Reverse Mortgage and USDA/Rural News; Economics and Rates
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Reverse Mortgage News
Moody’s reports that RMBS (reverse mortgage backed security) issuance volume increased in Q4 2017, up 9% from Q3 2017 and approximately 64% from Q4 2016. Finance of America Reverse LLC issued its first securitization backed by inactive home equity conversion mortgage (HECM) loans consisting of inactive Federal Housing Administration (FHA)-insured HECM reverse mortgage assets with a total aggregate balance of about $420 million. Collateral performance weakened in hurricane-affected areas. Tax reform is modestly credit positive for RMBS since it will be credit positive for RMBS borrowers. The effects of the tax cuts on the overall performance of the underlying assets will be modest, however, owing to the limited size of the savings for many borrowers and the fact that other borrowers will face higher taxes.
Contrary to what the Consumer Financial Protection Bureau believes, there is value in delaying Social Security and spending down assets, such as home equity, in the interim, according to nationally-renowned retirement expert Dr. Wade D. Pfau who teaches financial services and retirement planning at The American College. Dr. Pfau published an article in Advisor Perspectives that refuted the CFPB’s conclusions in an August report, titled The Costs and Risks of Using a Reverse Mortgage to Delay Collecting Social Security.
“…And it's two bare feet on the dashboard, young love and an old Ford, cheap shades and a tattoo, and a Yoo-Hoo bottle on the floorboard…” Thank you Kenny!
Last month, after months of water rights and real estate uncertainty and legislative deadlock, out in Washington Governor Jay Inslee signed the “Hirst fix” into law. The Legislature passed the “fix” in response to a controversial 2016 Washington Supreme Court decision, commonly known as the “Hirst decision,” that limited how counties approved building permits using permit-exempt wells for a water source. The “fix” is intended to clear up questions regarding domestic water use and the practical moratorium on rural development. K&L Gates lays out the key provisions of ESSB 6901 and analyze its potential impacts for landowners, developers, and counties.
Pacific Union Financial, LLC has received additional guidance from USDA regarding the suspension of IRS Form 4506-T. USDA’s recent bulletin states that they no longer require the 4506T for applicants; however, they have also stated that the Underwriter must continue to perform their due diligence when reviewing income and asset documentation obtained for the household. Pacific Union underwriters will continue to require the fully completed and executed 4506T with all loan applications delivered and will include them for updated signatures in the closing packages. The underwriters will assess the need for further verification as required by GUS and/or the associated risk profile of the applicants.
Mountain West Financial Wholesale has added USDA as an available option when users order appraisals. Selecting this will ensure that the report includes these USDA required statements: Completed by an approved FHA Rostered appraiser and completed HUD 4000.1 Minimum Property Standards (as per USDA Guidelines).
Plaza’s USDA Guaranteed Rural Housing program guidelines have been updated to allow manufactured housing on refinance transactions. It now accepts existing manufactured homes under the USDA Guaranteed Rural Housing Manufactured Housing Pilot program. Plaza’s USDA Guaranteed Rural Housing program guidelines have been updated. Pilot states where existing manufactured homes are eligible include: Colorado, Iowa, Louisiana, Nevada, New Hampshire, New York, North Dakota, Ohio, Pennsylvania, Texas, Vermont, Virginia and Wyoming.
Recall that USDA announced this suspension through its Single-Family Housing Guaranteed GovDelivery message system on December 21, 2017. Per FAMC, Lenders must continue to perform due diligence and review income and asset documentation obtained for the household to determine income eligibility for the USDA program.
PennyMac Correspondent Group has posted a new announcement regarding a temporary update to Rural Housing transcript requirements.
Mortgage Solutions Financial Wholesale Lending has financing available for farms and rural homes with unlimited acreage.
Capital Markets
An increase in inflation and broad acceleration of the US economy justify further, gradual increases in interest rates, according to minutes from the January meeting of the Federal Open Market Committee. Members made it clear they intend to nudge short-term rates higher. Retail sales posted a disappointing 0.3 percent decline as motor vehicle sales and parts, furniture, building material, and health & personal care stores all reported declines in January. While this data series has shown some seasonal weakness in the first quarter since the recession, when combined with the inflation data it could signal diminishing purchasing power for consumer.
Housing and jobs drive the economy, and last week we learned that housing starts surged to the second highest rate in the current cycle at 1.326 million annualized units in January and December’s figures were revised higher. Both multi-unit and single family posted solid gains which could be good news for home prices as these units are delivered. Permits continue to outpace starts at a 1.396 million rate for the highest showing of the expansion. For the time being, new homes are being scooped up about as fast as they can be built.
Yes, robust global economic data are overcoming longstanding investor fears about the staying power of the post-crisis recovery. The higher rates have influenced the stock market, upending favorable stock valuations based on lower rates. Few are talking about stalled wage growth and soft employment any more.
The Fed is backing away from the low-interest-rate policies that have been employed for nearly 10 years. By not reinvesting money from its maturing bonds, or mortgages that pay off early, it is pulling money out of the economy at the same time financial markets are becoming increasingly volatile. The rise in yields has coincided with the passage of $1.5 trillion in tax cuts, and the resulting larger budget deficits threaten to drive up yields as the government boosts the amount of bonds it sells to finance the cuts.
Looking at the actual bond market, the decrease in initial jobless claims yesterday helped U.S. Treasuries edge slightly higher by the close and bodes positively for nonfarm payrolls at their next release. The other positive economic news from yesterday was the fourth straight month the Conference Board's Leading Economic Index increased, with the report showing no negative contribution from any of the ten components that make up the reading.
The week now closes out with no major economic releases, though we do have several Fed-related events, including appearances by New York Fed President Dudley, Boston Fed President Rosengren, Dallas Fed President Robert Kaplan, Cleveland Fed President Loretta Mester, and San Francisco Fed President John Williams, and the Federal Reserve releasing its semiannual Monetary Policy Report to Congress ahead of Fed Chair Powell's appearances next week before the House Financial Services Committee & the Senate Banking Committee.
The string of positive economic releases recently has aided the FOMC’s plans to keep raising rates this year, and several members have marked up their growth forecasts due to relatively low bond yields, the effects of tax reform, and rising stock prices. We commence the day with the 10-year at 2.88% and 30-year agency MBS prices better .250 versus last night’s close.
Employment, New Products, and Business Opportunities
A National Title Company is looking for a strategic partnership with national consumer direct lenders or depository banks. Please email with information on your company.
In wholesale job news Ditech Wholesale is hiring talented experienced AEs in key markxets across the country and offer a unique blend of wholesale values overlaid onto correspondent disciplines. “It’s a great time to be in Wholesale for today’s salesperson. New companies are emerging, seasoned companies are looking for top talent, and the 2018 purchase market is already well ahead of 2017 volume (Ditech specifically). Many companies are turning towards the ‘desk AE’ model, believing that phone/email time can replace face time, but we do not believe in the ‘desk AE’ model, instead believing personal relationships will matter more than anything else as the market shrinks and products expand. Wells Constantine, National Sales Manager, is focusing on key, open markets in UT, PA, & VA for the North Region led by Tony Petronio; FL, NV and Houston, TX for the South Region, led by Wendy Licis; WA, & CA (Santa Barbara & Sacramento) for the West Region, led by Michelle Thiebaud.” Contact Cari Watkins in HR with questions”
Paramount Residential Mortgage Group, Inc. (PRMG) has officially partnered with the National Association of Hispanic Real Estate Professionals (NAHREP), the premiere Latino trade group dedicated to advancing high ethical standards for real estate professionals with 30,000 members nationwide. This partnership will allow PRMG to collaborate with NAHREP in expanding their shared vision of the American Dream and to develop strategies that will create generational wealth for the Hispanic Community through homeownership. The national lender will start the movement in the rural neighborhoods of central and Northern California. Additionally, Chester Ruiz, PRMG VP of Multicultural Development, will not only be leading this charge but will be working with several PRMG Multicultural Ambassadors that will be focused on Latino business and culture. If you are interested in partnering with a multiculturally aware lender, contact Chester Ruiz.
“Caliber Home Loans, Inc. combines the strength of our technology with the dedication of our mortgage professionals to deliver world-class service to our borrowers. Last year we were able to leverage this platform and produce our highest volume ever! After closing a $43 billion-year, Caliber is already off to a strong start in 2018. We’re recruiting top talent in competitive markets to be a part of our continued plans for aggressive growth. Interested Loan Officers should contact Jeremy DeRosa about a career at Caliber.
New Penn Financial is pleased to announce the launch of its new proprietary Jumbo product, DreamBig. Offering loan amounts up to $3M, $750K max cash-out, LTV to 90%, min 680 FICO, flexible underwriting guidelines and competitive pricing! To learn more about DreamBig and our full line of Jumbo products, please visit www.gonewpenn.com or call 1-888-988-1695.”
AnnieMac Home Mortgage’s Wes Costello, SVP of Quality Management & Collateral Risk, will be delivering a presentation at the Charleston, SC Valuation Expo on What is Quality? Wes will be the only speaker from an Independent Mortgage Banker and will provide a unique perspective given his background, Appraiser by trade, and AnnieMac’s approach to Appraisal Management. Wes’s presentation to fee appraisers will pull back the curtain on lender appraisal review and how lenders determine Quality in the appraisal valuation. The goal is to arm appraisers with a more complete knowledge of the appraisal’s importance in the mortgage lending process. The presentation will highlight valuation trends, appraising in an appreciating market, lesser known agency guidelines, and the need to draw adjustments from the market. The results of AnnieMac’s appraisal panel survey will be shared and a behind the scenes look at valuation tools used to analyze the appraisal will be viewed.
On Q Financial, Inc. has hired Vanessa Montañez as its first Vice President of Multicultural Business Development and to serve the Western region. Montañez has over twenty years of experience and has been nominated for Business Woman in Finance of the Year from the National Latina Business Woman Association. “On Q is proud to release a first-of-its-kind, Spanish mortgage website as well as many bilingual tools and support for homebuyers. Montañez currently holds the roles of Board of Director and Co-Chair for National Association of Women in Real Estate Businesses (NAWRB) and NAWRB Diversity and Inclusion Leadership Council (NDILC).”