My 16-yr old, who is preparing for the SAT tests, was (coincidentally?) reading an article the other day titled, “Six-Figure Jobs You Don’t Need A College Degree For.” After ending their title sentence in a preposition, the article goes on to talk about air traffic controllers, construction workers, plumbers, ultrasound technicians, “locomotive engineer”, and of course anyone in sales. I assume that this means mortgage brokers. But any broker who didn’t have a great January, and is expecting a great February, may want to consider alternative careers. Lock, pipeline, and funding records tumbled in January for many lenders, and most are hoping for a repeat performance in February. Now, if only mortgage rates come back down and guidelines would loosen back up…
Wells & Chase Lead 2008 Mortgages
According to Mortgage Daily, Wells Fargo was the largest residential lender in 2008, originating $230 billion worth of residential mortgages. Chase was second at $185 billion. Bank of America, Countrywide and Citigroup Inc. made up the rest of the top five. Countrywide’s figures were just for the first six months of last year since it was bought by Bank of America in July. U.S. originations were down 36% in 2008 compared to 2007 – but most expect a nice volume rebound in 2009.
Loan Underwriting/Guideline Roundup
Want a prior approval underwrite with Countrywide correspondent? You’re out of luck. Starting last week, CW will no longer accept loans for prior approval, and any loan requiring a prior approval cannot go to Countrywide. Nor will they review condo docs for prior approval of the project. Instead, Countrywide, a Bank of America Company, is using the underwriters to review closed loans and have stopped doing priors. And any lender approved with Fannie can go to them for the condo approvals.
Effective with locks on and after Feb. 3, 2009, Wells Fargo Wholesale Lending will discontinue the conventional streamlined refinance option, until further notice. The Freddie Mac-Owned Streamlined Refinance program, not even offered on the correspondent side, continues to be eligible.
On the correspondent side of Wells, starting on the 4th they will have new requirements for non-conforming loans. Eligible loans include 30-yr fixed and 5/1 ARM products – 15-yr, 7/1, and 10/1’s become ineligible. Borrowers must have a minimum 720 FICO, and LTV’s will be limited to 75% for 1-2 units, 70% for 3-4 units, and 70% for cash out depending on market classification. In addition, money held in retirement accounts cannot be used to meet post-close liquidity requirements.
Chase increased the hit for loans with FICO’s from 600-619 from .250 to 1.0. They also made some changes in the documentation used in identifying and documenting undisclosed debt that brokers should be aware of.
Is $729k Super Conforming Coming Back?
Are brokers in major metropolitan areas hoping for the return of the $729,750 loan amount? They may get their wish! In the version of the Stimulus Bill passed by the House, and moving on to the Senate, the loan levels revert to where they were last year. Here, read it for yourself
(a) Loan Limit Floor Based on 2008 Levels- For mortgages originated during calendar year 2009, if the limitation on the maximum original principal obligation of a mortgage that may purchased by the Federal National Mortgage Association or the Federal Home Loan Mortgage Corporation determined under section 302(b)(2) of the Federal National Mortgage Association Charter Act (12 U.S.C. 1717(b)(2)) or section 305(a)(2) of the Federal Home Loan Mortgage Corporation Act (12 U.S.C. 1754(a)(2)), respectively, for any size residence for any area is less than such maximum original principal obligation limitation that was in effect for such size residence for such area for 2008 pursuant to section 201 of the Economic Stimulus Act of 2008 (Public Law 110-185; 122 Stat. 619), notwithstanding any other provision of law, the limitation on the maximum original principal obligation of a mortgage for such Association and Corporation for such size residence for such area shall be such maximum limitation in effect for such size residence for such area for 2008….the Director may, for mortgages originated during 2009, increase the maximum original principal obligation limitation for such size or sizes of residences for such sub-area that is otherwise in effect (including pursuant to subsection (a) of this section) for such Association and Corporation, but in no case to an amount that exceeds the amount specified in the matter following the comma in section 201(a)(1)(B) of the Economic Stimulus Act of 2008.
Economic News–Spending and Consumption
Back to the economy! Friday we had both the Chicago Purchasers’ January Index and the University of Michigan Consumer Sentiment Index come in lower than expected. These came in after GDP was announced, and tended to help yields somewhat, at the continued expense of its cousin, the stock market. This morning we’ve already had Personal Income and Consumption, -0.2% and -1.0% respectively. Since spending is falling even faster than income, the saving rate rose to 3.6%. In fact, Personal Consumption is down for the sixth straight month. The last three months have all seen declines of around 1%. Later on we have the ISM Manufacturing Index, and Construction Spending, not exactly market-moving numbers. So far the 10-yr is at 2.79% and 30-yr mortgage prices are better by about .250.
Supposed headstone of Russell J. Larsen in the Logan City Cemetery, Logan, Utah.
FIVE RULES FOR MEN TO FOLLOW TO A HAPPY LIFE:
1. It’s important to have a woman, who helps at home, who cooks from time to time, cleans up and has a job.
2. It’s important to have a woman, who can make you laugh.
3. It’s important to have a woman, who you can trust and who doesn’t lie to you.
4. It’s important to have a woman, who is good in bed and who likes to be with you.
5. It’s very, very important that these four women do not know each other.