Subservicer Product; Conv. Conforming Changes From Lenders and Investors

In July I was fortunate to spend time in Colorado, Hawai’i, Nevada, Utah, and California, and I look forward to time in Illinois, Montana, Virginia and Utah during August. As I visit with different groups, inventory and affordability continue to be issues, as well as down payments. Forbes came out with a list of 30 state programs around the nation to assist with down payments, or have no private mortgage insurance. Along those lines, HUD’s latest definition of the “low” income level to qualify for certain affordable housing programs stands at $117,400 per year for a household of four people in Northern California’s San Francisco, Marin and San Mateo counties.

Fannie and Freddie News

Despite the industry’s continuing best efforts, GSE (government sponsored enterprise – namely Freddie Mac and Fannie Mae) reform this year is unlikely, especially with an election three months away. And the history of the sweep of their profits into the government coffers. Lending veterans know that not everyone who wants to own a home should own a home, and not everyone who applies for a loan is going to be approved. But the National Association of Realtors believes GSE reform is important to increasing home ownership. (Anyone remember HUD’s mandate to FNMA/FHLMC to buy poor loans and increase the home ownership percentage?)

NAR hosted a roundtable event a while back examining the scope and status of comprehensive Government-Sponsored Enterprise, or GSE, reform. Isaac Boltansky, director of policy research with Compass Point opened the event. “It is deplorable that Congress has left the GSEs in conservatorship for 10 years, but it isn’t all bad news. There have been meaningful administrative improvements that have made the system safer and have advanced the debate. As a result, the broader policy conversation has shifted from a consideration of remaking the mortgage finance system to an acceptance that a package of narrower reforms could suffice. Effectively, we’ve gone from consideration of tearing down the whole house for a rebuild to the belief that we should just tweak the house’s plumbing and do some landscaping.”

David M. Dworkin, president and CEO of the National Housing Conference, commented on the necessity, and corresponding complexity, of enacting comprehensive housing finance reform.

“Housing finance reform remains the single largest unfinished business of the housing crisis. The failure of Fannie Mae and Freddie Mac, the taxpayer bailout and repayment that followed, and their unresolved conservatorship continue to demand final resolution, even if Congress does not,” he said.

Recall that the Administration put out a proposal to remove the federal charter from statute and fully privatize the GSEs and called on policymakers to decrease the federal subsidies supporting housing by reducing the role of Freddie Mac and Fannie Mae in the housing market. Good luck.

Freddie Mac’s Bulletin 2018-12 updates lender credit requirements, leasehold estate requirements, Delivery instructions for: Automated collateral evaluation appraisal waivers, Homeownership education and the Uniform Loan Delivery Dataset (ULDD) specification addendum.

In early July Chase Correspondent removed several overlays for its clients.

Plaza Home Mortgage will be offering Freddie Mac’s HomeOne Mortgage  program starting July 30th. HomeOne's eligible terms in our Conforming Fixed program provide 97% financing under a Freddie Mac program for borrowers whose income exceeds Freddie Mac’s Home Possible income limits. Plaza also offers 97% financing on Fannie Mae’s standard and HomeReady programs as well as Freddie Mac Home Possible.

BoI Federal Bank Wholesale has discontinued its Conforming product line(s). As a result, these products will no longer be offered in the Optimal Blue system. Customers utilizing this content for proprietary products have six months from 7/23/18 to reconfigure eligibility/adjustment sourcing.

The UCD mandate is in effect and, if you're still figuring things out, Fannie Mae can help you ensure your Uniform Closing Dataset (UCD) file submissions are successful. Watch this quick overview video about UCD and visit the UCD page and the UCD Collection Solution page for more information. You can also Email the UCD team if you have additional questions.

In reference to the Fannie Mae published Selling Guide Announcement SEL-2018-05, AmeriHome is reminding lenders that it does not purchase loans secured by manufactured homes or HomeStyle loans.

PennyMac Correspondent Group has posted a new announcement: UCD Requirement Reminder.

Citibank Correspondent Lending continues to make changes, and I found this posted bulletin on conventional conforming loans I’d missed mentioning from January 19th. My apologies.

Fifth Third Correspondent Lending’s recent Communiqué addressed Loan Product Advisor (LPA) enhancement to now calculate the additional required reserves when the subject property is a second home or investment property. These are no longer required to be a manual calculation and doing so will result in an over-calculation of required reserves. This update applies for Loan Product Advisor (LPA) only.  Loans using Loan Prospector (LP) still require a manual calculation for the required additional reserves.

For all DU approved conventional loans, PennyMac is aligning with the various updates in Fannie Mae SEL 2018-05 and DU Release Notes 6.23, Read its release notes for details.

The Fifth Third Correspondent Seller Guide Underwriting Guide has been updated to support the changes in Fannie Mae’s DU Version 10.2 release the weekend of June 23rd. These changes will apply to new loan casefiles submitted or resubmitted to DU on or after the weekend of June 23rd. In addition, effective immediately, the Fifth Third Conforming and Jumbo product Flipping Policy has been eliminated.

Arch MI has outlined its position on the topics covered in Fannie Mae Announcement SEL-2018-05. Review its Customer Announcement for details.

Mountain West Financial Wholesale has updated it Conventional guidelines 6.9.15 regarding use of business funds. When a borrower intends to use business assets as funds for the down payment, closing costs, and/or financial reserves, a business cash flow analysis must be performed to confirm that the withdrawal of funds will not have a negative impact on the business.

Mountain West Financial has revised its Delegated Mortgage Insurance (MI) requirements to now offer delegated MI on LTV’s above 95%, with a maximum LTV of 97%. All other Delegated MI requirements currently remain the same.

Effective immediately, M&T Bank Correspondents’ Fannie Mae HomeStyle product pages are updated to reflect that interim inspections performed by a HUD consultant may be completed on a HUD Draw Request Form (HUD-9746-A) as oppose to an FNMA Form 1004D. All final inspections, whether completed by an appraiser or consultant must be completed on FNMA Form 1004D and state the project is completed in full.

Franklin American Mortgage Company, a division of Citizens Bank, N.A. announced it has removed multiple previous overlays on Conventional, FHA, and VA products, effective immediately.

Plaza Home Mortgage now offers the Freddie Mac HomeOne Mortgage.

MWF Wholesale posted underwriting guideline changes to allow Delegated MI on standard conforming with LTVs up to 97%. These updates have been implemented within its UW Manuals/Product Matrices.

MFW Wholesale is now offering the Freddie Mac HomeOne Mortgage. Review its Conforming Product Matrix for complete guideline details.

Ditech Financial announced the Fannie Mae Student Loan Cash Out Refinance feature, a cost-effective alternative to use existing home equity to pay off student loan debt. This feature provides the opportunity for borrowers to pay off one or more student loans through the refinance transaction, potentially reducing monthly debt payments. To register, contact the Ditech Lock Desk at 877-700-4622, option 5. The cash out loan level price adjustment will be waived, and loan will be subject to review prior to purchase to confirm eligibility.

Fannie Mae has revised AAA matrices to include the foreclosure-related title cost guidance issued June 6, which is effective for referrals on or after Sept. 1. Please note that the title search allowable cost and/or title update standard excess cost may have changed. To view the updated matrices, visit the Excess Attorney Fee/Cost Guidelines page.

On Aug. 18, Fannie Mae will update Condo Project Manager™ (CPM™) to align with the June 5 changes to its condo policies and to enhance the user experience by providing links to applicable Selling Guide policy. To accommodate the update, CPM will be unavailable from Saturday, Aug. 18 at 5 a.m. ET until Monday, Aug. 20 at 7 a.m. ET. For more information, review the release notes on the CPM page.

The Desktop Underwriter® (DU®) validation service Frequently Asked Questions (FAQs) have been updated to incorporate four new FAQs, three about Verification of Employment (VOE) and one about Verification of Income (VOI). These questions have been added to provide clarity around the time-sensitive VOE and VOI requirements and options for re-verification.

Wells Fargo Funding updated its Seller Guide to clarify that Fannie Mae HFA Preferred, Freddie Mac HFA Advantage, and any other HFA programs are ineligible for purchase.

Capital Markets

Despite JPMorgan’s CEO Jamie Dimon suggesting that the 10-year yield will hit 5%, rates dropped on Friday, including the 10-year closing 3bps lower at 2.95% after the release of a July Employment Situation report. (It missed headline estimates.) In addition, the markets were forced to digest news indicating Chinese officials have prepared a list of $60 billion worth of U.S. goods that may become subject to new tariffs. In addition to the jobs report on Friday, we saw the U.S. trade deficit widen to $46.3 billion in June, a wider figure than expected as June exports were $1.5 billion less than May exports while June imports were $1.6 billion more than May imports. On a positive note, the year-to-date goods and services deficit is up $19.6 billion, or 7.2%, from the same period in 2017, pre-trade war. Finally, the ISM's Non-Manufacturing displayed a cooling off that could feed expectations for a slowdown in third quarter real GDP growth.

This week’s calendar starts with a slow Monday: today we only have the July Employment Trends Index at 10am ET. Tomorrow, things pick back up with JOLTS job openings, June Consumer Credit, and a monetary policy decision from the RBA. Wednesday, we have the usual Weekly MBA Mortgage Index and weekly crude inventories before PPI, claims figures, and Wholesale Inventories on Thursday. The week concludes with July CPI figures and Treasury Budget on Friday. We start Monday with agency MBS prices nearly unchanged from Friday’s close and the 10-year yielding 2.95%.

Lender Products and Services

Len Patton CMB, a 20 year industry veteran, is now SVP of Business Development for Specialized Loan Servicing. SLS, part of the Computershare Group, is one of the nation’s highest-rated mortgage servicers. Len will be responsible for working closely with Capital Markets Cooperative’s Patrons, as well as other mid-market banks, credit unions, and independent bankers, searching for an industry-leading subservicing solution. Len can be reached here or by cell (904) 504-3268.

“Let’s be honest. Networking can suck. But it’s necessary in this business of ours, which is why on Thursday, August 9th from 10-11 AM PST/1-2 PM EST, Sierra Pacific Mortgage is providing a free webinar called ‘The Networking Playbook: How to Strategically Navigate the Room & Score Big Time!’ This free, engaging, info-training course focuses on how to make networking less awkward, less sales-y, and a much better use of your time. And all you have to do to register is click here. Make networking your thing and start cultivating relationships that generate sales in your future.

Business Opportunities

A national title Insurance agency in New York State is looking for a partner to increase its sales. The title and escrow agency has been around for over 12 years with a staff of 12 including two attorneys. “The ideal partner is someone with many banking and real estate connections looking to either merge, joint venture or become partners with the sole principal of the title agency. This individual or company understands the profitability within the title industry and is looking to get involved on the title side. It's a dream scenario for someone(s) to walk in here and use this national platform to get involved in the title industry.” Interested principals should send a confidential note of interest to me and I will pass it along to the president of the company. Please specify opportunity.

“We’re looking for partners.” “Let’s face it, the old mortgage business we knew is never coming back! We recognize that volume and margins are down, but our expenses are up! The reality is that many groups are going to have to join forces to survive this extremely competitive business. We are a multibillion dollar bank in Texas with a very strong balance sheet with all the agency approvals and a great customer service infrastructure that understands the mortgage business. We have the platform, but we need the production. So, if we join forces, utilizing each other’s strengths, we want just to survive, but we will all thrive! We need each other more than ever! If you are interested in making a very strategic decision that could positively affect your future, contact Rob Chrisman to forward your note and have a confidential discussion.”