FHA, VA Updates; Ginnie Mae Overview
Ginnie, FHA and VA News
Lender updates regarding Texas and Florida are quieting down slightly, so let's play some catch up on government programs.
Ginnie Mae will consider potentially misleading marketing practices involving U.S. Department of Veterans Affairs-backed lenders. Acknowledging concerns U.S. Sen. Elizabeth Warren raised in a recent letter, Ginnie Mae Acting President and Chief Operating Officer Michael Bright said that she is right to be bothered by the potential impacts aggressive mortgage marketing practices could have on veteran borrowers. Bright stated that Ginnie Mae has already taken some steps to address these issues, and announced the creation of a joint "Lender Abuse Task Force," which will work with the VA to crack down on such practices especially for VA IRRRLs.
People often confuse Freddie & Fannie and Ginnie Mae. As a reminder, Ginnie doesn't buy mortgages like F&F. Ginnie Mae is a government-owned corporation whose purpose is to make mortgages more affordable by guaranteeing repayment on $2 trillion of mortgage bonds even if borrowers default on the underlying loans. Ginnie-backed securities support several federal housing initiatives such as FHA, USDA, and including programs in which loans are made through the Department of Veterans Affairs. VA loans often have no requirement for a down payment and adding closing costs to loan balances so borrowers don't have to pay them at the time of the sale.
Are some Ginnie Mae-approved issuer companies taking advantage of the VA program to aggressively market and "churn" loans via soliciting existing VA borrowers to refinance a mortgage at little or no economic benefit? Ginnie will find out. Here is Ginnie Mae's letter to Sen. Warren.
This caught the attention of the secondary markets since quick refinancing has a negative impact on Ginnie Mae securities. Why would an investor pay 105 for a security filled with loans that are going to pay off in six months, and they investor receive 100 for them as they do? In addition, some VA borrowers may pay a higher mortgage rate than they otherwise would due to such churning. Ginnie Mae took steps to respond to these issues, as well as those raised in a November 2016 Consumer Financial Protection Bureau report, which offered a snapshot of complaints service members have filed related to VA mortgage refinancing. Ginnie Mae's initial measures to change its program rules were successful in stopping these practices with many lenders, including putting a six-month moratorium on refinancing.
The market has seen prices of Ginnie bonds drop relative to other agency MBS. As mentioned above, when investors buy Ginnie securities, they make assumptions about how quickly borrowers will refinance. If refinances happen more quickly than expected, investors risk losing their expected bond yield and income stream. Such factors make Ginnie bonds less attractive, and when demand wanes, prices fall. And falling securities prices lead to higher interest rates for mortgage borrowers.
On September 18 FHA updated its systems to accommodate the implementation of origination and servicing policies contained in the Home Equity Conversion Mortgage (HECM) program final rule that published on January 19, 2017; the servicing implementation guidance issued in Mortgagee Letter 2017-11 on August 24, 2017; and The changes to the HECM Mortgage Insurance Premium Rates and Principal Limit Factors announced in Mortgagee Letter 2017-12 on August 29, 2017. While FHA systems updates will be visible on Monday, September 18th, the HECM final rule changes will be effective for all FHA case numbers assigned on or after September 19, 2017, and the Mortgage Insurance Premium Rates and Principal Limit Factors changes will be effective for all FHA case numbers assigned on or after October 2, 2017.
FHA published Mortgagee Letter 2017-13, Extension of Temporary Approval Provisions for the Federal Housing Administration (FHA) Condominium Project Approval Process. This Mortgagee Letter extends FHA's temporary condominium project approval policy provisions until FHA completes both permanent policy rulemaking and the future Condominium Project Approval section of the Single-Family Housing Policy Handbook. This extension, without changes to existing temporary provisions, ensures that mortgagees, real estate professionals, and others may continue to work with borrowers seeking FHA-insured mortgages on condominium units in FHA-approved condominium projects. Temporary condominium project approval provisions continue to be applicable to all FHA Single Family Title II programs, including the Home Equity Conversion Mortgage program, unless otherwise stated.
Envoy Mortgage's Correspondent Lending Division (CLD) announced the release of HUD's FHA 203(h) product effective Monday, September 18th. The Section 203(h) program allows the FHA to insure mortgages made by qualified lenders to victims of a major disaster who have lost their homes and are in the process of rebuilding or buying another home. Through Section 203(h), the Federal Government helps victims in Presidentially Declared Major Disaster Areas (PDMDA) recover by making it easier for them to get mortgages and become homeowners or re-establish themselves as homeowners. Envoy's program offers 100% LTV when purchasing a property that require no renovation work. Envoy will purchase renovated properties but only after all work has been completed with final Inspection. Principal Residence only. 1-unit Single Family Property or a unit in a FHA approved Condominium Project. Underwriting Flexibilities on certain qualifying documentation related to property damage. FHA case number must be assigned within one year of the date the PDMDA is declared. For specific information, please refer to the product description in Section 4 of the Lender Guide.
And the Correspondent Lending Division (CLD) of Envoy Mortgage will now offer VA Sponsorships to eligible non-delegated customers. "The VA Sponsorship program is an excellent addition to the many products Envoy CLD currently offers for non-delegated lenders. Envoy's core strength of high-touch customer service fosters meaningful relationships with independent mortgage bankers, community banks and credit unions across the country."
United Wholesale Mortgage announced the expansion of its box of Elite product offerings, allowing more borrowers to qualify for great pricing. UWM's conventional Elite now starts at 700 FICO/$200K/80% LTV and FHA/VA Elite now starts at 680 FICO/$125K.
On FHA purchase transactions for properties built before 1978, the Property Seller/Realtor must issue a Lead-Based Paint Disclosure to the Borrower and include it in the Purchase Contract. NewLeaf Wholesale must obtain a copy of the Lead-Based Paint Disclosure with the Purchase Contract and ensure that the appropriate disclosure receipt option is indicated on the HUD 92900A. To ensure disclosure accuracy, the year the subject property was built must be accurate on the 1003.
Capital Markets
U.S. Treasury securities, and with them agency MBS, began the week on a lower note with longer-dated issues ending near their worst levels of the day. The yield curve steepened - of interest to those trying to gauge future economic conditions. Of more importance to the bond markets than the weekly or monthly econ news is the Federal Open Market Committee's meeting which is today and tomorrow. The market does not expect a rate hike to be announced on Wednesday, but the FOMC statement has an elevated potential to influence rate hike expectations for December and the Fed is expected to announce a start date for the balance sheet normalization process.
This morning we've had the August Housing Starts and Building Permits numbers (-.8%, +5.7%, respectively; starts down for the 2nd month in a row) and August Import & Export Prices (+.6%, and Q2 Current Account Balance (the broadest widened. Rates have taken the overnight session and this morning's numbers in stride. The 10-year yield, which ended Monday at 2.23%, is at 2.22% while agency MBS prices are better a shade.
Jobs, Rebranding, and Products
Santander Bank is in the midst of an ambitious growth plan and is currently hiring for experienced, top-performing Mortgage Loan Officers across its footprint (MA, RI, CT, NH, NY, NJ and PA). As a major mortgage lender, Santander leverages the benefits of local processing, underwriting and closing, and provides its Loan Officers with outstanding sales management support from a team of experienced, non-producing Sales Managers. Santander brings many benefits to the table for its Loan Officers including a superb product line-up (including an attractive jumbo balance sheet product), competitive rates, exclusive assigned retail branches and referral opportunities, a competitive commission plan and a great menu of employee benefits (including medical, dental, vision and 401K). If you are looking to build your list of contacts and grow your career as a Loan Officer with Santander, please e-mail Matthew Oliveira (401-435-1265).
WR Starkey Mortgage, LLP, a nationally recognized residential mortgage company, announced it's renaming the company to Certainty Home Loans, LLC and launching a complete rebrand on October 2, 2017. The rebrand puts the company's core strength front and center - delivering confident closings, with the terms agreed upon, and the timing promised. The rebranding strategy focuses on the expertise, transparency and customer service that Starkey Mortgage has delivered for nearly 20 years. And is the culmination of an extensive brand strategy which included interviews with employees, customers, and business associates to uncover a positive and relevant brand connection with key stakeholders. The rebrand to Certainty Home Loans marks a commitment to investing in the company's future by positioning it for continued growth. Visit Certainty Home Loans on October 2nd at CertaintyHomeLoans.com, and all social media channels.
Floify, the mortgage automation solution for top-producing LOs, has just rolled out dozens of exciting updates, apps, and integrations to make their platform even better! Now, LOs can instantly pull Verification of Employment and Income (VOE and VOI), assets, and liabilities via a secure integration with The Work Number, and tri-merge credit reports via Equifax Trended Credit*Hi-Lite directly into an application or loan file. Additionally, Floify's fully-customizable 1003 application can be embedded into your website and integrated with credit and asset verification services. Finally, the mobile version of Floify can be white labeled to match your brand then downloaded by your borrowers from your own personalized app store listing so they can upload docs or track loan status. To see how Floify can help you streamline your mortgage processing workflow, request a live demo. If you already know how well Floify will work for you, get started with a free trial, plus 25% OFF your first 4 months.
Listen to XINNIX's new podcast series, "Inside the Mind of a Top Executive." In this episode, XINNIX CEO Casey Cunningham speaks with Bruno Pasceri, President of Finance of America Mortgage. Drawing on his 30+ year, award-winning mortgage career, Bruno discusses how he develops an incredible company culture, implements vital training to create a powerful salesforce, and works to recruit the next generation of mortgage professionals. Click here to gain invaluable insight from one of the industry's top executives!
Come talk to Planet Home Lending's wholesale team at booth #12 at the Colorado Mortgage Summit today in Denver. "See how great pricing, make-sense underwriting, smooth processes, and quick turn times give you great results. Pick up the details on our innovative wholesale non-delegated lending partnership programs from Wholesale Regional Manager Ron Scott, or Senior Account Executives Linda Griffiths and David Kevelighan. Reach out to Ron (512.585.2284)."
Stop time-sucking tasks like hunting down borrowers for documents. Think about how much time you spend in email per day, I'm sure we would all agree it is way too much of our day. And moreover, email is insecure. Borrowers don't trust it. Better solutions are not as scary or expensive as you may think. Take Maxwell's borrower portal, for example. Lending teams using Maxwell are collecting borrower documents 73% faster than the average LO. Your needs list done in a day? An hour? This is possible with integrations of over 1,000 financial institutions, direct VOE/VOI, and 4506T. Along with a customizable loan application, automated borrower and agent notifications, and an easy way to sync to your LOS, it's no wonder Maxwell is the emerging leader in digital mortgage automation. Click here to learn more about Maxwell and Request a Demo today.
How should Lenders prioritize borrower satisfaction feedback? Most lenders have some version of a post-closing survey in place, but few reap actionable results, and even fewer end up creating an action plan for improvement. While some surveys lack depth, others reach deep into the customer experience only to produce piles of data that are never analyzed or used. And, problem areas can fly under the radar for lack of a reference point (consider an LO satisfaction score of 87, which sounds good until compared with the national average of 95, according to MortgageSAT's National Benchmark of more than 130,000 survey responses annually). Spending time and resources to gather customer feedback is only a good investment when that feedback is used to improve service and drive organic growth. In this month's MortgageSAT Tip, STRATMOR's Mike Seminari discusses prioritizing borrower feedback by determining which fixes will have the greatest impact on your business.