LenderNews by Rob Chrisman
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Jan. 22: LO jobs, reverse training, note on culture; disaster updates; jumbo trends; reverse mtg. securitization

January 22, 2018

If you want to read up on the latest Fannie lawsuit, here’s one dealing with a stripper hired into Fannie’s IT group but with unusual manager expectations. If you want to live in affordable beach town, stay away from California. Per this list, there aren’t any. In fact, looking at the West Coast, in the top 25 there is only one in Oregon (Coos Bay) and only one in Washington (Port Angeles) – most of the others are in Florida. And if you want the latest on Equifax, it is battling 334 separate consumer complaints. No surprise there, huh?
 
Employment, products, and training
 
Despite housing prices stabilizing nationally, FHA-insured mortgages are still in high demand due to their relaxed credit and down-payment requirements. To optimally manage the pipeline of CWCOT-eligible properties, servicers need to implement solutions that address unknown variables in both primary claims channels. In a recent white paper titled, "New Opportunities for Servicers to Optimize CWCOT Disposition Strategies,” author Min L. Alexander, SVP of Real Estate Services for Altisource, breaks down the barriers holding servicers back from efficient and effective CWCOT program strategies.
 
Reverse Mortgage Funding LLC is offering a free, in-person “Reverse Mortgage Jump Start” accelerated learning course — one in Miami on Wednesday, January 31, and another in Orlando on Thursday, February 1. Each one-day session will be from 10:00 a.m. to 2:00 p.m., with lunch included. “Find out how you can easily add this missing piece to your product mix, with a team of industry-leading professionals on your side. If you’re originating mortgage refinancing, home purchase loans, and/or lines of credit and not offering reverse mortgages, you’re missing out on a huge market opportunity — homeowners and homebuyers age 62+. This is a great way to learn the ropes and how you can get started. Admission is free, but seating is limited so reserve your place today!”
 
“At Caliber Home Loans, Inc. national growth is our story, but it begins at the local level. Collectively, our network of over 350 mortgage branches across the country created a 22% growth in volume last year. As a result, Inside Mortgage Finance ranked us #1 among non-bank distributed purchase retail lenders in the US in November 2017. We’re proud of our Loan Consultants and their contributions to our success as a company. Caliber was just voted #2 by Loan Consultants on Mortgage Executive’s 50 Best Companies to Work For list. If you’re a talented Loan Consultant looking to growth with us, visit www.joincalibernow.com or email Jeremy DeRosa.”
 
Culture & companies
 
Culture is critical in a company, and I received this note from Rob Clennan at Mortgage Solutions Financial. “As our industry and our customers evolve, we must define what sets us apart and brings value-added to those we serve. Some mortgage companies provide amazing technology that automates and streamlines the loan process, while others focus on making the loan process simple and personalized, incorporating a hands-on human element approach from application through closing. Mortgage Solutions Financial has long believed that there is a balance between automation and human interaction that can be achieved… and we have found it! We have superior technology that will keep all parties completely informed during the loan process, and offer enough support and flexibility to allow you, the originator, to keep in touch and maintain relationships with your borrowers and referral partners. Some loan originators love using new technologies, while others prefer using a hybrid of the old ways with the new.
 
“We may not fit the needs of every LO, but if our approach sounds attractive to you, and most of your business is government loans, you should give us a call. We will look at any loan with an “Approve Eligible”, as we do not have a credit score minimum. In other words, if you obtain an “Approve Eligible” we are doing the loan, to the findings, without a credit score minimum. There is power in doing business the old-fashion way. Since we are not a giant company and have no desire to become one, we can solve minor issues in minutes, not hours and large issues in hours, not days. We can work through issues by picking up the phone, not by trading emails. Mortgage Solutions Financial is committed to provide the best support in the industry to our LO’s, and are equally committed to their success. Let’s talk.”
 
Following the company’s brand announcement last week, The Money Source Inc. (TMS) announced a new Grow Happiness initiative, challenging its team members to hit the streets and put the words into action. TMS gave each team member $20 and encouraged them to be creative and give back to their local communities. Check out the full video here.
 
Jumbo & nonconforming news
 
The jumbo-mortgage market has been a bright spot for the banking industry in recent years. Banks love putting those loans on their books. But the tax law has already removed some of the shine from it.
 
The tax-code overhaul, among its many other consequences, eliminates some of the benefits of homeownership, particularly for high-end homes. And the borrowers who buy those homes are exactly whom banks have been targeting. As tight as the affordable rental housing market is, it’ll worsen. As economist Elliot Eisenberg points out, “These changes will reduce the value of tax credits used to build low income-housing, thus reducing the number of affordable units built by 15% or 14,000 units/year. Other changes make renting relatively more attractive, increasing demand. That will boost market rents.”
 
In conjunction with eligibility of conventional Conforming Loans at the 2018 loan limits, the minimum loan amount for Wells Fargo Funding Non-Conforming program will increase to $453,101. (Its maximum allowable Non-Conforming loan amount remains unchanged at $3,000,000.)
 
Wells Fargo Funding is updating its Non-Conforming state price adjusters to more accurately reflect the market, risks, and associated costs for these transactions:  Value changes for California and New York with an improvement to price effective January 12, 2018. Value changes for multiple other states, varying between improving and worsening price, effective January 22, 2018. 
 
The loan amount for all Pacific Union Financial, LLC Jumbo loan products must exceed the maximum conforming loan amount for the subject property county by $1.  With the increase to the 2018 Conforming Loan Limits, the minimum loan amount for Jumbo products will increase to the 2018 conforming limit plus $1.
 
Pacific Union Financial announced the new Jumbo Series W Fixed Rate and ARM program, another Jumbo financing option for our Correspondent channel.  The Series W product is now available in FLOW.  The Correspondent Jumbo Product Comparison provides a high-level overview of the differences between the Series W and Pacific Prime jumbo loan programs. 
 
AmeriHome is updating requirements in its Core Jumbo program. Updates are available at SellerWeb/Resources/Program Guides.
 
Disaster updates
 
Practically every investor’s disaster policies and procedures are driven off whether FEMA has declared a particular area a…disaster. And the best link is www.FEMA.com.
 
Pacific Union Financial continues monitoring the impact of the wildfires, flooding, mudflows, and debris flows currently affecting California. Any properties located within areas identified by FEMA offering private assistance will require confirmation, per its published guidelines. FEMA has included areas in the California counties of Los Angeles, Ventura, Santa Barbara and San Diego in its disaster declarations. Pacific Union requires certifications from Correspondents for properties in the affected counties for purchase to occur.
 
In response to Wildfires, Flooding, Mudflows, and Debris Flows in California and in response to a Federal Disaster Declaration, M&T Bank will enforce its Disaster Re-Inspection Policy for all properties located in Los Angeles, San Diego, Santa Barbara, and Ventura counties.
 
On 1/15/2018, with Amendment No. 2 to DR-4353, FEMA granted individual assistance to 4 California counties impacted by wildfires & mudslides starting 12/4/2017 and continuing. AmeriHome WILL NOT require disaster inspections for Fannie Mae, Freddie Mac, VA, USDA, or Core Jumbo loans in the counties identified However, reps and warrants apply. Also, FHA loans will not require disaster inspections but will require reps and warrants and FHA insuring requirements.
 
Capital markets
 
Ginnie Mae will continue to remit timely payment of principal and interest to investors. There will also be no disruption of essential functions like the granting of commitment authority and support for continued issuance of Ginnie Mae-guaranteed Mortgage Backed Securities (MBS) and REMICs. (Otherwise, FHA and VA mortgage loan originations could be impacted due to government workers not being in office, apps may be delayed if lenders can’t obtain verification of social security numbers, and lenders won’t be able to process loans if the IRS is not available to verify borrowers’ tax returns.)
 
Fannie’s trading desk has added an additional committing grid in Pricing and Execution – Whole Loan (PE – Whole Loan). The new grid for the 30-Year Fixed Rate – 200k Max Loan Amount will be available beginning today: the fact sheet.
 
Remember that “forward” mortgages are only one piece of the secuitization pie. The reverse mortgage industry continued its recent growth with a strong finish to 2017 and new HMBS issuance, which contain Ginnie Mae backed Home Equity Conversion Mortgages (HECMs), topped $2.11 billion in the fourth quarter, up from $1.89 billion in the third quarter. 
 
While there are a number of issuers currently in this space, the top 6 account for nearly 96 percent of all issuance.  For the fourth quarter, American Advisors Group (AAG) led the way with $444.9MM/21.1% followed by, Finance of America Reverse (FAR) ($421.5MM/20.0%), Reverse Mortgage Funding (RMF) ($420.3MM /19.9%), Longbridge Financial at ($275.5MM/13.0%), Live Well Financial ($247.2MM/11.7%), and Ocwen Loan Servicing ($217.5MM/10.3%).  Investors like these securities for their unique qualities – actuarially based performance, relatively stable and low prepayment speed, put back to HUD when loan balance reaches 98 percent of maximum claim amount (MCA), and extension-risk protection.  For 2018, the MCA increased for the second year in a row; up from $636,260 to $679,650.
 
Speculative fervor over tax reform-related repatriation and deregulation sent Treasury yields to new highs last week. Have rates gone up too far and too fast? Many think so. But basing your business model on rate forecasts is foolhardy.
 
US Treasury prices ended the week lower even with a somewhat quiet Friday that left the 10-year note yielding 2.64 percent, the highest levels since mid-2014. Just like the rest of the week, there wasn’t a single headline driving the momentum higher and it remains to be seen if there will be a bounce in the coming week or if the trend will continue. Headline consumer sentiment came in weaker than expected, but the survey still recorded strength in personal finance and household buying plans and the expectations index remained mostly unchanged. Friday night’s deadline for a funding bill came and went and the partial shut-down of the government is upon us. Much like the last time this happened in 2013 (and others prior), expectations are for little impact on the bond markets. As previously mentioned, however, this will create delays for loan applications that require IRS transcripts and IRS income and social security number verifications. This is the time to check those lock expirations, reach out to borrowers and reset expectations for timelines and closing dates. 
 
This week’s calendar sees updates housing, regional Fed surveys, and the first look at Q4 GDP on Friday. Some of these reports may be delayed, however, due to the shutdown, so the tentative schedule would bring the December Chicago Fed National Activity Index as the only significant release today (+.27). Tuesday brings Redbook’s same store sales and a $26bln 2-year note auction. Wednesday has MBA Mortgage Applications, FHFA House Price Index, Existing Home Sales and a $34bln 5-year note auction. On Thursday, initial jobless claims, December new homes sales, retail and wholesale inventories, December leading economic indicators, natural gas inventories, and a $28 billion 7-year note auction. As mentioned, Friday sees the first look at Q4 GDP as well as Durable Goods Orders. The 10-year starts the week yielding 2.65% and agency MBS prices are roughly unchanged versus Friday’s close.
 
 
(Please excuse any delays in communication this week, as I am filling the “weak back, weak mind” role doing volunteer work in an orphanage with a group led by Ken Perry of The Knowledge Coop.)
 
 
(Thanks to Larry for this one.)
A woman was driving home through the hills, having just come from wine country and had a very special bottle of wine on the seat next to her, a present for his husband, who loved fine wines.
The woman was feeling a little lonesome so when she saw a kindly looking old man hitchhiking she picked him up. The man turned out to be an Indian.
After they had chatted amiably for a bit, the woman noticed the old brave eyeing the bottle of wine.
“I’m sorry,” said the woman, “we can’t open that. It’s a very special wine. Very expensive. I got it for my husband.”
The Indian crossed his arms and thought about it. After a minute, he nodded ever so slightly and said, “good trade.”
 
 
Visit www.robchrisman.com for more information on our industry partners, access archived commentaries, or to subscribe to the Daily Mortgage News and Commentary. If you’re interested, visit my periodic blog at the STRATMOR Group web site. The current blog is, “Servicing: All It’s Cracked Up to Be?” If you have both the time and inclination, make a comment on what I have written, or on other comments so that folks can learn what’s going on out there from the other readers.
Rob
 
(Market data provided in partnership with MBS Live. For free job postings and to view candidate resumes visit LenderNews. Currently there are over 300 mortgage professionals looking for operations, secondary and management roles. For up-to-date mortgage news visit Mortgage News Daily. For archived commentaries, or to subscribe, go to www.robchrisman.com. Copyright 2018 Chrisman LLC. All rights reserved. Occasional paid job listings do appear. This report or any portion hereof may not be reprinted, sold or redistributed without the written consent of Rob Chrisman.)