“Rob, do you know where I can find a list of
the largest credit unions?” Yes I do: credit union ranking.
Credit unions in the United States serve 100 million “members” and are
not-for-profit, cooperative, tax-exempt organizations – the tax exempt
status particularly riling bankers and mortgage bankers. Interestingly
enough and to put things in comparison, total combined credit union
assets in the U.S. reached $1 trillion about three years ago – still well below the asset size of Chase, Citi, Bank of America, or Wells Fargo alone.
Residential lending industry observers are keenly attentive to volume projections. Using
rough numbers, in 2013 we did about $1.8 trillion, 2014 was about $1.1
trillion, and this year the MBA thinks we’ll do about $1.2 trillion.
This continued refi wave caught most by surprise, but from where was
the expected 2014-to-2015 expected growth going to come? I received a
note from fabled economist Mike Fratantoni with some Census Bureau
information. “Since the recession, new household formation has typically
lagged growth in population. As of December 2014, however, the
year-over-year increase in households exceeded 1.7 percent relative to a
population growth rate of 0.74 percent – much in the 4th quarter. According to the Census, there were 366,000
new owner-occupier households and an astounding 917,000 additional
renter households in the U.S. in the fourth quarter of 2014.
In total for 2014, the number of renter households grew by over 2
million. Despite fourth quarter growth, there was an overall decrease of
354,000 owner-occupier households for the year, resulting in net growth
of 1.66 million total new households. It turns out that this year about
500,000 households that lost their homes to foreclosure or a short sale
back in 2007 will, if they’ve maintained their credit, be able to again
qualify for a loan. In all, over seven million such households will be
added back to the pool of potential home buyers between now and 2022,
with more than a million households being added in years 2016 through
One thing that might help volumes, and rankle opponents, is a new loan modification plan. Mel Watt is considering principal mods for underwater borrowers with loans held by FHFA.
However, any plan will be “narrow” and will have to be done without
incurring costs to the taxpayer. Interestingly, by cutting MI premium
and G-fees, he is effectively increasing costs to taxpayers by
increasing the chance they have to bail out the fund. Given that house
prices have appreciated and seem headed that way, time is our friend.
Watt told reporters that he is studying a way to provide principal
reduction to a narrow group of homeowners who are underwater on their
mortgages without increasing costs for U.S. taxpayers. Principal
reduction has been a principle tool used by other lenders when modifying
mortgages but is not allowed on those in the portfolio of the two
government sponsored enterprises (GSEs). Note that Mel says mass
principal forgiveness would cost the government billions. It is no
surprise to anyone in the industry that the Congressional Budget Office disagrees that a mass principal forgiveness program would cost anything, as noted in this paper from nearly two years ago.
News Daily reminds us that, “Even though his predecessor as head of the
Federal Housing Finance Agency (FHFA) was adamant in his refusal to
consider it, Melvin L. Watt seems receptive to allowing Freddie Mac and
Fannie Mae some leeway to reduce the principal balance of their
troubled loans.” This move would be backed by Democratic lawmakers and
housing activists. In
Q3 of 2014, 1 in 10 homeowners with a mortgage were underwater, about
5.1 million people, a number that has been slowly declining as the
housing industry has been recovering. Director Watt stated that Congress
could pass a tax break law if they wanted to assist underwater
borrowers. In November, FHFA did allow borrowers who previously
foreclosed to repurchase their homes at market value. He also stated
that he does not have plans to extend the terms of HARP as the program is set to expire at the end of this year.
While we’re on the Agencies…
a reminder Fannie Mae implemented updates to Desktop Underwriter for
government loans in support of the 2015 VA loan limits. Review the DU for Government Loans January 2015 Release Notes for additional information.
Are you getting ready to start using Fannie Mae’s Collateral Underwriter (CU)? To help you get started, refer to the latest CU CheckPoint,
updated. The updates provide key information to help lenders prepare
for the Jan. 26, 2015 Uniform Collateral Data Portal (UCDP) release that
will include CU feedback upon submission of appraisals to Fannie Mae. View webinar dates and register and visit the CU web page for additional resources and information, including eLearning courses available at your convenience 24/7.
prompted one East Coast broker to observe, “CU flags overvaluation
only, but I love how they try and smooth it over by saying it considers both under and over-valuation.
They know that flagging only overvaluation results in a push to have
lenders/underwriters pressure appraisers to lower their values and be
more conservative thus violating their own appraiser independence
guidelines not to mention federal law.”)
In late December Fannie Mae also updated its Foreclosure Bidding Instructions and Third Party Sales as noted in its Lender Letter.
The servicer is encouraged to implement these requirements now but must
implement these policy changes no later than March 1 for all mortgage
loans with a foreclosure sale to occur on or after April 15. Submissions
received prior to Feb. 1 will be denied and may be resubmitted on or
after Feb. 1.
Fannie Mae UCDP Updates and Collateral Underwriter Are Here. These
updates include the addition of an appraisal risk score, flags, and new
messages from Fannie Mae’s new appraisal risk assessment application,
Collateral UnderwriterTM (CUTM). In addition, the severity level for 21
Fannie Mae proprietary appraisal messages that relate to eligibility
violations changed from a warning to a hard stop, requiring lender
action to obtain a “Successful” submission status. Review the UCDP Release Notification for details.
Are you ready to take your appraisal review to the next level with CU? To help you get started, visit the CU web page
for additional resources and information, including FAQs and eLearning
courses available at your convenience 24/7. Providing key information
about CU implementation, read the information on the CU CheckPoint.
to be outdone, Freddie Mac has loans for your borrower with “No Yard
Work Required”. Specifically, mortgage products you need to meet the
needs of condominium buyers, including: The New 3% Down Payment
Mortgage. Its new Home Possible Advantage
mortgage offers a maximum loan-to-value (LTV) ratio of 97 percent and
total LTV ratio of 105 percent. This new responsible mortgage option
will be available in March and provides you with an additional option to
reach qualified low- and moderate-income borrowers. Resources below
will help identify additional opportunities in its condo offering for
you and your borrowers.
And for condominiums…
Mac’s Loan Coverage Advisor is now available. This free application
calculates, tracks, and publishes the representation and warranty relief
status for every loan sold to Freddie Mac based on the selling
representation and warranty framework requirements. If you already have
your login details, log on to Loan Coverage Advisor. You can also access Loan Coverage Advisor from our Selling and Servicing Web. If you haven’t already done so, sign up. It helps lenders track their loans as they move toward obtaining representation and warranties relief
under the revised Representation and Warranty Framework. This tool will
allow you to track events throughout the life of the loan, including
those that impact eligibility for the sunset relief. Similarly, Fannie
Mae will be providing sellers with reports – in conjunction with their
quality control feedback reports – to help sellers monitor the relief
status of their loans.
a reminder, loans are eligible for relief if they 1) have no more than
two 30-day delinquencies and zero 60-day delinquencies in the first 36
months after acquisition, and are current as of the 36th month after
acquisition; or 2) satisfactorily complete a quality control review.
Loans that receive relief under the Framework remain subject to the life
of loan exclusions, which were revised in November 2014 to provide more
clarity and transparency in enforcement of the life of loan exclusions
(see Freddie Mac’s Bulletin and Fannie Mae’s Announcement).
you using Freddie Mac’s Quality Control Information Manager (QCIM) to
help manage your Quality Control (QC) performing and non-performing loan
requests? If not, look into this secure, web-based system. You’ll know
exactly where a loan is in the review and remedy process, as well as the
disposition of the loan file review. QCIM also makes communication
easier – it allows both Freddie and he lender to easily exchange
information online on remedies, loan quality trend analysis, and
underwriting deficiencies. For detail, visit Freddie’s QCIM webpage.
we had a spate of news – but it is hard to be excited about these
measures when the world is focused on oil and economic unrest in Europe.
Initial jobless claims increased by 11,000 and the four-week moving
average for claims fell by 6,500 to 292,750 last week. Nonfarm business
sector labor productivity decreased at a 1.8% rate during 4Q 2014. The
goods and services Trade Deficit was $46.6 billion in December.
Regardless, agency MBS remained decently supported: using all that money
from early payoffs the Fed came in for nearly $2 billion in 30yr
conventional 3s and 3.5s.
morning we’ve seen January’s Non-farm Payrolls. Expected lower from the
last print (+329k), it was actually +257k, the rate was 5.7%, hourly
earnings +.5% (a big jump!). There were significant revisions to the
last two months of +147k. While the unemployment rate has fallen
dramatically from 10% in autumn 2009 to 5.7% today, the number of
persons employed is barely 2 million higher than it was before the Great
Recession began in January 2008. Why? The labor force participation
rate has plummeted to 64%. Come on Millennials! As a proxy, the 10-yr
closed at a yield of 1.82%, began the day at 1.80%, but after the employment data it shot up to 1.88% with agency MBS prices worse .250-.375.
Jobs and Announcements
Mortgage Solutions Financial continues to look for wholesale correspondent AEs
as it “builds a team of elite account executives across the country.
Amazing concept – it seems that product, price and service make for a
pretty great production environment. And MSF continues to expand their agri-loan product;
and is now offering a path for no-recourse on loan originations. If
you’re anywhere in California or Texas, the East, or the Upper Midwest –
and want to build a true relationship-driven business that is
consistent and reliable – you need to contact Greg Grandchamp at MSF and at least hear what he has to say.” You can check them out at MSF Wholesale/Correspondent.
On the recruiting services side, Network Recruiters is “connecting
today’s best mortgage talent with the industry’s premiere mortgage
banking platforms and promoting partnering with mortgage
professionals nationwide. Our goal is to deliver opportunities that
allow our candidates and our clients to achieve superior financial
results. Network Recruiters is a mortgage only recruiting firm built to
assist retail and wholesale mortgage professionals. Our retail clients
include loan officers, branch managers, sales managers and senior
managers. Our wholesale clients include AE’s, area managers, regional
managers and senior managers. We provide our clients with valuable
market intel, schedule interviews for you to speak with hiring managers
and to ask meaningful questions regarding service levels, products
street level pricing. This process helps our candidates understand
what makes each company different.” Contact Steve Samuelson, EVP – Mortgage Recruiter – for more information about Network’s services.
Although the game remains the same, the players are changing uniforms. Universal American Mortgage Company (UAMC), the mortgage banking subsidiary of Lennar Corporation, one of the nation’s largest homebuilders and a member of the Fortune 500, announced that it has rebranded Pinnacle Mortgage Group to Eagle Home Mortgage. In
April of last year UAMC acquired certain assets of Pinnacle Mortgage,
Inc., a Colorado-based mortgage company founded in 1995 with retail
locations in Colorado and Southern California. These
offices will carry the name Eagle Home Mortgage which is UAMC’s retail
mortgage operation now with 110 offices in 26 states nationwide. UAMC
primarily provides financing solutions for home buyers purchasing homes
built by Lennar Corporation. Eagle Home Mortgage is a traditional retail mortgage operation serving new and resale home buyers.