HARP 2.0 Details; Allied Back in Business?; Margin Changes for MBS's;

Say what you want about zoning laws in Houston, but mosques and pig races don’t mix anywhere: http://www.youtube.com/embed/dUr1NxJDC94?rel=0.

Pacific Union Financial is looking to expand its sales force in the following regions: Northern CA, Southern CA, CO, CT, ID, MA, PA, MN, NV, OR, TX, and WA.  “We have fulfillment centers in the Bay Area, Orange County and Fairfax VA. We are looking for regional sales managers and area sales managers with existing teams to help us expand our national footprint,” along with looking for wholesale AE’s. Pacific Union is a Ginnie and Fannie Direct Servicer Seller offering “an aggressive comp structure,” full benefits, the advantages minimal overlays, 560 FICO’s on FHA (with restrictions), and so on. All wholesale candidates need to have recent production reports and an active broker base. If you’re interested contact Darius Mirshahzadeh at darius@loanpacific.com.

The saga of Texas-based Allied Home Mortgage Corp. continues: a judge ruled that it can originate and underwrite Federal Housing Authority-insured home loans, reversing HUD’s suspension a few weeks ago.

HARP 2.0: it's been released by the agencies (Fannie & Freddie) and now the large investors/servicers can slice and dice and incorporate it into their programs. How long will that take? I don't know. But here are the links to the original agency bulletins: http://www.freddiemac.com/sell/guide/bulletins/pdf/bll1122.pdf and https://www.efanniemae.com/sf/guides/ssg/annltrs/pdf/2011/sel1112.pdf. In plain language Fannie & Freddie would reduce fees and relieve lenders from some liability on home loans in order to lower the cost of borrowing to distressed homeowners. Fannie Mae, in its revised guidelines, said: “The lender is not responsible for any of the representations and warranties associated with the original loan.”

Freddie’s bulletin announces revised requirements for Freddie Mac Relief Refinance Mortgages -  Same Servicer and Relief Refinance Mortgages - Open Access offerings. “A portion of these offerings, mortgages with LTV ratios greater than 80 percent, represents our business implementation of HARP.” Key changes to this segment include no 125% LTV cap for fixed-rate Cash and fixed-rate Guarantor mortgages (the 105 percent maximum LTV ratio for ARMs will remain the same). “We’re also adding a borrower benefit provision that allows refinancing for the purpose of reducing the monthly principal and interest (P&I) payment, and modifying our mortgage payment history requirements for Relief Refinance Mortgages – Same Servicer and Relief Refinance Mortgages – Open Access.” “Updates are being made to requirements for when the P&I payment on the new refinance mortgage increases by more than 20 percent, as well as to requirements for income verification.”

Freddie also states, “Loan Prospector will be updated on or before March 15, 2012, to assess Relief Refinance Mortgages — Open Access with LTV ratios greater than 125 percent. The HVE estimate returned on Loan Prospector Feedback Certificates can then be used to determine property values for Relief Refinance Mortgages — Open Access. Until Loan Prospector is updated, loan assessments for Relief Refinance Mortgages — Open Access with LTV ratios greater than 125 percent cannot be completed.” “The expiration date of our Relief Refinance Mortgage offering is being extended to December 31, 2013. To be eligible for refinancing under this offering, mortgages must have note dates on or before December 31, 2013. Representation and warranty relief: For Relief Refinance Mortgages — Same Servicer with LTV ratios greater than 80 percent, Sellers will no longer be required to retain certain Seller representations and warranties on the mortgage being refinanced. New execution options: To support the lifting of the maximum LTV ratio requirement for fixed-rate Relief Refinance Mortgages — Same Servicer and fixed-rate Relief Refinance Mortgages — Open Access with LTV ratios greater than 125 percent, we are introducing a Cash and Guarantor execution option.” “Changes to Freddie Mac Relief Refinance Mortgages announced in today's Guide Bulletin are effective for application dates on or after December 1, 2011.”

Much more information can be seen by reading the bulletin, and indeed Fannie came out with more information: https://www.efanniemae.com/sf/mha/mharefi/. As noted above, we will see how the large investors fall into step with the guidelines.

Not to be outdone, HUD released its annual report on the FHA mortgage insurance fund, and noted that it believes its capital position of the insurance fund remains strong and expects to surpass its 2% capital ratio earlier than initially expected. The positive outlook is largely driven by the profitability of new originations, which are substantially better credit than 2005-08 collateral and are currently paying much higher mortgage premiums. “However, if economic conditions and home prices deteriorate much more than expected, the fund could find itself in a negative capital position. This could cause HUD to reconsider its position and increase the FHA annual premium. Such a move would be a substantial positive for GNMA convexity going into 2012…HUD indicates that, in the midst of continued weakness in housing markets across the county, the MMI Fund capital ratio remains positive this year at 0.24 percent. With new risk controls and premiums put in place by the Obama Administration, the independent actuaries predict the Fund will return to the Congressionally-mandated threshold of two percent capital more quickly than was projected by last year’s review. FHA’s capital reserve ratio measures reserves in excess of those needed to cover projected losses over the next 30 years. The independent actuarial reviews of the MMI Fund estimate FHA’s capital reserve ratio to be 0.24 percent of total insurance-in-force this year, falling from 0.50 percent in 2010.”

How much is $15 billion in servicing worth? How about $1 million? Ocwen has agreed to pay just under $1 million for a portfolio of mortgage servicing rights on an estimated 82,000 non-prime loans. The seller of the MSRs (mortgage servicing rights), which are valued at roughly $15 billion, is JPMorgan Chase. The deal, which is slated to close in phases beginning on the first of the year, also includes servicing rights for third-party private securitizations in which Chase and its affiliates were not issuers or loan sellers.

One quick note on yesterday’s link to the Middle East North Africa Financial Network's “view of companies like Redwood Trust” – it turns out that the information concerned Redwood Mortgage Investors, different than the Redwood Trust located in Northern California. The two are not affiliated.

With MF Global going under, the Federal Reserve Bank of New York plans to start demanding collateral from Wall Street dealers on trades that involve mortgage-backed securities as part of a tougher risk management stance. The Fed privately told dealers that mortgage securities sold to the central bank under its current buy-back program will require the posting of initial margin of 2.5 per cent and daily variation margin from Friday. (Margin refers to the deposit sellers will have to make with the Fed until the securities are delivered and the trade is settled. This protects the Fed in case a dealer runs into trouble.)

Things seem to be relatively quiet out there in mortgage-land: rates are not gyrating too badly. Better-than-expected Retail Sales, PPI, and Empire State numbers helped the stock market, and although they don’t always move in opposite directions Treasuries ended slightly lower (with the 10-yr note closing around 2.06%). Mortgage-backed security prices were practically unchanged from Monday’s closing levels.

This morning we’ve already had the MBA’s application index for last week: apps dropped 10% from the week before, with refi’s -12% and purchases down about 2%. Every LO out there knows that the thrill of low rates is wearing off, and high unemployment, tighter lending requirements, and a stagnant housing market are keeping a cap on things. Refi’s dropped to about 77% of all apps.

Later this morning we’ll have the Consumer Price Index, expected to be flat, Industrial Production and Capacity Utilization, and the NAHB Housing Market Index. In the very early going rates are slightly better with the 10-yr at 2.03% and MBS prices a smidge better. - MBS Prices

Part 1 of Men Teaching Classes for Women at THE ADULT LEARNING CENTER
REGISTRATION MUST BE COMPLETED By Sun, April 30, 2012 (Part 2  tomorrow)

NOTE: DUE TO THE COMPLEXITY AND DIFFICULTY LEVEL
OF THEIR CONTENTS, CLASS SIZES WILL BE LIMITED TO 8 PARTICIPANTS MAXIMUM.
Class 1
Up in Winter, Down in Summer - How to Adjust a Thermostat
Step by Step, with Slide Presentation.
Meets 4 weeks, Monday and Wednesday for 2 hrs beginning at 7:00 PM.
Class 2
Which Takes More Energy - Putting the Toilet Seat Down, or Complaining About It for 3 Hours?
Round Table Discussion.
Meets 2 weeks, Saturday 12:00 for 2 hours.
Class 3
Is It Possible To Drive Past a Wal-Mart Without Stopping? Group Debate.
Meets 4 weeks, Saturday 10:00 PM for 2 hours.
Class 4
Fundamental Differences Between a Purse and a Suitcase - Pictures and Explanatory Graphics.
Meets Saturdays at 2:00 PM for 3 weeks.
Class 5
Curling Irons--Can They Levitate and Fly Into The Bathroom Cabinet?
Examples on Video.
Meets 4 weeks, Tuesday and Thursday for 2 hours beginning at 7:00 PM
Class 6
How to Ask Questions During Commercials and Be Quiet During the Program
Help Line Support and Support Groups.
Meets 4 Weeks, Friday and Sunday 7:00 PM
(Classes 7-12 tomorrow.)

If you're interested, visit my twice-a-month blog at the STRATMOR Group web site located at www.stratmorgroup.com. The current blog takes a look at the impact of HARP 2.0 and the differences in the agency’s programs. If you have both the time and inclination, make a comment on what I have written, or on other comments so that folks can learn what's going on out there from the other readers.