Correspondent Products; Lender Eligibility for SBA PPP Loans; Dir. Calabria Said What?

While in captivity it is important to keep calm. “Many parents are discovering that the teacher was not the problem.” One of the kids next door phoned in a bomb threat to his own mother! Speaking of home life, when I’m in a rascally mood, after my dog eats and wanders off, I will put piece of kibble in his bowl. And he’ll wander back at some point, see the kibble, and think that he missed it the first time and gobble it down. Always amusing. Now I think he’s amused by me, since about every 40 minutes I wander over to the refrigerator or cupboard and look inside to see if I missed anything from 40 minutes earlier that looks appetizing. Nope, nothing magically appears. Good employees rarely magically appear, either, and here’s a fun video from Joe Thompson in Austin, Texas about recruiting. What isn’t fun is the FHFA’s Mark Calabria seeing no evidence of systemic crisis among nonbank servicers, and saying Fannie & Freddie are unlikely to aid mortgage companies as payments dry up. Some would say he’s showing his true colors, others ask if he needs stronger glasses. The MBA’s response is below.

Lender Products and Services

Prelim, a Y-Combinator backed software company, is providing a free version of its SBA Paycheck Protection Program (PPP) online application to community banks and credit unions with less than $10 billion in deposits to do our part to help U.S. small businesses apply and receive federal assistance. Click here to sign-up. Questions should be directed to CEO Heang Chan.

Lenders now have a viable solution to the challenges and limitations around the recent COVID-19 alternative appraisal guidance. The Property Vision app was designed with the Lenders security interests in mind. Appraisal Logistics, a leading provider of appraisal management technology and compliance solutions, has created Property Vision, a mobile friendly web-based solution to guide a Borrower through their interior and exterior inspection. Property Vision promotes social distancing by allowing consumers to answer questions about their property while taking photographs using any web-enabled device equipped with a camera. It automatically collects geocoding information and other metadata to ensure the photographs are current images and develops a detailed report for the appraiser. Property Vision gives borrowers assurance their lender cares about their wellbeing and gives lenders compliant, accurate valuations. There is no app to download and consumers are provided simple instructions that walk them through the process. To learn more, contact Mark Tague. 

We thought 2019 was a wild ride, but we had no idea the chaos 2020 had in store for us. COVID-19 and all of the uncertainty surrounding the pandemic has turned the lending world upside down and we’re all just trying to adjust to our new normal. A new eBook from Maxwell, “Lend from Home: Practical Tips for Remote Mortgage Teams,” is a comprehensive guide for mortgage professionals adjusting to working from home. A must-read for all lending professionals and managers, get your complimentary copy here (no form required).

Congratulations to Annemaria Allen, Founder & CEO of The Compliance Group  named as a “Trailblazer” in Mortgage Women’s Magazine, March/April 2020 edition. She currently sits on the board of directors of at the California MBA and is a proud member of the Women Presidents’ Organization. The Compliance Group (TCG) is an almost 20-year old firm focused on three core services in mortgage banking: Quality control as an outsource solution; compliance, both file level reviews and broader compliance audit work; and, servicing quality control, assuring agency servicing standards are adhered to. Learn more about TCG at TheComplianceGroup.net. 

Looking to sell your loans off faster? TMS is still buying loans on average under seven days! Do you use Encompass? As an Encompass Investor Connect partner, TMS is able to buy your loans even faster and reduce the workload for your post-closing team! Learn more about the benefits of partnering with TMS CAREspondent or bid a tape today at correspondent.themoneysource.com.

A note from Chad Jampedro, President of GSF Mortgage and GO Mortgage: “I would like to take this opportunity to thank our industry partners for their diligence and support during a very challenging March and beginning of April. We sincerely appreciate the efforts of our staff along with our warehouse partners, broker-dealers, realtors, builders, manufactured dealers, title companies, appraisers, notaries, vendor partners, and anyone who assisted our company in funding loans during this time. We are unable to be successful without the partners who support our company. We are in this together. We appreciate all of you, and if we can help you in any way please feel free to reach out at GO Mortgage or contactus@gomortgage.com. Stay safe and healthy.”

Leadership through a crisis begins with taking action. As a 30-year-lender, Stearns Lending continues to support the Wholesale lending community by providing tools to remain competitive and nimble in this environment. SNAP 2.0 provides the ability to leverage the bSNAP digital application and loan tracking tool, forward lock prior to registration, lock for 60 days with a 30-day-price, and initiate all Broker and Lender disclosures with one-click.  Take action, lean on each other and be grateful in these times. Click HERE to learn more about this platform or connect with a Stearns Account Executive.

Property inspections have become increasingly difficult to perform as homeowners shelter-in-place due to the COVID-19 crisis. Land Gorilla has introduced Remote Inspections to aid in the completion of interior and exterior inspections while eliminating in-person contact during the inspection process. Homeowners and other stakeholders work with a Land Gorilla Remote Inspector to validate locations and verify identities using live streaming video. The result is a fast and safe inspection report, allowing homeowners and lenders to overcome major roadblocks in these impacted times. To learn more, visit Land Gorilla.  

Corona, Liquidity, Servicing

Lenders and servicers should familiarize themselves with the definitions of, and differences between, deferral, modification, forbearance, and foregiveness when it comes to not making a mortgage payment or changing the terms. (For example, this article states that Chase is offering them, and that deferral and forbearance are interchangeable. And HUD spells it out.) Payments are delayed, not waived! With forbearance mortgage payments are reduced or suspended for a period a borrower and their servicer agree to, and at the end of that time, the borrower resumes (in theory) making regular payments as well as a lump sum payment or additional partial payments for a number of months to bring the loan current. With the CARES Act, no interest is accrued, nor are any additional fees charged. It is as if time stops for 6 months or 12 months. But everyone knows that no one is going to make three or six mortgage payments all at once. Two is a longshot.

And the big issue is whether any lender can deliver a loan to Fannie Mae or Freddie Mac not in forbearance but with a forbearance inquiry or forbearance request. The federal financial institution regulatory agencies, in consultation with state financial regulators, issued a revised interagency statement encouraging financial institutions to work constructively with borrowers affected by COVID-19 and providing additional information regarding loan modifications. The revised statement also provides the agencies’ views on consumer protection considerations.

Ginnie Mae announced that it had approved the inclusion of a servicing advance financing facility under its Acknowledgment Agreement program.  Under its Acknowledgment Agreements, Ginnie Mae has permitted a Note Securitization (NS) structure, which was developed in 2016 and allows for the securitization of servicing cash flows through a trust. This structure has been strongly supported by institutional investors that previously lacked a vehicle for investing in mortgage servicing rights (MSRs). Five of Ginnie Mae's top 11 Issuers (by February issuance volume) utilize the NS structure. 

As a result of the current transaction, PennyMac Financial Services, Inc. will be able to access financing for servicing advances through the NS trust. This transaction represents the first time that the NS Structure, which was originally designed to provide financing based on the value of the MSRs as a whole, has been expanded to separately finance the advanced payments that a servicer makes in connection with individual loans in its MBS pools. Separate financing for servicing advances under government-insured mortgage lending has been much more difficult for the private market to supply than for conventional loans.

Out of the California MBA comes word from attorney Joe Lynyak (Dorsey & Whitney) about lender and servicer eligibility for an SBA PPP loan. “We have confirmed that many mortgage servicers and some mortgage borrowers can qualify as an SBA-eligible borrower because the SBA is generally following its operating manual for its existing SBA lending programs, which is SBA Manual—SOP 50 10 5(J) (the “Manual”). As a general matter, a business that engages in lending cannot obtain an SBA loan, However, in the section which states categories of ineligible borrowers, the Manual contains an important exception: iii. A mortgage servicing company that disburses loans and sells them within 14 calendar days of loan closing is eligible. Mortgage companies primarily engaged in the business of servicing loans are [eligible]. Mortgage companies that make loans and hold them in their portfolio are not eligible.

“We discussed this exception from the prohibition and were informed by an SBA staff member working on the PPP program that mortgage servicers are clearly eligible, and a smaller universe of mortgage lenders are also eligible. Accordingly, the refusal by a bank to consider a mortgage servicer’s PPP loan application because of ineligibility is incorrect and needs to be explained. Until this gets sorted out, we suggest eligible servicers and mortgage bankers insist that a bank take their applications and commence processing. (Of course, all other qualification criteria apply.)”

The CFPB outlined the responsibility of credit reporting companies and furnishers during the COVID-19 pandemic, as well as a joint agency policy statement and its own compliance guidance FAQs to facilitate mortgage servicers’ ability to place consumers in short-term payment forbearance programs such as the one required by the Coronavirus Aid, Relief, and Economic Security Act (CARES Act). “The compliance statement and FAQs also address flexibility concerning loss mitigation notices, early intervention communications, annual escrow statements, continuity of contacts, pay off statements, and electronic communications with borrowers.”

The Down Payment Resource, a good source of down payment assistance (DPA) programs and first-time homebuyer information, set up a page for DPA program updates and trends.

By the way, readers should know that any news pertaining to “Wells Fargo Funding” is the Correspondent division? WFHM retail’s jumbo purchase is alive and well.

MGIC is temporarily suspending its insuring of investment properties and cash-out refinances, making underwriting and eligibility changes effective for MI applications received on or after May 11, 2020. Until further notice, the following are no longer eligible for mortgage insurance: investment properties and cash-out refinance transactions. “Additionally, we’re modifying our earlier guidance to note that desktop and exterior-only appraisal flexibilities announced by the GSEs on March 23 and March 31 are not eligible for loan amounts that exceed $1,000,000.

Gateway First Bank Correspondent Lending, the master servicer for Texas Vet programs, offering HUD 184 Programs and also servicing for about 3-4 State HFAs… “Effective immediately, all loans in which borrower(s) are actively seeking forbearance on any mortgage debt obligation, pending acceptance of a forbearance plan or have entered into a forbearance period, are ineligible for purchase by Gateway First Bank. This applies to all loan types and applicable to all borrowers related to the transaction, regardless if the borrower is making a form of payment during the forbearance period. Any loan purchased by Gateway First Bank, is susceptible to repurchase should any borrower(s) related to the transaction enter into or actively pursue forbearance within 14 days of the purchase date.”

loanDepot Wholesale has made the decision to “temporarily suspend the requirement for IRS Tax or W-2 transcripts under all circumstances except for: Jumbo Advantage. As a standard course of business, when federal income tax returns are used to document the Borrower’s income, tax transcripts of the Borrower’s federal income tax returns (1040s) are required to be obtained directly from the IRS. As a result of the IRS suspension, loanDepot Wholesale has made the decision to temporarily suspend the requirement for IRS Tax Transcripts on Jumbo Advantage transactions and utilize the following alternative documentation options. In order to be eligible, IoanDepot Wholesale must verify, via cancelled check(s) and/or bank statement(s), one of the following: evidence of refund received, or proof of payment(s) made to the IRS for taxes owed. Proof of refund or tax payment(s) is required for all tax years used for qualifying income and must be compared to the refund/payment(s) filed on the applicable IRS Form 1040.

“Due to increased risk, loanDepot Wholesale will also require IRS tax transcripts under the following circumstances: Handwritten tax returns, amended tax returns within 30 days prior to application date, through note date, wage earner employed by family member, or at the discretion of Underwriting Management. loanDepot Wholesale is not currently requiring tax transcripts on the following Agency transactions: Fannie Mae, Freddie Mac, VA, and FHA. A completed and signed 4506-T form is still required on all transactions.

Clients received, “Please be advised that First Guaranty Mortgage Corporation will temporarily suspend accepting all new government locks effective tomorrow 04-08-2020. No lock extensions will be permitted.”

MBA President and CEO Robert D. Broeksmit, CMB, responded to Federal Housing Finance Agency (FHFA) Director Mark Calabria's recent comments about mortgage servicers. "The FHFA Director’s recent statements send a troubling message to borrowers, lenders, and the mortgage market. Servicers are required to offer borrowers widespread forbearance under a plan devised and approved first by FHFA and then codified by the CARES Act. Fannie Mae and Freddie Mac are contractually obligated for the payments to investors. Since Fannie Mae and Freddie Mac will eventually reimburse mortgage servicers for the payments they must advance during forbearance, Director Calabria should advocate for the creation of a liquidity facility at the Fed to ensure the stability of the housing finance market.”

Capital markets

Rate volatility has quieted down: a good thing. U.S. Treasuries pulled back again yesterday as optimism surrounding the spread of the coronavirus continued. The 10-year yield closed the day +5 bps to 0.73 percent despite a late afternoon rally due to OPEC reportedly ready to agree to production cuts tomorrow if the U.S. is part of the production cut plan. For the day, the Desk purchased $21.746 billion MBS, slightly up from the day prior.

Today will see the same six FedTrade operations with the $25 billion tentative maximum. The MBA’s mortgage application survey showed a decrease of 18 percent from one week earlier for the week ending April 3, as economic weakness and the surge in unemployment continue to weigh heavily on the housing market. Purchase activity declined again, with the index dropping to its lowest level since 2015 and now down 33 percent compared to a year ago. Later today will be a $17 billion 30-year bond reopening auction as well as the release of the minutes from the emergency FOMC meeting on Sunday, March 15. We begin the day with Agency MBS prices worse .125 and the 10-year yielding .76 percent.