BofA and GMAC Resume Foreclosures; Feedback on HVCC's "Replacement"; Faulty Note Transfers; DU Early Check Reports; HECM Saver
THIS VIDEO IS CLASSIC for any Realtor, doc drawer, loan agent, etc. - and it's actually clean. These videos are making the rounds - there is another good one involving Realtors, but the language is pretty salty. If you really want to see it, Google "xtranormal I want to sell my house 7214397 ". BEWARE: It is not for those that blush easily.
Here is your chance to comment on the HVCC replacement rule put forth by the Fed. The Federal Reserve issued an "interim final rule" for real estate appraiser independence and replacing the HVCC. The new rules released yesterday by the Fed are optional until April Fool's Day, 2011, and for the next 60 days the Federal Reserve will be taking comments over the new rules.
Freddie & Fannie sent out their HVCC replacements Friday. The Fed's interim final rule clarifies that an employment relationship or affiliation between the appraiser and the mortgage lender is not a conflict of interest. So, while the Fed did clear the use of AMCs, these companies cannot have a financial interest in the property, a lender must pay independent appraisers and AMCs fees that are "reasonable and customary in the geographic market where the property is located" - a little subjective, etc. Lenders have to report appraiser misconduct, and are prohibited from extending credit based on appraisals they know are faulty beforehand. Read it and comment! DIRECTIONS TO SUBMIT COMMENTS HERE
Markets don't like uncertainty, and Bank of America and GMAC did their best to remove some of that by restarting the home foreclosure processes that were frozen by documentation concerns (in 23 states). The WSJ reported that "Bank of America Corp. reopened 102,000 foreclosure actions, declaring that it had found no significant problems in its procedures for seizing homes. GMAC Mortgage, a lender and loan servicer, said that it also is pushing ahead with an unspecified number of foreclosures that came under intense pressure." The paperwork will be submitted to courts by next Monday, and foreclosure sales will resume in those states starting in November. Wells Fargo, Citigroup, and others never imposed moratoriums. A Bank of America spokesman said the bank has found "no cases" thus far of foreclosures that should not have "gone through." Last week, James Dimon, J.P. Morgan Chase & Co. chairman and chief executive, said that no one has been "evicted out of a home who shouldn't have been."
Wall Street trading operations were already assuming this would happen. Bank of America's traders sent out a note last week saying, "We believe the MBS market will successfully muddle though the current foreclosure problem and that lenders' right to foreclose on delinquent borrowers will be sustained." Barclays notes, "Of all the issues, robo-signing seems the most likely to be a procedural matter, but only if all documents are in order. The bigger problem could be if the issues in question are judged to be more than simply technical.
For example, if a mortgage note was incorrectly transferred to a trust or never transferred at all, this may be a much deeper problem, making it unclear who can foreclose on the property. Most of the issues with improper documentation should have legal solutions, since the trust has an economic claim on the debt and it is unlikely that a borrower will be able to walk free of a lien simply because of some procedural sloppiness on the part of the lender/sponsor. However, fixing the procedures and establishing standing in these cases could take a long time" - 3-6 months. Today's announcement of the foreclosure resumption is a good step, but property law dating back to the 12th Century mixing with electronic property processing and trading is difficult to reconcile.
Last weekend Fannie Mae implemented a release of Desktop Reporting that now offers three new EarlyCheck management reports: "Three-Month Subscriber Summary Report: provides pass, fail, and correction rates for each of the lender's institutions over a three-month period", "Three-Month Check-Level Summary Report: provides pass, fail, and correction rates for each check over a three-month reporting period", and "Monthly Loan Summary Report: provides a loan-level view of all loans submitted in the month. It allows a lender to track pass and fail rates for each submission of a unique loan and the correction rate for that loan." Fannie's clients can go to efanniemae for the in-depth description of all three.
In another agency - HUD - FHA released more details on the HECM Saver, which came out a few weeks ago, mortgage insurance premiums, and "principal limit factor changes" for the HECM Standard. "Pre-October 4, 2010 HECM transactions that are closing after 10/4/10 as HECM Standard transactions with initial premium of 2 percent (2%), a monthly premium of 0.50 percent (0.50%) and use the 2010 principal limit factor table: Lenders are not required to provide information on the new initial mortgage insurance options, HECM Saver and HECM Standard. Pre-October 4, 2010 HECM Standard transactions that are converting to a HECM Saver loan or 2011 HECM Standard loan: Lenders may use separate comparison printouts to demonstrate both initial mortgage insurance premium pricing options, HECM Saver and HECM Standard.
Bank of America revised its correspondent guidelines for loans on properties in disaster areas. "For properties located in a standard or expanded disaster area, the waiting period for non-standard appraisals after the disaster period end date is reduced from 1 year to 120 days." BofA also, for conventional loans, "the restriction that rural properties "may not be zoned as agricultural" is removed", "Building permit requirements for unpermitted living areas are waived" under certain circumstances, revised some relocation benefits and employer-assisted loan guidelines, tweaked its power-of-attorney policy, etc.
GMAC Bank's correspondents learned that "United Guaranty (UGI) and RMIC have been removed as eligible contract underwriting providers for Non-Delegated Correspondents, however, remain approved providers for mortgage insurance. Non-Delegated Correspondents wishing to use an Approved GMAC Bank contract underwriter may submit to: MGIC & Genworth" and correspondents with delegated authority can continue to underwrite loans using their own internal resources or contracting directly with a MI provider of their choice. GMAC also adjusted two of its jumbo fixed loan amount price hits, basing them on LTV.
SunTrust issued 11 (count 'em, eleven) revisions to policies, procedures, and guidelines on Friday. Clients are advised to visit SunTrust's website to see all the details. Changes included appraisal time frames in disaster areas (must be followed for 180 days following the incident), "Due to the high cost loan requirements for lenders, SunTrust has removed the eligibility for refinance transactions in the District of Columbia" and will no longer purchase refinance transactions originated under the Jumbo Solution Second Mortgage and Portfolio Affordable Housing Mortgage Program in the District of Columbia, view as ineligible for underwriting by "Delegated Correspondent clients, regardless of the level of delegated underwriting authority: Agency loans with ANY subordination, whether a SunTrust second or non-SunTrust second, Agency Plus loans with ANY subordination, whether a SunTrust second or non-SunTrust second, Agency or Agency Plus loans where property is located in Cook County, Illinois, Jumbo Solution Second Mortgage Program, Key Loan Program, with or without secondary financing, and Portfolio Affordable Housing Loan Program.
PHH's best efforts clients now have updated guidelines for its FHA fixed-rate Streamline Refinance products, with or without an appraisal. "A minimum representative credit score of 640 is required for all borrowers on FHA Streamline Refinances as determined by either a three repository merged credit report or a residential mortgage credit report. Previously, there was no established minimum representative credit score for these transactions."
Caliber Funding is accepting transferred appraisals from Bank of America. "Only appraisals completed by Landsafe are eligible for transfer, transfer letter from Bank of America will need to be provided with the appraisal; the Business Partner will need to provide a letter stating that the loan has not previously been declined by Bank of America."
For economic news yesterday we learned that Industrial Production unexpectedly fell 0.2% in October, the first decline since June 2009, Capacity Utilization decreased to 74.7% from 74.8%, and the NAHB Housing Market Index increased from 13 to 16 in October. I don't know exactly what "13" or "16" means, but the NAHB Chairman said "Builders are starting to see some flickers of interest among potential buyers, and are hopeful that this interest will translate to more sales in the coming months. However, because most builders still have no access to credit for building homes, there is a real concern that we will not be able to meet the pent-up demand when consumers are ready to get back in the market." Any lender in what-used-to-be a new home market knows that the toughest obstacle is financing.
By the end of yesterday, both fixed-income and equity prices improved, mostly based on speculation that the Fed will increase its asset purchases under "QE2". (That is "Quantitative Easing", not the "Queen Elizabeth" cruise ship.) Only $1.2 billion of MBS's were sold, and the demand was strong from the money manager community. MBS prices finished better by .250-.375 in price making up for Friday's loss. Whether or not accumulators or lenders passed this improvement onto their rate sheets remains to be seen, but that is what the MBS market did. The 10-year note gained .75 in price and moving down to 2.49%.
What is the difference between the North and the South?
The North has Bloomingdale's; the South has Dollar General.
The North has coffee houses; the South has Waffle Houses.
The North has switchblade knives; the South has .45's.
The North has double last names; the South has double first names.
The North has Indy car races; The South has stock car races.
The North has Cream of Wheat; the South has grits.
The North has green salads; the South has collard greens.
The North has lobsters; the South has crawfish.
The North has the rust belt; the South has the Bible Belt.