Thanksgiving around the corner, here’s some conversation fodder.
Thanksgiving became a national holiday 151 years ago when President
Lincoln declared the last Thursday of November as national day of
thanksgiving. Then, President Roosevelt said Thanksgiving should be
celebrated on the fourth Thursday of the month to encourage earlier
holiday shopping. In Q2 of 2014, there were 115 million occupied housing
units, plenty of potential destinations for Thanksgiving dinner. There
are 4.4 million multigenerational households, consisting of 3 or more
generations; these households will undoubtedly have to purchase a lot of
food to feed their family. A little over 98% of households own a gas or
electric stove which matches the percentage owning a TV – there will be
plenty of games to watch.
Silvergate Bank, one of the pioneers of NonQM, is “thankful” for their client’s business and loyalty. Silvergate
has purchased over $20 million on a closed loan, correspondent basis
for the month of November. Alan Peviani states, “We are continuing to
build our client base and are accepting both retail and wholesale originations for our NonQM programs”.
If your company is considering moving into NonQM and looking for ways
to increase production and profitability, please contact Alan.
Endeavor America Loan Services is also adding correspondent clients.
“When choosing a correspondent partner, lenders often focus on the two
P’s: Product and Price. But what about the third ‘P’- Philosophy?
Philosophy is probably the most intangible of the three P’s but it can
have the most dramatic effect on a lender’s profitability. For example,
some lenders purchasing correspondent loans truly follow the 4155, while
others proclaim they have no overlays but leave you and your team
guessing with their inconsistent approach. Endeavor is making a name for
itself in the no-overlay correspondent arena.
EA’s credit philosophy is to truly follow FHA, VA, USDA, and Fannie
guides without adding any overlays. EA is seeing dramatic growth in
their correspondent channel using this philosophy, coupled with their
focus on speed and service, as they position themselves to become the Zappos of the Mortgage Industry.” Learn more on how to become approved with Endeavor America by visiting its correspondent or wholesale website.
Correspondent lenders everywhere are wondering if they are going to buy loans from a credit union dedicated to the marijuana business in Colorado.
At the other end of the spectrum from start-up credit unions, “The Dodd-Frank Act requires that certain banking organizations
with total consolidated assets of $50 billion or more and nonbank
financial companies designated by the Financial Stability Oversight
Council for supervision by the Federal Reserve periodically submit resolution plans
to the Federal Reserve and the Federal Deposit Insurance Corporation.
The plan, commonly known as a living will, must describe the company’s
strategy for rapid and orderly resolution in the event of material
financial distress or failure of the company.” Under the guidance given
to Wells Fargo for preparation of the 2014 plan submission, the firm’s 2014 plan
provides a “basis for a resolution strategy that could facilitate an
orderly resolution under bankruptcy. If fully developed in the future,
Wells Fargo’s plan could reduce the risk that the company’s failure
would pose to the stability of the U.S. financial system.”
The Ohio MBA reports that State regulators announced that some proposed changes to the Mortgage Call Report
will be postponed due to the feedback they received from industry
representatives. The new definition of “application”, which triggers
additional reporting, will not be implemented until 2016, as such; the
additional reporting requirements will be optional in 2015. The field to
capture Change in Application Amount will be implemented at the
beginning of 2015, but providing the information will be optional until
2016 and reporting on the number and dollar volume of QM and Non-QM
loans by state will be required in 2015.
Earlier this week the commentary mentioned the possible 4 basis point fee that HUD and FHA are asking Congress to approve as an “administrative support fee”.
Some banks and lenders want it others do not, thus pitting companies
and sectors against each other. For example, the CMLA had come out
firmly against it. And then we had the MBA…
MBA’s Action Alliance (MAA) group spread the words that, “When Congress
returns next week, its top priority will be to wrap up the
appropriations bill for the current fiscal year. Tucked into the Senate
version of the Transportation-HUD Appropriations Act (S. 2438) is a
provision that would allow the Federal Housing Administration (FHA) to
assess an administrative support fee to fund an enhanced quality
assurance program for single-family loans. While
MBA supports creating a new quality assurance program within FHA, the
provision contained in S. 2438 is overly broad and could negatively
impact consumers and lenders alike.
A key concern is that the fee will be retroactive – calculated using
the previous year’s mortgage originations instead of new originations.
This will retroactively raise costs on mortgages that have already been
originated and insured. We are also concerned about the overall size of
the fee. While HUD only sought $30 million for this new program, the
appropriations bill does not limit HUD to collecting only this amount.
In fact, the legislation allows FHA to charge as much as 4 basis points
on aggregate lender originations – far in excess of what it needs. And
because the fee is not limited only to FY 2015, HUD would be permitted
to levy this charge in future years. We are asking you to once again
make your voices heard and contact your Senators and Representatives to
urge that if the final HUD appropriations bill contains language
authorizing FHA to impose a fee on lenders, that it be limited in size,
scope and duration to cover the specific technology improvements needed
to implement the program. Please click HERE to go to the MAA homepage and click on the ‘Take Action’ button to get
started. If you don’t have, or have forgotten your username and
password, click on “forgot password” to retrieve it. Please contact
Annie Gawkowski at 202-557-2816 if you need assistance.”
Hey, this is almost as good as giving that “someone special” the entire West Wing series in a boxed set! The Federal Reserve System has hosted four “Outlook Live” webinars on the TILA-RESPA Integrated Disclosures rule. These
sessions, presented by the Consumer Financial Protection Bureau (CFPB),
are part of an on-going series of webinars to address the new rule as
creditors, mortgage brokers, settlement agents, software developers, and
other stakeholders work to implement the rule before its August 1
effective date. Consistent with all of our Outlook Live sessions, the
CFPB’s discussions on the TILA-RESPA Integrated Disclosures rule are
archived and are available for playback on our website.
The TILA-RESPA related webinars are available at the links below (to
access the recordings, enter the email address you originally used to
register for the event or complete the registration form if you have
previously not registered):
June 17 – Part 1 – Overview of the Rule
August 26 – Part 2 application, scope, record retention, timing for delivery and re-disclosure, tolerance, basic form contents
October 1 – Part 3 – Completing the Loan Estimate
November 18 –Part 4 – Completing the Closing Disclosure.
is a chief concern among potential investors, even in the $100 trillion
global bond market. During the past seven years, demand has outstripped
issuance five times, according to JPMorgan Chase. The financial
institution expects global demand to exceed supply by an estimated $400
billion next year. Bloomberg
So how much mortgage debt is out there? About $13 trillion – but
remember that all of that is not in securities. How do I know that? Once
again, the Federal Reserve is there for us. And a report released yesterday (Household Debt Balances Increase as Deleveraging Period Concludes) shows that borrowing is picking up.
Speaking of volume, the MBA’s weekly survey (covering 75% of retail lenders) showed that mortgage applications fell for the second straight week,
down over 4% on a seasonally adjusted basis from one week earlier. The
Refinance Index decreased by 4 percent from the previous week. The
refinance share of mortgage activity increased to 63 percent of total
applications from 61 percent the previous week. And the seasonally
adjusted Purchase Index decreased by 5 percent from one week earlier.
The FHA share of total applications is a little over 9% while the VA
share of total applications is over 10%. (The USDA share of total
applications remained unchanged at 0.8 percent this week.) Lastly, the
ARM share of activity increased to 7.0 percent of total applications.
(Read More: Mortgage Applications Slide Despite Falling Rates)
Moving over to the markets, some LOs wonder why mortgages prices don’t behave exactly like Treasury prices.
Rate movements a while back remind us of the added risks of lower
interest rates. Bond yields were decreasing as traders dropped wagers
that the Federal Reserve would raise interest rates next year, which
increases refinancing risk for investors in mortgage bonds. Fannie Mae’s
30 year mortgage had an average rate of 4.2%, which is the lowest since
June 2013, whereas Fannie Mae’s securities have an interest rate of
about 5%. The bond market pushed interest rates on government debt
lower, but as the duration of homes loans decreased (i.e., more likely
to pay off through refinancing) some investors and servicers must buy
securities to counterbalance lost income. What investors need to
remember, however, is that it has never been more expensive to close a
loan – and that the risk of refinancing is lower now because of it.
Given the news yesterday it is becoming harder that the economy is not doing pretty well. (If it were doing really well rates would be much higher, so be careful what you wish for.) Gross Domestic Product (GDP)
was revised up to 3.9% growth in 3Q, and in fact the gains in the past
two quarters are the best six-month period since 2003. The
SP/Case-Shiller index of property values increased 4.9% from
September 2013 with all 20 cities in the index showed a year-over-year
gain, led by a 10.3% rise in Miami and a 9.1% increase in Las Vegas. The
FHFA House Price Index rose for the 13th consecutive quarter (it uses
home sales price information from mortgages sold to, or guaranteed by,
Fannie Mae and Freddie Mac). There was one fly in the ointment
yesterday: the Conference Board Consumer Confidence Index dropped to
“88.7” in November down from 94.1 in October. “Consumer confidence
retreated in November, primarily due to reduced optimism in the
Tuesday, once again, demand for MBS outstripped supply and agency MBS
prices did pretty well resulting in a few intra-day price changes.
was then – today is a new day (there is no early close in the bond
markets). We’ve had Durable Goods Orders for October (expected improved
on headline and core, it was up .4%), as well as Personal Income
Consumption for October (improvements expected there as well, they were
+.2% and +.2%) while expectations for weekly jobless claims were lower
overall (291k last, but it shot up to 313k). Later this morning we’ll
have the November Final release concerning University of Michigan survey
(seen higher), October New Home Sales (467k prior), Pending Home Sales
(+0.3% last), and the 1PM EST $29 billion 7-yr note sale.
After the first spate of numbers the 10-yr is down to 2.24% and agency MBS prices are better between .125-.250.