FHA MIP Under Fire; Ellie Insight Report; Lender 1st New England Bankrupt;

As
you may have guessed, there is no logical correlation between whether
there is snow in Boston on Christmas and the performance of the stock
market. Any incidence of a white Christmas in Boston and bullish market
performance in the following year are purely coincidental. This may be
why this indicator is also referred to as the “BS indicator”. See? Who
says you never learn anything from this commentary?

As a reminder since there still seems to be a little confusion about this, Congress unanimously voted to extend a provision of the Servicemembers Civil Relief Act (SCRA) until January 2016,
which prohibits foreclosing on a Servicemembers house for one year
after returning from active duty. Congress had previously extended the
protection period from 3 to 9 months in 2008 and then to one year in
2012. If Congress did not pass the provision, the protection period
would have reverted back to three months. Last May, Senator Sheldon
Whitehouse proposed the Foreclosure Relief and Extension for
Servicemembers Act of 2014 and stated that troops returning from
fighting overseas should not have to fight to keep a roof over their
heads when they return home, as they often need to time to regain their
financial footing.

According to the latest Ellie Mae Origination Insight Report, the refinance market is picking up steam
due to the low interest rates, as lenders’ refinance share rose for the
fourth straight month in November. Since July, lenders’ overall volume
of refinances climbed thirteen percent and the total closing rates on
purchase loans increased to 66.5 percent, the highest level since Ellie
Mae began tracking this number in August 2011. The increase in refinance
volume has been a cushion for lenders who normally face a slow winter
market. As the end of 2014 approaches, The New Year looks promising for
most lenders with continued low rates and the re-emergence of the GSE’s
three-percent down payment loan programs. Other findings from the report
include the average time to close a purchase loan was 41 days, up one
day from October, whereas the average time to close a refinance loan
decreased to 37 days, despite the increase in refinance activity. Credit
requirements have also remained the same from a year earlier, with 31%
of borrowers having an average FICO score of under 700.

The level of FHA’s insurance premiums continues to come under fire. As
Millennials begin to invest in homeownership, changes need to be made
to allow these young adults to qualify and finance a loan.

Dave Stevens, president of the MBA, spread, “I wanted to share with you a letter that MBA Chairman Bill Cosgrove sent yesterday on MBA’s behalf to Secretary Julian Castro at HUD calling for FHA to reduce mortgage insurance premiums (MIPs)
in an effort to both improve access to credit for FHA’s targeted
borrower segment — low and moderate income and first time homebuyers —
and also as a means to ensure the future stability of FHA’s Mutual
Mortgage Insurance Fund (MMIF). MBA has long been on the record in
support of efforts to responsibly improve access to credit for qualified
borrowers. What really precipitated the letter was the re-entry of
Fannie Mae and Freddie Mac into the low down payment (95-97 LTV) space.
Our fear is that if FHA keeps MIPs at the current level, FHA would lose
more volume to the GSEs given that GSE loans with private MI would cost
borrowers less.  Further, FHA would face the threat of adverse
selection, with the GSEs picking off the higher credit quality borrowers
in the segment.  Both the lower volume and the lesser credit quality
borrowers pose threats to FHA’s efforts to recapitalize the MMIF to its
Congressionally-mandated two percent level.  You can read the letter for
more of our rationale.

The Community Home Lenders Association (CHLA) has called for the FHA to lower annual premiums
in order to make FHA loans more affordable for lower and middle income
homebuyers, an income bracket most millennials fall into. CHLA has
proposed the change after the FHA’s annual Actuarial Reported was
published, which indicated the FHA is making a steady progress towards
strengthening their finances. Since FHA’s mission is to provide
financing for first time and minority borrowers, the only way it can
fulfill this undertaking is by reducing premiums. Last February, CHLA
asked the FHA to reduce its annual premium level from 1.3% to 0.75%. In
this report, CHLA pointed out that about 125,000 to 375,000 borrowers
would have purchased a home in 2013 with an FHA loan if premiums weren’t
so high. FHA home purchase volume has also decreased by more than 40%
since 2010 and has experienced comparable declines in loans to
African-Americans and Hispanic homebuyers.

Ocwen Financial Corporation, in
the news lately and the nation’s largest independent mortgage servicer,
announced the re-launch of a free database of loan-level data for
mortgages serviced by Ocwen in private label mortgage-backed securities
(MBS), powered by the REALPortal platform. The re-launch addresses a
variety of requests from mortgage loan investors to enhance
functionality, access to data and bandwidth. Additional functionality is
being planned for near-term implementation. Access to Ocwen’s
REALPortal service is free, and interested parties can register a login
and password, click here.

Last month Stearns Wholesale
began offering LPMI pricing improvements and improvements to its
government pricing. LPMI pricing features improvements on FICO scores
700+. For more details, click here.
Government pricing also features improvements on FICO scores 660+ for
both purchase and refinance transactions. Stearns has also announced
mid-November that it migrated to a standardized Administrative Fee of
$995 for all mortgage transactions in the state of California ($795 for
Streamline transactions).

Penny Mac
has updated its VA High Balance LLPA Value effective with commitments
taken on or after Thursday, November 20th, 2014, the VA High Balance
Loan Level Price Adjustment will be reduced. The value will reflect in
the “Government LLPAs” tab of the Best Efforts, Mandatory, and AOT rate
sheets. To view the announcement, click here.

Plaza Home Mortgage
announced it has enhanced its risk management policies and procedures
governing its wholesale lending business by ordering third party risk
reports on settlement agents. The process will be managed for Plaza by
Secure Settlements Inc. Plaza has also launched its qualified mortgage
evaluation tool in collaboration with LoanScoreCard. Its QM finding
report will provide immediate assurance that the loan meets QM
guidelines. The full story is available for review in its press release.

PMAC Lending Services
posted interesting information regarding the Senate election results
potentially causing delay in USDA December 11th Map Changes. The midterm
elections results are in and the Republicans now control the U.S.
Senate. According to PMAC, it is more than likely when the current
Continuing Resolution (CR) expires on December 11th, the Republican
controlled House and Senate will likely pass another CR which will fund
our Government until March, 2015. If another CR is passed in December,
there is a strong possibility the current eligible areas will remain
intact during the length of the new CR. The CR extends a current general
provision regarding housing program eligibility. This means that if a
community is eligible today, they will remain eligible the length of the
CR. The new USDA guidelines (7 CFR 3555) went into effect on December
1st. Please note that all loan packages that did not receive a
conditional commitment by November 28th 2014 will be subject to the new
guidelines. If a loan application was sent to the USDA prior to December
1st and a conditional commitment was not issued, the USDA will have to
release GUS back to the lender and the file must be re-run through GUS
and the new guidelines will apply.

First Community Mortgage has
posted Wholesale Product and Pricing Bulletin 2014-11b NOVEMBER 2014
GUIDELINE CHANGES to its underwriting guidelines. To view the bulletin,
click here.

What did all that news yesterday mean for mortgage rates?
Gross Domestic Product was much stronger than expected (pushing rates
up), but Durable Goods were less than expected, pushing rates lower.
Personal income was +0.4% to $54.4 billion in November.  Disposable personal income (DPI) increased +0.3% to $42.4 billion.  Personal consumption expenditures (PCE) increased +0.6% to $67.9 billion. The FHFA House Price Index was +0.6% in October.  From
October 2013 to October 2014, house prices were up 4.5 percent – no
impact on rates. The University of Michigan Consumer Sentiment hit a
seven-year high, pushing rates up. New Home Sales were +1.6% in November
– not a big impact on rates. The median sales price of new houses sold
in November 2014 was $280,900; the average sales price was $321,800. The
seasonally adjusted estimate of new houses for sale at the end of
November was 213,000. This represents a supply of 5.8 months at the
current sales rate.

So after all that rates moved higher primarily due to the GDP number – it is hard to argue with the strength of the 3rd quarter and this momentum is expected to help things in the 4th. The 10-year note sold off .875 in price, closing at a yield of 2.27%, while current coupon MBS prices only worsened .5.

(Read More: MBS RECAP: The Kind of Holiday Session we Hope to Avoid; Bond Markets Pounded)

This
morning we had the MBA’s apps data for last week (falling further by 1%
from the week before) and will have Initial Jobless Claims at 8:30AM
EST – a day early (expected unchanged from last week’s 289k) and a $29
billion 7-year note auction at 11:30AM EST. In the early going rates are virtually unchanged from Tuesday’s closing levels.

 

Jobs and Announcements

Franklin American Mortgage, the nation’s 5th
largest wholesale lender, is seeking a highly motivated, experienced
sales management professional to serve as VP, Regional Sales Manager
covering the following areas: IA, IL, KS, MN, MO, NE, ND, SD, UT, and
WI. Responsibilities include recruiting prospective Account Executive
candidates, as well as developing, training, and mentoring new Account
Executives to grow loan production from active and prospective accounts.
Please visit FAMC’s job posting or e-mail Jennifer Rader for more information.

Different companies have different strategies for expansion.
Of course there are different ways to grow, adding products, channels,
regions, and so on. Along those lines I received an e-mail from industry
veteran Allen Friedman with iServe
that should resonate with anyone in a service business. “On the
coattails of the iServe’s growth in 2014 we plan on continued expansion
through 2015. The one area in this industry within our direct control is
service.  iServe continues to succeed by creating a user friendly team
environment that attracts new branches and originators, and is the
reason we have such a good record in retaining existing talent.” 
Friedman goes on to state that at iServe customer service is more than a
checklist of daily activities.  “It is a corporate culture that
recognizes that the loan file is processed based upon a series of
relationships, all dependent upon each other.  It is the personal
contact, the fast response times, and the accessibility at any time,
that allows the flow to be seamless and stress free for everyone
involved. At the forefront and most importantly, our actions have a
direct effect upon the lives of the borrower.  In some cases, it
represents their first experience in the home buying or refinance
process.  For many, it is a defining moment in their lives, in which
iServe participates as a critical link.  We never forget that there is a
borrower and referral partner at the end of every transaction.  At the
end of the day, our team philosophy assures that our originators have
the freedom to originate loans in an environment of consistency and
self-assurance that each and every borrower will be well cared for.”

iServe is looking for established originators and branches in key markets throughout the country to join the company.
Co-CEO Ken Michael states, “We have the talent, product, vision and
support to continue our growth at each and every level.” Allen Friedman
can be reached at afriedman@iservelending. com.

At the other end of the scale, Newton-based residential mortgage company 1st
New England Mortgage Corp
. has filed for Chapter 7 bankruptcy. 1st New
England Mortgage Corp. does business as Aberdeen Mortgage, FNE Mortgage
and First New England Mortgage,
according to the bankruptcy filing. The mortgage company had $1.2
million in liabilities, including $124,456.28 to Company President and
CEO David W. Black and $944,375.47 to Lehman Brothers Holdings Inc. care
of Dallas-based Locke Lord LLP, according to the bankruptcy papers.

Article source: http://www.mortgagenewsdaily.com/channels/pipelinepress/12242014-servicemembers-fha-mip.aspx

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