Georgia vs Sun West; BofA Repurchase Requests; Lender USDA Updates
Mortgage banker thwarts Zions Bank robbery?! Don Worthington with Primary Residential writes, "Our sales Manager Corey Lewis was on the phone with a customer while she was at the bank. The customer was talking with him about what verification we needed from her bank when it got robbed. Corey had her on the phone in one ear and he had his cell phone in his other hand with police on the other line relaying information." Able to leap stacks of VOEs in a single bound!
One of the telling exchanges that have sprung up in the last few years is between the owner of a lender doing $30 million a month and anyone else. "I'm only doing $30 million a month. I don't know if I can afford to hire an attorney or a $120k/year head of compliance." "Can you afford not to?" Just like anyone in a manufacturing role, lenders need to be good at monitoring. Automakers, for example, routinely track and measure the failure rates of everything from a car's brakes to air bags to power steering. Now banks and lenders are being forced to think much the same way about mortgages. Strict Fannie Mae and Freddie Mac requirements are forcing lenders to identify and eliminate mistakes, both small and large, in home loans. Mortgage compliance, with its seemingly endless reviews, reports to senior managers and laborious changes to business processes, is often seen by lenders as an annoying money pit.
American Banker observes, "But compliance is not just costly. It is more critical than ever to the bottom line, and can save lenders millions of dollars and further regulatory scrutiny." In the distant past most lenders would have pegged their defect rates at 10% or more. But now Fannie, Freddie and the Federal Housing Administration are demanding that lenders produce higher quality loans with few mistakes. "Lenders have spent the past year testing not only against credit guidelines such as loan-to-value ratios and FICO scores. They also have to make sure loans comply with myriad mind-boggling regulatory requirements that can gum up the lending process."
The article goes on. "While lenders are grudgingly expanding compliance programs they also are pushing back. Bill Cosgrove, the CEO of Union Mortgage in Strongsville, Ohio and chairman elect of the MBA, said mortgage lenders should not have to buy back loans for simple mistakes. Doing so has had a chilling effect on lending. 'We are trying to develop a bucket where there are minor, middle issues and major repurchase triggers,' said Cosgrove. 'Today that system is not in place and lenders are suffering. When you have 'I got you' penalties, overlays come into play. When a loan goes delinquent, it has to be a material defect,' to trigger a buyback, he said. Lenders have adopted so-called credit overlays to reduce lending to riskier borrowers."
Sure enough, buybacks continue to plague many companies, tying up money and resources defending loans made many years ago. American Mortgage Law Group published an observation noting, "We saw a very intriguing article come up in the news recently, which agrees with our analysis. It too predicts that BOA will attempt to recoup as much of its losses as it can by forcing correspondent lenders to repurchase loans. However, the article also agreed that there may be light at the end of the tunnel in that the settlement arms lenders with a fresh line of defense. The article revealed that as part of the settlement, BOA released a 'statement of facts' that includes a number of striking admissions. In short, BOA admitted to selling billions of dollars' worth of RMBS without disclosing key facts about the quality of the loans backing them, allegedly costing investor billions of dollars in losses. BOA further conceded that it originated risky mortgage loans and made misrepresentations about the quality of those loans to Fannie Mae, Freddie Mac, and the Federal Housing Authority. In addition, Countrywide acknowledged that its prioritization of loan 'sale-ability' led it to expand its loan offerings to include 'Extreme Alt-A' loans - loans that they would permit even if the borrowers' self-reported income or assets raised substantial doubts about the borrowers' truthfulness. All in all, Countrywide wanted to originate any loan that it could possibly sell, and misrepresented these loans to its investors."
The State of Georgia snagged another lender for employing a convicted felon - this time it was Sun West. Last week it was Hometown Lenders (out of Huntsville, AL). The orders ban the mortgage company's owners from acting as branch managers of a Georgia-based mortgage broker or mortgage lender. Many states, including Georgia, do not allow mortgage brokers and mortgage lenders to employ convicted felons or allow any such person to be involved in mortgage lending, the departments explained in a press release
Some relatively recent USDA updates from lenders:
Envoy Mortgage CLD has announced that they will continue to purchase USDA loans with Conditional Commitments "subject to the availability of commitment authority" during the interim period.
M&T Bank is reminding customers of the USDA eligibility map change for loan applications dated on or after October 1st (application defined as complete loan guarantee request). Loans in the pipeline should be checked against the "future" map eligibility areas on the USDA website. If the area will not be eligible after October 1st, those loans need to be sent to the appropriate USDA office as soon as possible.
M & T Bank posted updated information regarding USDA eligible map areas. Any area currently eligible will remain eligible through December 11, 2014 unless Congress changes that date.
Plaza Wholesale is reminding lenders of the 2 upcoming changes on USDA loans effective October 1st: USDA Fee Change and Rural Map Change. Fannie Mae's Homepath program has been discontinued. Plaza will accept loans that meet Fannie Mae's HomePath eligibility deadlines. As a result of the severe storms and flooding in Michigan on August 13, FEMA has declared disaster areas for Macomb County, Oakland County and Wayne County, Some of the loans scheduled to close in these areas may need to be suspended or delayed until confirmation of the property's condition can be obtained.
Wells Fargo Funding now has three authorized appraisal management companies: Clear Capital, ServiceLink, and Rels Valuation. USDA annual fee increase beginning with conditional commitments issued on or after October 1st may impact loans currently in process as there are delays in conditional commitments in some areas. These delays potentially may create the necessity to re-underwrite and re-disclose loans affected. Sellers should contact their local Rural Housing location to understand current processing times.
Flagstar Wholesale posted its memo reflecting an announcement made by USDA regarding a temporary lapse of funding at the beginning of Fiscal Year 2015.
Penny Mac posted two announcements covering information on its Jumbo program and USDA program: 14-51: Updates to Asset, Liability and Property Requirements for the Jumbo Program.
14-52: Retirement of Property Flip Overlay on USDA Rural Housing Loans.
Penny Mac's updated information includes definitions for Early Payoff Policy, Early Payment Default and Repurchase Price and updates to its defect section in its seller guide. Also posted, resources for corrections to collateral are available for review. Per the Fiscal Year 2015 Commitment Notice released September 30, 2014, funding for the USDA Rural Housing Loan Program will not be available for a short period of time at the beginning of Fiscal Year 2015, which begins October 1, 2014. During the temporary lapse of funding, Rural Housing will issue Conditional Commitments "subject to the availability of commitment authority" for purchase and refinance transactions. Regarding USDA loans, Per the Fiscal Year 2015 Commitment Notice released September 30, 2014, funding for the USDA Rural Housing Loan Program will not be available for a short period of time at the beginning of Fiscal Year 2015, which begins October 1, 2014. During the temporary lapse of funding, Rural Housing will issue Conditional Commitments "subject to the availability of commitment authority" for purchase and refinance transactions. Penny Mac will continue to purchase USDA Rural Housing loans with Conditional Commitments subject to the availability of commitment authority.
Some volatility crept into the market Tuesday - much of it due to a major sell-off in equities. Stock market investors fear that the world economy is weaker than we thought a week or two ago, and so have been selling stocks. Some of those doubloons have flowed into our bond markets, driving up demand and thus driving down rates. Thomson Reuters summed it by observing, "High handles (higher coupon mortgages) also served to deter buyers as FNMA 3.5s crested above $103, a level not seen since late May. Supply was once more a mere footnote to the equation, as mortgage bankers pipelines are thinned and their focus is more with selling specified paper than bothering with TBA (to be announced securities used as hedges)." So on no economic announcements agency MBS prices improved .250-.375; the 30-yr FNMA current coupon plunged seven basis points to 3.03%; its lowest reading since June 2013.
For excitement today we've already had the MBA weekly survey on mortgage rates and lending activity. (Applications were up almost 4%, refis +5%, purchases +2%; refis accounted for 56% of all applications and ARMs stood at 8%.) At 1PM EDT (use EST in the winter!) the Treasury sells $21 billion of 10-yr notes while 2PM EDT offers the Federal Reserve release on FOMC minutes from the last meeting of September 16th and 17th. In the early going rates are nearly unchanged from Tuesday's close. The 10-yr is at 2.36% after closing yesterday at 2.35% and agency MBS prices are worse .125.
Jobs
Pinnacle Capital Mortgage is currently seeking an Underwriting Manager and lead underwriters for its Southwest Regional Center located in Phoenix, AZ. Pinnacle Capital Mortgage has been recognized as a Scotsman Guide Top 10 Lender for the last 2 years, and has received recognition as one of the Phoenix Business Journal's "Best Places To Work." Interested candidates should have a minimum of 2 years recent underwriting experience as a DE underwriter, as well as experience with wholesale and retail production. For more information or to submit your resume, please contact Pam Davis, Regional Operations manager at PCM and to learn more about the company visit PinnacleCapitalMortgage.
And Houston's Network Funding, LP is a top-25 independent mortgage banker that that has always focused on purchase lending as its predominant percentage of funded business. Network Funding has been a "Triple Eagle" mortgage banker since 1998, and has decided to build upon its success and is looking for experienced, successful Loan Officers and Branch Managers to bellwether our growth in CO, AZ, OR, WA, CA, WY, & MT, TX (Dallas, Houston, Austin & San Antonio). "We have competitive, compliant compensation plans, great technology and efficient systems in place to make your move seamless. Also, if a career path is important to you, Network Funding may be a great opportunity for you. Our growth presents opportunities to successful loan officers to build and manage a Network Funding branch. If you are top tier producer with leadership skills and your current employer has not presented a career path to you, reach out to me and let me share our thoughts on why Network Funding may be the right opportunity at the right time." To learn more about Network Funding, LP and its branch opportunities please contact Brett Snortland, National Sales Manager.
Last but not least today, AmeriHome Mortgage Correspondent - "one of the fastest growing, full service, national correspondents in the market has more exciting changes on the way. It is adding a 30 Year Fixed Jumbo (up to $3MM) to the growing slate of Non-Agency products and enhancing AmeriHome's Interest Only programs to include 40 year amortization and conforming limit (min $250K) options. For more information on how to become an approved Seller, please reach out to sales@amerihomemortgage. com. As a result of their continued growth, AmeriHome is also looking to add experienced Sales Executives (with an existing book of business) in the Southeast and North Central regions, along with an Inside Sales AE for its Corporate Headquarters in Los Angeles...if interested please contact jobs@amerihomemortgage. com.