VA Loan Limits; QRM Update; TMBA Kick-off Conference for January; Fannie STAR News for Servicers


bread is square, then why is sandwich meat round? And why should VA loan limits
be any different than other government agency loan limits? They target
different borrowers and guidelines, of course, but the VA county loan limits for 2012 have finally been posted on the
Department of Veterans Affairs (VA) Home Loan Limits website. Loan limits for
counties in the contiguous United States will range from $417,000 to a maximum
of $625,500, depending on the median county home price.  Loan limits in
some counties have decreased but this does not impact IRRRL transactions which
can remain at current limits. The VA is alerting lenders that it is possible
that Congress may pass legislation in the near future increasing the limits. Please
note that the limits apply for loans closed from January 1, 2012 through
September 30, 2012:

worldwide need to raise $460 billion or reduce risk-weighted assets by 17% to
meet tougher Basel III requirements, a study from Boston Consulting Group
concludes in a story from the Financial Times. They need our money – send checks!
Seriously, the H.8 report released by the Federal Reserve recently showed that
domestic bank holdings of agency MBS have increased by $27 billion over the two
week period ending on November 30, which brings the YTD growth in bank holdings
of MBS to $148 billion – a significant pickup since the August announcement from
the Fed that it is likely to keep overnight Fed Funds near 0% through mid-2013.
Add to this volume the recent monthly
purchases of around $25 billion agency MBS by the Fed and it is easy to see why
mortgage rates are doing well: supply and demand.

DZ Bank,
the central bank for German cooperative banks, is suing Bank of America and
Ally Financial over the sale of residential mortgage-backed securities. DZ
alleges that Ally and BofA were “actively involved” in all aspects of
the securitizations, and that the offering misrepresented the underwriting
standards of the underlying mortgages. “The offering materials also
contained material misrepresentations and omissions regarding key statistical
characteristics of the mortgage loans,” DZ said in a story from Bloomberg

I think
that I dined in a restaurant that claimed one Michelin Star once – at least the
bill would suggest that. In mortgage-land, Fannie Mae has announced the results
of its Servicer Total Achievement and Rewards (STAR) Program through the third
quarter of 2011, measuring the performance of servicers with an emphasis on
foreclosure prevention. “Encouraging servicer improvements through the STAR
Program is an important component of Fannie Mae’s overall efforts to prevent
foreclosures and stabilize neighborhoods. Servicers are categorized into three
peer groups based on the number of Fannie Mae loans they service and measured
based on performance metrics and results from operational assessments across
key business processes. As of the end of the third quarter, the following
servicers are on track to be at or above median performance in order to achieve
at least a three STAR rating for 2011: Peer Group One (consisting of 11
servicers): CitiMortgage Inc., Everbank, GMAC Mortgage LLC (Ally Bank) and
Wells Fargo. Peer Group Two (consisting of nine servicers): Aurora Bank FSB,
Central Mortgage Company, Fifth Third Bank, The Huntington National Bank, and Regions
Bank. Peer Group Three (consisting of 13 servicers): American Home Mortgage
Servicing Inc., Arvest Mortgage Company, Associated Bank, NA, Capital One,
Colonial Savings, Doral Bank, Manufacturers and Traders Trust, Nationwide
Advantage Mortgage Company, and Navy Federal Credit Union. Fannie Mae will
publish final 2011 STAR rating results in early 2012 – the anticipation is similar
to the Oscar nominations.

Where does the discussion over QRM (Qualified
Residential Mortgage) stand?

Basically it is mired down in a sea of government agencies. But recently the MBA
created a stir by saying the proposed QRM rule may be “fatally flawed.” (The
last time I heard that term was from a long-time-ago girlfriend describing our
relationship, but that’s another story.) In written testimony prepared for
delivery before a House Financial Services subcommittee, MBA President and CEO
David Stevens said that although it is still premature to call for repealing
the QRM, “that day may not be far away. Regrettably, the proposed rule, with
its QRM definition and creation of a premium capture cash reserve account, is
so deeply flawed that we seriously question whether it reflects congressional
intent or can ever be successfully implemented,” Stevens wrote ahead of the
hearing. The committee is holding the hearing to assess the Private Mortgage
Market Investment Act authored by Rep. Scott Garrett, R-N.J. The bill calls for
abolishing Dodd-Frank’s risk-retention provisions, among other reforms for the
secondary mortgage market.

The Texas Mortgage Bankers Association
(TMBA) announced the location and dates of its annual Southern Secondary Market
. (Yes, Texas – home of Dr. Pepper since 1885.) This year’s
conference (“Ingredients for Success:  Education, Understanding, Execution
and Results”) will be in Houston on January 18-19, 2012. Speakers include Ted
Tozer of GNMA, Doug Jones of PennyMac and Paul Jacobs from Bank of Manhattan. TMBA
president David Frase noted, “Our line-up includes expert panel discussions on
Servicing Retention, Risk Management, Alternative Products, Repurchase Demands
and other demonstrative issues rising in our marketplace today. We expect to
serve our attendees with the best ingredients for success in today’s dynamic
environment”. This year’s conference will also include a “Warehouse Lenders
Tabletop Session” with several companies available to discuss warehousing
demands in 2012. Register for the event here.

For a
touch of investor news, Fifth Third
sent word out that, “Borrowers currently residing in California
are now eligible to purchase or refinance a property located in a Fifth Third
Wholesale Lending approved state outside of California. Lending on properties
in the state of California remains ineligible at 5 3, however. Fifth Third also
noted that, “Community property status is based on the location of the
borrower’s primary residence. The following states are considered to be
Community Property States for 5 3: ID, LA, NM, TX, WA, and WI. The required
closing documents will follow the guidelines of the state in which the subject
property is located. All Conforming and Portfolio Products Liabilities of the
non-borrowing spouse are not required to be included in the calculation of
debt-to-income ratios. All FHA, VA, and USDA Products Liabilities of the
non-borrowing spouse must be included in the calculation of debt-to-income

Third continued on its roll, and announced that United Guaranty has been added
as an approved MI company, and that “Fifth Third Wholesale Lending Operations
will be closed on Monday, December 26, 2011 in observance of Christmas” -this
will impact the calculation of rescission on refinances.

US Bank’s National Wholesale Division “due to continued credit tightening
and softening property values, U.S. Bank Home Mortgage Wholesale Division will
make the following changes to our Simultaneous HELOC product effective for new
applications taken on or after today: Minimum HELOC Line Amount will increase
from $10,000 to $15,000, and a 1% charge will be assessed for any Line Amount
$25,000.00 or under.”

immediately, PMAC Lending Services
will require borrowers to “receive a copy of all appraisal reports (3) business
days prior to close or waive their right to receive such reports at least (3)
business days before closing on all transactions.  Until now, this policy
only applied to Conventional transactions however due to investor mandates it
is now required on all FHA, VA and USDA transactions as well as Conventional
loans. In light of this change, closing documents for all loan products must
contain a written acknowledgment  from the borrower that either they
received all appraisal reports (3) days prior to close or waived their right to
receive such reports at least (3) days prior to close.”

Home Savings of America reminded brokers that FNMA will
install an update for DU for Government loans this weekend. Key items include, “Updates
to the Credit Risk Assessment for VA Loan Casefiles. The credit risk assessment
for VA loan casefiles will be updated with this release. As a result of these
updates, customers should expect to see overall improved credit characteristics
for loan casefiles that receive an Approve recommendation, a change in the
underwriting recommendation for some loan casefiles, and reduced Approve
recommendation rates.”

In the
markets we saw quite the set of headlines yesterday: Jobless claims dropped by
19,000 to 366,000 in the week ended Dec. 10, to the lowest level in 3 years,
the Producer Price Index rose 0.3% in November, Core Rate energy and food rose
by just 0.1%, the Philadelphia Fed general economic index increased to 10.3 in
December from 3.6 last month, and Industrial production unexpectedly declined
0.2% in November, after a 0.7% gain in October. This strong news was matched by
continued nervousness from Europe, so both stocks and bonds rallied/improved. Today
the economic calendar quiets down to close out a busy week with only the
Consumer Price Index (expected slightly higher) on which to focus. The 10-yr closed at 1.91% and in the early going
is at 1.92% – basically unchanged along with MBS prices.

The European Commission has just announced an agreement whereby English will be
the official language of the European Union rather than German, which was the
other possibility.
As part of the negotiations, the British Government conceded that English
spelling had some room for improvement and has accepted a 5-year phase-in plan
that would become known as “Euro-English”.
In the first year, “s” will replace the soft “c”.
Sertainly, this will make the sivil servants jump with joy. The hard
“c” will be dropped in favour of “k”. This should klear up
konfusion, and keyboards kan have one less letter.
There will be growing publik enthusiasm in the sekond year when the troublesome
“ph” will be replaced with “f”. This will make words like
fotograf 20% shorter.
In the 3rd year, publik akseptanse of the new spelling kan be expekted to reach
the stage where more komplikated changes are possible. Governments will
enkourage the removal of double letters which have always ben a deterent to
akurate speling. Also, al wil agre that the horibl mes of the silent
“e” in the languag is disgrasful and it should go away.
By the 4th yer people wil be reseptiv to steps such as replasing “th”
with “z” and “w” with “v”.
During ze fifz yer, ze unesesary “o” kan be dropd from
vordskontaining “ou” and after ziz fifz yer, ve vil hav a reil sensi
bl riten styl. Zer vil be no mor trubl or difikultis and evrivun vil find it
ezi TU understand ech oza. Ze drem of a united urop vil finali kum tru.
Und efter ze fifz yer, ve vil al be speking German like zey vunted in ze forst

If you’re interested, visit my twice-a-month blog at the STRATMOR Group web
site located at . The current blog discusses the time
frames for borrowers returning to A-paper status after a short sale or
foreclosure. If you have both the time and inclination, make a comment on
what I have written, or on other comments so that folks can learn what’s going
on out there from the other readers.

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