Jumbo Channel Changes; Disaster Policy News; IT Risk
Does anyone really know for sure what happens in China? With that many billion people there are a lot of moving parts. For example, the PBOC is easing some mortgage down payment rules for certain home buyers, lowering the amount to 20-25%. (In Chile it is the same.)
There is legislation afoot to eliminate the caps on VA loans, which will make them much more popular in high cost areas. Basically it will become a no money down jumbo. It has passed the House, and the prospects are good in the Senate and the White House.
A First Community Mortgage recent announcement pertains to its Non-Conforming Jumbo program.
Fifth Third Mortgage's March communication addresses updates to all Freddie Mac and Non-Agency Jumbo Products Condominium requirements, its Ineligible Condo List and an appraisal document delivery reminder.
Flagstar is no longer requiring the social security number verification form on non-delegated loans with the exception of Jumbo loans, AUD findings requiring SSA results or underwriting determination requiring SSA.
Franklin American Mortgage reduced the minimum required FICO from 640 to 620 for the FHA Standard Fixed and 5/1 ARM products. FHA Standard Streamlines will remain at 640 and there are no changes to the FHA Jumbo FICO requirements. In addition, Its FHA Jumbo guidelines have expanded to reflect that there is no limit to the number of financed properties owned if the borrower's credit score is > 720, and the DTI does not exceed 45%. Borrowers who do not meet these requirements may not have any financed properties other than the subject property.
Effective for loans registered on or after 02.08.16, NYCB Mortgage updated its underwriting guidelines for the Jumbo Fixed 30 Year product. For complete product details, visit Gemstone's Jumbo Fixed 30 Year product page.
And news from the primary markets on flood & weather challenges?
A TransUnion analysis determined that using court record violation data aids in predicting homeowners policy claims and losses. The non-weather loss ratio was two times more for those with the most severe court violations compared to a clean household. The report identifies that 25 percent of policies had at a minimum, one criminal or traffic violation based on the primary named insured. Additional household members were found for 60 percent of the policies analyzed and the violation hit raised jumped to 34 percent to 25 percent.
The NAMB recently commended the House Financial Services Committee for taking up HR 2901, the Flood Insurance Market Parity and Modernization Act of 2015. Sponsored by Reps. Dennis Ross (R-FL) and Patrick E. Murphy (D-FL) HR 2901 affirms and clarifies Congress' intent in Section 239 of the Biggert-Waters Flood Insurance Reform Act of 2012 to encourage a vibrant private market in flood-insurance products that would compete with the taxpayer-subsidized offerings of the National Flood Insurance Program. "Whenever private parties are allowed to compete, the consumer wins," said NAMB President Rocke Andrews, CMC, CRMS. "Allowing private flood insurance companies to compete for flood insurance business will bring more options to the consumer and should drive down costs."
Unfortunately, the areas affected by disasters continue to grow. Lenders are continually posting updates to impacted counties. For up to date information, view the FEMA website.
The disaster hits just keep coming. As a result of the Governor of California's emergency proclamation for the areas affected by the Aliso Canyon gas leak and the ongoing efforts to contain the leak, Pacific Union Financial, LLC is monitoring the impact. While it has been announced that the leak has been temporarily contained, Pacific Union is proceeding with caution for the funding of loans secured by impacted properties.
Late last year I had lunch with a group of mortgage professionals. Lumped in with the requisite underwriters, processors, and secondary folks, was an individual who assumed a tremendous amount of daily operational risk; however, by his own admission, he claimed he wasn't "a mortgage guy." The man in question was the IT administrator (presumably there for the free pinwheel sandwiches and brownies), and was a little taken aback when I replied that whether or not he highlighted his mortgage experience on his resume, he was in fact "a mortgage guy" now. There's no denying the impact Dodd-Frank has placed on IT departments. Lending institutions have, among other things, been saddled with the responsibility of data retention and archiving, disaster recovery and business continuity planning; all areas which were woefully under-addressed ten years ago.
Mortgage bankers are notoriously bad at compartmentalizing risk. Ask an executive, "Who handles credit risk?", and they'll probably give you the name of their head of underwriting; inquire as to who assumes price risk, and they'll probably point you to the lock desk manager. I'm reminded of a conversation I had with a U.S. Navy Captain one time when he said,"regardless of rate and rank, in the Navy, everyone from the cook to myself, is first and foremost, a fire fighter." While I know not everyone is in the business of IT, everyone should be concerned with technology, because according to some, EVERYONE is in the business of technology. Angel Mendez writes, "At an all-company meeting last fall at Cisco Systems in Silicon Valley, Chairman and CEO John Chambers made an important point about Cisco's customers. "In the future, every company will be a technology company," he said. "Bank of America will be a technology company specializing in banking." It's an important point. IT is routinely overlooked in the mortgage business with respect to risk.
We hear it all the time now, "real estate values are higher now than they were back in early 2007." I'm not sure what to make of this, however, what I do know is that the housing market is currently one (if not the only) bright spot to a rather dismal economy....but I guess that was the case too back in the late '00s. If I knew how to use a witty hash tag remark, like the youngsters are doing these days, I would, but back in my day we called "# "a pound sign. Wells Fargo writes, "23.5 Percent Probability of Recession in the Next Six Months. Recent economic and financial developments have brought talk of recession back into the spotlight. Some potential sources of the recession talks are volatility in financial markets, stress in the manufacturing and mining sectors and global factors. For instance, between January 2015 and January 2016, the ISM-Manufacturing index (ISM-M) dropped over 10 percent, industrial production (IP) declined 0.7 percent (including negative growth for 8 of the past 13 months) and the Commodity Research Bureau's Index (CRB Index) declined over 15 percent. The S&P 500 index dropped over 5 percent during the same time period. In addition, the index of leading indicators (LEI), one of the most well-known predictors of the near-term state of the U.S. economy, recently reported negative growth for two consecutive months (December 2015 - January 2016), which has only happened one other time (August - September 2011) since the Great Recession."
Turning to the markets for Tuesday, we had a spate of potentially market-moving news - although once again rates barely budged. Retail Sales fell 0.1% in February, although declining gasoline prices had a lot to do with it. Ex-autos and gas, they were up 0.3%. The downward revisions to January got everyone's attention however as the initial 0.2% estimate was revised downward to -0.4%. The Producer Price Index fell 0.2% in February as well - below the Fed's desires. Ex-food and energy, it was flat on a month-over-month basis and is up 1.2% YOY. The Empire Manufacturing Index rebounded smartly to .62 after a heavily negative start to the year. Lastly the NAHB Homebuilder Sentiment Index was unchanged at 58 in March. This is a 9 month low, and slightly lower than expected. The builders are saying there is a shortage of decent lots and skilled labor. The builders have been able to drive the top line by raising prices, not by pushing volume.
Today for excitement we'll have the MBA Mortgage Index, February CPI and Core CPI, February Housing Starts and Building Permits, February Industrial Production and Capacity Utilization, and the March FOMC rate decision - don't expect a change. We wrapped up Tuesday with the 10-year at 1.96% - pretty steady so far this week!
Jobs and Announcements
If you are an IT executive who is excited by the chance to build and shape an innovative production technology platform for a growing Consumer Direct organization in the Dallas area, this is a rare opportunity to build the technology and your own team from the ground floor. "This head of Mortgage IT position requires developing a strong, agile Mortgage IT organization that is in tune with the business and will make a strategic difference in achieving the Company's mission. You will be required to not only fully leverage Encompass LOS business functionality and integrate ancillary applications to enhance the CD point of sale and fulfillment process workflows, but also have a vision to implement innovative technologies to make technology a differentiator for the organization. LOS IT leadership experience with an organization originating at least $2 billion annually & knowledge of the mortgage regulatory compliance environment are required." Interested parties can send confidential resumes to me. (Please specify opportunity & excuse delays in response due to travel.)
Indecomm Global Services, a leading provider of mortgage technology, training, and outsourcing services is seeking an experienced Project Manager for Processing. Clients include prominent top tier, mid-tier lenders, and regional lenders as well as title and settlement companies. The successful candidate will provide a high level of customer service, communicating well with loan officers, brokers, account executives and processors with the primary function being to ensure the timely and accurate closing of loans as well as implementing the Project Execution Plan. The candidate may also be assigned additional duties as required. This position is based out of Charlotte, NC. The ideal candidate should have 3 years minimum, 5 years preferred, of continuous processing experience and management. Interested candidates should send their resume to HR Manager Candy Mechels.
Are you an independent mortgage banker, credit union or community bank, looking for MORE from your investor counterparts, beyond just competitive pricing, a wide array of products and solid service? Well, with last year's partnership with CastleLine's Certified Loan Program, Plaza Home Mortgage, Inc. has done just that with its National Correspondent division, extending automatic rep and warranty relief directly to its correspondents, thereby limiting their repurchase risk/exposure on every delegated loan sold to Plaza. Plaza is one of the few investors to currently provide its correspondents with this automatic insurance coverage, and does so at no additional cost, substantially mitigating the losses caused by repurchase demands due to borrower or employee fraud and misrepresentation, manufacturing defects (underwriting errors, guidelines violations, etc.), appraisal discrepancies, compliance violations (including TRID), and more. Find out more by contacting Plaza today at 858-404-0166 or at the link above.
In personnel news Inlanta Mortgage announced that Nicholas DelTorto will remain president and assume the role as CEO. Congrats! "I consider myself privileged to know and work with Nick. He has done a great job in leading our company and senior management team since his promotion to president in 2012. He is dedicated to Inlanta and the success of our company," said John Knowlton, Chairman of the Board. Mr. DelTorto was recently elected to the National Mortgage Bankers Association (MBA) Residential Board of Governors (RESBOG). With this appointment, DelTorto becomes the first member of the Wisconsin Mortgage Bankers Association (WMBA) to be elected to the RESBOG.
Parkside Lending recently announced that it has added the Premier Jumbo to its existing suite of Jumbo products. "Premier Jumbo offers competitively priced ARMs and 15-year fixed loans for borrowers with strong credit. We are pleased to offer another product to help borrowers who need loan amounts greater than $417,000. For more information on Premier Jumbo or any of our other Jumbo products, contact your Parkside Account Executive or info@parksidelending.com. Let Parkside Lending bring the power of caring to your business through our exceptional customer service supporting this new program and all of our products."