Flagstar's Expansion; News Regarding Freddie and Fannie

Why couldn’t the sesame seed leave the gambling casino? Because he was on a roll. In an admittedly weak segue, rolls are made in kitchens, and LOs may want to pass this link along to their Realtor clients: here are the top trends this year in kitchens. top trends this year in kitchens. Some of them are pretty interesting. Also of interest is the National Association of Mortgage Brokers (NAMB), an association that represents the interests of individual mortgage loan originators and small to mid-size mortgage businesses, seeking to ban trigger leads.

News From the GSEs, Lenders Reacting to Freddie and Fannie Changes

Of great interest yesterday for lenders was news that the Supreme Court declined to hear an appeal challenging the profits the government receives from housing giants Fannie Mae and Freddie Mac. Politico reports that, “Three lawsuits, consolidated into one, were brought by Fannie and Freddie shareholders, who sought the dividends the two companies pay to the Treasury Department. The shareholders sued the government after a 2012 decision directing the two companies to turn over their profits. The net-worth sweep, as it's known, has been a windfall for taxpayers, with more than $250 billion paid into U.S. coffers.”

“The Supreme Court's decision further weakens the political clout that investors have to try to negotiate a better outcome with Congress and the White House as part of GSE reform…One of the strongest arguments that investors have is that a court will void the dividend sweep, which would then change the economics of the conservatorship. This legal threat is not dead, but it now rests only with the federal claims court."

Mortgage Bankers Post Open Letter to Congress on GSE Reform.  More than 130 mortgage banking leaders from 40 states, including current and former officers of the Mortgage Bankers Association, sent an open letter to Congress Tuesday emphasizing the need for comprehensive secondary mortgage market reform.

Pacific Union Financial posted updates to Conventional products. Single premium LPMI is now allowed on >95% to 97% LTV/(H)CLTV primary residence purchase transactions. At least one borrower must be a first-time homebuyer, as indicated on the loan application (Form 1003) in Section VIII. Monthly LPMI is not allowed. Premium pricing: A lender credit cannot be used to fund any portion of the borrower’s down payment or reserves, and should not exceed the amount needed to offset the borrower’s closing cost. Delinquent taxes must be paid at or prior to closing. Pacific Union will no longer allow delinquent taxes to remain unpaid, even if a lien has not been recorded in public records or on title.

FAMC Correspondent National is now offering the Freddie Mac Home Possible Fixed Rate Product. Loans may be locked/registered under this new product effective February 5, 2018.

Starting Monday the 22nd of January, Doorway Home Loans updated its existing 10-day lock periods to 15 days for all Doorway FNMA and GNMA Programs.

PennyMac Correspondent has updated the BE Rate Sheet Interest Rate Structure for Conventional 25/30 Yr. Fixed Products effective January 2nd, 2018.

Freddie Mac has expanded requirements for qualifying borrower income commencing after the Note Date, including, but not limited to following: Maximum employment gap increased to 90 days from 60. Permitting rate/term refinances as eligible transaction type in addition to purchases. Reducing the additional reserve requirement to 1 from 6, Income and/or cash reserves still required for monthly PITI and other monthly liabilities during employment gap. Future salary increases now permitted in addition to new employment.  Refer to Fifth Third Correspondent Underwriting Guidelines for additional information.

WesLend Financial has made changes to its Portfolio Agency Plus, Alt-Doc & Investor guidelines. Minimum FICO Score Requirements have dropped to 600. Maximum DTI (programs requiring DTI) will accommodate up to 55% DTI, with certain conditions. Maximum LTV has been raised to 90%, on Agency Plus and Alt-Doc, subject to certain conditions. Maximum Cash-Out LTV has been raised to 85% on Agency Plus and Alt-Doc, subject to certain conditions. Definition of “Donors” for Gift Funds now follows Fannie Mae B3-4.3-04 6. HPML to be considered on a “Case by Case” basis.  See its guidelines for most up to date information.

Due to a recent Freddie Mac announcement, rental income changes initially required for loans delivered to AmeriHome beginning 1/15. With the Freddie Mac extension, the changes may still be adopted at any time prior but will be required for loans delivered to AmeriHome on or after November 1, 2018.

View Wholesale Product and Pricing Bulletin 2018-1 Guideline Updates for important changes to FCM’s underwriting guidelines effective January 19th.

On Wednesday, January 10, 2018, Freddie Mac announced the rental income updates will now be effective for loans delivered on or after Friday, November 30, 2018.  Due to this change, the new effective date for loans underwritten and/or delivered to Flagstar Bank is as follows: The Conventional Underwriting Guidelines will be updated for table funded transactions registered on or after Monday, September 3, 2018 and correspondent transactions delivered on or after Monday, September 3, 2018.

In response to Freddie Mac Bulletin 2017-23, Wells Fargo Funding is updating its conventional conforming loan documentation requirements as follows:  Expanding the recertification of value requirement from 60 days to 90 days. Allowing the purchase of Freddie Mac Loans that Closed with an automated collateral evaluation (ACE) appraisal waiver and have settlement dates greater than 120 days after the Note date. Effective as of January 30, 2018.

PennyMac Correspondent Group posted a new announcement on February 12th encompassing various topics.

Wells Fargo Funding is providing the following options to deliver ULIs for delegated Loans: At Loan Registration on wellsfargofunding.com (Best Effort Loans only). On the Loan Submission Summary (LSS – Form 1). Anywhere on the current Uniform Residential Loan Application (URLA; Fannie Mae Form 1003/Freddie Mac Form 65), dated July 2005; revised June 2009. Anywhere on the Demographic Information Addendum. In the Uniform Loan Delivery Dataset (ULDD) file uploaded to wellsfargofunding.com. In the direct loan data transfer from Encompass (available for Ellie Mae Encompass users only).

As reminder, Wells Fargo Funding requires Sellers to comply with Freddie Mac’s Uniform Closing Dataset (UCD) mandate for bifurcated Loans delivered on and after February 12, 2018.

Fannie Mae updated Spanish translation forms 3044.1s, 3244.1s, and 3522.44s to reflect the English form updates made in January. The Instruction (summary) documents and taglines were updated to reflect the revision dates. The tagline of Form 3522.44s was updated to indicate that it is a joint Fannie Mae/Freddie Mac form. Visit the Security Instruments and the Notes pages to view these forms.

Capital Markets

A short week didn’t spare U.S. Treasuries from having losses across the curve Tuesday/yesterday despite retreating from overnight lows, as they remained negative throughout the day without displaying much volatility. The main pressure was due to the high supply of $258 billion in bills and coupons set for auction this week, since supply and demand factor into rates, in addition to higher yields and mixed earnings reports.

The other news of note from Tuesday was that Spain's Economy Minister Luis de Guindos will replace current European Central Bank Vice President Vitor Constancio in May, potentially opening the door to Bundesbank President Jens Weidmann becoming the next ECB chief. This would make for a much more hawkish ECB, meaning more inclined to raise European rates.

Turning to today, we’ve had the MBA’s weekly mortgage application indices for last week. Volumes continue to fall (margins are doing the same) and application volume fell over 6% from the previous week. Refinances dropped 7% and the refinance share of mortgage activity decreased to its lowest level since July, 44.4 percent of total apps.

Preliminary February Markit manufacturing and services will be released later in the morning, before January existing home sales and some Fed speak by alternate voters later. The headline is the 2PM ET release of the minutes from the January 30-31 FOMC meeting, Yellen’s last as chair, with markets focused on discussion surrounding inflation. Additionally, there are two Treasury auctions. We start the day with the 10-year yielding 2.88% and agency MBS prices better nearly .125 versus yesterday’s close.

Employment, New Products, and Expansion

Wintrust is on a roll and expanding its presence around the country! Having just finished their conversion to Encompass and readying to announce its new digital mortgage solution, Wintrust is positioned to WIN BIG in 2018. As a bank owned mortgage company lead by true mortgage professionals, Wintrust has the resources, products, fulfillment and marketing to help originators and mortgage leaders really grow their business. Wintrust is interested in growing throughout the country and is looking for right minded people to make that happen. If you want to hear the Wintrust story and explore how you or your company could fit in, reach out to Bob Shield at (847) 939-9361.  

Paramount Residential Mortgage Group, Inc. (PRMG) recently broke the silence on the topic of plagiarism when PRMG National Marketing Director, Paul Lucido publicized his editorial; Plagiarism VS. Originality, as published in National Mortgage Professional (NMP).  "My hope through educating folks on this subject is that we can bring to light some of the underlying concerns and eventually cease this pandemic that has continuously been taking place over the years. Although plagiarism can sometimes be flattering as the notion is obviously appreciated, it is also disappointing as it can negatively impact a company’s overall brand when other contenders try to use that same concept to benefit their business. My mission within the mortgage advertising realm is to always bring something new to the table and not follow the status quo", said Paul Lucido.  To view the full published editorial, please click here.

FundingShield is pleased to announce Stergios “Terry” Theologides has joined its Senior Advisory Board. Terry has held high-ranking legal and leadership roles with several companies leading up to moving to FundingShield, including being part of the leadership team that launched CoreLogic as a standalone public company and EVP/GC of Morgan Stanley’s U.S. Residential Mortgage businesses. Terry has served on the Federal Reserve Board’s Consumer Advisory Council and in leadership roles in several other industry and professional associations including the Housing Policy Council of the Financial Services Roundtable, the MBA, the American Financial Services Association and as Chair of the Consumer Data Industry Association. “I’m delighted to be working with the FundingShield team and am excited about their innovative financial technologies designed to mitigate the growing threat of mortgage wire fraud,” shared Theologides. For more information on Fundingshield’s services to combat wire fraud and manage settlement agents contact info@fundingshield.com.

Flagstar Bank announced that it has signed a definitive agreement to purchase the mortgage warehouse loan portfolio from Santander Bank. Flagstar will bring on Santander's existing relationship managers, adding the employees to its warehouse business, during the first quarter of 2018. The terms of the transaction were not disclosed. “For our new customers, it means more product choices, including eNotes." Observant folks, and those with a good memory, will note that Flagstar has expanded its consumer direct lending operation by adding a team from Capital One, acquired Stearns Lending’s delegated correspondent lending business, acquired Opes Advisors (a full-service mortgage bank and financial advisory firm), and acquired eight Desert Community Bank branches from East West Bank.