Update on MSAs; TRID for Realtors; Avalanche of Freddie & Fannie updates
June marked the beginning of hurricane season, as the North Atlantic hurricane season began on June 1st and ends November 30th. The last time the U.S. was struck by a major hurricane was in October 2005 when Hurricane Wilma hit Southwest Florida and this August will mark the ten year anniversary of Hurricane Katrina. Last year, six hurricanes hit the U.S. and in order to prepare for such emergencies, 51.5 percent of U.S. homes have a prepared emergency evacuation kit, 82 percent of occupied housing units have enough nonperishable emergency food for three days and 54.3 percent have an emergency water supply. Heck, I don't even know if any of my flashlights work...
We have some events coming up that are of interest.
The Community Mortgage Lenders Association will host a reception for CMLA and Lenders One members at the August 2 conference in Washington's Gaylord Hotel & Conference Center. The reception will feature a senior Congressional staff speaker who will provide an outlook on regulatory reform legislation. A CMLA educational session will include a panel discussion of the current state of, and prospects for, regulatory reform for community-based lenders. The panel will feature CMLA government relations professionals and recognized experts on regulatory reform.
The Collingwood Group announced additional dates for its FHA Handbook 4000.1 training webinar series for FHA Lenders. The webinar series will run July 21st - July 23rd. The training covers originating basics, underwriting the property and borrower, closing and endorsement, origination quality control, and servicing quality control.
And for those who feel the need to delve into FHA scorecard requirements, the AllRegs underwriting course covers FHA TOTAL Scorecard requirements, and those scenarios in which a manual downgrade is required. It will also include the "Red Flags" as identified by FHA, which require a much deeper review of the documentation. This course is a series of 4-instructor led webinars with the next series of sessions beginning in August.
Do Borrowers Care about Down Payment Amounts and Mortgage Rates?" Well, do they? I did a little write up for the STRATMOR site that you can check out.
Michael Milken, roughly the 500th richest person in the world, doesn't sit around wringing his hands over home appraisals. But the Milken Institute published a piece by Ed DeMarco on appraisals that is worth a gander. (Thanks to Joan Trice with Allterra Group for sending this along.)
Whether or not Marketing Service Agreements (not Metropolitan Statistical Areas) are "legal" or not continues to be an issue. The CFPB decided that RESPA Section 8 violations could be found even when fair market value was paid for services rendered if the relationship was in part predicated on referrals. Put another way, paying fair market value is not necessarily enough (SCP Blog Articles tab) to protect you from a RESPA violation. If the CFPB determines that the relationship was in part based on an agreement to make referrals it is illegal. PHH is in the crosshairs.
Speaking of PHH, Jonathan Foxx writes, "PHH Corp., the company made famous recently for its alleged mortgage insurance kickback scheme, is taking on the Behemoth Bureau with an attempt to overturn its $109 million penalty. The theory? That the Bureau's ruling was an abuse of discretion. PHH petitioned the appeals court to review the CFPB's order because it is "arbitrary, capricious, and an abuse of discretion within the meaning of the Administrative Procedure Act" and, if that is not enough, it is a violation of federal law, including the Real Estate Settlement Procedures Act and the Consumer Financial Protection Act of 2010. In early June, Director Cordray supported the findings of the Administrative Law Judge Cameron Elliot on the point of its correctness; however, Mr. Cordray said that Judge Elliot incorrectly applied the law's provisions when assessing PHH's penalty. Let's dig a little deeper. What Mr. Cordray was maintaining was the view that the penalty for RESPA kickbacks for mortgages that closed on or after July 21, 2008 - which, by the way, is exactly three years before the date when the Bureau assumed RESPA enforcement authority from HUD - should be penalized for each payment PHH received after that date."
Lenders Compliance asks, "We realize the TILA/RESPA rules are complex. An affiliate or ours is a real estate company. So, we are wondering how the new rules will affect real estate agents. Do you have a list of items that we consider important for real estate agents to know about the TRID requirements?"
In Fannie and Freddie news, Freddie Mac rolled out a helpful list of the documents its quality control teams are most likely to find missing from new mortgage files (not seasoned files from the crisis or pre-crisis years vintages).
Fannie Mae released its monthly summary report containing information about Fannie Mae's monthly and year-to-date activities for our gross mortgage portfolio, mortgage-backed securities and other guarantees, interest rate risk measures, serious delinquency rates, etc. In May, the GSE's gross mortgage portfolio shrank at a compound annualized rate of 25.9 percent, from $405.1 billion down to $395.1 billion. It was the first time since before the conservatorship began in September 2008 that the value of the gross mortgage portfolio dipped below $4 billion.
Everything is bigger in America, which includes some forms of loans: jumbo loans. As we know, Freddie Mac and Fannie Mae can back loans known as conforming loans. However, there is a limit to amount that they can back, known as conforming loan limit. The loans that go higher than this limit are jumbo loans. Where are most of these jumbo loans located? 32% of the country's homes that require a jumbo loan are in California with San Jose leading the way (56%). Conforming loan limits have allowed the number of homes that require a jumbo loan in regularly pricey areas to fall well below pre-bubble levels. However, in less expensive areas, jumbo loans are in a higher quantity than pre-bubble levels because of a high home value appreciation.
NewLeaf Wholesale conventional pricing will include the new Fannie Mae/Freddie Mac LLPAs beginning with rates published on July 15, 2015. A schedule of the new LLPAs, with the changed adjustments highlighted, is released with this announcement: Agency LLPA Grids and can also be found posted on the NewLeaf TPO website under Lock Policy and Forms.
About a month ago Fannie Mae updated its servicing guide to include updates to requirements related to adverse action, Fannie Mae's investor reporting manual, Fannie Mae's allowable bankruptcy attorney fees exhibit and the introduction to new Fannie Mae custodial document reconciliation department.
Freddie Mac announced updates to Guide terminology regarding the new disclosure forms required by the Consumer Financial Protection Bureau (CFPB) under its final rule, TILA-RESPA Integrated Mortgage Disclosure (the "TRID Rule"), with respect to settlement-related disclosures. To help prepare for when the TRID Rule goes into effect, the following updates will be made: Settlement/Closing Disclosure Statement will be defined in the Guide Glossary in response to the TRID Rule requirements with respect to the settlement-related disclosures. The new term includes, as applicable, both the HUD-1 Settlement Statement and the new Closing Disclosure. Loan Prospector® will be updated by August 1, 2015, to reflect the new terminology. On and after the TRID Rule effective date, you will not be required to collect borrower signatures for disclosure forms or collect additional forms. This is in line with CFPB's implementation of the rule. However, consistent with current industry practices, you may wish to consider collecting (or continue to collect) signatures and/or forms.
Fannie Mae's EarlyCheck Version 4.0 will be implemented the weekend of Sept. 12 and will also include support for Uniform Loan Delivery Dataset (ULDD) Phase 2 loan delivery XML file changes, as well as several revisions to Phase 1 data points. In addition, the EarlyCheck Loan-Level Results will be updated to display up to four borrowers and up to ten provided and derived Special Feature Codes (SFCs). EarlyCheck 4.0 will provide lenders an advance view of the future edits in the new Loan Delivery application and allow lenders to prepare for the ULDD Phase 2 updates. View the EarlyCheck Version 4.0 Release Notes for more information.
Freddie Mac has released Bulletin 2015-10 regarding TRID disclosures. Highlights of the bulletin include updates to the Guide to encompass the new terminology and Loan Prospector will be updated by August 1st to reflect the new terminology as well. Freddie mac will not require signed Settlement/Closing Disclosure Statements or additional forms on and after the TRID Rule Effective Date but Seller/Servicers may still want to collect signatures. Freddie Mac will also not require the delivery of the Uniform Closing Dataset in 2015.
Future Changes for Fannie Mae Investor Reporting Customer Transition Guide, Reports Specifications, and Updated FAQs are now available. Click a link for information regarding the Future Changes to Investor Reporting page, Customer Transition Guide, Reports Specifications for New Reports, and updated FAQs in preparation for the Feb. 1, 2017 elimination of the Single-Family MBS call-in requirement and Loan Activity Report delivery changes.
Freddie Mac has both mandatory and servicing released capability on Freddie Mac's s Selling System and it has had it for quite some time: Freddie's Selling System dates back to 2005.
Effective Wednesday, July 15, HomeBridge Wholesale will be implementing the new FHFA-directed LLPAs. The new grid will impact all new Fannie Mae and Freddie Mac locks effective July 15th.
And once in a while LTVs for certain extinct programs still are asked. For example, months ago Penny Mac posted a reminder that the last day to deliver DU 9.1 1-unit, owner-occupied, cash-out transactions with LTV/CLTV/HCLTVs exceeding 80% was April 15 with the last day to purchase being April 30. (Click the link to view its announcement 15-14.)
Transitioning to the markets, on Monday everyone was checking those rate sheets. Sure we wanted the situation in Europe to be resolved - but not impact our bond market. No such thing. The U.S. fixed income markets ended with broad but modest losses today after Greek Prime Minister Alexis Tsipras capitulated to creditor demands and the proposal was set to go to the Greek Parliament. The plan includes pension cuts, privatizations of state-owned enterprises, hikes in VAT rates for some goods (and the end of exemptions for the Greek islands), and hikes in business taxes.
For excitement today we've had June's Retail Sales and Retail Sales ex-auto (-.3%, -.1%, both lower than expected and May was revised lower), and June Import Prices (-.1%). After the lousy retail sales figure we find the 10-year yield at 2.40% after closing at 2.43% and agency MBS prices are roughly .250 better.
Jobs and Announcements
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In the correspondent arena "Pacific Union Financial is one of the fastest growing correspondent lenders in the country. It offers a full array of correspondent selling options including mandatory and best efforts commitments, delegated and non-delegated underwriting, and products to include FHA, VA, USDA, agency, and Jumbo loans. The company continues to be a market leader and pioneer in FHA and VA lending with minimal overlays that allow lenders to optimize their FHA and VA market opportunity. Pacific Union also has its own in-house servicing platform so it can service loans purchased." If you would like to become a Pacific Union Financial correspondent, please confidentially contact management at correspondent@loanpacific. com.