Plenty of Conventional Conforming Updates; A September Hike?
Hopefully all the dads out there had fun Sunday. The U.S. Census Bureau tells us in 2008 there were 70.1 million fathers in the U.S. and in 2014 24.7 million fathers were part of married-couple families with children under the age of 18. There were 1.9 million single fathers in 2014 and of this, 43.5 percent were divorced, 33 percent were never married and 18.8 percent were separated. In 2011, the amount of child support received by custodial fathers totaled $2 billion of the $3.7 billion that was due, while custodial mothers received $19.5 billion of the $31.7 billion due. Not only was yesterday Father's Day but it was the summer solstice. Yes, if you don't like the sun rising at 4:15AM and setting at 11:45PM, stay away from Anchorage, Alaska.
Let's play major some catch up on investor & lender changes in the Fannie/Freddie world!
First of all, consumers are getting more bullish on housing, according to the Fannie Mae National Housing Survey. They are not getting more bullish on the economy however, even though their incomes are rising. Pessimism about the economy is at a six month high.
On the topic of reverse mortgages, Fannie Mae updated its Mortgage Loan Servicing Manual in This Announcement. The information updates policy requirements authorizing the servicer to submit a request for a short sale when the surviving spouse or heirs request to purchase the property and the transaction is not arms-length.
Plaza Wholesale announced that for Conventional Conforming and High Balance/Super Conforming loans Plaza will follow Fannie Mae (DU) or Freddie Mac (LP) guidelines regarding payoff of revolving debt to qualify. Revolving debt account balances may be paid off to qualify and such accounts do not need to be closed as a condition of excluding the payment from the DTI ratio. If the Borrower pays off or pays down existing debts in order to qualify, the payoff or pay down of the debts and the source of the funds used must be documented in the Mortgage file. Note: This is a recent change for Fannie Mae (see SEL-2015-06) and therefore DU has not yet been updated. The DU message stating that revolving debts must be included in the total expense payment if the account is not being closed may be disregarded.
United Guaranty is responding to the storms in Texas and Oklahoma with forbearance measures that provide flexibility for borrowers who are coping with damage to their homes or interrupted employment. Forbearance measures to prevent foreclosure actions on those coping with storm damage should follow the procedures on dealing with homeowners affected by disasters, natural or otherwise, found in the guidelines established by Freddie Mac and Fannie Mae. Servicers will not need prior approval from United Guaranty for workout terms on individual cases under these guidelines.
A recent Wells Fargo Funding News Flash had updates on programs are now available such as the removal of its policy overlay on student loan payments. Wells will follow Fannie Mae or Freddie Mac requirements when calculating deferred student loan payment amounts. Additionally, the overlay regarding long term disability on its Super Conforming Mortgage Program Loans has been removed. Wells will follow its standard conventional policy for documenting long-term disability income, as specified in Section 820.05: Income Analysis.
Freddie Mac extended disaster relief to eligible borrowers harmed by Texas and Oklahoma storms. Freddie Mac's disaster relief policies are targeted to borrowers with homes in presidentially declared Major Disaster Areas where federal Individual Assistance programs are being made available to affected individuals and households. Vice President of Single-Family Servicer Performance Management, Yvette Gilmore encourages Texas and Oklahoma residents whose homes or businesses were affected to call their mortgage servicer.
Don't forget that the FHFA requested input on house price index measures for conforming loan limits for Fannie Mae and Freddie Mac. The FHFA sent to a Notice and Request for Input to the Federal Register on a method for assessing the national average single-family house price for use in setting the conforming loan limits of Fannie Mae and Freddie Mac.
Back in late May, in response to the Fannie / Freddie Loan Level Price Adjustors on certain programs, US Bank has updated its LLPA(s) on new locks or relocks of expired loans.
Several weeks ago M&T Bank posted new information for all Fannie Mae, Freddie Mac & Treasury Condominium and Cooperative project reviews. Fidelity Bond/Crime insurance coverage is no longer required if the project consists of 20 units or less. The complete Fidelity Bond/Crime coverage policy is available.
And for DU approved conforming loans, PennyMac aligned with Fannie Mae's change and will no longer require that the revolving account be closed. Revolving accounts that are paid down to zero at closing may remain open and no monthly payment needs to be included in the DTI ratio. Click to read Penny Mac's revolving account announcement.
Impac Mortgage Wholesale offers over 60 loan products. One featured product is the Fannie Mae 97% LTV with program highlights to include: FICOs down to 620, 3% down payment may be from gift funds, and No Income Limits, No counseling required.
Fannie Mae's posted a new servicing notice regarding its Standard Modification Interest Rate Adjustment. This Notice provides the new Fannie Mae Standard Modification Interest Rate required for all Fannie Mae conventional mortgage loan modifications, excluding Fannie Mae HAMP Modifications.
Fannie Mae has selling and servicing policies to assist impacted borrowers (or potential borrowers) following a disaster, such as the recent flooding in Texas and Oklahoma. Refer to Assistance in Disasters for information on where to find Fannie Mae's policies for providing assistance to borrowers impacted by a disaster.
Mountain West Financial Wholesale recently updated its guidelines to reflect Fannie Mae's newest update regarding revolving debt accounts which are paid down to zero at closing may remain open and no monthly payment needs to be included in the DTI ratios.
NewLeaf Wholesale shared the news...as of June 1, 2015, Loan Prospector is Free.
Turning to the economy, it's nice to see that the East coast has finally dug itself out of all that snow. It looks like it because, although most economic data pointed to a loss of momentum in the first quarter, Wells Fargo took a closer look at Gross Domestic Income (GDI), and it gives a reason for optimism. GDI is measured as the sum of sub-components- compensation of employees, taxes on production & imports, subsidies, profits and economic depreciation. As a reminder, the Gross Domestic Product (GDP) numbers showed the economy contracted at a 0.7% annualized rate for the first quarter. These numbers went down for some temporary reasons such as labor disputes in the supply chains, and "residual seasonality", also known as Christmas fever.
Folks should know that the GDP standard seasonal adjustment method fails to account for this residual seasonality, which led to a slow first quarter. However, the latest figure on GDI indicates that economic growth was not nearly as weak in the first quarter as GDP suggests. Instead of the economy contracting like the GDP data shows in the first quarter, GDI shows the economy expanded at a 1.4% annualized rate. While this is still a slowdown from the 4Q GDI data, the stronger rate of growth compared to GDP comes from further improvement in the labor market (4.8% increase in pay and benefits in the first quarter). GDI is a more reliable indicator of turning points in the economy. For example, GDI began to weaken before GDP ahead of the 1990-1991 and 2008-2009 recessions. Overall, looking at aggregate growth through GDI suggests that output was stronger in the first quarter and that the economy continues to expand.
So what happened last week? In anticipation for the interest rate hike in the coming months by the Federal Open Market Committee, the 10-year yield reached an 8-month peak at 2.5%. Why is there anticipation for an interest rate hike? Signs of improving economic outlook as the U.S. Consumer prices gained strength in May, thanks to higher energy costs. Homebuilders are more confident and they also anticipate better sales in the future thanks to rising perspective buyer traffic. This prospective buyer traffic is partly due to 700,000 "boomerang buyers." These are people who were previously unable to qualify for mortgages during the crisis who are now reentering the mortgage market. Also, core prices are up 2.5% in a 3-month annualized basis as well as improving retail sales bode well for future economic growth. This positive economic outlook points to the predicted interest rate hike in September.
Ah hiking, the great outdoors, birds chirping... Oh, wait, we're talking about the imminent interest rate hike? Wells Fargo takes a look at the Federal Open Market Committee's (FOMC) decision to keep the federal funds target range unchanged until further data is received. The result was largely anticipated and supports projections by Wells Fargo that the Fed will hike interest rates later this year. This is due largely in part to upgraded assessments of current U.S. economic activity such as the increase in hiring, growth in household spending and the housing market showing moderate improvement. However, for the rate hike to happen, the FOMC says that there needs to be further improvement in the labor market and they need to be "reasonably confident" that inflation will move back to its 2 percent target over the medium-term. What about the Fed's updated economic outlook? GDP growth outlook for 2016 and 2017 didn't change much from its recent trend. While the Fed remains understandably cautious, the policy statement and outlook suggest that the U.S. economy has "solid underlying momentum and is strong enough to withstand the first rate hike in nine years in the not-too- distant future."
We also have a belly-full of scheduled news this week out of the U.S., in addition to whatever happens between Greece and the European Union. Today is the Chicago Fed number as well as Existing Home Sales. Tomorrow is Durable Goods - always volatile - as well as the FHFA House Price Index and New Home Sales. Wednesday is another 1st Quarter GDP number but also the Personal Consumption Expenditure (PCE) - the Fed likes to look at it. On the 25th are Initial Jobless Claims, Personal Income and Consumption, and a bunch more PCE figures. The only thing left for Friday are some forgettable University of Michigan numbers regarding whatever consumers happen to want to answer the survey. We closed out the 10-yr Friday at 2.27%.
Jobs and Announcements
Hiring in the correspondent channel continues. Deephaven Mortgage is seeking additional entrepreneurial sales professionals to expand their correspondent relationships. "We are looking for both Vice President of Client Development and Sales Associates positions throughout the Western U.S. Deephaven is the premier provider of private-capital liquidity for non-prime residential mortgage originations and actively purchasing non-agency residential mortgage loans on a best efforts flow basis from originators in over 40 states. Deephaven is a long term investor in the loans it purchases. Qualified applicants should have experience covering mortgage bankers as well as excellent communication and presentation skills. Please forward resumes to Brett Hively, Managing Director of Client Development.
And on the Ops side, Johnson Bank, a privately owned full service financial services company located in Racine, WI is looking for an experienced Mortgage Lending Operations Manager to oversee the following areas: Mortgage Systems, Processing, Underwriting and compliance. This senior level management position will provide strategic direction for loan operations including work flow management, allocation of resources and authorize all Mortgage operations policies and procedures. Must have an extensive knowledge and understanding of residential mortgage lending practices, industry guidelines, compliance and regulations along with a thorough understanding of underwriting, processing, documentation, quality control requirements, and investor's guidelines. Understanding of various products including conforming, jumbo, new construction, affordable loans and state bond programs. Keep pace with industry trends and ability to influence and facilitate change is necessary and a keen eye towards process improvement - identifying ways to streamline processes within investor and regulatory guidelines. For more information or a confidential discussion contact Jane Shea, VP & Sr. Human Resources Consultant (920.225.5543).