GMAC Temporarily Suspends Foreclosures in 23 States; Discover Entering Mortgage Biz?; HMDA Data; New DU Version 8.2; Prop 4 in Florida

Naming a mortgage company is almost as important as naming your band. "The Noble 5" began in the mid-60's, but the members changed their name in 1970 to Lynyrd Skynyrd. The name was inspired by Leonard Skinner, their basketball coach and gym teacher who enforced rules against boys having long hair. Unfortunately Mr. Skinner died yesterday in Florida at the age of 77. "It was against the school rules," Skinner said then. "I don't particularly like long hair on men, but again, it wasn't my rule."

(How many times have I heard an underwriter lash out at me with something like that?)

If Discover Financial Services goes out and buys or starts a mortgage company, it may need a new name - and probably not the CEO's PE teacher's either. DFS just arranged to buy Citigroup's private student loan assets for $600 million, and is also considering ways to enter the mortgage and checking accounts businesses. Discovery's CEO told Reuters that the company would be able to start up its own checking account business without necessarily buying an existing company, but "inorganically, with direct mortgages, there are a number of successful players in that space, so that's an area that I wouldn't rule out," he said, adding that potential targets are "not necessarily that large, but things that could give us a good platform" for building a new business.  FULL STORY

Do you ever wonder where all the Home Mortgage Disclosure Act and mortgage insurance company information goes? How about HERE? All of the Home Mortgage Disclosure Act results are there, as are all the PMI companies' information. "The FFIEC provides data from the nation's eight PMI companies. The 2009 PMI data include information on approximately 636,000 applications for mortgage insurance, comprised of about 356,000 applications to insure home purchase mortgages, and about 280,000 applications to insure mortgages to refinance existing obligations."

The 2009 HMDA information covers data on mortgage lending transactions at 8,124 U.S. financial institutions covered - including banks, savings associations, credit unions, and mortgage companies, and lending activity includes applications, originations, purchases of loans, denials, and other actions such as incomplete or withdrawn applications. "The data include nearly 15 million applications (of which nearly 9 million resulted in loan originations) and 4.3 million loan purchases, for a total of 19.3 million actions. The data also include information on 210,000 requests for preapprovals that did not result in a loan." Etcetera, etcetera, etcetera.

I mentioned Fannie's statement on replacing the HVCC. I failed, however, to mention that Freddie sent out a similarly worded statement, including, "The Code is expected to sunset pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (Dodd-Frank Act) on or about October 21, 2010." Go to FREDDIE'S SITE to read all about it.

In this conventional world, what Freddie and Fannie do flows down to most other lenders. Are you ready for a new version of DU from Fannie?

Fannie "issued release notes describing items in the Announcement and other recent announcements that will be supported with the release of Desktop Underwriter Version 8.2 the weekend of December 11, 2010."  Fannie also sent clients an announcement with policy updates on simplified high-LTV ratio transactions and borrower contribution requirements, updated employment and income policies, revolving debts in debt-to-income ratio, joint credit reports, reporting and validation of mortgage insurance, undisclosed liabilities, updated foreclosure policies for DU loan case files, miscellaneous Selling Guide Updates, and unit number special feature code and other updates. Check out the updates HERE.

Chase expanded its maximum seasoning period for government loans from 60 days to 90 days from Note Date to Chase Purchase date. Chase also told its correspondents that it will no longer require proof of FHA upfront MIP payment in the file: "Chase will verify that the FHA upfront MIP has been paid and received by HUD. However, if Chase is unable to verify the payment, the Correspondent will be required to provide proof of payment." Lastly, Chase followed the HUD/FHA MI premium revisions effective with FHA Case Number assignments on or after October 4, 2010.

MGIC reported that starting 1/1, "the State of Florida is increasing the emergency assessment on most property and casualty insurance premiums from 1% to 1.3%. This includes mortgage insurance premiums paid on loans secured by Florida properties. The 1.3% assessment will be applied to initial and renewal premiums for MI applications received by MGIC on or after Jan. 1, 2011. MGIC is required to add the assessment to your premium. MGIC collects the assessment and remits it to the State of Florida."

There was some confusion among outside observers about a Bloomberg story stating that Ally Financial Inc.'s GMAC Mortgage unit told brokers and agents to halt foreclosures on homeowners in 23 states. Per a story in Bloomberg, bankers were told to stop evictions, cash-for-key transactions and lockouts, regardless of occupant type, with immediate effect, according to the document, addressed to GMAC preferred agents. But then supposedly the company, mostly owned by taxpayers, said that a moratorium was not instated, but rather foreclosures are continuing while the company and its vendors address a procedural issue with the forms required on existing foreclosures. Rather, foreclosures are temporarily suspended. The original story said that the company will also suspend sales of properties on which it has already foreclosed. The letter tells brokers to notify buyers that the company will extend the closing date on all sales by 30 days. Buyers will be able to cancel their agreement to purchase and get their deposit back, according to the letter. CT, FL, HI, IL, IN, IA, KS, KY, LA, MN, NE, NJ, NM, NY, NC, ND, OH, OK, PA, SC, SD, VT, and WI are on the list.

What are the implications of this action, which comes about a week after several law firms in Florida representing lenders withdrew cases against borrowers? Using publicly available data from HUD and RealtyTrac, Barclays created a list of judicial foreclosure states. (This is where judicial foreclosures are most common and in which the lender has to appear before a judge and obtain a court order before initiating foreclosure proceedings against the delinquent borrower. Such states tend to have much longer foreclosure timelines than non-judicial states.) All but one (NC) of the states listed by GMAC are judicial states. Also, all the judicial states in the country but one (Delaware) are on the GMAC list as well. Barclays notes that this would hint at some potential issues with judicial states that are driving the GMAC directive. Foreclosure timelines in those states for GMAC loans will be extend further, potentially adversely affecting their eventual severity. I imagine attorneys are standing by... It appears that about 30% of the outstanding balance of GMAC-serviced loans falls within these 23 states, but the states contain about 40% of GMAC delinquent loans.

Monday we learned, to some surprise, that U.S. home-builder sentiment unexpectedly held steady in September, according to a survey that pointed to a still-weak housing market. The NAHB Index was unchanged at "13", matching last month's level, which was the lowest since March 2009. It seems to be bumping along the bottom - if you're worried about the market or your job, are you going to buy a new home? FULL STORY

In Florida, homebuilders (and pro-growth advocates) are fighting against Proposition 4, which allows voters to decide on changes in local land use plans rather than local planning commissions. Proponents say that it would reduce over-building that fueled the recent crash in that area, where some prices are down 50% and thousands upon thousands of houses are vacant. Opponents say it will cost the state construction jobs, new businesses, and raise taxes. As you can imagine, builder contributions are flowing in to defeat it.)

Yesterday was a good day for both stocks and bonds - mortgage prices tagged along for the ride and by the end of the day MBS's were better by .250 in price with only $1.8 billion being sold. The 10-yr Treasury ended the day at 2.71%, while the S&P 500 closed at a four-month high. This morning we had Housing Starts and Building Permits. No one argues with the fact that homebuilders continue to struggle with the after-effects of the homebuyer tax credit: single family starts have declined in each of last three months and are now down 23% since the April contract signing deadline, erasing the two months of incentive-induced gains. And although oversupply primarily impacts existing home sales, it still impacts housing starts. This morning Starts number was up about 10% (541k to 598k) - the highest number in 4 months. Permits were up about 2%, as expected. Later today we'll have the big event of the week, with the potential to move rates: the FOMC meeting's statement at 2:15PM EST. Ahead of that, the 10-yr is back down to 2.67% and mortgages are better by roughly .125.

A loan agent and a priest both died and went to Heaven at the same time. They get to the pearly gates where Pope St. Peter greets them. He motions to the priest, and they both hop in a jeep and go out the back door. There are about 50 acres of rolling hills with a little cottage on the knoll.

St. Peter turns to the priest and says "This will be yours for eternity. A perfect little cottage right next to lovely pond, a lush garden, and a library full of books."

The priest says, "Thank you so much. This I shall enjoy!"

St. Peter drops off the priest, goes back to the pearly gates and motions to the loan agent.

They hop in a stretch limo and go out the front door. There are about 500 acres of land, with mountains and lakes and rivers. There is a huge 200-room castle on one of the mountains, and a wishing well that makes wishes come true. St. Peter says "This will be yours for eternity. You can live in that castle with servants to wait on you hand and foot, and you can have everything you want."

The broker looks at St. Peter and says "Well, now, don't think I'm not grateful, but why am I getting so much more than the priest?"

St. Peter just laughs and says, "You brought more souls to Heaven! When the priest preached, everyone fell asleep. But when you talked about locking in rates, people prayed!"