PHH Sells Fleet Business; New Reverse Mortgage Program for Correspondents; Caliber's Non-Agency Rollout

By: Rob Chrisman • Tue, Jun 3 2014, 10:45 AM

How's it going with "private money" and mortgage-backed securities? Not so hot. The creation of MBS is down, as one would expect, and of course cash purchases don't create MBS, and in fact retire them. Cash deals account for 29% of all sales, according to Bloomberg. Retiring baby boomers are choosing to own homes outright, as opposed to having a mortgage. Historically that number has been closer to 20%, but heck, given the current paperwork and underwriting burden, why would anyone go through the mortgage process if they didn't have to?

On the jobs front, Crescent Mortgage Company is seeking Account Executives in North Texas, Oklahoma, and Virginia as well as an inside sales representative domiciled in Atlanta, GA. Founded in 1993, Crescent Mortgage Company is a top national wholesale and correspondent lender, and is a wholly owned subsidiary of CresCom Bank (OTC BB: CARO). Crescent's primary customers include over 1,000 community banks, credit unions, and high quality mortgage brokerages throughout the country, and product offerings including Fannie Mae, Freddie Mac, FHA, VA, USDA Rural Development, and portfolio jumbo options. Crescent also offers financial institution-specific products such as its One-Time Close, and Two-Time Close construction to permanent programs as well as optional contract processing services to its partners. If you are interested in joining the Crescent Mortgage Family and working with high quality financial institutions, please send resume and cover letter to Fowler Williams, CMB, President, at fwilliams@crescentmortgage. net.

And Homeowner's Mortgage (HME) based out of Colombia, S.C. (a subsidiary of CoastalStates Bank) is expanding. HME recently hired two seasoned mortgage professionals to join its team: congrats to Tommy Adkins, who will run production for the entire mortgage company, and Tim Haug, who has been hired to manage and grow the Warehouse Lending program. As a result of these additions, HME is currently adding a select group of Mini-Correspondents/"Brokers to Bankers" to this Warehouse Lending program. HME offers very competitive financing terms, rapid fundings off of the line for many different product types, and a wide range of investors on its Approved Take-Out list. Interested companies should contact Tim Haug at thaug@coastalstatesbank. com. HME is also hiring qualified state and retail branch managers as well as Regional Wholesale/Mini-Correspondent AEs throughout the Southwest, Southeast and Mid-Atlantic states. Those interested in any of the above production opportunities should contact Tommy Adkins at tadkins@homeownersmtg. com.

And Reverse Mortgage Solutions (RMS) has recently hired Steven Klein to help larger institutional lenders add the Reverse Mortgage product to their product offering on a Correspondent basis. The reverse mortgage program - specifically the reverse for purchase and the line of credit for long-term financial planning objectives - is highly under-utilized. More and more traditional lenders are adding this product to not only help their customers, but to retain and attract top Loan Officers and to decrease the cost per loan to originate. As one of the largest reverse mortgage players in the industry - RMS can help banks, mortgage bankers and credit unions launch this program through their expertise in training, marketing assistance, and ongoing support. Steve can be reached at steven.klein@rmsnav. com and you can visit RMS for more information as well.

Speaking of reverse mortgages, Reverse Mortgage Daily reports that "Reverse mortgage stakeholders are working together to delay the impact of Massachusetts legislation that will require face-to-face counseling for some reverse mortgage borrowers beginning August 1, and could deter lenders from conducting business in the state. During 2010, an amendment to a bill was passed into law that included the mandatory provision for certain low income seniors. Since then, the industry has worked toward postponing the mandate-succeeding in that effort twice. It is now scheduled to take effect August 1, following the end of the current fiscal year in Massachusetts. While the face to face counseling would be required only of those deemed qualifying as low income, lenders have said one of two outcomes would take place as a result of the mandate: either all borrowers in Massachusetts would need to receive the counseling in person or lenders would cease lending in the state. 'There are housebound seniors, transportation issues, language issues and a host of restrictions,' says George Downey, founder of Harbor Mortgage Solutions in Braintree, Mass., noting a past brief face to face counseling mandate in Massachusetts that brought wait times for borrowers to two to four months. 'The bottom line is it effectively will shut down reverse mortgage lending as we have known it in Massachusetts.'"

While the issue is pressing currently in Massachusetts, it could have implications for other states, like California, that have also seen legislation introduced-though not passed-including similar requirements. Currently, North Carolina has mandatory face-to-face counseling, but also has some state funding available to help agencies bear the costs involved.

Let's keep going with some specific product, investor, lender, vendor news. I don't know how folks keep up with all this!

The WSJ reports that Wells Fargo is "overhauling its offerings of home-equity lines of credit so that most new customers will be required to pay principal and interest over the life of the loan, a significant shift by the nation's largest home-equity lender. By restructuring the product, Wells eliminates the prospect of future payment-shock issues. Wells says that it will continue to offer interest-only HELOCs only for customers with significant assets. While the vast majority of homeowners today take out first-lien mortgages that are fully amortizing, most HELOCs allow borrowers to make only interest payments typically for 10 years."

Mountain West Financial's wholesale bulletin outlines DU REFI PLUS credit requirements specifying a payoff demand is required in the file to document the current servicer, all Borrowers must have a FICO Score, existing mortgage must be current and 0 X 60 day late payments in most recent 12 months and borrower must meet the requirements for FNMA DU underwritten loans, including mortgage delinquency, bankruptcy and foreclosure requirements.

History was made last month when Mortgage Harmony, home of the HarmonyLoan and Loan Retention Software, facilitated the first HarmonyLoan origination by a correspondent lender for sale to a credit union. Jeff Richards, loan officer with First Home Mortgage originated the HarmonyLoan for sale to Coastal Federal Credit Union out of North Carolina. "Coastal recognizes the value of leveraging the correspondent army to originate loans and First Home Mortgage is pleased to have an outlet for the HarmonyLoan that differentiates them from the rest of their competition. It is nice to witness industry innovation in the making!"

And under the "tools lenders can use", Vidverify reminded users of its platform that enables lenders to provide the borrower and loan officer with a series of videos that automatically deliver a clear, concise and consistent message throughout the loan process. "Vidverify allows banks and mortgage banks to get in front of potential regulatory issues by educating borrowers as to the mortgage process providing clear explanations of their paperwork, and definitions of all relevant mortgage terms. The system contains a complete video library which also allows for customization for your company. Additionally, you can track the status of each video to confirm it has been viewed by your borrower." Contact Laura Hopkins at lhopkins@vidverify. com with any questions.

Citibank Correspondent Lending has updated general credit policies including pooled funds and calculating rental income. Loan specific, FHA fixed rate transactions regarding rebuttable presumptions and safe harbor policies have been updated as well. Contact your account executive for the most recent bulletin enhancements to Citibank products.

Conforming guideline updates have been posted by Cole Taylor Mortgage. Effective immediately, conventional, conforming products will allow 100% gift funds with DU automated approval. Additionally, revolving debt payoff to qualify on both DU and LP is also available. For the complete details, contact your area representative.

Franklin American's wholesale channel alerted brokers to the ECOA counteroffer clause. "The Equal Credit Opportunity Act (ECOA) allows financial institutions to make counteroffers to the applicant when original terms requested would result in an adverse action. Notification of the counteroffer is required within thirty (30) days of a completed application (Wholesale utilizes the underwriting received date to start the 30 day clock) in which underwriting has received all necessary documentation to evaluate the application for the amount and type of credit requested. This is the same notification requirement for a credit decision made on a completed application. Examples of counteroffers may include: (1) a debt‐to‐income (DTI) ratio that exceeds agency guidelines and FAMC counters with lowering the rate to reduce the DTI; (2) the appraised value is too low and FAMC counters to reduce the loan amount; or (3) if the applicant cannot meet loan program criteria, then FAMC may counter with an alternative loan program (a new loan number is required if switching loan types). NOTE: Counteroffers may include adding a borrower to qualify, but removing a borrower is not an acceptable counteroffer. If the applicant does not accept or respond to the counteroffer, the applicant must be provided an adverse action (notice) based on the original loan terms requested.

(One broker from New Jersey wrote, saying that this is interesting. "Mortgage brokers and bankers are actually required to accept all mortgage applications, or they could have issues. I am not a compliance expert, but I believe that if a broker accepts and submits a purchase application and it is not denied but counter-offered, it could force the purchase of a home to proceed with a transaction that may not fiscally be in the borrower's interest. Many brokers believe that the loan should always be denied and then a counter offer given. This affords the borrower all options not just what might be in the lenders interest.")

PHH and Element Financial announced the signing of a definitive agreement for PHH to sell its fleet business to Element for approximately $1.4 billion in cash, with PHH receiving proceeds of $750 million to $800 million after taxes and transaction expenses. PHH plans to use the cash to reinvest in its business, return capital to shareholders, and reduce unsecured debt levels. And it appears that the mortgage group will benefit.

Caliber Home Loans Inc. has announced the launch of its new Non-Agency Mortgage Program which adds four new products to the company's product line-up. Caliber's new Non-Agency Mortgage Program focuses on the needs of four types of borrowers. It includes Caliber's "Fresh Start" Program (a credit re-establishment program is for borrowers who may have experienced a credit event, but cannot find a program in the marketplace that meets their needs as they re-establish a strong credit history), a Foreign Nationals program that offers greater flexibility to qualified borrowers who are not citizens of the United States and whose mortgage needs are not being met by the market's current offerings, a Non-Warrantable Condos program for borrowers who currently have limited options because they are looking to finance condos in projects that are not currently eligible for loans backed by the government sponsored agencies, and a Non-Agency alternative that offers expanded guidelines and qualifying considerations for asset depletion to eligible, qualified borrowers, including expanded debt-to-income ratios, an interest-only option and no prepayment penalties.

Turning to the markets, in terms of the "benchmark" 10-yr T-Note yield, Friday we closed at 2.46%, and Monday at 2.53%. And sure enough, prices on agency MBS prices worsened .250-.375, depending on coupon. But there wasn't much in the way of market-moving news, so I won't waste your time over-analyzing things. There isn't much today either. At 10AM EST is April Factory Orders, which are seen lower from the prior +0.9% results. So maybe we'll see a quiet day. In the very early going the 10-yr is at 2.56% versus its 2.53% close Monday, and agency MBS prices are down/worse about .125.