Another Correspondent Lender Bails; REITs Join Non-QM Fray; Rise of the Vendor
Guess what opened up on this date 100 years ago? No, it wasn't the first Starbucks. The Panama Canal opened. Do you think the mortgage industry will settle all the lawsuits and complaints by the time the 200 year anniversary rolls around? I hope so. The latest settlement involved Freedom Mortgage and discrimination. And we had the recent SunTrust Mortgage Force-Placed Insurance Class Action Settlement. But those regulating and monitoring lenders aren't immune to making mistakes, and this story explains how the CFPB admits it made false allegations about credit unions.
I am sure that it was more recent than 100 years ago, but it is a rare phenomenon when a lender's existing branches see a pick-up in purchase business in the autumn and winter months - and companies are gearing their overhead accordingly. Granted, many companies are seeing decent volumes - but it is still summer and much of that is from the addition of LOs and branches. Meanwhile, lenders everywhere are doing what they can to keep decent producers in their stables: free skittles in the lunch room, trips to places with lots of vowels in the name, that kind of thing. (And for some, "decent" might be as few as 2-3 loans a month!) Companies attempting to keep staff include Wells Fargo, as this Bloomberg article points out.
(As a quick side note, Wells Fargo and JPMorgan Chase announced they will open new branches in Florida. Florida has the Everglades, an extremely fascinating natural swamp that inevitably causes the first-time visitor to exclaim: "Huh." Wells already has 200 branches in the state and JPMorgan has 175.)
The LO comp move prompted one industry vet (who probably has a Wells Fargo bank account, checking account, ATM card, credit card, has their mortgage with Wells...) to write, "Funny let's fix our revenue slump by paying more to LOs who are already making too much. Wells has a record of overpaying for mortgage in every division except correspondent. They need to learn something the rest of us did a while back: you can't make up for losses with more losses."
The Federal Home Loan Bank of Atlanta has joined the MPF program that allows its banks, credit unions and other members to sell fixed-rate, conforming mortgages on the secondary market. The FHLB Atlanta became the 10th regional bank in the Federal Home Loan Bank System, a federal housing finance agency, to participate in the Mortgage Partnership Finance (MPF) program, which was created in 1997 by the FHLB of Chicago. Reuters reports that "Through the MPF's 'Xtra' product, home loans made by members of a participating FHLB are bundled and sold to Fannie Mae FNMA.OB, a sibling housing finance agency, at competitive rates, FHLB Atlanta said. At the end of 2013, FHLB Atlanta had nearly 1,000 members and $122.3 billion in assets. All of the district FHLBs provide 'advances' or loans to their members to lend to homeowners or potential home buyers. 'With MPF Xtra, our shareholders, regardless of their size, can offer their customers the same competitively-priced loans and keep the option to sell or retain the servicing of those loans,' FHLB Atlanta Executive Vice President and Chief Business Officer Robert Dozier said in a statement. The other FHLBs in the MPF program are Boston, Chicago, Dallas, Des Moines, New York, Pittsburgh, San Francisco, Seattle and Topeka."
Affiliated's correspondent announcement, not impacting its wholesale or retail channels, was short and sweet. "Dear Correspondent Partner, as you are aware, there have been significant changes within the mortgage industry that have impacted our business over the past several years. Based on the current environment, and after careful consideration, Affiliated Mortgage Company has made the difficult decision to exit the correspondent business effective on Friday, August 15, 2014. Per our contract, we will continue to accept locks through August 30, 2014. Effective Monday, August 18, 2014, extensions or re-locks on any locked loan will not be allowed. Rest assured that loans in our current pipeline, as well as those loans locked by the 30th, will be processed and purchased according to our usual guidelines. We ask that you fulfill your contractual obligations with regard to your active locks with AMC. We will be available to answer any questions or conditions that arise concerning your loans until all pipelines are cleared. Please consider this official termination under the terms of our purchase and sales agreement." To repeat, its wholesale and retail channels are carrying on - business as usual.
At the other end of the spectrum, Baton Rouge-based GMFS was purchased last week by Zais Financial out of New Jersey for $61 million, and now Bloomberg reports that REIT Zais will soon start locking and funding non-agency loans within qualified-mortgage rules that will "expand credit slightly beyond what's available in the prime-jumbo market today. Zais CEO Michael Szymanski said, "We expect to see some expansion in our offering versus where the market is today on items such as LTV, transaction type, occupancy status...Could be >85% LTVs, though "certainly not 97%," and "there would be obviously mitigating factors that we felt were a good offset."
Bloomberg also reports that rival REIT Western Asset Mortgage plans to start buying new whole loans this quarter, with focus on high credit quality, non-QM mortgages "where we believe that we can earn higher net interest spreads without taking on much incremental credit risk," CIO Anup Agarwal said.
Hey - here's something you can print out for a little weekend reading at the beach: FHFA's proposal for a single security. FHFA released a white paper requesting input on a proposed structure for a Single Security that would be issued by Fannie Mae and Freddie Mac. The MBA has called for a common agency, TBA-eligible security for more than two years, and development of the Single Security was a significant part of FHFA's 2014 Strategic Plan for the GSEs. "The MBA is analyzing the white paper and will be forming a working group to study its impact and craft a response to FHFA." And if you are interested in being part of this effort contact the MBA's Dan McPheeters.
Let's see what vendors have been up to recently. After all, plenty of companies are using them to lower fixed costs and rely on their expertise. The residential lending business has become so complicated that it has become like the medical profession. One just doesn't just go to the "eye doctor" anymore. One goes to the retina specialist, or the "cataract surgeon". And lenders just can't rely on a good underwriter to take over servicing or compliance, or a lock desk person to hedge a $100 million pipeline. When one walks around the conference exhibition halls, they are filled with vendors and counterparties peddling their wares. The Rise of the Vendor!
Secure Settlements, Inc. (SSI), a data intelligence and risk analytics company for the mortgage industry, today announced that it has concluded a strategic joint venture agreement with CIS Information Services (CIS), a credit reporting and business risk assessment firm to streamline and enhance the SSI's suite of vendor management and risk monitoring products and services. CIS will provide technology integration and access to critical public data to improve the SSI risk reports and will also offer the SSI suite of mortgage industry data intelligence products to its existing client base of more than 2,000 businesses nationwide. (Secure Settlements recently partnered E.R. Munro & Company to offer SSI vetted low risk title agents access to competitively priced surety and fidelity bonds.)
Congrats to Jane House! Informative Research, a leading mortgage information services provider, announces the appointment of Jane House as Director of Portfolio Solutions to lead a nationwide portfolio risk and retention department. Informative Research was just accepted as a credit vendor for Lenders One: Details.
MGIC announced PreQual Approvals issued on or after Aug. 4, 2014, will be valid for a period of 90 days and Lender paid Single Premium credit tiers have been redefined Lender Paid Rate Cards.
Arch MI Introduces New Master Policy with 12-month rescission option for Lenders, the new policy offers Lenders choices and flexibility for rescission relief options to suit all business needs infocenter. Arch also released updated Program Guidelines on August 11. Change includes expanded qualification criteria for borrowers under our EZ Decisioning program.
On the NMLS front, the annual CE Season began August 1st, What You Need to Know: NMLS Education Newsletter. In preparation for the start of the annual CE renewal season, various course provider web sites have been reviewed and many of them contain old or inaccurate information about the Uniform State Test (UST) and state CE requirements. Ensure Courses and Testing.
Accurate Group launched EquityRenew to help Banks tackle HELOC resets. The solution is expected to help banks protect profits from HELOC defaults, reduce internal costs and time spent on analysis, and ensure regulatory compliance Press Release.
The CFPB is calling out banks for not publicly disclosing campus financial product marketing agreements Full Story. The Office of the Comptroller of the Currency (OCC) has issued Bulletin 2014-37 on Consumer Debt Sales (the "Bulletin"). The Bulletin addresses the application of consumer protection requirements and safe and sound banking practices to debt sales by OCC-supervised institutions (national banks and federal thrifts) of all sizes, including community banks OCC Bulletin.
National MI announced that National MI's mortgage insurance products have been directly integrated with D+H's MortgagebotLOS, an all‐in‐one loan origination system (LOS) that supports retail, wholesale and correspondent mortgage lending. As a result of this integration, lenders who use MortgagebotLOS can now order National MI policies from within the loan origination system, saving time and streamlining the process for lenders," said Pete Pannes, chief sales officer of National MI.
Auction.com has launched an online community welcome designed to provide novice and experienced real estate buyers and sellers with a place to learn more about Auction.com and the real estate auction process in general. The new resource is intended to enhance customer support and create a collaborative environment where consumers can learn from the company and each other.
MetaSource, LLC (MetaSource) announced it has acquired Mortgage Compliance Advisors, LLC (MCA) headquartered in Salt Lake City, Utah: Press Release.
Lender Direct Inc. website turned some heads with its offer to compensate Realtors 0.75% on Every Loan While Being RESPA Compliant. FHA and VA Programs with minimum FICO of 580, FHA manual underwrite ok with max DTI 43%. DU Refi Plus and LP Open Access Refi with 125% LTV max and 620 minimum FICO, just to name a few details Lender Direct is offering.
Equifax's availability of its verification of hazard insurance (VOHI) for mortgage and home equity lenders is said to improve processing time. Its turnkey process verifies the status of homeowners' insurance on purchases, refinances and home equity loans and lines, reducing delays and processing costs while streamlining the loan origination process.
Rates continue to be very low - there doesn't seem to be much reason for them to go much higher. And the demand for longer-dated maturity instruments continues to be strong - and those are a long way away from overnight Fed Funds in the yield curve. Yesterday we had a decent amount of news. Jobless Claims rose 21k, and the previous week's level was revised up by 1k from 289k to 290k. The 4-week moving average was 295,750, an increase of 2k from the previous week's revised average. U.S. Import Prices fell .2%, and import prices for automotive vehicles fell 0.8% last month - the largest drop since 1992. All is quiet overseas, but there continue to be articles which include both "Europe" and "recession" in the same sentence.
We come to the end of yet another week here in the business world, with a day including a decent amount of economic news. Despite all the experts thinking inflation would be out of control by now due to Quantitative Easing, it hasn't happened. Today we had the Producer Price Index out: it was expected to be flat with the core rate +.2%, and came out at +.1% & +.2%. The Empire State Manufacturing number of August came out (expected to drop to 19 from 25.60, it came in at 14!) as well as the Industrial Production and Capacity Utilization couplet, expected +.1% and 79%, respectively, and the Thomson Reuters / University of Michigan Survey of Consumers. As a benchmark, the 10-year T-Note saw a 2.40% close Thursday and this morning we're at 2.39% and agency MBS prices are better by about .125.