In her new book, “Going Rogue,” Sarah Palin says she doesn’t like vegetarians. Palin says all vegetarians should go back to Vegetaria, where they came from. Unlike Conan O’Brien, from whom that line came, many investor bulletins are not concise. And I may have seen more releases from top investors of greater length, but I really don’t remember when. In case you’re not interested, I’m listing the guideline roundup last on today’s report—lenders are listed alphabetically.
Hiring Brisk At Big Banks
A story in the Wall Street Journal confirms what many in our industry already knew, which is that mortgage restructuring is a growth business for hiring. The four key investors/servicers, Wells Fargo, Bank of America, Citgroup, and JPMorgan Chase “have collectively hired almost 17,000 people this year”. Given that almost 7 million households are 30 days or more overdue, that’s a lot of figuring out how much they can afford to pay each month! Wells alone, per the article, has hired 7,000 employees this year; Citi has added 1,400 jobs.
Treasury Auctions & Rates
Yesterday’s 2-yr sale didn’t move the markets much. The overall demand for the $44 billion 2-yr note was lower than last month’s auction. Historically speaking, a shortened holiday week can increase the volatility, either up or down, but with the additional supply coming into the market more folks are worried about prices heading down and rates going up. But it isn’t as if we didn’t know about the auction last week, right? And rates did fine, in spite of stocks rallying, gold hitting a new high, and an incredibly strong Home Sales number. And mortgage prices did especially well, since, as we’d expect, origination was slow. How long can this last?
Existing Home Sales
But how ‘bout that Existing Home Sales number being up over 10% and hitting the highest level in almost three years? We all knew that there would be a “first time home buyer tax credit ending” crunch, but it exceeded what experts had forecast. Inventories of previously owned homes decreased by 3.7% – that represented a 7-month supply at the current sales pace, with median prices down 7.1% a year ago. Regionally, sales in October compared to September rose 11.6% in the Northeast, 14.4% in the Midwest, 12.7% in the South, and 1.6% in the West.
We learned this morning that U.S. economy grew more slowly than initially thought in the third quarter. The second reading of 3rd quarter GDP showed 2.8 percent annual increase rather than the 3.5 percent pace it estimated last month and a touch below the 2.9% expected. Although we have another auction ahead of us, after the GDP news we find the 10-yr down to 3.34% and mortgage prices better by between .125-.250.
Lender Guideline Roundup
Affiliated, a lender (including correspondent division) out of South Dakota, is no longer accepting FHA 2008 products.
CitiMortgage told clients that their FHA fixed rate loans are now eligible to be originated as Higher Priced Mortgage Loans (as set forth in Regulation Z), provided all applicable FHA and Citi overlay guidelines and lending parameters are met. FHA ARMs, Hybrid ARMs and Streamlined Refinances are not permitted, nor are debt ratio exceptions. Also, after the 17th HUD “has issued a clarification to Mortgagee Letter #2009-32 regarding the use of TOTAL Scorecard on FHA Streamline loans with case numbers: “NO Credit Qualifying Streamline Refinance: Loan should not be run through TOTAL. However, if the loan is run through TOTAL the file must be underwritten and closed as a regular (non-streamline) rate and term (no cash out) refinance. And for “Credit Qualifying Streamline Refinance: Loan should be run through TOTAL via DU or LP.”
After tomorrow for Citi, regardless of the AUS findings, if the subject property being financed is a 1-4 unit investment property and rental income is being used for qualifying purposes, the borrower must have a 2-year history of managing rental property. And the Operating Income Statement is required on all single and multi-unit investment even if rental income is not used to qualify. And non-arms length transactions “must be manually underwritten by CitiMortgage and processed using full documentation (Modified/Standard documentation for conventional and government loans or CRA Full Documentation for community lending loans; no AUS).
Individuals Employed by an Interested Third Party.” Citi’s bulletin goes on to address loans to employees of its correspondents, property flipping (legitimate rapid resale transactions include property sales by employers or relocation agencies related to employee relocations, property sales by Government sponsored enterprise, etc. – best to check their guidelines), documentation for high cost loans (must include lock in agreement, rate sheet, lock confirmation, etc.), living trusts, mandatory data fields, etc.
Citi reminded customers that “FHA-approved lenders are now prohibited from accepting appraisals prepared by FHA Roster appraisers who are selected, retained or compensated in any manner by a mortgage broker or any member of a lender’s staff who is compensated on a commission basis tied to the successful completion of a loan.” “The new Appraiser Independence and other requirements are effective for Case Numbers assigned on and after January 1, 2010. CitiMortgage requires all Correspondents to be aware of and fully comply with the new HUD requirements.” Citi has taken the time to post their approved appraisers on www.agentsite.com as well as the Correspondent Website.
Flagstar notified clients that the maximum allowable fees test was reduced from 4.75% to 4.00%. For all “broker loans that are funded on or after December 1, 2009, and all correspondent loans that are closed and delivered on after December 1, 2009, the new maximum allowable fees test will be reduced to 4.00% from its previous ceiling of 4.75%. We would also like to remind our customers that all third-party fees, including lender and seller paid fees are included in the investor test.”
GMAC Bank Correspondent Funding sent out a series of announcements dealing with paper MI certificates, DU Refi Plus Fixed Texas Home Equity Product Guidelines, Short Sales policies for FHA loans, a reminder that FHA Streamline Refis are not eligible for AUS submission, and a VA IRRRL FICO clarification.
US Bank National Wholesale Division followed Freddie’s “Super Conforming Loan” limits for next year, in that they are unchanged. In addition, US Bank National Wholesale Division followed Mortgagee Letter 2009-48 with FHA’s changes to it appraisal requirements: it is no longer a requirement to obtain a second appraisal for loans greater than $417,000 secured by properties located in a declining market. And “it is no longer a requirement to obtain a second appraisal for loans greater than $417,000 on a cash-out refinance transaction in a declining market. However, FHA is retaining its requirement for a second appraisal when a property is resold between 91 and 180 days following acquisition by the seller, if the resale price is 100 percent (or more) higher than the price paid by the seller when the property was acquired. In this case a second appraisal must be obtained from another appraiser and the cost of the second appraisal cannot be charged to the homebuyer. The second independent appraisal must be completed by a FHA appraiser selected by the lender that is underwriting the mortgage. The lender is not to request a second case number through FHA connection.”
As of last Friday, Wachovia-serviced loans that are owned by Freddie Mac may now be eligible for the Freddie Mac Relief Refinance Mortgage program through Wells’ wholesale. Loans requiring MI are not eligible for the Freddie Mac Relief Refinance Mortgage.
Wells’ correspondent channel announced enhanced fidelity bond coverage requirements for condominiums for prior approval loans. “Wells Fargo Funding requires acceptable fidelity bond coverage for condominium projects greater than 20 units submitted for Prior Approval underwriting after Pearl Harbor Day (12/7). “If no state law exists, the amount of coverage must be at least equal to the greater of: three months of assessments/maintenance fees of all units in the project, or the sum of all cash and reserve fund monies that are in the custody of the condominium association or its management agent.” Delegated condominium loans must comply with Agency condominium requirements. And after 12/28, “the maximum LTV/CLTV allowed is 80% for condominium investment property transactions utilizing the Wells Fargo Prior Approval HOA Cert Review to qualify the project. If the LTV/CLTV exceeds 80% and the mortgage is secured by an investment property, Sellers are required to provide a Fannie Mae PERS. Prior Approval and Delegated cash-out refinance transactions utilizing LP decisions must meet Freddie Mac’s updated requirements according to Freddie Mac Bulletin 2009-24.
In order to meet Freddie Mac delivery requirements for cash-out refinance transactions as stated in Bulletin 2009-24, Wells Fargo will require conventional Prior Approval and Delegated loans decisioned with an acceptable LP feedback be purchased on or before December 14, 2009, when the transaction is a cash-out refinance combined with any of the following: Interest-Only payment feature LTV > 80% and no secondary financing, LTV/TLTV/CLTV > 75/80/80% with secondary financing.”
A woman from New York was driving through a remote part of Arizona when her car broke down.
An American Indian on horseback came along and offered the New Yorker a ride to a nearby town. She climbed up behind him on the horse and they rode off.
The ride was uneventful, except that every few minutes the Indian would let out a ‘Ye-e-e-e-h-a-a-a-a’ so loud that it echoed from the surrounding hills.
When they arrived in town, he let her off at the local service station, yelled one final “Ye-e-e-e-h-a-a-a-a!” and rode off.
“What did you do to get that Indian so excited?” asked the service-station attendant.
“Nothing,” the woman answered. “I merely sat behind him on the horse, put my arms around his waist, and held onto the saddle horn so I wouldn’t fall off.”
“Lady,” the attendant said, “Indians don’t use saddles.”