Appraiser Numbers Dwindling; One Security for Fannie & Freddie? Jumbo Loans Booming; ICE & MERS
Are you an appraiser? Maybe you should be honored: there are fewer and fewer of you every year, and your ranks are down to 80,500 nationwide. There are fewer now than at the start of the year, but the pace of decline is slowing. Sometimes real estate agents representing the buyer and seller in a transaction work for the same broker. Be careful about dual agency!
Last week the commentary discussed Libor, and the possibility that the Intercontinental Exchange (ICE) may charge a licensing fee for the use of the index. It turns out that ICE, known for energy trading and its control of the New York Stock Exchange, is engaged in negotiations to form a partnership with Mortgage Electronic Registration Systems Inc., (MERS) which documents the ownership and resale of about half of U.S. home loans. As the industry knows, MERS is still under a consent order with the U.S. government that it's operated under since 2011, the result of alleged failures to properly manage its business. "MERS, a unit of closely held Merscorp Holdings Inc. based in Reston, Virginia, began operating in 1997 in order to speed up real estate paperwork -- especially changes in ownership and servicing rights for loans.
Speaking of ICE, I received this from JF on the West Coast: "Bloomberg subscribers now have to pay an $11/month fee to ICE to get real time LIBOR as of July 1. Otherwise, 28 hour delayed LIBOR data remains 'free.' 'Free' is if you don't count the $2,000/month cost of a Bloomberg terminal. Also, I noticed recently that the WSJ suddenly stopped providing the Libor Swap Curve both in the paper and online version. Maybe the Fed should charge folks if they want to know what the FOMC target rate is..."
We're in a new environment when it comes to vendors, protecting borrower information, and counterparty risk. On the vendor side of things, Secure Settlements announced that vetted agents are now eligible for enhanced mortgage settlement insurance covering the lender's exposures to borrower's identity information theft. "Additional Coverage offered through Certain Underwriters at Lloyds of London designed to address Lender Risk regarding Data Privacy and Security at the Closing Table. The MSI Policy, which launched in April 2014, was designed to protect retail mortgage lenders that utilize SSI's ClosingGuard closing agent vetting product against losses arising at the closing table from such perils as fraud, theft and documentation error. Coverage extended to warehouse banks and secondary market investors including GSEs, and certain consumer losses at the closing table.
Regardless of the vendor, they typically deal with conforming and nonconforming loans, agency or jumbo, fixed or adjustable. Focusing on jumbo loans, apparently business is booming - further highlighting the difference between the haves and the have-nots. Bloomberg reports that, "Banks are handing out mortgages of as much as $10 million to the wealthy in record numbers while first-time homebuyers struggle to get loans. Americans from San Francisco to Boston are taking out a record number of mortgages in excess of $1 million while stiff lending standards crimp total loan volume. The number of loans from $1 million to $10 million to buy single-family homes in the 100 largest metropolitan areas surged to more than 15,000 in the second quarter, the highest ever, according to property data firm CoreLogic. (But) In June, about 28 percent of total existing-home sales involved new buyers compared with an average of 35 percent since October 2008, according to the National Association of Realtors.
By the way, for folks who care about historical loan performance, especially the loan performance from brokered loans, Fannie and Freddie have some nifty reports.
Let's keep playing catch-up with some lender and agency specific news.
Churchill Mortgage has announced that it has partnered with Mortgage Harmony to provide borrowers with its HarmonyLoan Rate Reset product.
Donna Beinfeld, President of compliance firm Donnashi, contributes, "Training on Desktop Underwriter Version 9.1 August update is available and is considered 'Open Registration.' 'DU Version 9.1 August Update Live Web Seminars: Join Fannie Mae for a live web seminar to learn more about the Desktop Underwriter® (DU®) Version 9.1 Update, scheduled for release the weekend of Aug. 16, 2014. The webinar will review the updates being made to DU, including foreclosure message updates, deed-in-lieu of foreclosure and preforeclosure sale message updates, the addition of a charge-off policy message, 2014 Area Median Income limits, a special feature code retirement, and updates to align with the Selling Guide.'"
Plaza Home Mortgage Wholesale weekly updates include the following: Elite Jumbo Program maximum LTV/CLTV for cash-out refinance transactions has been increased by 5% points.
Clarifications regarding loan modifications that result in debt forgiveness are not allowed. Clarification that mortgage ratings must be provided through the month of the closing date of the new loan. Addition of the requirement to provide evidence of payment of tax liability if an extension is filed and Added the requirement for commercial lease agreements when the property is reflected on Part 1, Schedule E, of the borrower's individual tax returns. To review product updates visit: Elite Jumbo. Additionally, Due to system issues, Plaza's Fee-in pricing functionality has been temporarily removed from PULSE. If you wish to include your administrative fee-in price, you must enter your request in the Comments section of the Price screen, or you may contact the Plaza Lock Desk directly and they will apply the price adjustment to your lock. For any questions, please contact your Plaza Account Executive.
Cole Taylor Mortgage Wholesale division has updated its guideline specifically regarding tax transcripts and its conforming guidelines. Effective immediately, IRS transcripts or evidence of borrower extension filing is required. Large deposit requirements on conforming products have increased from 25% to 50% of the borrowers qualifying income aligning with recent Fannie Mae and Freddie Mac changes. Additionally, guidelines have been enhanced to allow for un-sourced large deposits to be removed from the total assets if funds are not needed for closing or reserves. Review Cole Taylor conforming guideline for more detail. Contact your area manager directly with any questions.
Weslend Wholesale's newest updates include changes to Direct Jumbo and WesLend Direct ARMs. If subordinate financing is present on the loan, the CLTV must be used to calculate the Loan Level Price Adjustment (LLPA). The daily rate sheet and Broker Connection have been modified to reflect that the Loan Level Price Adjustments are based on the LTV and/or CLTV on the loan. Regarding Pre-locks on WesLend Direct Jumbo and WesLend Direct ARM's, after careful consideration, Weslend has decided to allow forward locks for a trial period with limitations. Additionally, the LP Super Conforming pricing adjustments from the Standard Agency Jumbo Program have increased as follows: LP Super Conforming 30 year adjustment has increased from 0.875% to 1.00%. LP Super Conforming 15 year adjustment has increased from 0.25% to 0.875%. Changes are effective immediately; contact your account executive for details.
Even though GSE reform (basically Fannie Mae and Freddie Mac, for the purposes of this article) is pretty much dead until at least 2015 in Congress, that has not stopped those in the business from moving ahead with changes. The FHFA, MBA, NAR, home builders, and banks are all pushing agendas with regard to changes that could and should be made. The message to Congress: lead, follow, or get out of the way. One area of reform that is receiving a lot of publicity lately focuses on the secondary markets. Namely, why do we need two different securities for conventional conforming loans? Historically, there are differences between a loan underwritten to Fannie's guidelines (through DU) and Freddie's (LP). Each has programs that the other does not have. And there are certain guideline nuances exist, typically known to LOs and underwriters. But these have been gradually disappearing as the FHFA has overseen both agencies, and tend to issue bulletins where both Fannie & Freddie announce changes to policies and procedures.
Yes, we're definitely heading toward one security for Fannie & Freddie loans. The Federal Housing Finance Agency wants to see Fannie Mae and Freddie Mac issue one set of home-loan bonds and FHFA likely will be issuing a report on the matter next month, sources say. The issuance of separate bonds by the two mortgage giants has divided trading, thereby has reduced liquidity. FHFA Director Mel Watt expected the effort to "improve liquidity in the housing finance markets," and "reduce costs to the enterprises, particularly Freddie Mac, since Freddie's securities have historically traded at a disadvantage." Hey, while we're at it, let's make the process and structure so that we can throw in FHA, VA, USDA, and jumbos! But the question will remain: what to do with the trillions of dollars of existing Freddie and Fannie securities? Will those continue to trade using old methodologies? Old remittance cycles? Old reps and warrants? These questions, and a myriad of others, are being answered by the FHFA in expectations of a proposal that will be great interest to the marketplace.
For economic news this week... well, there just isn't much: Factory Orders tomorrow, some trade figures on Wednesday, Jobless Claims Thursday, and then on Friday we wrap up with the always rip-roaring Nonfarm Productivity, Unit Labor Costs, and wholesale trade numbers. And when there isn't much news in the U.S., stock and bond prices can easily be influenced by overseas events. But for now, things are pretty quiet. The yield on the 10-yr T-note Friday afternoon was 2.50% and in the early going today it is nearly unchanged at 2.49% and agency MBS prices are a shade better.
Jobs
If San Diego appeals to you, San Diego-based AimLoan.com is hiring a Funding and Closing Manager. Founded in 1998, AimLoan originates conventional, FHA and VA mortgages throughout the country using an Internet-based, direct-to-the-consumer business model. This position will be responsible for the hiring, development and support of the doc drawing, funding and post-closing teams. A minimum 10 years' experience is required, including management experience. Visit AimLoan to learn more about the company and then email confidential inquiries or resumes to Vince Kasperick, president.
Also in the West on the production side, Kinecta continues to grow its wholesale lending with Account Executive positions now open in Seattle, Las Vegas and Phoenix. Kinecta Federal Credit Union is one of the nation's leading credit unions, with more than $3.5 billion in assets and serving over 270,000 member-owners across the country. Kinecta offers a competitive compensation and benefits package in addition to a dynamic culture and an exceptional product line (check out limited overlay agency, jumbos, reduced MI programs and our new 80-10-10 at www.loankinection.com). If you are interested in joining a successful team, please send your questions and resume to Anthony Jackson.
A quick congratulations to Jonathan Seigel, who is now the Managing Director of FirstKey, a leading provider of loans designed specifically for investors in one- to four-family residential rental properties. "Mr. Seigel will be primarily focused on sourcing small and large balance rental finance products as well as developing and implementing strategic marketing initiatives."