Ocwen-PHH; Changes to Fees, Pricing, and Lock Policies
As an industry we don’t want headlines about the Department of Housing and Urban Development (HUD) spending $31,000 on a dining set spending $31,000 on a dining set for Ben Carson. But we have them. Especially when over 33,000 Texans are still displaced from their homes as a direct result of Hurricane Harvey, five months after the storm battered the Houston area. Many of these people are still living in temporary federal emergency housing. In related news, and not just in Texas, home buyers are increasingly putting in bids sight unseen. A survey from brokerage firm Redfin Corp. found 35 percent of home buyers did not visit a property before putting in a bid. This rate shoots up in tight housing markets like Los Angeles, where 57 percent of buyers bid on a home without visiting it.
The Ocwen PHH deal
Remember when “Ocwen” turned heads by creating a company out of spelling “New Co.” backwards?
Who’d want to buy a big company in residential lending these days? Apparently, Florida’s Ocwen Financial Corp. does: It has agreed to buy PHH Corp., a Mount Laurel mortgage servicer, for $360 million in cash. The per-share price of $11 represents a 24 percent premium over PHH’s close Monday, and $260 million of the purchase price will be funded from cash at PHH. In a bit of a generic statement, the decision by PHH to sell the company followed “a comprehensive assessment of the risks and opportunities associated with operating the business and the strategic opportunities available to us,” said Robert B. Crowl, PHH’s president and CEO. The deal is expected to close in the second half of this year.
The companies have something in common, namely both have been targeted by regulators, and paid millions in fines. For example, PHH agreed last month to pay $45 million to settle allegations that it improperly serviced mortgages between 2009 and 2012. And not to predict future lawsuits, but there could be PHH shareholders who believe that the company is worth more than $11 a share, given the meaningful discount to book value.
On a combined basis, as of December 31, 2017, the company would service 1.9 million loans with an unpaid principal balance of $328 billion and originate over $3 billion of residential mortgage loans, including reverse mortgages, annually. “Ocwen projects that the increased size and scale of the combined company should create various strategic and financial benefits, including accelerating Ocwen’s transition to an industry-leading servicing platform, improving servicing and origination margins through improved economies of scale, reducing fixed costs (on a combined basis) by eliminating redundant corporate overhead and public company-related costs, and providing a superior foundation to eventually enable the combined servicing platform to resume new business and growth activities to offset portfolio runoff.
Ron Faris, President and CEO of Ocwen, said, “…this transaction gives us the opportunity to migrate to their existing BlackKnight LoanSphere MSP servicing platform more quickly and with less risk than had we just implemented the system ourselves…”
Ocwen is hosting a webcast and conference call today at 8:30AM ET live over the internet from the company’s website. To access the call, click on the “Shareholder Relations” section, or dial (908) 982-4684. A replay of the conference call will be available via the website approximately two hours after the conclusion of the call and will remain available for approximately 30 days. Another call to discuss the announced deal and 4Q earnings is today at 10am. Dial (800) 239-9838; pw 7092674.
Changes to Rates, Fees, and Pricing Structures
Mortgage Solutions Financial announced that, “Effective with loans locked between February 26, 2018 and March 31, 2018, MSF is pleased to offer a free, one-time 15-day lock extension for all loans locked or re-locked with a 15 day lock period.”
Effective for loans locked February 23 Flagstar Bank will be making LPMI price adjustment updates of which most are improvements. Since the mortgage insurance premiums may differ among the mortgage insurance companies, for loans that Flagstar Bank orders the LPMI, it will use these LPMI LLPAs so that each loan scenario is priced the same no matter who the mortgage insurance carrier is.
Effective for locks on or after February 13 Plaza has significantly improved the FHA base price and we have reduced the number of FHA FICO related LLPAs. While some LLPAs may now be “worse” the total fully adjusted price will be improved or the same compared to pricing prior to this change.
Back in mid-December MGIC expanded its premium rate options for Borrower-Paid Split Premiums, effective with MI applications received on or after Dec. 18, 2017.
Arch MI RateStar, the only risk-based MI pricing solution, now has direct, real-time access through Cloudvirga. “We are excited to partner with an innovative company like Cloudvirga,” said Chris Hovey, Arch MI’s Executive Vice President and Chief Operating Officer. “Like Arch MI, Cloudvirga is aggressively reimagining the mortgage process for greater speed and efficiency. Together, we are bringing Cloudvirga users immediate, real-time access to RateStar, the most dynamic and competitive MI rate program available.”
Lender Paid Mortgage Insurance pricing has improved on all ResMac products including Home Ready and Home Possible. The updated pricing is reflected in Quick Quote and page 5 of its Rate Sheets.
Franklin American is updating requirements regarding flood hazard determinations. Ideally, lenders will submit a life of loan flood hazard determination from one of two providers: CoreLogic or ServiceLink National Flood, LLC. Loans including life of loan tracking from these two vendors will fund under the current fee schedule, with no additional fees. Beginning with loans funded on March 5, 2018: Loans documented with flood certs from other vendors, or without life of loan coverage, will incur an additional fee of $10.00.
Effective with applications taken on or after February 1, 2018, changes have been made to appraisal fees in all Pacific Union Financial origination channels. While modest adjustments have been made for some states, others required more change to remain competitive and will receive better turn times from appraisers and AMCs. Please ensure the appropriate adjustments are made to the initial Loan Estimates disclosed on or after February 1, 2018.
Effective Saturday, January 27, 2018, Flagstar will be making fee changes to the Appraisal Pricing Matrix, Doc #4905. The updated fees for Alaska, Hawaii and the Virgin Islands have been moved from page 5 to the main body of the matrix.
Effective for all ILE’s issued on or after Thursday, March 1, 2018, if the broker inputs the processing fee prior to sending the ILE, DM will leave the fee as is and if no fee is input, then one will not be added during the closing process. Flagstar Bank will no longer allow 3rd party processing fees to be charged on the CD if the fee was not disclosed on the Initial LE.
Effective with applications taken on or after February 1, 2018, Pacific Union Financial has made changes to appraisal fees in all origination channels.
Sun West Mortgage Company, Inc. has extended its lock desk hours up to 8 PM PST to facilitate the locking of forward mortgage loans. You can now submit lock requests through "Price The Loan" option in sunsoft or www.SeeMyLoanStatus.com until 8 PM PST on all business days.
PRMG has improved its pricing on Lender Paid MI. Contact your rep for details.
Effective February 19, 2018, Pacific Union is offering a lowered rate for all Florida PacificPlus loans. Pacific Union has moved Florida from Group 4 to Group 2, which decreases Florida’s rate by nearly 40%. Also noteworthy, Pacific Union has increased the maximum pricing allowed on FlexKey products.
Capital Markets
Federal Reserve Governor Randal Quarles says US growth might be poised to accelerate faster than expected, which would necessitate a rise in interest rates to maintain stability. At this point, is this a surprise to anyone? A rate selloff yesterday had many mortgage shops conducting intraday price changes, as the Treasury market closed with losses across the curve after Fed Chair Powell’s hawkish question and answer session that followed his written statement. The prepared comments were largely a nonevent with Powell expressing optimism regarding the economic outlook warranting gradual rate hikes while maintaining the Fed’s PCE inflation target of 2%, reiterating that the FOMC views the near-term risks to the economic outlook as roughly balanced. His unscripted remarks that three rate hikes were already priced in before the recent positive fiscal policy developments resulted in the market pricing in the potential for four rate hikes in 2018.
The financial press is still debating about Powell: Did he mean to change market expectations about the 3/21 “dots” during the House Q&A, or are markets reading too much into his commentary? Powell will have the opportunity to clarify his commentary when he appears before the Senate on Thursday - that testimony begins at 10AM ET.
Actual economic releases from yesterday showed durable goods orders declined 3.7% in January, far worse than expected as there wasn't a lot of carryover order momentum from December, suggesting Q1 activity is proceeding at a slower pace. The Conference Board's Consumer Confidence Index, however, exceeded expectations in February to reach the highest level since 2000. The December S&P Case-Shiller Home Price Index rose 6.3%, following last month's 6.4% increase, while the FHFA Housing Price Index increased 0.3% in December following a 0.4% increase in November
Today we had the weekly MBA mortgage applications for last week (+2.7% overall; purchases +6% but refis -1%). We then received the second release of Q4 GDP with expectations set at 2.3% versus 2.6% previously reported but was +2.5%. The PCE deflator is expected to be unchanged at 1.9% YoY, and indeed was. February Chicago PMI will be released at 9:45am, and is expected to fall to 65.0 from 65.7, while January pending home sales, at 10:00am, are expected to decline 1.5% following the previous 0.5% increase. And the headline for the rest of the week is Fed Chair Powell's testimony picking back up again on Thursday. After the initial stats rates are with the 10-year is yielding 2.89% and agency MBS prices are better about .125 versus last night.
Employment and Company Events
“At Mr. Cooper, we’re excited about the continued investment we are making in our Correspondent channel with a focus on ease of doing business, product development, technology and providing a world class experience for our clients. Specific to products, we have a defined road map to roll out multiple products every quarter! With our goal to help our lenders expand their reach, Mr. Cooper Correspondent introduces the Fannie Mae No FICO program offering. The program provides additional outlets to help borrowers with non-traditional credit, especially First Time Home Buyers and Millennials. The Freddie Mac and FHA No FICO programs will follow shortly. Mr. Cooper is the largest non-bank servicer and a leading investor for Co-issue transactions and Sub-Servicing, with Private Label capabilities. In preparation for Correspondent business expansion and to ensure ongoing client service excellence, the channel is seeking experienced Account Representatives. Please contact Bryan Budd for details!”
“Stearns Wholesale Lending is thrilled to congratulate our 2017 President’s Club Winners! Our highest achieving Account Executives worked passionately throughout the year to help their Clients achieve the American Dream. Their achievement will be recognized with a fabulous trip to Hyatt Ziva in Cabo San Lucas this April. In addition, we’re super stoked about heading to Utah TODAY for our 2018 Wholesale Sales Rally! Our entire team of Account Executives will be converging on Salt Lake City for an opportunity to learn, celebrate and plan for continued success in 2018. Contact jvazquez@stearns.com and learn how you can be a part of this talented team!”
Congratulations to Rick Sharga who Carrington Mortgage Holdings announced has rejoined the company as an EVP and the primary spokesperson for Carrington. He’ll be responsible for public relations and communications, as well as branding and marketing strategies for all of Carrington’s companies.