

FHA released an update on RESPA and the SAFE Act. I am not sure that it contains any new information, but if anyone is looking for a summary of where the government stands now on these issues: HERE IT IS

Yesterday we had the advent of the NMLS data change. Wells Fargo wholesale, and everyone else for that matter, is now requiring Nationwide Mortgage Licensing System data except for those states currently exempting themselves. So you'd better complete both the Loan Originator ID and the Loan Originator Company ID fields for loans. NMLS ID numbers should not include letters or special characters, consist of Social Security Numbers, phone numbers, state license numbers, client code, be fictitious, or be shorter than four digits or longer than 12 digits.

The yield curve (the difference between 2-yr and 10-yr yields in this case) is the flattest it has been since October, signifying the potential for deflation and evening the playing field between ARM and fixed-rate mortgages. This especially impacts folks looking to refinance. Interestingly, according to The Royal Bank of Scotland, about 37% of the mortgage market is "truly refinanceable" at current rates. If mortgage rates improve .25%, RBS calculate that around 51% of the market would enter this camp. But borrowers and properties still must qualify and deal with higher fees.

And will those borrowers looking to refinance, or obtain a loan on a purchase, be doing it in person or on line? Kate Berry with American Banker suggests that most bankers agree that online lending applications can attract customers and drive up volume, but few actually offer such services. At this point the majority of lenders either already offer or know that they have to offer some type of interactive, online mortgage application at some point in the future. But per a recent study, only 18% actually offer applications online now. Many offer only a basic form that borrowers must download and print, and then an employee must re-enter the data manually later. Of course, one problem is that liens and mortgages still must be "wet signed," and few counties and municipalities will accept an electronic signature on a mortgage because they do not have the technology infrastructure. Loan officer should know that, per the article, "online application volume is expected to triple by 2013 with volume growing from just 4% this year, to 13% of total volume". Lenders still expect loan officers to be the dominant channel, accepting 57% of all mortgage applications by 2013, down from 67% this year. And employees who work at bank branches are expected to originate roughly 13% of mortgage applications by 2013, the same as this year. Four of the top 10 residential lenders dominate online originations: Quicken, JPMorgan Chase, PHH, and SunTrust.

Flagstar updated its "Credit and Liabilities" guidelines for conventional loans. Deed-in-Lieu of Foreclosure and Pre-foreclosure Sales, alternatives to foreclosure, have had their waiting period requirements changed. Two years for transactions with a maximum LTV of 80%, four years for transactions with a maximum LTV of 90%, and seven years for transactions for transactions with an LTV greater than 90%. In addition, Flagstar Bank told its brokers that it will only accept one GFE History per loan, and that a new Borrower Acknowledgement of Receipt of GFE will not be permitted as a reason to change the GFE History document. The GFE History must be filled out correctly when submitted and changes will not be allowed as restitution may be required based on information contained within the worksheet.

With the volatility in interest rates picking up, lenders are reminding their clients about both renegotiation and extension policies. For example, US Bank Home Mortgage will consider a renegotiation of a lower interest rate under the following conditions: it has not yet received the loan closing request, the broker may not raise the interest rate prior to renegotiation, as this policy may not be used to increase the compensation to the broker, limit one renegotiation per loan, loan must be within 10 days of funding, base price must improve by at least 1 point, etc.

Security National Mortgage told its wholesale clients that it is no longer honoring the waiver for the HO-6 policy requirement on FHA condominiums. "We will require evidence of interior hazard insurance coverage for all FHA insured mortgage loans secured by condominiums. Due to this change, any exception for loans in your current pipeline will be looked at on a case by case basis."

Yesterday I mentioned SunTrust 2nd's program. A few folks wrote that the state exclusion list is pretty onerous. These states are not eligible for the Jumbo Solution second mortgage: AK, FL, MI, MN, NV, NY, OH, RI, and there are CLTV restrictions for AZ and CA.

Wells Fargo's wholesale channel made several changes to the fees and process on Reverse loans, or Home Equity Conversion Mortgages (HECM). Its clients need to review Wells' "Application Submission Process Job Aid". Also, the FHA allowable origination fee for the HECM product will no longer be charged to the borrower. This fee was typically financed by the borrower; therefore, this change will increase the funds available to the borrower. The underwriting fee assessed to brokers will be eliminated. Brokers will now receive a full 2% of the Maximum Claim Amount as compensation, which is paid by Wells Fargo. Lastly, Wells Fargo's broker clients were told that on August 14th Wells Fargo is "changing the qualifying rate for Conventional Conforming 3/1 or 5/1 ARMs and Non-conforming 5/1 ARMs to the greater of the note rate plus 2% or the fully indexed rate (index + margin)."

Today we had the unemployment data, which inevitably brings up a status report on how the administration's efforts are going with job creation. If one thinks about it, however, the President of the United States has very little effect on the economy - much less so than the Chairman of the Federal Reserve Ben Bernanke or Congress. The President's popularity, however, is greatly impacted by the economy. Although through speeches and actions the President can influence the confidence of citizens, the President does not directly create significant numbers of jobs. And certainly confident consumers help the economy, but entrepreneurs and companies are the ones that create jobs based on the economic climate. Congress, of course, is involved with tax cuts or increases, tariffs, etc.

With the drop in rates came MBS selling from investors, money managers, and mortgage bankers - it would appear that locks are picking up. Let's hope that the new locks aren't coming from some other lender's existing pipeline, and vice versa! Originations were believed to be heavier at $2.5 to $3 billion, causing mortgage prices to "widen out" versus Treasury prices early in the day - one trader said that "You couldn't give away a mortgage this morning." Fortunately for mortgage prices this situation changed course around mid-day yesterday.

This week we had a weak ADP jobs number, and a week Jobless Claims number. Today Nonfarm payrolls, projected to have contracted 110k with private payrolls growth at +112k, came in at -125,000, the Unemployment Rate dropped to 9.50%, and Hourly Earnings rose again +.1%. There were some back-month revisions higher. Later on we'll have Factory Orders - and then look for the bond market to get very quiet as folks head out for a three day weekend. Markets are whippy after the release. READ MORE

There will be no commentary Monday due to the holiday. Ahead of a BBQ weekend, how about some "Man Rules":

Men are not mind readers. Ask for what you want. Let us be clear on this one: Subtle hints do not work! Strong hints do not work! Obvious hints do not work! Just say it!

Come to us with a problem only if you want help solving it. That's what we do. Sympathy is what your girlfriends are for.

Learn to work the toilet seat. You're a big girl. If it's up, put it down. We need it up, you need it down. You don't hear us complaining about you leaving it down.

"Yes" and "No" are perfectly acceptable answers to almost every question.

Anything we said 6 months ago is inadmissible in an argument.

If something we said can be interpreted two ways and one of the ways makes you sad or angry, we meant the other one.

You can either ask us to do something, or you can tell us how you want it done. Not both. If you already know best how to do it, just do it yourself.

If we ask what is wrong and you say "nothing," we will act like nothing's wrong. We know you are lying, but it's just not worth the hassle.

If you ask a question you don't want the answer to, expect an answer you don't want to hear.

And when we have to go somewhere, absolutely anything you wear is fine. Really.