TRID training; Supreme Court Decides 2nd Mortgage Case; Title and MI Updates
Some in the industry are focused on Wells Fargo CEO John Stumpf's recent comments saying that cybersecurity and an evolving payments industry are the two biggest risks to banks. "It's not if but when," right?
Mortgage Returns is preparing to launch a new, mobile ready, CRM platform, and as part of the kickoff is inviting attendees of the Mastermind Summit to join management at the Ghostbar located at The Palms, Las Vegas today from 8-10PM. Those wishing to attend must RSVP to Mortgage Returns' Director of Marketing Kim Goldstone.
Yes, in August we'll find out who is still closing loans and providing customer support and who isn't. "REMN Wholesale's management has brought in a heavy hitter to lead their next TRID educational webinar this Thursday. Benjamin Olson, former deputy assistant director for the Office of Regulations at the Consumer Financial Protection Bureau, will be presenting REMN's latest free TRID webinar, produced in conjunction with National Mortgage Professional magazine. Olson is a partner of BuckleySandler LLP and intricately involved with the preparations for the CFPB's final rules and forms surrounding TRID, making him one of the few true experts on the pending changes. And on the hiring side REMN Wholesale continues its search for seasoned account executives nationwide and underwriters in its Woodland Hills, CA office. Know anyone who'd be interested? Have them send their confidential resumes to REMN's Amanda Miele.
Sometimes when change is in the air, like with TRID, it is good for loan officers and others in the industry to remember what RESPA and TILA are meant to do - their purpose. Here's a little write up to help keep things in context: "To Understand TRID Changes, It is Good to Know the History."
In a win for banks & non-bank lenders, the Supreme Court ended 2nd mortgage/bankruptcy debate when it ruled that underwater homeowners can't get rid of a second mortgage by filing for bankruptcy protection. All nine Supreme Court justices agreed that filing for chapter 7 bankruptcy protection doesn't give homeowners the power to cancel a second mortgage when their properties aren't even worth the value of the first mortgage. The case involved two Florida homeowners who tried to cancel their second mortgages from Bank of America, arguing that because a second mortgage gets paid after the first, it is essentially worthless. Lenders, however, fought to keep the second mortgage liens, arguing that the debt could someday be fully paid once property values rise. Remember that in 1992 Supreme Court justices determined that a bankrupt homeowner doesn't have the power to cancel the lien on an underwater first mortgage. To put things in context, last year more than 700,000 individuals and couples filed for chapter 7 bankruptcy, the most popular type of consumer bankruptcy, which enables a court-appointed trustee to sell a person's property to repay debts and then cancel the rest. And about 2.1 million underwater homeowners had second liens at the end of the second quarter of 2014, said lawyers for Bank of America, citing a CoreLogic report.
In other legal news First Tennessee settled a lawsuit with the FHA for $212 million. Once again The False Claims Act was cited. "'First Tennessee admitted failings that resulted in poor quality FHA loans,' said Acting U.S. Attorney John A. Horn of the Northern District of Georgia, in a statement released Monday. 'While First Tennessee profited from these loans, taxpayers incurred substantial losses when the loans defaulted.'"
And the public has another way of investing in mortgage banking: Blackstone is coming out with an initial public offering (IPO). Blackstone, of course, has been buying mortgage companies lately, such as Pinnacle in the West and Gateway Funding in the East and is pretty much global force in commercial and residential real estate.
As a gauge of general business, the American Land Title Association (ALTA), the national trade association of the land title insurance industry, reported title insurance premium increased 11.1 percent during the first quarter of 2015 when compared to the same period a year ago. The title insurance industry generated $2.6 billion in title insurance premiums during the first quarter of 2015 compared to $2.3 billion during the first quarter of 2014 according to ALTA's 2015 First-Quarter Market Share Analysis.
Zelman &Associates published its April Mortgage Originator Survey, indicating that purchase volume has remained strong withstanding the minimal improvement in credit conditions due to overlays and regulatory changes. Key takeaways from the survey include purchase applications increasing 13 percent YoY, with 52% of respondents experiencing better-than-expected volume. Purchase trends remain positive based on traffic and preapproval activity, but a lack of inventory is still a challenge in certain areas. The credit quality index dropped to 65 for the fifth consecutive month due to an increase of first-time buyers entering the market and the underwriting index declined to 65.9, reaching the lowest level in five years. Over the next year, 38 percent of lenders expect to see further credit easing as well. Lenders do not expect a significant change in nonbank lenders' credit standards despite lawsuits surrounding FHA lending. The availability of private mortgage insurance was rated at 69.6 up from the 2014 average of 65.5. To learn more about the Mortgage Originator Survey for April, contact Ivy Zelman.
And the Mortgage Credit Availability Index increased for the sixth consecutive month in March by 2.3 percentage points, indicating a loosening of credit standards. The growth in credit availability among the low interest rate environment and the increase in home equity will open up the market for purchase originations in the near future. The MBA predicts that in 2015, total originations will reach $1.349 billion, which is higher than the leading industry forecast of $1.256 billion. The increase in credit is supported by government actions which include the FHFA's G-Fee decision this month, which is expected to result in a flatter LLPA grid, the FHFA's finalization of the Private Mortgage Insurance Eligibility Requirements which is likely to be softened, additional clarification of lender liability under FHA's endorsement requirements this year and a possible extension of HARP. Through these government actions, an incremental increase in the expansion of credit availability should follow. To read the full report by Compass Point Research & Trading, LLC, click here.
So let's play some catch up on MI news.
Starting in mid-March Lender Paid Mortgage insurance option became available for LTVs 95.01 to 97% on conforming fixed loans through NYCB Mortgage.
ditech has announced the addition of National Mortgage Insurance (NMI) for its non-delegated and delegated clients submitting loans for underwriting. As a reminder, when submitting a loan to ditech for underwriting, please select your preferred MI Company on the Correspondent Lending Underwriting Submission Checklist. The selected MI Company will be used if possible. See Product Matrices for complete product details.
MGIC published its April operating statistics, with new notices declining by 15.4% YoY and 1.6% MoM, a year earlier new notices were down 18% YoY and 3% MoM. New insurance written reached $3.6 billion and paid claims dropped 3.4% MoM. Net recessions and denials declined to 61 from 72 a month earlier and ending delinquent inventory was down 20.9% YoY compared to 21.3% YoY in March and down 27.9% a year ago. For the full report of MGIC's monthly operating statistics, click here.
A few weeks ago MGIC announced it is removing all market-related underwriting restrictions, effective with MI applications received on or after May 18.
Somewhat recently Rohit Gupta, President and CEO, Genworth U.S. Mortgage Insurance weighed in on the FHFA's extension of the eligibility date for HARP mortgages through December of 2016 in the following statement: "Genworth U.S. Mortgage Insurance supports the changes announced by the Federal Housing Finance Agency (FHFA) on May 8, 2015, to extend the eligibility date for the Home Affordable Refinance Program (HARP) through December 2016. Since the launch of the HARP initiative in 2009, Genworth has aligned with HARP guidelines to provide more than 100,000 eligible homeowners the opportunity to reduce their mortgage payment by an average of almost $200 each month. Genworth is committed to helping borrowers stay in their homes, and we're ensuring that our guidelines allow as many homeowners as possible to take advantage of the HARP refinance opportunity." Click to link to read the formal announcement of FHFA at the Greenlining Institute Annual Economic Summit.
MI company United Guaranty expanded underwriting requirements for Student loan payment calculation and Rate/term refinance transactions: seasoned subordinate liens.
Essent Guaranty, Inc. and MortgageFlex Systems, Inc., an established provider of loan origination and servicing technology, announced that Essent MI is available to lenders through MortgageFlex's LoanQuest mortgage loan origination system (LOS). Lenders now will have access to Essent MI for delegated and non-delegated loans and real time rate quotes directly from the LOS.
Turning to the markets the economy impacts everyone, especially those in the lending industry, and here's a comment from Ken Odeluga, a senior market analyst at www.cityindex.com.sg. "The US economy got off to a weaker start than first thought with first quarter economic activity showing a decline of 0.7%, a reversal from the initial 0.2% advance for the period reported last month. However despite this decline in economic growth, the housing market has remained particularly robust, with pending home sales hitting a nine-year high last month. New home sales and construction were also strong in April. In fact it was an upward revision in residential construction last quarter which offset some of the weakness elsewhere. However the picture isn't quite so clear going forward. Although unemployment is significantly low at 5.4%, meaning more people are in employment so would be able to hold a mortgage, consumer confidence is pulling back and the possibility of a rate rise is looming towards the third quarter of this year, all of which could easily negatively impact pending sales and therefore the housing market in the coming months."
We did have a spate of news upon which to chew yesterday - most of it showing that the economy continues to book along and thus nudge rates higher. We learned that Personal Income was +.4% in April while spending was flat. PCE, a measure of inflation, rose 0.1% over the prior month and 1.2% over the prior year on a "core" basis. Construction Spending was +2.2% in April, creeping above $1 trillion - up about 5% versus a year ago. ISM Manufacturing showed that economic activity in the manufacturing sector expanded in May for the 29th consecutive month, and the overall economy grew for the 72nd consecutive month. And when you combine all that with a glob of $25-30 billion in corporate debt supply hitting the market, well, rates went up.
Today Greece is all over the news, and in the United States we'll have some 2nd tier numbers that generally don't move rates much. We'll have April Factory Orders at 8AM Mountain Time (expected flat), and some May auto and truck sales figures. And for numbers we had a 2.18% closing yield on the risk-free U.S. 10-yr T-note versus this morning's 2.23% - and agency MBS prices are worse about .250 in price.
Jobs and Announcements
In sales management opportunities, a well-established, highly competitive National Consumer Direct Lender, based in Southern California is seeking a highly motivated Sales Leader to manage their Consumer Direct Division, consisting of 3 to 5 direct reports. Interested parties can send confidential resumes to me at rchrisman@robchrisman. com. (Please specify the opportunity, and excuse any delays due to travel to Denver.)
"AnnieMac Home Mortgage continues to invest in our industry by putting dollars toward education. We offer TRID training for Realtors and title companies because, 'A process is not good enough; education & awareness with accountability is what will differentiate.' Come August the conversation will become a tale of the HAVE'S & HAVE NOT'S. The 'haves' will enjoy benefits of their training and processes, the 'have not's will miss closing dates and be on damage control, there is no middle ground here. There is a significant market share grab presenting itself for those who are prepared. AnnieMac is pursuing for Q3 expansion branches with a track record of at least $5 MILLION in monthly fundings. AnnieMac Home Mortgage is a leading, national privately-held firm. We are a FNMA, FHLMC, and GNMA approved seller/servicer and devoted to the organic & controlled growth of its business units. Contact Paul Zinn, National Director of Business Development, at 856-577-7749 if you would like to learn how AnnieMac can grow your business."