Mortgage Cryptocurrency; Lender and Agency FHA, VA changes; Ginnie Names Names
Here’s a riddle for tonight’s Happy Hour for snowed-in Chicagoans: What do New Day Financial, Nations Lending Corp., Freedom Mortgage Corp, LoanDepot.com LLC and Flagstar Bank have in common? Answer: they were singled out by Ginnie Mae as being "outliers" in terms of their prepayment speed profiles in multi-issuer pools, and not in a good way. And no one wants to be singled out by GNMA for this. “Such deviations from market norms are not acceptable and put a veteran earned benefit at risk.” (There were a few other lenders who received the letter, but not explicitly mentioned. The usual suspects are suspected.)
New Products
LendingQB has added CoreLogic's LoanSafe Fraud manager into its LOS to bring a more streamlined lending experience to LendingQB customers. This recent integration adds to the growing list of CoreLogic products offered in LendingQB and shows the LOS provider’s commitment to not just building partnerships but also strengthening existing ones. For more information, visit LendingQB.
Aperture announced the launch of Property Coin, a cryptocurrency backed by a diversified, professionally managed portfolio of real estate and mortgage loans. Aperture (led by long time mortgage industry/ investment banking/ banking tech pros Matt Miles, Andrew Jewett, Rudy Cortes, Dan Goldman and Pat Fogarty) has systematized the acquisition, rehabilitation and disposition of residential real estate ("flips") with over 50% unlevered IRRs produced to date. Property Coin is the intersection of real estate investment and cryptocurrency: 100% of the net proceeds from the sale of Property Coin will be invested in real estate and loans selected by Aperture’s team of investment professionals using their proprietary technology. “Property Coin is the first structured real estate portfolio on the blockchain, and the only way that we are aware of, anywhere, to invest in the residential "fix and flip" asset class with an institutional partner”, said Andrew Jewett, co-CEO.
From out in California comes news that Orange-based American Advisor’s Group (AAG), known for being a reverse mortgage provider, is “expanding into traditional home loans to help seniors who want an alternative for tapping into their home’s equity to help pay the bills during retirement.” Yes, AAG is expanding into conventional home loans. The firm announced Wednesday, Feb. 7, it recently leased an 11,000-square-foot office in Folsom where 70 to 80 new loan officers will oversee the company’s new mortgage operation.
Ginnie: Things are Hotting Up
“Hotting up” is a term they use in Scotland when things become tense, interesting, worthy of note. Ginnie Mae singled out "outliers" in terms of their prepayment speed profiles in multi-issuer pools, and not in a good way. And no one wants to be singled out by GNMA for this. “Such deviations from market norms are not acceptable and put a veteran earned benefit at risk. This work builds off the ‘Ginnie Mae – VA Loan Churn Task Force,’ which has been ongoing since September 2017,” noted the press release.
Ginnie put out a press release on additional actions they have taken to control churning, and that they notified those outliers. Is “outliers” a politically correct term, like the CFPB using “bad actors?” Regardless, it’s shape up or ship out for those companies. My guess is that all of them will “deliver a corrective action plan that identifies immediate strategies to bring prepayment speeds in line with market peers.” If they are unable to “demonstrate a path to improved performance, said issuers risk being restricted from access to Ginnie Mae multi-issuer pools. Thereafter, those issuers may only have access to Ginnie Mae custom pools."
Recall that the Veterans Administration (VA), on Feb. 1, 2018, enhanced disclosure requirements for interest rate reductions refinance loans (IRRRLs). The change outlined by the VA closes a prior reporting loophole and requires lenders to provide the Veteran's Statement and Lender Certification no later than three business days after receiving a loan application. Per the VA, early disclosure in the application process affords Veterans the opportunity to make informed decisions and determine if the proposed IRRRL is in their best interest. This new policy goes into place for loans closed on/after April 1, 2018.
Ginnie Mae’s issuance of these notices directly follows recent announcements of program changes, APM 17-06, Pooling Eligibility for Refinance Loans and Monitoring of Prepay Activity, and APM 18-02, Risk Parameters Applicable to Single Family Issuers. These APMs outline acceptable risk parameters for mortgages backing Ginnie Mae securities and ongoing issuer evaluation.
Todd Jones, President of BBMC Mortgage, a Division of Chicago’s Bridgeview Bank Group, sent, “BBMC fully supports the task force and the measures Ginnie Mae and the VA are taking to control churning and protect our veterans. The actions of a small percentage of Lenders have caused financial harm to 10’s of thousands of veterans, and their actions could drive up costs for all veterans utilizing their earned VA Loan benefit. Ginnie Mae’s action today, will certainly have an impact. If reports of the issuers being notified are accurate, due to each of their business models, those lenders will have no choice but to make immediate and meaningful changes that will benefit the veteran community as whole or risk their company’s very existence. BBMC Mortgage has always acted responsibly and even instituted our own overlays to ensure closing costs are recouped in a reasonable amount of time and have always required documenting the net tangible benefit for the veteran. These simple make sense solutions to ensure the veteran is being cared for properly, are not only the right thing to do for the veteran, they have now proven to be the right thing for the company’s bottom line.”
United Wholesale Mortgage has lowered its minimum FICO requirement from 680 to 660 on FHA and VA Elite loans, in addition to lowering the minimum loan amounts for Elite loans from $175,000 to $125,000 with no LTV cap. UWM also lowered its minimum FICO on non-Elite FHA, VA and USDA loans from 640 to 620. These changes give even more borrowers access to lower rates and fast turn times.
PennyMac Correspondent Group has posted a new announcement clarifying the Ginnie Mae seasoning requirements application when the underlying loan being paid off is a government loan.
The changes issued by Ginnie Mae (GNMA) regarding seasoning and payment requirements are effective with pool issuance on or after April 1, 2018. Pacific Union Financial, LLC must comply with the new GNMA requirements, therefore loans that do not meet the following requirements must be purchased on or before February 15, 2018. VA does not prescribe seasoning and payment history requirements for cash-out refinances; therefore, Pacific Union is adopting GNMA’s requirements for VA cash-out transactions. Documents impacted by this change will be published on February 12, 2018.
As announced previously by AmeriHome, the new Ginnie Mae seasoning requirements addressed in APM 17-06 will be required for loans delivered to AmeriHome on or after Friday, March 2, 2018. Affected loans that do not meet the new requirements must be purchased by AmeriHome on or before Tuesday, March 13, 2018. Also noted by AmeriHome: for 2018 HMDA reporting purposes, AmeriHome is identified as “Type of Purchaser: Code 71 - Credit union, mortgage company, or finance company.”
HUD recently announced a top-to-bottom review of all current and pending regulations related to manufactured housing as part of an effort to address affordable housing shortages. HUD will accept public comments about manufactured housing regulations through the mail or at regulations.gov until February 26, at which point comments will be submitted to the Manufactured Housing Consensus Committee—a statutory committee of mobile home producers, retailers, customers, and public officials—for review. Manufactured homes, which are built on a permanent chassis in a manufacturing plant and then transported, are constructed according to a code administered by HUD instead of according to state, local, or regional codes, like other types of housing. This gives HUD wide authority to regulate or deregulate them.
The Department of Veteran Affairs (VA) announced new loan limits effective for loans closed on or after January 1, 2018. The new county loan limits do not apply to VA IRRRL's. VA will guarantee 25% of the loan amount on an IRRRL, regardless of whether the loan exceeds the limit for that county. NewLeaf allowed the new VA loan limits for loans closed on or after January 1.
Effective immediately, for all FHA transactions utilizing gift funds, NewLeaf Wholesale must include evidence of donor's ability to give the gift, per HUD Handbook 4000.1.
M&T Bank Correspondent is requiring the following seasoning requirements, effective immediately, for all new VA Refinance & FHA cash-out Refinance registrations: The borrower must have made at least six payments on the mortgage being refinanced and at least six full months must have passed since the first payment due date of the refinanced mortgage and at least 210 days have passed from the closing date of the mortgage being financed. If the borrower assumes the mortgage that is being refinanced, they must have made six payments since the time of assumption. Loans that do not meet this requirement must be purchased no later than February 28, 2018.
Mortgage Solutions Financials’ VA cash out program highlights include: No Credit Score Overlay to VA Guidelines (VA does not have a minimum credit score). High Balance Loan Amounts Allowed - No restrictions to VA Guidelines! No overlays to VA LTV / HCLTV Guidelines (100% LTV is possible). No overlays to the amount of cash out allowed per VA Guidelines: Manufactured Homes Allowed. Manual Underwriting Approval Allowed per VA Guidelines LP or DU.
Mortgage Solutions Financial posted expanded Government Monitoring Information requirements effective January 1.
Capital Markets
The markets were once again focused on the funding of the US government Thursday, which will increase because of the 2-year budget deal put forth by the Senate. The 10-year Treasury note rose a modest 1 basis point to a yield of 2.84 percent and reach a new intra-day high of 2.844 percent. A weak 30-year bond auction also reinforced the recent concerns about future Treasury supply. Retiring New York Federal Reserve President William Dudley spoke saying that if the economy continues to expand at its current pace, that the case could be made for a fourth rate hike this year. He also downplayed the current stock market declines as “small potatoes” when compared to the gains seen over the last few years.
Today’s calendar is another light one with only wholesale inventories and sales for December though the markets are digesting headlines from DC surrounding the budget deal. The US gov’t entered a “shutdown” technically but only for 5.5 hours as the Senate and House passed the 2-year spending, deficit-ballooning agreement. On to President Trump’s desk for signing. Rates aren’t much changed versus yesterday’s close: the 10-year is yielding 2.83% and agency MBS prices are roughly unchanged.
Employment, Products, Promotions
According to the most recent ARMCO Mortgage QC Trends Report, purchase transactions continued to outpace mortgage refinance originations in Q2 2017, with an increase of over 9% from Q1. The critical defect rate continued its upward trend, reaching 1.76% in Q2 2017, while the leading critical defect categories for Q2 2017 were Borrower and Mortgage Eligibility, Credit, and Income/Employment. Purchase transactions continued to dominate the percentage of loan originations, and defects associated with underwriting and eligibility made up most critical defects. View the full report
For the third consecutive year, Envoy Mortgage has won the Top Mortgage Employers Award from National Mortgage Professional Magazine. Polling its readers on criteria such as, compensation, corporate culture, long-term strategy, marketing support, training resources and innovation, this is further testament that Envoy Mortgage continues to sustain an environment built foxr growth and support. The company also launched several marketing and technology-driven tools in 2017 to provide their loan originators further ways to increase their business. In 2018, Envoy is transforming the consumer connection by increasing their focus on referral partner relationships and continuing to provide exceptional borrower experiences. To learn more about Envoy Mortgage and how you can become part of an award-winning team, email us.
“As the saying goes, ‘It's lonely at the top.’ But as the #1 distributed non-bank retail lender in the country, Caliber Home Loans, Inc. isn’t lonely at all. In fact, from where we sit, the sky is the limit. Loan Officers ready to work for a lender that can elevate their careers should contact Jeremy DeRosa or visit www.joincalibernow.com. The view from here is great!”
Consistent with American Pacific Mortgage’s commitment to partner and add Independent Mortgage Banks to their growing family, APM has added 14 branches throughout the Rocky Mountains and Southwest of Catalyst Lending. Kevin Yamane, President of Catalyst Lending, said, “We are so happy to join such a good company and we look forward to a long and successful relationship.” If you're interested in learning how other Independent Mortgage Banks have partnered with APM, click here to email Peter Schwartz (916-770-0053).