Change in Views on Credit; HSBC Cuts Off Chinese Nationals; WAC’s Servicing Deal

News

Since
its Friday let’s veer away from mortgages for a quick moment. With the
recent rash of celebrity and music deaths, including the Jefferson
Airplane’s Paul Kantner yesterday, here is a site
that lists the “Top 100” musical stars still alive. How old is Willie
Nelson? Heck, those turning 80 this year include Bill Wyman, Englebert
Humperdinck, Kris Kristofferson, and Charlie Daniels. But while we’re on
entertainment, it certainly seems that lenders’ commercials will be evident during the upcoming Super Bowl. There are rumors of an ad by SoFi. And rumored to be one by Quicken Loans.

Flagstar
reported revenues that beat many expectations due to higher MSR
(servicing) income, higher NII, a rep warranty benefit, and lower
expenses. But generally analysts are trimming future earnings for “Flag”
and other publicly held residential lenders due to lower mortgage
volume forecasts. (Can everyone lower their expenses? We’ll see!)
Flagstar’s gain-on-sale income declined to $46 million from $68 million
in 3Q15. Mortgage origination volume fell by 26% to $5.8 billion, down
from $7.9 billion in 3Q15. The company reported a GOS margin of 92 bps
down from 105 bps in 3Q15 and up from 87 bps in 4Q14. Management
attributed some of the weaker earnings in mortgage banking to the new
TRID disclosure requirement.

Europe’s biggest lender HSBC will no longer provide mortgages to some Chinese nationals
who buy real estate in the United States, a policy change that comes as
Beijing is battling to stem a swelling crowd of citizens trying to get
money out of China.

Walter Investment Management Corp. announced the acquisition of assets from Residential Credit Solutions (RCS)
including certain assets of the RCS servicing platform and the
transition of core operational employees to the Ditech servicing
organization. The deal also involves WAC entering into new subservicing
agreements with RCS and the transfer of certain existing residential
mortgage loan subservicing agreements. This involves $9.8 billion of
UPB. RCS had previously announced that it has decided to close its
operations in Fort Worth, TX, a move that will result in an estimated
134 jobs being eliminated.

Lenders
are focused on compliance, credit, and profitability, the order
depending on the lender, and let’s see what has been happening with
credit lately.

Marty Flynn, EVP with Colorado’s Advantage Credit wrote to me discussing “Trended Credit Data” and the Agencies. “Your
readers may recall Fannie Mae’s October 2015 announcement regarding
their planned use of trended credit data beginning in 2016: Fannie Announcement on Trended Data
Although implementation information from Fannie has been scant since
then, the credit reporting agency community, aka credit resellers, have
recently received updates from the two national credit bureaus who are
participating in Fannie’s trended data initiative at this time, Equifax
and Transunion. By the way, Experian is expected to start mandating
trended credit data beginning in 2017. 

“With
Fannie’s trended data policy as the backdrop, Equifax and Transunion
have mandated
all credit resellers operating within the mortgage
industry to start delivering trended credit files to their mortgage
lender clients. This includes mortgage tri-merge origination,
prequalification, secondary use and credit reports for quality
control. Equifax and Transunion both state that the trended data policy
will extend to all credit reports accessed by mortgage lenders/brokers
and there will be no carve-out for non-conforming loans. Conversion to
trended credit data is expected to occur throughout March.  Equifax,
Transunion are allowing a grace period for credit report price
adjustments pertaining to the new (higher) cost of trended credit
files. Expect new pricing from resellers to be effective around June.

“It
is estimated that over 26 million consumers today are “credit
invisible”
and this will help lenders by increasing home ownership and
mortgage access among younger consumers and first-time home buyers. In
addition we should see scoring a higher percentage of consumers that
were deemed un-scoreable by traditional risk scores, making the best
lender terms available to a larger proportion of the population,
identifying borrowers headed towards mortgage default earlier, and
identifying ‘transactors’ versus revolvers with up to 30 months of
utilization history.” Thanks Marty!

Credit Plus
announced the availability of Reps and Warranties coverage for all of
its verification services. The coverage allows customers to better
defend their companies against the negative financial consequences of a
possible loan default and the resulting repurchase requests. The firm
has undergone a stringent review process to obtain certification of its
processes and as a result, its customers are able to obtain the insured
products. The insurance is underwritten by an insurer rated A by A.M.
Best and A+ by Standard and Poor’s. By offering insured products and
extending the benefits of Reps and Warranties coverage to its customers,
Credit Plus is acknowledging and responding to the Consumer Financial
Protection Bureau’s (CFPB) and Office of the Comptroller of the Currency
(OCC) expectation that lenders are now ultimately responsible for
practicing effective third-party risk management.

Fannie
Mae will implement expanded whole loan committing grids on Monday, Feb.
1, providing greater transparency and enhanced certainty of execution
for 15-year and 30-year commitments. This change will give its whole
loan sellers the transparency of the specified market that has
historically been available through an MBS execution. View the infographic by clicking the link.

Fannie Mae is targeting the release of Desktop Underwriter (DU) Version 10.0
for the weekend of June 25. DU Version 10.0 will include enhanced
credit risk assessment using trended credit data, and simplified and
automated underwriting for borrowers with multiple financed properties.
Release Notes will be posted by the end of February and may include
additional items. We are providing a DU Version 10.0 Preview Notification and Integration Impact Memo to allow lenders and technology solution providers time to prepare.

Freddie
Mac spread the word that servicers are “now able to directly change the
reporting
of a third-party sale to an REO status without submitting a
rollback request. We’ve updated our foreclosure sale reporting error codes to more accurately reflect today’s housing market and align with Servicers’ business needs.”

As has been mentioned in this commentary, Freddie Mac and Lenders One have established a new alliance.
This relationship will give Lenders One members who are Freddie Mac
Seller/Servicers pricing and execution benefits, enhanced access to
mortgage products, and professional training and development
opportunities.

Pacific Union Financial
has updated its VA non-delegated DTI to include no maximum required for
AUS approved recommendations. Also, specialty high balance cash-out
refinance transactions are allowed. Also updated are its Conventional
guidelines regarding ineligible programs. Guidelines have been updated
to indicate that the Fannie Mae HomeReady and Freddie Mac Home Possible
programs are not permitted.

Fannie Mae has the new HomeReady Income Eligibility Lookup tool
provides lenders and other housing professionals with a quick and easy
way to determine potential eligibility for HomeReady. Simply use the
tool to look up census tract income eligibility by property address or
by Federal Information Processing Standards (FIPS) code. This
easy-to-use tool is available 24/7 to provide you with the information
you need to serve your customers. Also, if you haven’t had a chance to
take a look, check out all the HomeReady resources available on the HomeReady page

Fannie Mae and Freddie Mac (the GSEs) have updated the Release Notification
on their respective Uniform Collateral Data Portal (UCDP) websites with
additional details about the UCDP appraisal-sharing solution, featuring
the Feb. 7, 2016, release date. This new functionality enables
correspondent lenders to easily share appraisal information in UCDP with
their aggregators. Aggregators will have access to real-time results
for their correspondents’ appraisals to ensure they have the most
up-to-date information.

Wells Fargo
has expanded its prior approval High Balance Loan programs to align
with recent Fannie Mae’s changes. Expanded LTVs/TLTVs/CLTVs, addition of
cash-out refinance for 2-4 unit primary units, 2nd homes and investment properties. Contact Wells for its temporary lock and registration procedures for its expanded products.

NYCB Mortgage
Table Funding Clients are no longer required to use the Record of
Account IRS Transcripts for Conforming loan transactions only. The
Return Transcript may be provided for underwriting purposes. Examples
include: YTD paystub 1 W2 = 1 year completed 4506T, YTD paystub
and 2 W2s = 2 years completed 4506T, 1 year personal tax returns = 1
year completed 4506T and 1 year IRS transcripts. The requirements noted
above do not apply to High Balance loan amounts, Jumbo Fixed, Portfolio
ARM, and Portfolio Fixed loan programs. Two years of IRS Transcripts are
required for loan approval on these products.

Sun West announced
several changes to its conventional high-balance product guidelines.
Investment properties now offered for high-balance transactions with
FICOs greater than 660, Maximum LTV/CLTV extended up to 95% for
fixed-rate mortgage transactions for single unit principal residences,
Removed requirement of field review of property for loan amounts greater
than $625,500 with an LTV, CLTV, or HCLTV ratio greater than 80%, LTV,
CLTV, and HCLTV ratio maximums for high-balance product for borrowers
with 5-10 financed properties now aligned with standard product
requirements, Non-Occupying borrower’s income and liabilities are now
considered by DU for all principal residence mortgage transactions.
Previously, only the credit and assets were considered by DU.

Turning
to something simple like interest rates, by the time all was said and
done Thursday rates hadn’t moved much versus Wednesday’s closing levels.
But fixed-income securities initially shot higher after
a pitiful December Durable Goods number, then sold off on an oil spike
as the Russian energy minister talked about cutting supply, and then
rallied back as oil retreated and equities sold off. LOs saw some rate
changes by lenders. The $29 billion 7-year Treasury auction was met with
strong demand, drawing the highest indirect bid since the Treasury
began issuing 7-year notes in 2009! Mortgage rates are now close to
their lowest levels in three months and most rates sheets are in the
3.75-3.875% range on conforming 30-year fixed.

This
morning we’ve already seen the BOJ (Bank of Japan) surprise everyone by
deciding to bring deposit rates into negative territory – so you have
to pay them to keep your money! We’ve also had the Q4 GDP (Gross
Domestic Product) figures (+.7%), and the Q4 Employment Cost Index
(+.6%). Coming up are some secondary numbers: the January Chicago
Purchasing Manager’s Index and the January Michigan Sentiment number. We
closed Thursday with the 10-year yielding 1.99% and after these early
numbers it is down to 1.94% and agency MBS prices are better by .250.

Jobs and Announcements

Indecomm Global Services, a leading provider of mortgage technology, training, and outsourcing services is seeking experienced loan closers.
Clients include prominent top tier, mid-tier lenders, and regional
lenders as well as title and settlement companies. The successful
candidate will provide a high level of customer service, communicating
well with loan officers, brokers, account executives and processors with
the primary function being to ensure the timely and accurate closing of
loans. The candidate may also be assigned additional duties as
required. This position is located Charlotte, NC. The ideal candidate
should have 3 years minimum, 5 years preferred, of continuous loan
closing experience, with a preference for wholesale closing experience.
Interested candidates should send their resume to HR Manager Candy Mechels.

For
lenders looking for a new correspondent investor, “Some Correspondent
lenders are struggling with buying TRID loans more than others in the
marketplace. The Money Source Inc.
is currently averaging less than 10 days from delivery on all
Correspondent loan purchases. With their unique approach to treating
their correspondent lenders as partners, The Money Source has averaged 8
days to purchase new files for all of 2015. TMS has worked tirelessly
the last few years to build a Correspondent platform with just the right
combination of speed, price, and service that is the cornerstone of
success for their sellers. To find out more about what a Partnership
looks like compared to a ‘Transactionship’, please email EVP of
Correspondent Lending, Jeff Vanderluit.”

On the flip side, last month it hit the press that Citi would be laying folks off.
Certainly this “RIF” (Reduction in Force) is hitting the mortgage side
of Citi’s business this month. Sorry to hear that, although those
impacted can post their resumes – for free – on www.LenderNews. com.

Altisource Portfolio Solutions has been on a hiring spree as well, bringing on board Eric M. Lapin, Kevin J. Cooke and Devin P. Daly.

And congrats to Guild Mortgage
who “achieved record growth in 2015, with loan volume reaching $13.8
billion, up 86.1 percent from $7.4 billion in the 2014 period. The
growth continues a trend started in 2010. In five years, loan volume has
more than tripled from $4.1 billion and Guild has expanded from its
western base with 75 branches in 16 states in 2010 to 234 branches in 25
states at the end of 2015.”

Australia’s Computershare,
which purchased Specialized Loan Servicing for $113.6 million about
five years ago, announced that it signed an agreement to acquire Altavera Mortgage Services, a provider of independent, third-party mortgage origination services to residential mortgage lenders.

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