Flood Insurance Update; What's New with Fannie & Freddie?
May is Older Americans Month. Underwriters probably know that about 21% of the labor force is comprised of men 65 and older and only 13.5% of women in the same age range. 79% of older Americans owned their homes as of fourth quarter 2015. Now, the moment you all didn't know you were waiting for: there are roughly 53,000 Americans aged 100 and older. For every 100 centenarian women there are only 21 centenarian men.
Chase recently hosted its inaugural Mortgage Banking Executive Summit in New York City, an intimate gathering of senior mortgage professionals to learn about and discuss topics that are shaping the industry. The event featured a number of sessions from JPMorgan Chase leaders and industry experts who addressed a wide-range of topics including: the 2016 presidential election and its impact on the banking and mortgage industry, the importance of restoring the private-sector securitization market, and the power of social media and how it is effectively used by industry professionals. Another highlight from the day featured a panel titled, "Lending through Change and Adversity"; Steve Hemperly, head of mortgage originations at Chase, moderated the panel with Jen Piepszak, CEO of Business Banking, Bill Emerson, CEO of Quicken, and Mike Weinbach, CEO of Mortgage Banking. The group discussed the evolution of the mortgage industry, from changing regulations to the emergence of new technology, as well as strategies to strengthen the corporate culture and engage employees.
"As the mortgage market continues to evolve, it's important that the key industry players come together to openly discuss the challenges and opportunities," said Greg Beliles, head of Mortgage Banking's Correspondent Lending channel. "We've received positive feedback on this event, and look forward to hosting similar forums in the future."
The nation has certainly had its share of flood and disaster news. The private flood insurance bill is now in the Senate's hands. The reason that the House of Representatives took a look at it? Property owners who opt to purchase flood insurance in the private market rather than through the National Flood Insurance Program may do so under current rules, but they risk paying higher rates if they return to the NFIP. H.R. 2901, the "Flood Insurance Market Parity and Modernization Act," passed the U.S. House of Representatives by a vote of 419-0 and seeks to alleviate that concern.
Realtors, for one, liked the news. "For many, the NFIP offers the only source of coverage that meets federally-related mortgage requirements and protects properties in the 100-year floodplain. At the same time, consumers who wish to purchase insurance in the private market should have the freedom to do so...This legislation will help foster a vibrant private flood insurance market while giving consumers the flexibility to return to the NFIP at a reasonable cost if they choose to."
Under current regulations, the NFIP requires homeowners to retain a minimum amount of flood insurance coverage to maintain the lowest rates available within the NFIP. Those same regulations treat consumers who move to private insurance as having had a "break" in coverage, even if the private insurance product offers comparable coverage for the property.
Oftentimes, consumers will return to the NFIP when a private insurance product goes up in price or is no longer available. In that instance, a homeowner can only do so in the face of a rate hike.
H.R. 2901 would change this by clarifying that private flood insurance that meets state law provides continuous coverage. If the bill becomes law, property owners could move seamlessly between the NFIP and private insurance markets without the risk of arbitrary rate increases.
Apparently the bill is a necessary follow-up to the Biggert-Waters Flood Insurance Reform Act of 2012, clarifying Congress' intent to encourage development of a private market in flood-insurance products to compete with the taxpayer-subsidized policies offered through the National Flood Insurance Program.
H.R. 2901 defers to the states' expertise in insurance regulation to develop appropriate guidelines for qualifying policies, including those written through the excess and surplus lines markets. Additionally, it ensures that any period in which a property is covered either by an NFIP policy or a private policy is to be considered "continuous coverage."
At this time, the Federal Emergency Management Agency (FEMA) has not issued a declaration specifying impacted areas for the recent Texas flooding's. Wells Fargo Funding is assessing both the expanse and effect of the flooding, but has not yet enacted Disaster Policy. Past Newsflashes may be found on its Wells Fargo Funding website in the Info Gallery or within its Seller Guide. In order to meet Freddie Mac's July 1, 2016, pooling requirement, Home Possible Loans that require MI coverage at Freddie Mac's current levels, must be purchased on or before May 13, 2016. After this date, Wells will only purchase Home Possible Loans under Freddie Mac's new MI coverage levels, reflected in the table below. In addition, these Loans will be subject to Freddie Mac's new delivery fee (price adjuster) caps. Also posted, Closing Disclosure's (CD) signed at consummation is now eligible for eSignature and/or eDelivery.
The Pacific Union Financial, LLC policy for properties located in disaster areas is published in its Correspondent Lending Guide. Pacific Union is monitoring the impact of severe storms and recent disaster declarations throughout several states as published by FEMA's Disaster Declaration Summary. Also, refer to state-specific PDF Maps for areas recently impacted, as identified by FEMA.
NewLeaf Wholesale has published a new insurance policy detailing property hazard insurance requirements.
Turning to agency news, more specifically Freddie & Fannie, remember that the FHFA is working to create a single security this year that will bring together FNMA and FHLMC mortgage backed securities. The shift will streamline the process and reduce costs associated with creating and administering such MBS. A good thing for borrowers!
Freddie Mac put out a Single-Family Seller/Servicer Guide (Guide) Bulletin (2016-8) to announce an update to the application of the new delivery fee cap structure for Freddie Mac Home Possible® and Home Possible Advantage mortgages (collectively Home Possible mortgages). Specifically, Freddie is removing the delivery fee cap eligibility requirements based on area median income (AMI) or the location of the mortgaged premises in an underserved area (as originally announced in our December 9, 2015, Guide Bulletin 2015-21). Instead, customers only need to look at the LTV ratio and borrower's credit score to determine if the zero or 1.50 percent delivery fee cap applies. We made the change based on customer input to make Home Possible mortgages more affordable to more eligible borrowers. his delivery fee cap structure takes effect for Home Possible mortgages with settlement dates on or after July 1.
This Lender Letter introduces a new mortgage loan modification program, the Fannie Mae Principal Reduction Modification, at the direction of FHFA and in collaboration with Freddie Mac. Details of this program are included in this Lender Letter. In addition to LL-2016-02, Fannie Mae is also publishing a list of Servicer FAQ's related to this program.
One of Fannie Mae's recent announcements pertains to lenders preparing to deliver the Uniform Loan Delivery Dataset (ULDD) Phase 2 required data in Loan Delivery by the June 27, 2016 mandate. Several edit changes are occurring -- edits switching from Warning and Warning-to-Fatal to Fatal, and new edits being introduced. Also on June 27, EarlyCheck Version 4.0.5 will be released featuring new and modified edits. For more information on these changes, reference the EarlyCheck Release Notes and the Loan Delivery Release Notes.
With all this going on who has time to look at rates? Wednesday we saw bond prices improve, and rates drop slightly, as overnight selling in risky assets was reinforced during the U.S. session by a weaker-than-expected ADP Employment Change for April. Factory orders and April's ISM Services Index were better than expected, but the market focused on the ADP number.
Tomorrow is "job's day" but today we've already had the April Challenger Job Cuts (above the 1st quarter's average) and Initial Jobless Claims for the week ending 4/30 (+17k to 274k) - and that is all for scheduled news. We ended Wednesday with the risk-free U.S. T-note at a yield of 1.78% and this morning it is hovering around 1.80% with agency MBS prices roughly unchanged, maybe a shade worse.
Jobs and Announcements
Denver based LenderLive Correspondent is actively seeking experienced regional account executives for two territories: Delaware/New Jersey/Eastern Pennsylvania and New York/New England. LenderLive's correspondent program is a fast-growing, FNMA, FHLMC, GNMA seller/servicer providing a full product suite that includes non-QM. The company does business in all states offering delegated and non-delegated options with BE and mandatory delivery. "Its correspondent program offers a truly distinctive value proposition, including a Fast Track seller approval that activates clients in days rather than weeks. In addition to their compensation plan, LenderLive correspondent account executives have the ability to earn additional income cross-selling affiliate services." Contact Bob Kallio for more information.
In retail news Regency Mortgage Corp., a New Hampshire based independent mortgage banking company, is seeking to acquire retail production teams, mortgage brokerage companies or other independent mortgage banking firms throughout New England and along the eastern seaboard, including Florida. Regency is a FNMA/FHLMC Seller-Servicer with a mature and very strong fulfillment operation, a highly innovative marketing and sales platform and a competitive LO comp. plan and pricing model. If you are a sales leader looking for that one company that will best support you and your team, allowing you to do what you do best, grow and expand your business, then you should be speaking with Regency Mortgage Corp. Take that first step to controlling your future today by calling Mark McCauley, VP of Loan Originations for a confidential discussion, 888.646.5626, ext. 473.
And moving inland a national, top-50 mortgage banker is discretely searching for an immediate acquisition opportunity to exclusively support its Midwest real estate and builder partners. The ideal target is a correspondent banking platform with legacy-free monthly production volume of $20-40M. Must have direct FHA authority at a minimum; full agency approvals are preferred but not an absolute requirement. Will also consider a $15-20M monthly brokerage platform. Production from our partner relationships is expected to grow to $1.5B over the next 18 months. Attractive buyout terms including multi-year production incentive bonus. Interested principals and agents are encouraged to submit a letter of interest to me.
"Network Funding, LP is proud to welcome Ross Cowan as its new National Business Development Manager. Cowan has over 13 years of experience, and in his new role he will be responsible for identifying and recruiting the best entrepreneurial retail mortgage originators across the United States." If you'd like to have a conversation about what Network Funding has to offer, please contact Ross (303-956-8843). You can learn more about Network Funding and their available positions at www.join.nflp.com.
And congrats to Steve Smith. Stearns Lending, LLC, announced his appointment to the position of Chief Financial Officer, with senior executive level responsibilities for the Company's accounting, treasury and financial activities and associated strategies. Mr. Smith comes over from Caliber Funding.
Who says that there are no new entrants in the mortgage biz? "Arrive Home Mortgage exists to put the interests of the Customer first by rebelling against the status quo. Conceived and helmed by our collective of industry experts, Arrive Home Mortgage LLC, is a mortgage company designed to put the interests of the Consumer first. Addressing deep-seated flaws within the current home-loan process, we've crafted an expedited experience that guarantees low rates, expert guidance and faster closings."