PHH Sheds More Servicing; Flood Insurance News; Jumbo, Conforming, and Appraisal Changes


Residential Investment Corp. (NYSE: NRZ) announced it has
entered into an agreement, through its wholly-owned subsidiary New Residential
Mortgage LLC (“NRM”), to purchase approximately $72 billion UPB (480,000 loans)
of seasoned Agency and private-label mortgage servicing rights (“MSRs”) from PHH Mortgage Corporation. The total
purchase price is approximately $612 million. In addition, associated with the
MSR purchase, NRM will purchase approximately $300 million of servicer advances
from PHH Mortgage, so the total transaction is $912 million. The deal excludes
the Ginnie Mae (GNMA)-related MSR, which the company previously announced it
had sold to Lakeview.

But apparently PHH knows how
to actually service loans, and concurrently with the Purchase Agreement NRM
entered into a subservicing agreement with PHH and PHH will subservice the
mortgage loans underlying the MSRs acquired by NRM.

What is PHH going to do with
the money from selling its non-GNMA servicing? Management expects that
substantially all the proceeds from the transaction will be used to repay PHH’s
senior unsecured notes and borrowings under the Company’s servicing advance
facility and to pay taxes. PHH will have a large tax bill associated with its
deferred tax liability. Compass Point Research expects that, “one of the next
steps for PHH will involve a meaningful return of cash to shareholders via
accelerated share repurchase (e.g., large tender) and/or potential dividend.”

NRDC submitted
 on a proposed
 by the Department of
Housing and Urban Development, which, when finalized, will increase the
nation’s resilience to flood disasters. “The proposed rule achieves greater
protection for the nation by requiring future HUD-funded projects, like
affordable housing, hospitals, and other kinds of community infrastructure, to
be built with an additional margin of safety against potential flooding.

“Floods are already the most
and costly type of natural disaster in the United States, and they are
only projected to increase in frequency
and severity as sea levels rise and precipitation patterns shift in response to
climate change
. With the new standards in
place, HUD will ensure that its projects are less likely to be damaged in a
flood, which will reduce the Federal cost of future flood events and save
taxpayer dollars.

“Implementation of HUD’s
proposed rule will provide long-term benefits for the nation in avoided
disaster costs, as well as safer, more prepared communities. As HUD is a
significant funder of affordable housing and economic development,
implementation of higher flood protection standards will reduce the risk of
losing housing and essential community services in the event of a flood.” If
this perks your interest, you can read
more here

Correspondent Lending’s Flood Insurance Best
Practice (CL 317) and Hazard Insurance Best Practice (CL 227) have been updated
to address current common issues specific to flood and hazard requirements and
documentation.  Click a link to view each updated document: Flood
Insurance Best Practice
Insurance Best Practice

AmeriHome posted: FEMA announced in
DR-4293 that assistance has been made available to Tennessee’s Sevier county to
supplement individual, state, and local recovery efforts in the areas affected
by wildfires beginning 11/28/2016 to 12/9/2016.

posted an updated FEMA Declared Disaster Counties document.

While we’re talking about
lender and investor updates, let’s see what everyone is doing in terms of the
conventional conforming loan limits for 2017. (This commentary has had numerous
updates already.)

Effective with Best Efforts
locks and loans locked in Mandatory commitments created on or after December
22, 2016, Nationstar Mortgage is aligning with the Conforming loan
limit increases
for standard and high balance loans, as announced by Fannie Mae
and Freddie Mac.  All new loan limits will be
applicable in DU for Version 9.3 or Version 10.0 loan casefiles submitted (or
resubmitted) on or after the weekend of December 10, 2016. Also, note that loan
casefiles underwritten through DU prior to December 10th that receive an
Ineligible recommendation due only to exceeding the 2016 loan limit may be
delivered after January 1, 2017, without resubmitting to DU if the loan amount
complies with the applicable 2017 loan limit. To
view all Nationstar’s updates, click here.

PRMG will accept the new loan
limits on Government products effective January 1st, 2017. However, DU will not
be updated to reflect the new limits for FHA or VA until the weekend of January
21st, 2017.

to view PRMG December 19th Product Profile

Mortgage Company systems will be updated to
support the new 2017 loan limits for all products by January 1st, 2017.  Additionally,
the minimum loan amount for FTMC Non-Agency Jumbo Products has also increased
as a result of the new maximum conforming loan amounts.

as of December 15thSun
accepting lock requests per the new 2017 Conventional loan limits published by
Fannie Mae and Freddie Mac.

Correspondent Lending is accepting agency loans
according to the recently announced 2017 Agency loan limits as follows: DU
Loans – New registrations or DU re-submissions on/after December 10, 2016. LPA
Loans – New registrations or LPA re-submissions on/after December 2, 2016. System
updates scheduled to be in place on Friday, December 23rd that will allow
registration of a conforming loan up to the 2017 maximum conforming loan
amount. As an interim solution prior to the system updates being implemented,
register new loans exceeding the former maximum loan limits at the former
maximum loan amount. Upon receipt and review of loan file, the loan amount per
the documents submitted will be updated.

The loan amount for all Pacific Union Financial, LLC Jumbo loan products must exceed the
maximum conforming loan amount for the subject property county by $1. 
With the increase to the 2017 Conforming Loan Limits, the minimum loan amount
for Jumbo products will increase to the 2017 conforming limit plus $1. For its
Pacific Prime product, the higher 2017 minimum loan amount will be effective
for applications dated on or after January 1, 2017. Mortgage Insurance
providers will accept the 2017 loan limits however, some MI providers may not
allow up to the maximum loan amount.  Refer to the applicable website for
information.  The Pacific Union MI Matrix will be updated as information
becomes available.

FAMC (Franklin American) is
ready to purchase those loans that meet Day1Certainty requirements.

to view the Penny Mac announcement regarding 2017 loan limit increases.

 updated its guidelines
(which you should read for full details) to support recent GSE initiatives. Conforming
and High Balance/Super Conforming Loan Limit Changes: The new higher GSE limits will
be supported for all 1-2 unit properties. Refer to the guideline matrices
in the National MI TrueGuide underwriting guidelines document for 3-4 unit
property maximums. Fannie
Mae Collateral Underwriter (CU) Risk Score = 2.5: If the CU Score is less than or
equal to 2.5 and the following criteria are satisfied, the value conclusion is
considered approved/validated and no further assessment of the appraisal is
required: Loan is AUS Eligible per DU and the appraisal qualifies for
limited review per CU Day 1Certainty Eligibility requirements for appraisals
with CU scores =2.5. Appraisal is present, complete, current, and
consistent with the purchase contract and application. Review of the appraisal
narrative and photos do not reveal any influences on value that cannot be
modeled and appropriately considered by CU. And Fannie
Mae Property Inspection Waiver (PIW): National
MI will accept the value and does not require that the lender provide an
appraisal if the loan satisfies Fannie’s requirements with respect to the PIW. A
Loan Limit Locator is available on its website.

And at the other end of loan
sizes, what’s new in jumbo-land?

Effective 12/15/2016, Mountain West Financial’s Jumbo II products were
no longer suspended.

Mortgage Company spread the word that the
minimum loan amount for FTMC Non-Agency Jumbo Products has also increased
because of the new maximum conforming loan amounts.

Turning to changes in
evaluating collateral, the drop in business has certainly eased up the strain
on appraisers in some parts of the nation. What’s up with appraisal requirements?

MWF posted the following: Effective
as of December 23
, 2016, Mortgage Works AMC will be adding an additional $100 onto the base appraisal fees for Bay
Area properties located in the following counties: Alameda,
Calaveras, Contra Costa, Lake, Marin, Napa, San Francisco, Santa Clara, San
Mateo, Solano and Sonoma.

Mortgage now maintains and
distributes a monthly Appraiser Exclusionary List to continue to ensure
collateral quality. Correspondents are encouraged to review the Nationstar
Mortgage Appraiser Exclusionary List prior to submitting a loan for loan

MT Bank announced a geographical
expansion of its Manufactured Housing program. Effective with loan registrations
dated on or after 12/28/16, FHA 203(b) manufactured housing loans will be
available in all M T eligible areas. A noteworthy product enhancement on
manufactured includes that MT will now obtain a Manufacturers Home Real
Property Conversion certificate of completion from NLS instead of the Lender
requirement to do so. MT will now perform these steps concurrently during
the loan review and funding process and absorb the cost.

Third Correspondent Lending’s updated Ineligible Condo
is available in the Correspondent Connect Online Guides and Forms.

Have rates stopped going up?
Perhaps: yesterday U.S. Treasuries had one of their best days since the
November 8 U.S. election. Coming from out of nowhere, the Treasury auction of
5-year notes was surprisingly strong. Apparently the 5-year part of the yield
curve (“the belly”) led the way as it was seen as the most attractively priced
area. So there were buyers. By the time the dust settled Wednesday the 10-year
note had improved .5 in price and was yielding 2.51%. Mortgage-backed
securities had improved about .375.

Today is the last full day of
trading for 2016, and we’ve already had Initial Jobless Claims (-10k to 265k)
and November Advanced Goods Trade (a new indicator showing a $65.3 billion
deficit). Coming up is a $28 billion 7-year note auction. After these figures the 10-year is hovering around
2.49% with agency MBS prices better by roughly .125 in price versus last night.

Jobs and Announcements

“The older we get, the more we can’t believe how old we are.” With two business days left in 2016, plenty are feeling like they’ve aged a little this year. And the aging process may speed up a little in the first quarter as lenders rid themselves of below average originators (“Why pay them minimum wage if they’re not producing?”) and slack operations staff. 

While we’re on jobs, Ditech Wholesale is hiring talented experienced Account Executives in key markets across the country. “With the rise in interest rates, we understand that territory expansion and alignment are now at a premium. With our recent re-entry back into Wholesale, we are in a fortunate position to have some wide-open geographies, allowing our Account Executives the unique opportunity to be first in market and capture large footprints with more customers at their disposal. With that in mind, our technology, infrastructure, and deep agency relationships empower Brokers and support Account Executive in creating and building strong business relationships. Our leadership has proven success in strategically navigating through market volatility increasing our overall market share year over year.” Click Here to review the job description and apply today! You can also contact Owen Welch with questions.

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