Time flies, this week we can expect the FHA Annual Report to be released with folks watching for that 2% capital level, and before you know it Thanksgiving weekend will be here. It is usually around that time when Fannie Mae and Freddie Mac, through the FHFA, or vice versa, come out with the 2017 conforming loan amounts. The smart money is betting on an increase, but if you want some historical perspective here’s
a nifty website. And capital markets staffs
continue to pay attention to the 10% maximum high-balance conforming
(“superconforming”) delivery cap SIFMA has.
Is the market for mortgage
servicing assets (MSRs) heating up again? Hedge fund manager Bayview Financial Holdings LP bought the right to
collect payments on about $8.7 billion of Ginnie Mae-backed mortgages from Two
Harbors Investment Corp. Bloomberg’s
Matt Scully reported that “Two Harbors, a real estate investment trust that
invests in mortgages, said last week that it sold almost all of its rights to
collect payments on Ginnie Mae-backed home loans during the third quarter.” All
kinds of folks declined to comment.
And PHH Corp. says it has begun its exit from
private-label mortgage lending, and is selling most of its Ginnie Mae MSR
portfolio to Lakeview Loan Servicing. Scully writes, “PHH
Corp., said this week it’s exiting its holdings of Ginnie mortgage servicing
rights and is selling its $14.8 billion portfolio to Lakeview Loan Servicing.
The assets have generally become less profitable as regulatory requirements
have intensified and the government has brought fraud lawsuits against
servicers. The U.S. government-owned mortgage company Ginnie Mae guarantees
more than $1.7 trillion home of loans. It backs loans made through programs at
the Federal Housing Administration and Department of Veterans Affairs. These
mortgages are often more expensive to service than those guaranteed by Fannie
Mae and Freddie Mac, because borrowers make lower down payments, which
increases the risk of default, and the loans can require expensive hedging.”
Issuers are responsible for payments to investors in the mortgage securities
that Ginnie guarantees.
A big worry for Ginnie Mae’s
management that has been brewing for quite some time is that Ginnie has been
increasingly reliant on nonbank issuers, and those non-depositories rely on MSR
sales or financings for liquidity in a way Ginnie’s traditional bank issuers
don’t. If the decline in bidders or demand translates into too much of a decline
in MSR values, a source of nonbank funding could be at risk. And remember that
the problem isn’t small: this year Ginnie passed Freddie in terms of security issuance.
Ginnie’s Ted Tozier has stated
that, “My biggest fear right now is that we might be running out of
servicing capacity.” As a fix, non-depository Ginnie issuers/servicers may
be subjected to stress tests. Many companies desiring to retain Ginnie
servicing have had to finance the MSRs, but it is hard to say exactly how much
issuers rely on MSR sales and financing. Anecdotal tales indicate that more MSR
financing is secured by Fannie Mae and Freddie Mac servicing rights rather than
Ginnie, and that banks favor Fannie or Freddie’s MSRs.
Capital’s has had a busy November. Project
Matador is offering a $50-75 million per month Fannie Mae flow servicing rights
offering. The servicing flow will be a representation of the originators June
through August weighted averages, which is 100% FNMA A/A, 85% Fixed 30, 15%
Fixed 15, WaLA $360K – $376K, 1% HARP refinance loans, 32% Purchase Money
Originations, 68% Wholesale Originations; 32% Retail Originations, 82% Single
Family/PUD Properties, 85% Owner Occupied Properties, 99% of properties
concentrated in CA (by count), WaFICO 755 and WaLTV 65%.
Project Igloo is a bulk and
concurrent flow offering of $395M Fannie Mae Freddie Mac in bulk with an
additional $75-$150M per month Fannie Mae Freddie Mac flow. The bulk
portion will be 61% FNMA A/A, 39% FHLMC GLD, 1% FNMA MBS, 72% Fixed
30, 26% Fixed 15, 2% ARM, 4.07% (F30) Note Rate; 3.27% (F15) Note Rate. 3.19%
(ARM) Note Rate, average loan amount of $179K, 752 WaFICO, 77% WaLTV, 96% SFR
and PUD, 94% O/O, 100% retail originations, with Geography: 23% LA, 22% AR, 13%
FL; the flow portion of the deal will be 50% FNMA A/A, 50% FHLMC GLD, 83% Fixed
30, 16% Fixed 15, 1% ARM, average loan balance $210K – $213K, 72% Purchase
Money Originations, 100% Retail Originations, 96% Single Family/PUD Properties,
91% Owner Occupied Properties, 26% of properties concentrated in LA, with a 751
WaFICO, 78% WaLTV.
And from last month, Project
Pumpkin, which was a $1.8 Billion bulk servicing package. The package
characteristics were: 76% FNMA, 24% FHLMC, 84% Fixed 30, 16% Fixed 15, 4.01%
(F30) Note Rate; 3.34% (F15) Note Rate, Avg Bal $214K, 756 WaFICO, 76% WaLTV,
86% Single Family Properties, 88% Owner Occupied Properties, 50% Purchase
Originations, 82% Broker Originations, with geographical representations: 49%
GA, 11% UT, 6% CA.
MIAC, which recently found homes for $224 Million worth of first lien,
was the exclusive representative recently for an $880 Million FNMA/FHLMC/GNMA
Mortgage Servicing Portfolio. The portfolio was offered by a mortgage company
that originates loans with a New York concentration. The package: $182,954
Average Loan Size, 100% Fixed Rate, 45.58% FNMA A/A, 6.14% FHLMC 3 ARC, 0.08%
GNMA I, 47.90% GNMA II and 0.30% Warehouse Loans, 3.998% WAC, Weighted average
delinquency rate of 6.48%, Weighted average loan Age of 16 months, 716 WaFICO,
with 100% Retail originations.
Servicing Group, recently sold a $1.2 billion
FNMA/FHLMC non-recourse servicing portfolio. The package was 99.2% fixed rate 1st lien product, $264k average loan
amount, 752 WaFICO, 74% WaLTV, 3.64% WAC, No delinquencies, with top states:
California (26.4 percent), Georgia (9.4 percent), Pennsylvania (7.7 percent),
and Florida (7.0 percent).
Speaking of handling
borrower’s payments, Fannie
Guide has been updated to include changes related
to Deadlines to Submit Requests for Expense Reimbursement, Updates to Defined
Expense Limits, New Property Preservation Expense Limits, Servicing Transfers
and Clarifications Related to Mortgage Loan Modifications.
if the NY Fed didn’t have any money to buy mortgage-backed securities? The FOMC
has told us that, “The Committee is maintaining its
existing policy of reinvesting
principal payments from its
holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed
securities and of rolling over maturing Treasury securities at auction…” But what if principal payments go down? With the
higher rates comes less chance of the Fed receiving money from rate term
refis and thus early payoffs to purchase more agency MBS. That’s a bit of a double whammy
(higher rates lead to fewer refinances, fewer refinances lead to less Fed
purchases, less Fed purchases lead to higher rates), although with many areas
appreciating cash-outs are picking up. And there are borrowers selling their
homes and moving up.
Last week fixed-income
securities took a drubbing after the election. There is plenty of speculation
on the possible economic policies of the incoming Trump administration.
Investors feel the new administration will be more business friendly with tax
cuts, deregulation, and higher defense spending. But interest rates moved higher because President-elect Trump
has promised to impose tariffs and deliver a $1 trillion infrastructure
spending package, both of which could increase the Federal deficit, and
ultimately drive up inflation.
Scheduled economic news this
week? Today we have no news of substance. Tomorrow we jump in up to our necks
with Import Prices, the Empire Manufacturing Index, Retail Sales, and Business Inventories
– whatever that is. Wednesday the 16th we’ll have the application data from
last week from the MBA’s poll, the Producer Price Index, the Industrial
Production and Capacity Utilization couplet, and the NAHB Housing Market Index.
Thursday we’ll see the Housing
Starts and Building Permits duo, the Consumer Price Index, Initial Jobless
Claims, and the Philly Fed; Friday the 18th is Leading Economic Indicators. We
start the week with rates higher versus Thursday afternoon: the 10-year’s sitting around 2.24% and agency MBS
off/worse .375-.625 depending on coupon.
If you are you looking to become an expert in your field then you should join the Sierra Pacific Mortgage’s webinar this Wednesday, November 16. For 35 years, the National Association of REALTORS has developed their expertise by researching homebuyer and seller trends. Jessica Lautz, Manager of Member Consumer Survey Research, will be speaking on home buyer demographic trends and how they have changed over the years. This promised to be a great Market Power for anyone in the business.
There is just 1 more day to register for United States Appraisals Free “Day 1 Certainty” webinar. “Speakers, Jeremy Staudenmaier (Fannie Mae) and Rick Garrie (United States Appraisals) are bringing Mortgage Lenders up-to-speed on the hot topic of ‘Day 1 Certainty.’ Registrants will learn how to use the built-in automated quality assurance tools that gives Lenders immediate representation warranty relief. Registrants will leave the webinar with first-hand knowledge of how to take advantage of the Day 1 Certainty program and make the most of Collateral Underwriter.
On November 16th, join Morrison Foerster’s conference to examine potential post-election changes to the financial regulatory system, including changes to the Dodd-Frank Act and more broadly to the structure and governance of the Federal Reserve.
Sponsored by WFG National Title Insurance Co., October Research LLC’s Webinar on November 21st features noted RESPA expert Phillip Schulman of Mayer Brown LLP and title industry veteran Charles Cain of WFG. The pair will discuss the PHH v CFPB case and the court’s interpretation of RESPA. They also will help industry participants better understand the current RESPA Section 8 compliance risk landscape.
Prospect Mortgage thanks our Veterans! Prospect recently hosted a “Walk for Our Troops” to honor all Veterans and raise funds for Homes for Our Troops. Consider donating to this great organization: https://goo.gl/amE0sQ. Also, on November 17, Prospect will be hosting a free, educational webinar “How Dec. Can Make or Break Your Summer Selling Season” with top Agent Mark Moskowitz and sales expert Todd Duncan. Register to learn how to beat the holiday haze!
Jobs and Announcements
In job news, a 20-year old residential lender is looking for an experienced CFO for its Servicing Division. The company is a Ginnie, Fannie, and Freddie approved lender, issuer and servicer with a large servicing portfolio, and is currently funding $1.5 billion per month in third party origination and retail channels. Candidate should have experience with all aspects of servicing including sub-servicing. If you are interested, please forward your resume to me for confidential consideration.
Franklin American Mortgage, one of the nation’s top ten wholesale lenders, is seeking experienced account executives for several US cities. Franklin American Mortgage Wholesale Lending is seeking highly-motivated, experienced sales professionals to serve as account executives in the following cities: Chicago, IL and Sacramento, CA. Both markets have active, healthy book of business. Responsibilities include developing prospective accounts, maintaining loan production from active accounts, and educating both prospective and active accounts about product changes and updates. For more information on these positions and others, and to apply online, please visit FAMC Jobsor e-mail Jennifer Rader for more information. Franklin American Mortgage is FHA Direct Endorsed (DE), VA Automatic and LAPP Approved, FNMA/FHLMC and GNMA approved seller servicer.
In more wholesale job news, PRMG is now hiring motivated and experienced Wholesale Account Executives to help expand its product and services in addition to offering opportunities to sell Non-Delegated Correspondent and Retail. Management is also looking for experienced Wholesale Regional Sales Managers to help serve the Northwest and Mid-Atlantic U.S. territories. “Ranked #1 of the 50 Best Companies to Work for in America, PRMG continues to experience a high level of growth in its wholesale, retail and correspondent channels. PRMG has nearly 1,300 employees nationally and is licensed in 47 states with 93 branches located throughout the country! Please send all resumes and inquires to HR@prmg.net. Isn’t it time that you take a good look at PRMG?”
In product news, Bestborn Business Solutions reached a milestone in October as a 50th lender signed up to use its Loan Vision mortgage accounting solution, just over two and a half years since implementing the first early adopter. Loan Vision was developed to specifically meet the needs of the independent mortgage bank, which has been underserved for many years, and leverages the power of a globally recognized Microsoft financial management tool. “We launched our specialized mortgage accounting solution at a time when the mortgage industry has been forced for years to use an outdated, underpowered accounting solution,” said Martin Kerr, President of Bestborn Business Solutions. “We engineered Loan Vision to be a solution that meets the needs of today’s mortgage banking enterprise and our growth up to this milestone is a testament to the fact that the industry has embraced it.” Loan Vision offers enterprise level accounting and business management functionality in one industry focused solution. For more information contact Carl Wooloff.