Trends in 2nd Mortgages; More Disaster Lender News

News

Residential
lending, and real estate in general, is impacted by legal maneuvering
big and small. Sure the big cases and settlements garner the headlines,
but what about the “in the weeds” things that impact borrowers? Let’s
take a random case study… maybe not so random since plenty of foreigners
are buying property in the United States.

When
it comes to the law and lawsuits, there are numerous time-consuming and
expensive steps in the process. Property owners are not an exception to
this procedure. Unfortunately, both buyers and sellers are on the hook
for any misrepresentations, with or without knowledge. Tax liens,
easement rights, existing lawsuits, etc. are examples of issues that can
turn into a drawn-out legal battle.

So
what happens when a property transaction crosses international lines?
As more investors abroad are purchasing property in the states, the laws
can become tedious and convoluted. The state of California has existing
guidance regarding the requirements allowing parties to complete their
lawsuits against non-resident owners of properties.

Henry
Chuang of Peter Brewer law offices discussed a recently decided
California appellate case
regarding international buyers of California
property. In the
case of (Buchanan vs. Soto), the legal issue was whether “service”
(serving lawsuit paperwork to the defendant) was proper to an
out-of-country, non-resident owner of California property.

Buchanan
sold a property to Soto in 2007. In 2011, Soto had defaulted on the
loan and was subsequently sued by Buchanan but in the interim, Soto
transferred interest of the property to her husband, Ramon. Thus,
Buchanan entered another suit with the trial court for the fraudulent
transfer. With two lawsuits pending, Buchanan’s attempt at serving
Soto’s husband revealed he has been deported back to Mexico. Buchanan,
unable to obtain a current address for Ramon, petitioned the court to
allow a published notice of lawsuit instead of serving the paperwork.

Although
Soto argued Ramon’s unavoidable absence at the trial should warrant the
proceedings to cease, the trial court moved forward stating the
published notice as well as Soto’s conversations with her husband
regarding the suit during the pending case was sufficient notification.

The
Trial Court’s decision to award the judgement to Buchanan was appealed
by Ramon, however, the Fourth Appellate District Court upheld the trial
court decision. The Appellate Court further held that California law
allows
for the court system to have jurisdiction over a non-resident for
lawsuits relating to propertied located in California.

Disaster news and updates from investors agencies continues to flood lenders. (Pun intended.)

Servicers
are reminded that Fannie Mae has selling and servicing policies to
assist impacted borrowers (or potential borrowers) following a disaster,
such as the recent flooding in the Midwest. Refer to Assistance in Disasters for information on where to find Fannie Mae’s policies for providing assistance to borrowers impacted by a disaster. View the press release.

In addition to FEMA’s up to date listings to include affected counties in Missouri, Stearns
is also requiring the inclusion of Collin, Ellis, Rockwell and Dallas
counties. To view Stearns’ latest full Disaster Matrix, including the
State and affected counties or areas, Click Here.

In response to the flooding in Arkansas and Missouri, Wells Fargo Funding
will require Sellers to follow our standard Disaster Policy for all
impacted properties, effective immediately. Although Federal Emergency
Management Agency (FEMA) had not yet issued a declaration for the
impacted area(s), Wells Fargo Funding has determined that properties
located within certain ZIP codes are impacted. As a result, the Disaster
Policy must be followed. Log into Wells website for zip code details found on its January 6th Newsflash.

Pacific Union
is monitoring the impact of severe storms resulting in flooding,
straight-line winds, tornadoes, and blizzards throughout several states,
including Arkansas, Idaho, Illinois, Louisiana, Mississippi, Missouri,
Oklahoma, and Texas.  See Idaho, Mississippi, Missouri, Oklahoma and Texas maps for areas recently impacted as identified by the Federal Emergency Management Agency (FEMA).

AmeriHome
summed things up in its recent bulletin to clients, “On January 4,
2016, the Federal Emergency Management Agency (FEMA) announced that
federal disaster aid with individual assistance has been made available
to the State of Mississippi to supplement individual, state, and local
recovery efforts in the areas affected by severe storms, tornadoes,
straight-line winds, and flooding…The President’s action makes federal
funding available to individuals and business owners, state and eligible
local governments and certain private nonprofit organizations on a
cost-sharing basis for emergency work and the repair or replacement of
damaged facilities…See AmeriHome Seller Guide Section 10.10 Disaster
Policy for property inspection requirements for properties located in
FEMA declared disaster areas.

Re-inspection
requirements
are expected to remain in place for all properties with
appraisal dates prior to the incident end date or for at least 90 days
following the incident end date for loan transactions where an appraisal
inspection is not otherwise required unless otherwise announced by
AmeriHome. Sellers are reminded that they are responsible
for determining potential impact to a property located in an area where
a disaster is occurring or has occurred. Irrespective of whether a
property was included in the area covered by the declaration, if a
Seller has reason to believe that a property might have been damaged in a
disaster the Seller must take appropriate action
to ensure that the property is free from damage and meets AmeriHome
requirements at the time of purchase by AmeriHome. Employment
re-verification requirements for declared disaster areas are not
necessary at this time.

No doubt about it: plenty of lenders are eyeing 2nd mortgages as a growth business for 2016.

Taking
a broad view for a second, the U.S. Housing Debt and Credit numbers are
an important data set to economists. Recently, the NY Fed released 2Q15, and noted, “Aggregate
household debt balances increased in the third quarter of 2015. As of
September 30, 2015, total household indebtedness was $12.07 trillion, a
$212 billion increase from the second quarter of 2015. Overall household
debt remains 5% below its 2008Q3 peak of $12.68 trillion.” According
to the release Mortgage balances, the largest component of household
debt, increased in the third quarter. Mortgage balances shown on
consumer credit reports stood at $8.26 trillion, a $144 billion increase
from the second quarter of 2015. Balances on home equity lines of credit (HELOC) dropped by $7 billion, to $492 billion.

LoanMe
Inc., an “alternative” online lender, offers borrowers two new loans:
LoanMe Small Business’ Premier Loan and LoanMe Personal’s Look Alike
Loan. “The Premier Loan allows small businesses access to funds without
having to tap their home equity. This can be a game changer for those
owners who may find opening a line of credit to be particularly
challenging. The loan amount can go up to $250,000 without using a home
as collateral. In the area of personal loans, LoanMe Personal’s ‘Second
Mortgage’ Look-Alike Loan allows a homeowner to gain funds through an
unsecured loan in amounts typically associated with a second mortgage.
Borrowers can now receive as much as $100,000 to spend in all the ways
they might use a second mortgage without putting their home up as
collateral. In fact, homeownership is not even required to qualify for
this loan.

“For both loans, once approved, LoanMe’s streamlined application process can have funds deposited into customers’ bank accounts as quickly as the same day.
With interest rates as low as 14.9% and origination fees from 7.5%,
Premier loans can be a great option for business owners. Meanwhile
consumers can take advantage of The ‘Second Mortgage’ Look Alike Loans
with rates starting from 9.9% and an APR as low as 11.39%, if they
qualify. These potent loan alternatives are expected to complement each
other well in the marketplace. Both loans are available online at www.loanme.com.” Talk about charging what the market will bear!

For a list of lenders/investors by state offering second mortgage programs you may want to check out www.mortgageelements. com – just type in the state and then the program and see who pops up.

Going back to November, effective with case numbers assigned after November 11, 2015, Land Home Financial Services, Inc. is
updating its HECM-to-HECM Refinance Policy in accordance with the NRMLA
Ethics Advisory Opinion 2015-2. Generally, the seasoning requirement
has been extended to eighteen (18) months and the borrower must either
be adding an eligible borrower to the loan or pass both a Closing Cost
Test and a Loan Proceeds Test. To avoid any adverse unintended
consequences to our Senior Customers, Originators or Partners with HECM
to HECM refinances that are currently in the application process, but
have yet to pull a case number and believe the HECM to HECM refinance
will provide the borrower with a Bona Fide Advantage, may request a
prior review and exception through November 30, 2015.

As an additional clarification to existing Sun West
guidelines regarding HECM-to-HECM Refinances, Sun West will accept a
HECM-to-HECM Refinance only if it meets the seasoning requirement. There
must be an 18 month waiting period after the closing of the prior HECM
loan before it can be refinanced to a new HECM loan.

In
terms of interest rates, “experts” and the Fed can predict short term
rate increases all they want. But if China dissolves into a sea of even
further government intervention, and the world’s economic picture is
negatively impacted, then rates may head right back down. This week
global markets once again took their cues from Chinese markets/news:
yuan devaluation, articles further yuan depreciation, equity markets
shut after trading down by 7%, news of a lift of the circuit breakers.
The overall theme of the global markets was a “risk-off” tone in very
choppy trading which in turn leads to cash moving out of stock markets
and into safer investments such as Treasury securities.

But
let’s not forget Europe. The U.S. Dollar Index fell 0.81% to 98.38
today to move into negative territory for 2016. The strongest major
currency against the greenback was the euro, which benefited from a
surprisingly low unemployment rate for December and another month of
robust German factory order growth. Eurozone unemployment declined to a
four-year low, touching 10.5% in December versus economists’
expectations for an uptick from November’s 10.6%.

 

This
morning we’ve had the unemployment data. Nonfarm Payrolls for December,
expected at +200k, came in at +292k, with a back-month revision higher.
Hourly Earnings were unchanged, and the Unemployment Rate was 5.0%. We
closed the risk-free 10-year T-Note at a yield of 2.15% and this
morning it is 2.20% with the usual agency MBS prices worse .250.

 

“Golf Ball Marker”

Golfer walks into the pro shop at the local course and asks the golf pro if they sell ball markers.

The golf pro says they do, and they are only $1.00.

The guy gives the golf pro a dollar.

The golf pro opens the register, puts the dollar in, and hands him a dime to use as the marker.

NOTE: This economic model is also used by our government.

Jobs and Announcements

Freddie Mac announced a new relationship with the Lenders One Mortgage Cooperative. The
new alliance will give Lenders One members who are Freddie Mac
Seller/Servicers pricing and execution benefits, enhanced access to
mortgage products and professional training and development
opportunities. Dan Goldman, Interim Chief Executive Officer of Lenders
One said, “We are committed to forming valuable alliances for our
members. This relationship enables us to further support our members in
growing originations and gives them additional opportunities to increase
engagement in the increasingly dynamic housing market.” The
announcement and the recent addition of 12 new members mark a strong
start of the year for Lenders One. Additionally, there will be several
exciting announcements from Lenders One heading into their Winter
Conference in New Orleans, March 6-9. For more information about Lenders
One, please contact Dan Goldman.

In job news Indecomm,
“known as a sales leader in outsourcing, technology, training and
support to the mortgage industry, is looking for an experienced sales
director to promote Indecomm services.
Duties will include selling Indecomm Technology and outsourcing
solutions to new and existing customers, meeting specific goals and
targets for new sales and maintaining relationships with multiple
contacts in each account on various business matters. The ideal
candidate will have a good working knowledge of mortgage banking,
outsourcing and relationships with midsize and large mortgage companies
on a national basis that can be leveraged. Confidential resume should be
directed to Linda Bomar, Vice President of Sales.

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