Anti-Money Laundering Still a Concern; Investor Updates; Secondary Conference Chatter

Here's a little more informal/off-the-record chatter from the Secondary Conference. First, there is a general sense of optimism among the participants although the MBA revised their 2014 estimates down to about $1 trillion. Sure, March and April were good months, and May is showing a lot of promise with lock numbers - but anything compared to January and February has to be better, right? Citi "says" it wants more biz - we'll see. (More below.) Fannie & Freddie reps are going about their jobs, with perhaps a little more of an "attitude" than in previous years. They will eventually come out from under the government, but it will take years. And they are making money - although much of their earnings have come from settlements, and that is not a sustainable source of income. Between that and being under conservatorship, well, the big parties they threw in the past are long gone: hosting a big party attended by individuals from companies they took settlement money from isn't kosher.

In jobs & expansion news, currently celebrating its 55th year in the mortgage industry, Mid-Island Mortgage Corp. is, once again, experiencing significant growth in originations. Headquartered in Westbury, NY and a Regional Office in Woburn, MA, Mid-Island Mortgage Corp. is currently interviewing for referral-based loan originators for both locations. "Extremely competitive in rate, aggressive in our comp, contributing to health and 401(k), with full marketing and operational support makes Mid-Island the ideal career spot for serious mortgage pros." Privately-owned Mid-Island Mortgage has its own growing servicing portfolio, and has full agency approval (Fannie, Freddie, Ginnie). Email your resume to careers@mortgagecorp. com today.

On the wholesale side, REMN Wholesale continues to show its dedication to the broker channel. REMN just opened a new West Coast operations center in Newport Beach and is actively recruiting experienced underwriters and account executives to help build the growing office. As a division of HomeBridge Financial Services, Inc., REMN Wholesale is known for its commitment to same day turn times on new files and their leadership in renovation lending. (REMN Wholesale will have a major presence on the floor of the NAMB National Conference in Las Vegas this September and those at the event are invited to join them at the REMN 25th Anniversary Celebration at LAX nightclub on the 14th.) Experienced AEs and underwriters interested in joining the REMN Wholesale team should send their resumes to aerecruiting@REMN. com for AE opportunities and uwrecruiting@remn. com for positions in the underwriting department.

In other company news, Citi has developed a solid reputation in the industry for waffling: it is in the market, out of the market, in, out. Sometimes its pricing is great, but service levels are poor, or vice versa. Although actions speak louder than words, yesterday CitiMortgage CEO Jane Fraser announced that it is looking to increase its market share in the U.S. mortgage market by beefing up the correspondent biz. Fraser called the correspondent market "very important" and said that Citigroup was "open for business" with correspondent lenders. Fraser also said that the bank would look to hold the new loans on its balance sheet and would be "extremely careful" about the quality of the loans it will make. Citigroup fell to #7 in terms of volume last quarter, quite a drop from a year ago. Citi, like the other aggregators, needs to remember that its competitors aren't necessarily the other aggregators but are now the Agencies and non-bank servicing buyers.

Poor MERS can't catch a break. Over the last few years have come repeated court challenges to its business model - and MERS continues to do business in every county in every state. And now...it has a disease named after it! More accurately, there is a disease that shares its acronym. MERS, the disease, has spread to 18 countries, and is a viral respiratory illness caused by a type of coronavirus, according to the US Centers for Disease Control and Prevention. It was first reported in 2012 in Saudi Arabia. One write-up I saw humorously noted that "the virus has similar traits to other viruses such as Dodd Frank and other ridiculous regulations. Those infected with MERS start off with symptoms like high stress, baldness with potential development of comb over, weight gain causing a tighter waistline, tiredness from over regulation and inefficient requirements, and loss of income from high expenses. More than 500 cases have been reported worldwide, and about 30 percent of those infected have died from MERS, Reuters reports - but the disease, not the Mortgage Electronic Registration System.

Besides the large number of training guides produced by the MBA and others, there are some other books that LOs or secondary marketing folks might find of interest.

Casey Fleming, an industry veteran of 35 years and trainer and mentor to mortgage originators, has published a new book aimed at consumers of real estate finance services called The Loan Guide: How to Get the Best Possible Mortgage.  The book teaches readers how to think about whether to get a mortgage at all, how to determine what loan product and pricing is best for their specific situation, how to manage their debt over a lifetime, and a great deal more.  Casey is offering consumer-oriented seminars based on the book that can be used to help originators build relationships with Realtors and to build their business.

Lenders can't spend a single day without thinking about compliance - which is fine until it negatively impacts the access to credit by borrowers. Part of that includes, especially for banks, include FinCEN. In February, 2012, the Department of the Treasury's Financial Crimes Enforcement Network (FinCEN) issued a Final Rule requiring non-bank residential mortgage lenders and originators (RMLOs) to comply with the provisions of the Bank Secrecy Act by establishing anti-money laundering programs. The Final Rule stated that RMLOs must have a compliant AML program established on or before August 13, 2012.  The Final Rule contained "4 pillars" that an AML program must contain, one of which was qualified AML training for all relevant employees.

Specifically, there must be provisions for initial, new hire and ongoing training; an adequate system to verify that each employee took the training; and that records be kept documenting the type of training, the presenter, the material covered and the test results. Exchange Analytics, Inc. is a leading supplier of Anti-Money Laundering compliance training services to the mortgage lending and mortgage origination industry. It offers a web-based AML training course designed specifically for employees of RMLOs. Exchange Analytics' services also provide for the specific documentation and record-keeping requirements of an AML program. To learn more contact Larry Israel at lisrael@xanalytics. com.

Let's keep playing catch up with some relatively recent investor news.

Impac Mortgage Corp. has announced Vermont is now an eligible state. It has updated the matrices for the Freddie Mac Conforming Fixed and ARMs to include 5/1 arm product both conforming and super conforming. HPCT (higher-priced covered transaction) qualification for 7/1 and 10/1 ARMs have been clarified. Matrix pertaining to manufactured homes has been updated as well including the elimination of the overlay on FHA manufactured with respect to derogatory credit waiting periods on manufactured home loans as they will follow FHA guidelines. Matrices for Fannie Mae products have been updated as well. Limitations have been set to new mortgage insurance contracts to either Borrower Paid monthly premium or Lender Paid Single Premium Guides are also available for viewing.

Impac has lowered the minimum credit score for all of its VA products to 620, including the new 3/1 and 5/1 VA ARMs.  For FHA transactions, the minimum FICO is 580, including the new 3/1 ARM, with certain restrictions pertaining to 580-619 scores.

For the Jumbo Platinum product, Impac has updated the guidelines on appraisals, business funds, the use of authorized user accounts and non-traditional credit as trade lines, gaps in employment, VOEs for self-employed borrowers, pricing on loans without escrows, eligible property types, qualifying rates for ARMs, and fraud.

Envoy has enhanced its Conforming Fixed guidelines to allow a total DTI that is the more restrictive of 50% or the AUS findings and to allow LTV/CLTV/HCLTVs up to 85% on 2-unit primary residence purchase and limited cash-out transactions that are underwritten by DU.  The guidelines for MyCommunity Mortgage transactions have also been relaxed to allow subordinate financing with a 95% maximum CLTV/HCLTV.

And the Correspondent Lending Division of Envoy announced the release of its Jumbo Products with the following features: Specific Lender approval required for product; LTV/CLTV/HCLTVs allowed up to 80%; Loan amounts allowed up to $1,500,000; Loan amounts allowed up to $1,000,000 for First Time Homebuyers; Cash-out allowed up to $300,000; Minimum loan amount is $417,001; Maximum DTI is 43% on 1-unit properties; Envoy Mortgage must underwrite all loans - Delegated underwriting is not allowed.

Last month we learned that ditech Mortgage Corp. will now purchase single and double wide manufactured housing on FHA product. Per HUD QM Rule, FHA Manufactured Housing loans are exempt from the points and fees limit and therefore assured a safe harbor designation under the HUD QM rule assuming all other QM standards are met. Expansion of their LPMI products in an effort to reach more borrowers and offer a great tool to help loan officers compete in this purchase market. ditech has also rolled out My Community Mortgage program (as either a fixed, ARM or LPMI option) and removed the minimum borrower investment overlay on conforming loans (100% gift now allowed/SF/primary).

Bank of Internet has added the new Meridian 7/1 and 10/1 ARM programs to its product suite and has made several changes to the Meridian Fixed programs, which are available to price and lock through Optimal Blue.  For Portfolio ARMs, the previous prepayment penalty has been removed.

First Community Mortgage has expanded its wholesale lending territory into West Virginia. Numerous changes have been made to their guidelines. Conventional products will require full property tax rate and for qualifying PITI. Assets and reserves modifications regarding borrower contribution amounts when using gift funds, donations from entities, or employer assistance have been updated.  Sourcing large deposits in single or multiple aggregated non-payroll deposits or VOD variances that represent amounts in excess of 25% of the borrower's gross monthly income is also addressed. Other topics are outlined as well such as mixed use/non-residential use property, added condo guidance, Non-Permanent Resident Alien ineligibility, FHA manual underwriting credit score, DTI, and compensating factor requirements additions, and VA requirements to name a few. Please see the full guidelines at WHOLESALE PRODUCT & PRICING BULLETIN 2014-03b for specific details regarding these changes.

On the lack of news rates in the U.S. have been pretty steady this week, although Wall Street traders are seeing a pick-up in agency MBS volume. Yesterday rates decided to improve despite the pick-up in volume, and current coupon mortgage-backed securities improved about .250. The move was mostly attributed to comments from FRB Cleveland President Plosser who said the strengthening economy could mean the Fed would have to hike rates sooner versus later.

You know it's a slow day when the only news for the morning is the MBA's application numbers. Apps were up slightly last week (.9%) with refis up almost 4% and purchases down about 3%. But we will also see the minutes from the last FOMC meeting - don't look for any surprises. The 10-yr is sitting around 2.53% and agency MBS prices are down/worse about .125.