LenderNews by Rob Chrisman
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Jan. 23: AE jobs, Non-QM on the rise? Guild & Quicken in the media; two sides to the FHA about-face; mortgage & bank conferences

January 23, 2017

Our thoughts and prayers go out to the families of those that lost their lives in storms in the South and East. On the other coast, Los Angeles has received more rain over the weekend than in all of 2013! And while we’re talking about extremes, the definition of “mansion” can be relative. Whatever it means, exactly, is unknown, but Bruce Springsteen is selling his.
 
Royce Goldman spread the word about its enterprise strategy regarding jumbo and non-QM marketing. “Royce Goldman is a data marketer connecting professional origination partners with high capacity homeowners looking to work with the best bankers in the industry. Specializing in jumbo and non-QM marketing, Royce Goldman is built on an ecosystem of marketing strategies that conform to our partners focus and market opportunity. Prime & Alt-Prime Jumbo will be the new frontier of credit in 2017 and we want to help you compete in this space. If your organization is looking to expand into targeted lead buying or enterprise level marketing strategies aimed at the Jumbo and Non-QM marketplace; Royce Goldman has the solutions for your firm. For information about becoming a Professional Origination Partner, please visit STRATEGY or contact Zac Russell (800-966-2173).
 
In broker & AE job news, FundLoans.com is a residential wholesale jumbo non-QM lender. “At FundLoans.com we take a common-sense approach to looking at your loan. We don’t underwrite like a bank, we underwrite like a private fund. We thrive in the super jumbo area and love working with self-employed borrowers. FundLoans.com is looking for experienced Account Executives who thrive when challenged, inspired to deliver a level of service unparalleled in the mortgage industry. Come join the nation’s newest Jumbo Non-QM lender as we grow and thrive in this lucrative new space. We are hiring in the following markets: CA, FL, TX, AZ, CO, WA, OR.”  Email your resume today for additional information and consideration to David Hidy (760-388-5888).
 
Radian is proud to be celebrating its 40th anniversary!  A lot has changed since Radian was founded in 1977, but our commitment to our customers stands the test of time. Over the last four decades, Radian has led the mortgage insurance industry with innovative products and solutions to help our lending partners work more efficiently and navigate business challenges. Visit www.radian.biz/40years to journey back in time with us, and see how Radian continues its commitment to your success now.
 
With Richard Davis is stepping down from the CEO job at U.S. Bancorp after a decade in the role, who’s next? Mr. Davis, 58 years old, will be succeeded by Andrew Cecere, the firm’s president and chief operating officer, at the bank’s April annual shareholder meeting.
 
And Allied Mortgage Group, based in Bala Cynwyd, PA, has announced the appointment of Joe Duffy as its SVP of Production leading the company’s origination efforts within its retail and wholesale channels. “Joe has an extensive background in building and leading mortgage sales teams and his deep experience is an asset for the company as we continue our growth in to new markets.”
 
Mortgage companies in the news? Sometimes, even when it is good news and helpful to the borrower, the tone of the reporter(s) makes it disdainful. Take this TV story on Guild Mortgage offering the loan program from Unison that splits the down payment in exchange for future equity. (“Do you mean, the borrower actually has to pay something back?”)
 
Quicken Loans received some press over the weekend. The government has filed a lawsuit accusing Quicken of aggressive FHA underwriting practices. Quicken denies the charges and notes how it has some of the best credit performance in the FHA program.
 
Who can work in the mortgage business without training, or attending some related events?
 
Don’t miss early bird registration for Lenders One’s Winter Conference on March 5 – 8 at the Loews Sapphire Falls Resort at Universal Orlando. This members-only event will deliver valuable insights and includes access to brand-new 2017 Lenders One programs and services. Hear from keynote speaker Kevin Carroll, who has worked with organizations such as Walt Disney, Nike, ESPN and Starbucks, to learn how to elevate your business through the power of play. With education session tracks including leadership & growth strategy, compliance, business development and operational efficiency, plus multiple networking opportunities for sharing best practices — this is an event you’ll want to attend. Contact Susan Malpocker for questions or more information about Lenders One.
 
Expect a different conference experience at ABA Real Estate Lending Conference March 29-31st in Orlando. Sessions have been crafted in close collaboration with bankers and our corporate partners to provide practical, relevant content. The conference format has been changed to fully encourage conversations and open exchange of insights and experiences. ABA has extended its early bird registration deadline to February 1st. Members will save $200 if they register before the cut-off. Plus, ABA member banks can benefit from an additional team discount.
 
Plaza is providing a complimentary Manufactured Home Appraisal webinar on January 23rd. This webinar will discuss the various types of manufactured homes as well as the areas of the Manufactured Home Appraisal that require specific information regarding this type of property. Plaza will also provide information to help you understand what a data plate and red tag is.
 
NAMMBA announced its Inaugural Conference which will take place April 6 – April 9, 2017 in Atlanta, Georgia. Presented by Radian, this historic conference will feature CEO’s, industry and real estate partners and national sales speakers from across the country with 20 Sessions available. Register now to receive the Early Bird discount only available until January 31st.
 
If you are a FHA approved lender, or are interested in becoming a FHA approved lender, OMBA will train your staff to underwrite, process and originate FHA loans. The OMBA will conduct a comprehensive 12-hour Direct Endorsement Training Webinar on February 15 and 16. This course covers both basic and advanced underwriting guidelines for both purchase and refinance transactions.
 
FHA’s annual recertification deadline is around the corner and the certification language is new. Are you ready? Join BuckleySandler for a complimentary webinar on January 31st. Guest speaker from FHA’s Lender Approval and Recertification Division, and BuckleySandler partners Michelle Rogers, Melissa Klimkiewicz, and Katy Ryan, will help mortgagees navigate this year’s FHA annual recertification.
 
Politics and lending are intertwined, and we’ll see if that changes much in the next four years. The very first executive action by the new Trump administration was to, as one newspaper put it, “block an Obama administration (move) that would have reduced the cost of mortgages for millions of home buyers.” In the first hour of Trump’s presidency, the U.S. Department of Housing and Urban Development sent a letter suspending the 0.25 percentage point premium rate cut for Federal Housing Administration-backed loans. The FHA published Mortgagee Letter 2017-07, which immediately suspends Mortgagee Letter 2017-01, Reduction of FHA Annual Mortgage Insurance Premiums (MIP) Rates, until further notice.
 
One headline read, “In First Act as President, Trump Raises Mortgage Rates on Struggling Homeowners.” HUD’s letter implied that they felt the insurance fund was not yet stable and couldn’t afford it, and suspended the cut “indefinitely … effective immediately.”
 
But all along, since that January 9 announcement, Republicans cast the move as hasty and said it threatened to undermine the stability of the system. And on Friday General Deputy Assistant Secretary for Housing Genger Charles announced that HUD would "suspend indefinitely" the rate reduction, saying "more analysis and research are deemed necessary." Dave Stevens, President of the MBA, conjectured that the new administration “haven’t had their own chance to look at the state of the reserves, the strength of the fund and make their own analysis. My view of this is that it is not ideological whatsoever. It is a technical decision."
 
On reader asked, “Where do the Mortgage Insurance Premiums go?” The premiums fund the Mutual Mortgage Insurance Fund, which would bail out lenders if borrowers default on their mortgages. The balance in the fund that backs FHA mortgages is just 16% higher than the legal minimum. One politician noted that, "This strikes me as very little buffer above the minimum. And after all, as recently as 2013, the FHA needed a bailout."
 
There is a reason that FHA insures about 16% of new mortgages in the United States. Lenders will admit that FHA loans are still a great deal even with the old MIP rates. The loan amounts can be very high, depending on county, with 3.5% down, non-occupant co-borrowers allowed, all gift, seller credit, no termite report necessary, lower credit scores are OK, and so on.
 
As one would expect shares of publicly traded mortgage insurance providers such as MGIC Investment or Radian Group moved higher on Friday. Recall that on January 9, shares of MGIC & Radian fell 3-5% when the FHA said it would reduce the annual premiums on mortgage insurance on home loans agency insures by a quarter point on Jan. 27. But not to worry: both stocks have been big gainers since the election: Radian is up roughly 36% since Nov. 8, and MGIC is up about 27%.
 
"Based on the prior administration’s lack of communication on the FHA premium reduction, we believe the decision to review such action prior to implementation is prudent. We are confident the review will support a premium cut," said Scott Olson, CHLA’s Executive Director. "Our hope is the Administration will conduct a comprehensive review of housing policies and implement changes that will help millions of Americans who have been left out of homeownership for far too long.”
 
And the AEI International Center on Housing Risk applauded the move as well, saying it is good news for both first time homebuyers and taxpayers. “The fact is that little of the price cut goes to expand access to new homebuyers not already intending to purchase. Research by the AEI International Center on Housing Risk has demonstrated that implementing a mortgage premium price cut during a seller’s market (defined as <=6 months of homes for sale inventory at current selling rate) does little to expand access to new borrowers. 
 
“Suspending the premium cut will benefit taxpayers, as it will result in additional needed capital accumulation by the FHA. There is general agreement that the current 2% minimum standard is just that, a minimum… suspending this price cut may well forestall the usual tit-for-tat responses from the FHA’s tax-payer supported competitors—responses that only serve to fuel a race to the bottom.”
 
Investors and lenders were, of course, quick to act. “This is an operational nightmare,” one doc drawer sent me. The MBA sent out a bulletin highlighting the most common operational and compliance challenges that will arise as a result of this action.
 
Franklin American sent out, “…The MIP Charts that are currently in effect and were published as of 9-14-2015 must continue to be utilized for all FHA transactions.”
 
Pacific Union sent, “…With this change, all FHA loans must be disclosed at the current MIP requirement for the program. Pipeline loans disclosed with the lower MIP will need to be re-disclosed within the next three business days (1/20/2017-1/25/2017) to reflect current MIP rates.  Announcement of suspension of the MIP reduction is considered a valid change of circumstance, allowing for re-disclosure within three general business days. Please note that, upon re-disclosure, a new three specific business day waiting period will be required if: 1.A CD was already disclosed on the file; and 2.       The new increased MIP amount causes the previously-delivered CD to become inaccurate (i.e., the APR increases by more than .125%).
 
From the primary markets to the secondary markets…
 
If anyone wants to know what made rates scoot up last week they have no further to look than Janet Yellen’s speech. It seems that the U.S. economy is closing in on the Federal Reserve’s goals: the long-run unemployment rate is around 4.75%, and inflation slowly inching back towards 2%. Ms. Yellen suggested that "As the economy approaches our objectives, it makes sense to gradually reduce the level of monetary policy support… Our foot remains on the pedal in part because we want to make sure the economic expansion remains strong enough to withstand an unexpected shock, given that we don’t have much room to cut interest rates."
 
For actual rates, Friday we prices didn’t do much and ended the day near Thursday’s levels. Following the FHA MIP announcement, G2/FN swaps popped 1 to 3 ticks vs. prior to the announcement. But that was then, this is now, and let’s see what we have for economic news this week. Zip today; tomorrow will be December Existing Home Sales and a $26 billion 2-year Treasury auction. Hump Day are the MBA Mortgage Index for last week, November FHFA Housing Price Index, and a $34 billion 5-year Treasury auction.
 
Thursday contains the December Advance International Trade in Goods figure, Initial Jobless Claims, December Leading Indicators, December New Home Sales, and a $28 billion 7-year Treasury auction. Friday we wrap things up with the Q4 GDP and GDP Deflator, December Durable Goods Orders, and January Michigan Sentiment. Friday the 10-year note closed yielding 2.47%. This morning it is floating around 2.46% with agency MBS prices roughly unchanged versus Friday end-of-day.
 
 
An elderly, but hardy cattleman from Texas once told a young female neighbor that if she wanted to live a long life, the secret was to sprinkle a pinch of gunpowder on her oatmeal each morning.
She did this religiously and lived to the age of 103. She left behind 14 children, 30 grandchildren, 21 great-grandchildren, five great-great-grandchildren and a 40-foot hole where the crematorium used to be.
 
 
If you’re interested, visit my periodic blog at the STRATMOR Group web site. The current blog is, “Are You Sure that Rates are Going Higher?” 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 2017 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.)