David Stevens to Head FHA, FDIC Closes 53rd Bank of 2009, Low Rate Financing From Homebuilders

Congratulations to David Stevens. On Friday the U.S. Senate confirmed Dave to head the Federal Housing Administration (FHA). Stevens will take over the agency in the middle of their huge surge in business, and many feel that with the non-HVCC appraisals and the fact that the FHA insures mortgages with a small down payment for borrowers who meet its standards are creating the next possible “cause for concern” in the mortgage business.

FDIC Seizes 53rd Bank of 2009
They don’t seem to be garnering headlines, but on Friday the FDIC closed their 53rd bank this year: the Bank of Wyoming. The BoW had $70 million in assets and $67 million in deposits, and is expected to cost the FDIC deposit insurance fund $27 million by the time it is taken over by Central Bank & Trust (based in Wyoming).

Low Rate Financing From Homebuilders
Would a 3.75% mortgage make you buy a newly built house? TBI, the mortgage arm of Toll Brothers, is offering a 7/1 ARM for 3.75% for loans under that magical level of $417,000. After 7 years, the life cap is 8.75%, which isn’t too bad especially if rates head up. As usual, borrowers can decide to take the current market 30% rates, which have moved back down toward 5%, or below, or take a flier on the ARM loan (probably a good option if the buyer is going to move before seven years). The Wall Street Journal noted that back in January Toll Brothers came out with a 3.99% 30-yr loan, followed by Lennar’s 3.625%, but a few months ago Hovnanian Enterprises said its 3.99% rate sparked “underwhelming” interest from buyers.

PPIP Can Help Jumbos
After several months of waiting, the PPIP (Public Private Investment Program) program for securities was finally announced. Why should a mortgage banker care? PPIP gives institutions a way to leverage non-agency RMBS, and TALF ineligible CMBS [read: securities backed by jumbo loans] so it may help prices of non-Fannie & Freddie securities. Apparently there are still many questions to answer and market-related concerns in the next several weeks, but it is a step in the right direction for jumbo product. (Eligible assets include CMBS and non-agency RMBS securities issued prior to 2009. These securities are required to have been rated AAA by at least two rating agencies and be backed by loans and leases and not other securities. This would keep re-REMIC’s outside the universe of eligible securities.)

Lending Guideline Updates
What is Wells Fargo’s wholesale HELOC gang up to? Effective today, they are going to roll out a CLTV expansion program for certain markets, and when the senior lien with already with Wells Fargo and is a conventional conforming fully amortizing fixed-rate 1st with a term less than 30 years. Other criteria, if the borrower needs an 80% CLTV loan on their primary residence, include a FICO of > 740, a DTI of <40%, a maximum loan amount of $350k; condos are ineligible. Union Bank of California told their sellers that, there are two major Regulation Z changes that will be affecting all lenders for loans submitted after July 27th: the originator must certify, using a new form, that “the broker, directly or indirectly, has not and will not collect any fees (other than a credit report fee) until Union Bank’s early disclosures, as required by Regulation Z, are provided to the customers, or the broker previously submitted the application to another lender and has collected upfront fees in accordance with Regulation Z for that prior submission.” And UBOC follows others by stating that if the APR varies by +/- more than .125% prior to closing, Union Bank is required to provide a revised disclosure 3 days prior to consummation. In addition, the customer has 3 days to review the revised terms. Late last week Taylor, Bean, & Whitaker announced that it will be imposing a new minimum FICO requirement for FHA Streamlines (credit and non-credit qualifying) and VA IRRRL’s of 620. And “any Conventional, FHA (including Streamline Refinance), or VA (including IRRRL) loan that exceeds $417,000 with a Credit Scores below 660 must be LOCKED prior to July 13, 2009 and must close no later than September 15, 2009, and must be delivered to TBW within 10 days after closing Loans in this category locked on and after July 13, 2009 will require a minimum FICO of 660.” In fact, TBW told sellers that all loans must have a minimum score of 620, if not higher for certain programs. Can Bank of America Corp saves its stockholders billions of dollars in fees, supposedly due to U.S. taxpayers for guarantees against losses at Merrill Lynch, by saying the rescue agreement was never signed and the funding never used? Apparently the legal agreement was never completed, possibly allowing BofA to pay nothing of the $4 billion fee it agreed to pay in January. (Do you remember the reaction of your boss when you forget to do something so simple, like sign a form?) Regulators say that the money is owed since BofA benefited from the Merrill deal. Bank of America received a total of $45 billion, plus $188 billion in asset guarantees, so that it could cover Merrill's losses. Bank of America, by the way, comes out with earnings later this week – and does anyone really want to cross the government? Market Update
What is going on with the markets? Many expect stocks to continue their slide after Treasury Secretary Geithner agreed with what many analysts felt: that there are still “enormous challenges” for the economy. What do we have this week for economic news, given that, aside from the auctions, the news was fairly limited last week? It is a big news week. There isn’t much today, but tomorrow we have the Producer Price Index, along with the Core PPI, and Retail Sales. Wednesday we’ll see the Consumer Price Index, with Core CPI, Industrial Production and Capacity Utilization, and Business Inventories. Thursday bring weekly Jobless Claims, and the Philly Fed survey, and we end the week on Friday with Housing Starts and Building Permits. Whew! Currently the yield on the 10-yr Treasury note is at 3.30% and mortgages are about unchanged from Friday afternoon.

Daily Humor
A woman went up to the bar in a quiet rural pub. She gestured alluringly to the bartender who approached her immediately. She seductively signaled that he should bring his face closer to hers. As he did, she gently caressed his full beard.
“Are you the manager?” she asked, softly stroking his face with both hands.
“Actually, no,” he replied. “Can you get him for me? I need to speak to him,” she said, running her hands beyond his beard and into his hair.
“I’m afraid I can’t,” breathed the bartender. “Is there anything I can do?”
“Yes. I need you to give him a message,” she continued, running her forefinger across the bartender’s lips.
“What should I tell him?” the bartender managed to say.
“Tell him,” she whispered, “There’s no toilet paper, hand soap, or paper towels in the ladies room.”