Mortgage forbearances drop to a two-month low

There are 4.14 million mortgages in forbearance this week, a two-month low, Black Knight said in a report on Friday.

The number dropped by 435,000 from last week – the largest decline of the pandemic, according to the report.

Measured as a share of all mortgages, the forbearance rate fell to 7.8% from 8.6% in the prior week, the report said.

The decline comes as the number of COVID-19 infections spikes to record levels in several of the nation’s largest states, including Texas and California, which could fuel layoffs. Also looming is the July 31 expiration date of the CARES Act’s beefed-up unemployment benefit that could lead to an increase in forbearance requests.

“Recent spikes in COVID-19 around much of the country and the scheduled expiration of expanded unemployment benefits both represent significant uncertainty for the weeks ahead,” said Andy Walden, an economist and director of market research for Black Knight.

About 6% of mortgages backed by Fannie Mae and Freddie Mac are now in forbearance, down from 6.8% last week, the report said. That’s about 1.7 million mortgages with an unpaid principal balance of $354 billion.

About 11.6% of home loans back by the Federal Housing Administration and the Veterans Administration have suspended payments, down from 12.3% last week, Black Knight said. That’s about 1.4 million home loans with an unpaid principal balance of $240 billion, according to the report.

In addition, there are 1.1 million private-market mortgages in forbearance, representing an 8.2% share, down from 9.3% last week, Black Knight said. Private-market mortgages aren’t backed by a government agency or a GSE. They could be jumbo mortgages held by banks or home loans packaged into private-label bonds. The unpaid principal balance for those mortgages is $304 billion.

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[PULSE] Ginnie Mae restricts long-time legitimate business activity of mortgage servicers

Ginnie Mae’s newly imposed restriction on repooling of reperforming forborne loans yet again penalizes servicers acting as essential service providers in the continuing efforts to protect mortgagors facing financial hardship due to COVID-19. 

Let me count some of the ways Ginnie Mae servicers are bearing the brunt of mortgagor forbearance under the CARES Act: no servicing fee income during forbearance of up to a year (and potentially longer should Congress decide its necessary); no relief from advance requirements for the period of such forbearance; no revision of the structural impediments to private financing to fund advances; and no reimbursement for the cost of funds for advances. 

Guest Author
Laurence Platt

Yet, investors in Ginnie Mae securities generally are insulated against the risk of mortgagor forbearance under the CARES Act because they are timely paid on the securities they hold irrespective of borrower or servicer defaults. 

In issuing APM-20-07 on June 29, 2020, Ginnie Mae decided to further protect investors from the potential enhanced prepayment risk resulting from early pool buyouts of forborne loans. This protection, however, comes at the expense of servicers.

By restricting servicers from relying on long-standing, legitimate business activity – early pool buyouts coupled with the repooling of reperforming loans – Ginnie Mae has elected to deem a routine activity as inappropriate because it is unnecessary and, gosh, may produce a profit. 

Context

Under the Ginnie Mae program, servicers (labeled as “issuers”) are required to advance to Ginnie Mae securities holders the regularly scheduled mortgage payments on the underlying pooled mortgage loans backing the securities if the mortgagors do not pay. 

This obligation lasts until the defaulted loan is purchased out of the pool by the servicer or is paid off by either the mortgagor or through mortgage insurance or guaranty proceeds. Backed by the full faith and credit of the federal government, Ginnie Mae guarantees the servicers’ advance obligations to securities holders.

A servicer purchases loans out of pools backing Ginnie Mae securities for one of three reasons:

  1. It may elect to repurchase a loan that is unpaid for three consecutive months or is delinquent for four consecutive months (such as a loan that continues to be one month delinquent for four consecutive months). For this purpose, Ginnie Mae considers a loan in forbearance to be unpaid. Many servicers make this election if they have the funds to do so in order to cease the obligation to advance regularly scheduled mortgagor payments of principal and interest. 
  2. Except with respect to trial modifications, Ginnie Mae prohibits the modification of pooled loans, and, thus, a servicer effectively is required to repurchase a delinquent loan to be modified. 
  3. As a last resort after exhaustion of efforts to cure, Ginnie Mae requires the servicer to repurchase a loan that proves to be ineligible for mortgage insurance or guaranty, since such insurance or guaranty is a statutory requirement for Ginnie Mae to issue guaranteed securities backing a pool of mortgage loans. 

Servicers routinely obtain private financing to fund loan repurchases, referred to as “early pool buyouts,” and the cost of funds on such financing often is lower than the pass-through rate on the securities or the cost of continuing to make advances on the pooled loan.

A modified or delinquent loan that reinstates as a reperforming loan is eligible to be repooled to back newly issued Ginnie Mae mortgage-backed securities. Proceeds from the sale of these securities is the source of funds to repay the early pool buyout financing; depending on the interest rates of the repooled loans relative to current market yields, the sale also may generate secondary market gains.

One way to reinstate a delinquent FHA-insured loan and thereby make it eligible for repooling is through a “stand alone partial claim.” The USDA has a similar concept called a “mortgage recovery advance.” A “partial claim” is a no-interest junior loan secured by the mortgaged property, the proceeds of which are used to bring the loan current.

In the case of COVID-19, no payments by the mortgagor are due on the “stand alone partial claim” until the payoff, maturity or acceleration of the insured mortgage, including for the sale of the mortgaged property, a refinancing or the termination of FHA insurance on the mortgage. 

By using a junior lien, the loan does not need to be modified. Presently, a servicer may accomplish a “stand alone partial claim” or a “mortgage recovery advance” without repurchasing the delinquent loan from the pool, but servicers routinely combine the permissible early buyout of a delinquent loan, a reinstatement through a “stand alone partial claim” or “mortgage recovery advance,” and a repooling of the reperforming loan into newly issued securities.

What did Ginnie Mae do?

Under the new APM, “any Reperforming Loan that entered into forbearance, of any type, regardless of duration, on or after March 1, 2020, and is bought out on or after July 1, 2020, as reflected in the Issuer’s servicing system of record, is ineligible collateral for Ginnie Mae securities backed by any existing pool types.” 

Instead, Ginnie Mae is creating a new pool type to securitize this type of reperforming loan based on a seasoning requirement. First, the borrower under a reperforming loan must have made timely payments for the six months immediately preceding the month in which the associated mortgage-backed securities are issued. Second, the issue date of the mortgage-backed securities must be at least 210 days from the last date the loan was delinquent. This restriction does not apply to modified loans, only reperforming loans.

“Reperforming Loans” are not limited to loans that are reinstated through a “stand alone partial claim” or “mortgage recovery advance.” The term is broadly defined to be a loan that is not more than thirty days delinquent, previously was bought out of a Ginnie Mae pool, and has the same rate and terms as the originally pooled loans.

This means that the new policy prohibits repooling of loans that are reinstated solely as a result of the borrower’s repayment of forborne amounts and resumption of regularly scheduled payments.

Why did Ginnie Mae do it?

The APM only hints at the reason behind Ginnie Mae’s change in position, stating that “Ginnie Mae seeks to ensure that transactional activity related to these options does not impair market confidence in Ginnie Mae securities.” It highlights that FHA’s “Stand Alone Partial Claim” and USDA’s “Mortgage Recovery Advance” do not require pool repurchases unless the terms of the loan require modification. 

Ginnie Mae states that it is implementing the new pooling eligibility restrictions “to ensure that loan buyout activity is aligned with borrower and MBS program interests … while continuing to provide for buyout transactions that are appropriate and necessary.” 

While not expressly stated, the purpose seems to be to prevent any enhanced prepayment risk to Ginnie Mae securities holders resulting from early pool buyouts, which Ginnie Mae correctly notes are not required to effect a “Stand Alone Partial Claim” or “Mortgage Recovery Advance” in order to cause the delinquent loan to be reinstated as a reperforming loan.

What does it mean for issuers?

Simply put, Ginnie Mae is depriving servicers of a long-standing, legitimate, elective business strategy under the Ginnie Mae program apparently because this discretionary activity is not necessary to enable a servicer to cease servicing advances in respect of forbearance. Generating a profit from repooling reperforming loans somehow is viewed as a nefarious activity. 

But perhaps generating a bit of profit from such repooling is a necessary and appropriate survival tool for servicers to offset the costs they bear and the servicing fee income they lose in implementing the CARES Act’s requirements. 

In isolation, insulating investors in Ginnie Mae securities from enhanced prepayment risk relating to forbearance certainly is a worthy public policy goal. When compared to the costs, expenses and lost revenue servicers are bearing in respect of forbearance, one has to wonder whether Ginnie Mae is fairly balancing the interests of servicers and investors.

In this regard, the new restriction is a material adverse change on servicers, which is predicated on neither any legislative change requiring the revision nor any real abuse by servicers that the policy is designed to correct. 

While Ginnie Mae may have the authority to revise the Mortgage-Backed Securities Guide from time to time, servicers have a right to reasonably rely on the basic construct of the program without material adverse changes not grounded in law or abuse. Servicers create, acquire and finance their Ginnie Mae MSRs based on this reasonable expectation.

As a matter of sound public policy, as well as acting in good faith and dealing fairly with its contract counterparties, Ginnie Mae should not unilaterally and materially alter the rights and obligations of issuers in an adverse way without just cause.

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Fewer U.S. tenants paid July’s rent

Multifamily housing saw fewer tenants making their rent payments for July as the COVID-19 pandemic worsened.

According to RealPage and the National Multifamily Housing Council‘s research, 77.4% of renters living in professionally-managed apartments in the U.S. made their rent payment as of July 6. This has ticked down slightly from a year ago when it was 79.7%.

Monthly payments received by July 6 came from 83.5% of residents in Class A properties, the most luxurious apartments, while 81.5% from those living in Class B properties and 68.9% from those living in Class C properties paid July’s rent.

“It is clear that state and federal unemployment assistance benefits have served as a lifeline for renters, making it possible for them to pay their rent,” Doug Bibby, NMHC President said in a statement.

The most significant drop was seen in metro New York, RealPage said. July rent payments came from 59.3% of households as of July 6.

The decline came after New York Gov. Andrew Cuomo extended eviction moratoriums through August, New York protests called for him to extend that period, and Ithaca, New York, announced it was cancelling rent.

COVID-19 hotspots Texas, Florida and Arizona had collection rates of 86%, 85% and 85%, respectively. This is down about three percentage points year over year in these locations.

LendingTree said that 31% of renters said they don’t think they will be able to make next month’s rent payment on time, either. The enhanced unemployment benefits that are part of the CARES Act expire at the end of the month.

“Unfortunately, there is a looming July 31 deadline when that aid ends,” Bibby said. “Without an extension or a direct renter assistance program that NMHC has been calling for since the start of the pandemic, the U.S. could be headed toward historic dislocations of renters and business failures among apartment firms, exacerbating both unemployment and homelessness.”

In June, the share of total rent collected on the first day was 10%. In April and May it was 12%, and in the January through March period it was 16%, according to LeaseLock. The total amount of rent collected by June 6 was 80.8%, NMHC said.

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People movers: Sierra Pacific Mortgage, Premier Sotheby’s International Realty and Proper Title

Sierra Pacific Mortgage has named Jeff Lochmandy as its vice president and divisional sales director for third-party originations.

With over 30 years of experience in the mortgage industry, Lochmandy was previously at HomePoint Financial as its managing director.

“I am energized by the opportunity to provide Sierra Pacific with both the know-how and momentum they’re seeking to become dominant in the wholesale lending channel,” said Lochmandy. “The company is exceptionally positioned to achieve its goals, and I’m glad to be part of that.”

Premier Sotheby’s International Realty has announced the appointment of John Gleeson to the role of senior vice president of development services, responsible for Florida and North Carolina.

Prior to joining Sotheby’s, Gleeson was the vice president of London Bay Homes and spent nearly two decades as an executive at Bonita Bay Group.

“I am excited to be working with one of the most discerning luxury real estate brands, and a talented team led by Budge Huskey,” Gleeson said. “I look forward to overseeing the continued growth of new development business across the company’s dynamic footprint.”

Proper Title has promoted Kathy Kwak to executive vice president and has brought on Zjacobe Snyder as senior escrow officer.

Kwak has 14 years of experience in the real estate industry as an attorney and underwriting counsel. Kwak joined Proper Title in 2017, starting as director of title and making her way to vice president, and now executive vice president.

Snyder is a 25-year veteran of the title industry, most recently spending 12 years as an escrow officer at Fidelity National Title Insurance.

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July 10: Ops, LO, AE jobs; servicing, lead, marketing products; flood of conventional conforming changes

Bubonic plague in China? What’s next, frogs falling from the sky? Water turning into blood, darkness for three days? A big bank requiring $1 million in your account for some retail jumbo refis? Oh wait… that happened. (That’s one way to manage capacity.) Ivy League football has been yanked, and hurricane season is approaching in the Southeast with the periodic rushes to buy plywood and drinking water. We already have our hands full with temporary lay-offs and cutbacks turning into permanent job losses, something that the Federal Reserve has been trying to avoid. For good news, lenders are focused on “tappable” home equity topping $6.5 trillion, which is a record per Black Knight. One official noted that with mortgage interest rates hitting record lows, 90 percent of homeowners with tappable equity now have first lien rates above the prevailing market average. And Black Knight’s research suggests that cash-outs accounted for just 42 percent of refinance loans in the first quarter, roughly half of what was seen at the recent high in Q4 2018 and the lowest such share since Q1 2016. LOs: Go get ‘em!

Employment and transitions

Prime Choice Funding (PCF) is adding operations and sales staff to support both our Retail and Wholesale divisions and will continue growing throughout 2020! PCF is looking for a VP of Operations, a Credit Manager, Underwriters, and sales professional. Being an aggressively priced lender in the industry, we offer an aggressive comp plan and support. The company offers competitive compensation, outstanding benefits, great culture, and state-of-the-art technology. For more information or to submit your resume,  please contact Join Team PCF.”

Norcom Mortgage’s Area Manager, Buddy Moore, is continuing Norcom’s rapid growth in Florida. Norcom is approved by Ginnie, Freddie, and Fannie, and owns its servicing portfolio. Norcom’s innovative systems and total marketing support have guaranteed their loan officers and branch managers growth. If you are a driven, self-starting, entrepreneurial Loan Officer, ready to take the next step to becoming a Branch Manager, please reach out to Buddy Moore today.

“Looking for a company offering continuous growth, a full-scale marketing strategy, continued training, career improvement courses? At Carrington Mortgage we offer a complete suite of products including FHA, VA, FNMA, FHLMC and a robust menu of loan programs which has further fueled our growth. We are currently recruiting for an experienced AEs with FHA and VA experience for the Orange County, California market. This position comes with an existing account base!” If you feel your sales skills and experience would be a fit with Carrington, please email John Cervantes.

NewRez Wholesale is hiring experienced Account Executives as well as Operational positions nationwide. As a Top Ten Wholesale Lender, NewRez offers a large national footprint with robust territories, dedicated broker support, leading technology, and innovative marketing tools that create an end-to-end customer experience lasting through in-house loan servicing. If you bring an entrepreneurial spirit and proven track record in sales or operations, contact Cathy Fox or Jennifer Mercedes to learn more about growth opportunities at NewRez.

“At Mr. Cooper, we hold the honor of being a “Great Place To Work”, and we’re looking to make it even greater by adding great, new talent. We’re significantly building out our teams across the board. Open positions include Underwriting Managers, Underwriting Team Leads, and Underwriters in both our Correspondent (Delegated and Non-Delegated) and Direct-to-Consumer divisions – just to name a few. We’re also looking for a dynamic Client Relationship Representative for our Correspondent Non-Delegated division as well as Sales and Processors/Processing Managers in our DTC division. If you’re ready to bring your experience to our great team, we want to talk to you! Contact Pamela Peak to learn about all opportunities. Mr. Cooper is the largest non-bank servicer with over 3.8 million customers, a portfolio of $600B+ and 9000+ Cooper colleagues nationwide. Our culture, our technology, and our compelling benefits package are just some of the offerings that make us great. Visit our Cooper Career page for more.”

Kristy Fercho is joining Wells Fargo at the beginning of August as the new head of Wells Fargo Home Lending and replacing Michael DeVito who is retiring. Mr. DeVito had a short tenure at Wells of only 23 years – a virtual rookie. Kristy’s had 18 years of leadership via Flagstar Bank and Fannie Mae, along with being the vice chair of the board of the Mortgage Bankers Association, vice chair of the MBA’s Diversity and Inclusion Advisory Committee, and a long list of associations with various organizations and of various accolades. Wells Fargo will be chairing the MBA!?

Mortgage Connect LP announced the addition of 26-year vet Gabe Minton as Chief Information Officer. Gabe has made a name for himself as an expert system architect and was a founding MISMO member.

Indecomm Global Services announced that Narayan Bharadwaj has joined the company as SVP of Automation responsible for automation strategy and execution with a goal of transforming the operations and technology landscape of the mortgage industry.

Guaranteed Rate Affinity, a mortgage origination joint venture between Guaranteed Rate and Realogy Holdings Corp. appointed Jim Anderson as SVP of Strategic Growth to “strengthen the company’s partnerships and leverage in the marketplace.”

Broker & lender services & products

Plunging house prices (CoreLogic HPI Forecast) makes understanding borrower behavior & attitude (i.e., willingness to pay) paramount. Houses don’t pay the mortgage, people do. And socioeconomic uncertainty, falling house prices, and vanishing equity make “some” people behave anomalously, regardless of their income & asset levels. Heck, overstated (and understated) credit scores are daunting enough on lenders. Throw falling house prices into the mix, and the actionable Mortgage Risk & Fairness Score is the only solution. MRS is a powerful, predictive & prescriptive, data-driven “intelligence” tool that enables lenders, servicers, investors, and MI’s to get to know borrowers better, holistically. Then, use that deep, incremental intelligence – propensity, segmentation, ability, resiliency, and “willingness” to pay – to better manage crisis-cycle credit risk & blind spots, latency, financial inclusion, pricing, capacity, regulation, and servicing. MRS is plug-n-play, validated (top 10 bank) and vetted (CFPB, OCC, Fed). Click for Info.

 

Modern real estate experts and mortgage lenders must adapt the way they identify and engage their audiences to meet the unique challenge of a quickly changing landscape. DataTree Lists is a powerful new customer acquisition and marketing list solution for marketers, list brokers and lead consultants. DataTree Lists provides highly targeted, direct marketing leads sourced from the largest, most comprehensive database of U.S. property and homeownership information, including public record data covering nearly the entire U.S. housing stock, over 7 billion recorded document images, title plants, homeowner association (HOA) information, listing data and more. From equity to new movers, foreclosure properties, distressed homeowners and more, quickly identify and reach specific and unique target markets, including advanced segmentation by available property equity, propensity scoring, new movers listing status, tax and foreclosure status, and loan and financing specifications. See what DataTree Lists can do for you.

Mortgage servicing disruptor Sagent adds two big hires. Tim Von Kaenel will lead product vision and M&A as Chief Innovation Officer. Tim ushered in the digital mortgage era by bringing push-button, phone-based simplicity to mortgage originations as head of product at LoanDepot and Cloudvirga. “After being on the front lines of modernizing originations, it’s a natural progression to expand this vision to servicing,” said Tim. Also Shawn Stroud joins Sagent from mortgage compliance and ops giant Computershare as Director of Information Security to keep America’s largest banks/lenders secure and in real-time compliance with real-time policymaking. These are the latest in a series of exec hires as CEO Dan Sogorka and Sagent redefine homeownership for servicers, consumers, and America’s housing system. Contact business development head David Doyle to discuss partnership opportunities, or contact sales head Hernan Lardiez to discuss Sagent’s cloud-based servicing suite.

Agency shifts

The FHFA just announced another extension, to August 31 from July 31, on several of its loan origination flexibilities “to ensure continued support for borrowers during the COVID-19 national emergency.” These include alternative appraisals on purchase and rate term refis and alternative methods for documenting employment and income.

Bloomberg reported that “the U.S. Supreme Court agreed to decide (in October) whether investors can challenge the 2012 agreements that let the federal government collect hundreds of billions of dollars of Fannie Mae and Freddie Mac’s profits. The justices said they will hear an appeal by President Donald Trump’s administration of a ruling that would force the government to defend against a shareholder lawsuit. The investors say the agreements exceed the authority of the Federal Housing Finance Agency… A ruling in the investors’ favor would give them a chance to collect a massive settlement.”

Fannie Mae published a new Lender Letter (LL-2020-10), Usage of Redesigned Form 1003 Before January 2021, to provide guidance to lenders on use of the redesigned Uniform Residential Loan Application (URLA/Form 1003). Also, Fannie Mae and Freddie Mac have published updated Spanish Translation Aids to assist borrowers in completing the English version of the redesigned URLA, and an updated Uniform Loan Application Dataset Mapping Document.

Fannie Mae released an overview of the process for titling manufactured homes as real property in all 50 states. Such titling is a critical step in making a mortgage on a manufactured home eligible for sale to Fannie Mae.

To meet Agency delivery requirements, Wells Fargo Funding updated its maximum loan age for conventional Conforming Loans from 10 months to four months effective for loans purchased on or after June 16th. (Wells Fargo Funding had aligned its effective date for the previously communicated COVID 19 temporary flexibilities with the extended date the Agencies announced on May 5, 2020. Temporary flexibilities are extended to include Loans with application dates on or before June 30, 2020: Age of documentation, market-based assets, and self-employment verification – conventional Conforming Loans. This also includes temporary flexibilities for verbal VOEs and appraisals for conventional Conforming Loans. In addition, Wells is aligning with Agencies’ temporary appraisal flexibilities for new construction properties. However, Wells is not aligning with the Agencies’ temporary policies on Remote ink-signed notarization (RIN), the use of RIN is ineligible for Wells transactions.)

Flagstar issued a memo regarding Conventional and Government Employment Verification and Income Updates Due to COVID-19.

Arizona Industrial Development Authority (AzIDA) is updating its program income limits to align with Fannie and Freddie HFA limits. AzIDA will have a pipeline of transactions to work through with different income limits based on the specific casefile date. Keep these new limits in mind when talking with your borrowers/potential borrowers. For more information, view the Mountain West Financial Wholesale.

United Wholesale tightened its self-employed guidelines, reflecting Freddie and Fannie’s changes. Audited P&L and/or bank statements are key for the self-employed.

Effective for loans with application dates on and after June 3, 2020, Caliber Home Loans released updates to its published COVID-19 Overlay document for Conventional and USDA to align with recent Fannie Mae and Freddie Mac Bulletins. For complete details and requirements, review the revised COVID-19 Overlay document published in AllRegs.

loanDepot Wholesale/Correspondent posted Freddie Mac Home Possible® and Fannie Mae HomeReady® Income Limit Updates.

PRMG’s Product Update 20-34 includes clarification applicable to conventional loan application date in conjunction with the “current status” of the borrower’s existing mortgage. LPA approved loans, Agency Fixed, Agency LP Fixed and ARMS, Home Possible, updated requirements in alignment with Freddie Mac for properties that are eligible for property waivers.

AmeriHome has aligned with Freddie Mac changes listed in Bulletin 2020-13 with the exception of the upcoming Freddie Mac SOFR Indexed ARM products. AmeriHome Credit Administration is currently reviewing. Updates will be provided as they become available.

Plaza Home Mortgage announced that the .750 loan level price adjustment for all conventional cash-out refinances (announced on May 4, 2020) will be reduced to .250 for all new locks. The additional cash-out LLPA continues to be in addition to any other standard cash-out price adjustments.

FCM lifted its temporary conventional cash out overlay. Details can be found in its Wholesale Announcement 2020-28 and Delegated Correspondent Announcement 2020-26.

FAMC Correspondent National Bulletin 2020-24 includes information on COVID-19 Updates announcing temporary guidance on Conventional Products Self-Employed Borrowers and USDA-RD Product Tax Transcripts.

In June MWF sent out Bulletin #20W-069, saying that temporary Self Employment guidance during COVID-19 will be rescinded in its entirety.

The PennyMac Correspondent Group posted Announcement 20-43 regarding Fannie Mae and Freddie Mac Updates and an Amendment to previous PennyMac Announcement.

Previously, PennyMac announced it would not purchase any delegated or nondelegated conventional loan where the appraisal has a Collateral Underwriter (CU) score of 5. PennyMac has rescinded that announcement (#20-23) and will accept appraisals with the same requirements as prior to the announcement. Correspondents are encouraged to work with appraisers and their AMCs to resolve issues that result in high-risk scores. PennyMac will complete an internal appraisal review of all appraisals with CU 5s and will determine if the appraisal or property is acceptable

PennyMac is updating the requirement for a verbal verification of employment to be required no earlier than 10 business days prior to close for all conventional Fannie Mae and Freddie Mac loans. Please note, due to the ongoing pandemic and related economic concerns, PennyMac recommends the VVOE be completed as close to the note date as possible.

Recent Flagstar Bank announcements include QM Points and Fees Lock Enhancement, Temporary Eligibility Requirements for Conventional Purchase and Refinance Transactions, Temporary eligibility requirements for self-employed borrowers based on the announcements made by Fannie Mae and Freddie Mac.

AmeriHome Mortgage Company has adopted recent COVID-19 interim Agency guidance from Fannie Mae and Freddie Mac for self-employed borrowers. Guidance updates include changes to minimum additional income documentation requirements. Reviewing YTD P&L statements, business account statements, and other relevant documentation as well as calculating and establishing stable monthly income. Note that loan proceeds from the Small Business Administration (SBA) PPP or any other similar COVID-19 related loans or grants are not considered business assets.

Capital markets

MIAC Capital Markets Group is pleased to represent a seller of $5.27 Billion FNMA MSR. The seller is a highly capitalized institution who is liquidating their mortgage exposure. The portfolio has a nationwide footprint, an average loan size of $117k, weighted average rate of 4.082 percent and a weighted average loan age of 53 months. Bids are due 7/21/20 at 5PM ET. For additional information including the offering memo and detailed loan data, please contact your MIAC sales representative at 212-233-1250 or $5.27 Billion FNMA MSR.

It was another rally yesterday for U.S. Treasuries and MBS, sending yields on the 10-year note and the 30-year toward eight-week lows due to a poor showing in the stock market, good demand for a 30-year bond sale, and an unexpected jobless claims number. Initial claims decreased by 99,000 to 1.314 million, a bit better than feared, but still well up from February and over 1.1 million higher than at this point a year ago. Continuing claims fell but were still above 18 million. Less bad, but bad. Freddie Mac revealed new lows in both the 15- and 30-year fixed rates of 2.51 percent and 3.03 percent, respectively. In other MBS-related news, the FHFA announced another 1-month extension (to August 31) to some loan origination flexibilities due to coronavirus related hardships.

Today’s calendar is done and dusted, with June PPI (weak at -.2 percent, ex-food/energy -.3 percent). The day’s two MBS FedTrade operations will see the Desk purchase up to $4.7 billion starting with up to $2.9 billion UMBS30 2 percent through 3 percent followed by $1.8 billion GNII 2.5 percent and 3 percent. Daily Fed support is set to increase starting next week based on the paydowns in the Fed’s portfolio. We begin the day with Agency MBS prices up/better by .125 and the 10-year yielding .57 after closing yesterday at 0.61 percent.

I have a scary math joke, but I’m 2² to say it.

Visit www.robchrisman.com for more information on our industry partners, access archived commentaries, or to subscribe to the Daily Mortgage News and Commentary. If you’re interested, visit my periodic blog at the STRATMOR Group web site. The current blog is, “Mortgage Outlook: What if it is Cloudy?”, focused on the current political climate. If you have the 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.

Rob

(Market data provided in partnership with MBS Live. For free job postings and to view candidate resumes visit LenderNews. This newsletter is designed for sophisticated mortgage professionals only. There are no paid endorsements by me. For up-to-date mortgage news visit Mortgage News Daily. For archived commentaries, or to subscribe, go to www.robchrisman.com. Copyright 2020 Chrisman LLC. All rights reserved. Occasional paid job & product listings do appear. This report or any portion hereof may not be reprinted, sold, or redistributed without the written consent of Rob Chrisman.)

 

Wells Fargo loosens jumbo lending requirements for current customers

Wells Fargo announced updates to its non-conforming refinance products at the beginning of July. While the updates loosen the jumbo requirements for current customers, the new standard for customers without a Wells Fargo relationship increased four times the amount it originally announced back in April. 

According to a spokesperson for Wells Fargo, as of July 1, any existing Wells Fargo customer can now get a non-conforming refinance with the mega bank. Or, if they have an existing loan that they need to refinance and no other deposit accounts, they can now get a non-conforming refinance with Wells Fargo. 

This means as long as they have a home mortgage, home equity line, deposit account, brokerage account, investment account or even if they have as little as $100 in their account, they can get a jumbo refinance. 

However, those who don’t have an existing relationship with the bank will need to transfer $1 million or more in assets to a qualifying deposit, brokerage or investment account in order to apply, according to Wells Fargo.

In a call with HousingWire, Wells Fargo did add that in some circumstances there may be other mortgage loan products available to customers without an existing Wells Fargo relationship depending on a variety of factors, and even if they do not transfer funds into a qualifying deposit, brokerage or investment account.

These new jumbo requirements serve as an update to news in April that Wells Fargo would only refinance jumbo mortgages for customers with at least $250,000 or more in assets under management with the bank for 30 or more days prior to the application. This was applicable to both new and existing customers. 

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Wells Fargo names Kristy Fercho as head of Home Lending

Wells Fargo has announced Kristy Fercho will join the company as the new head of Wells Fargo Home Lending, beginning in August.

Kristy Fercho

Fercho will replace Michael DeVito, who said he plans to retire this summer after spending 23 years with the bank.

Fercho has 18 years of experience in the mortgage industry, most recently serving as the president of the mortgage division at Flagstar Bank since 2017.

“Kristy is a customer-first business leader with deep home lending experience. She has been an inspiring and vocal leader across the mortgage industry while driving transformational growth at Flagstar,” said Mike Weinbach, CEO of Consumer Lending at Wells Fargo, in a written statement. “Buying a home remains one of the most important financial decisions our customers will make in their lifetime, and Kristy is the right person to help us ensure that no one can do it better for them than Wells Fargo.”

Before Flagstar, Fercho led the strategy and business performance of single-family customers at Fannie Mae for 15 years. Fercho has also held sales, operations, and human resources roles at Baxter International before moving to Pepsico, where she was director of worldwide corporate human resources.

Currently, Fercho is the vice-chair of the board of the Mortgage Bankers Association, vice-chair of the MBA’s Diversity and Inclusion Advisory Committee, a co-chair of the Affordable Housing Council, and a member of its Residential Board of Governors, as well as on the board of City Year and the Detroit Zoological Society.

DeVito has been in the financial services industry for over 30 years, having served as the head of Wells Fargo Home Lending in January 2018 . Prior to that, he was the head of mortgage production and running mortgage servicing operations.

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California, Oregon and South Carolina continue to require in-person notarizations

In an effort to combat the economic toll of COVID-19, a wave of varying permanent and temporary legislation for remote online notarizations continues to sweep across the country.

While the SECURE Notarization Act currently sits in the introductory phase at the senate, states have taken it upon themselves to enact their own regulations and legislation of RON.

According to a recent report by Qualia, nearly half of the United States has not enacted RON legislation despite a survey by the company that remote notarizations surged 40% from April to May. Three states in particular, California, Oregon and South Carolina maintain a requirement for in-person notarizations and have yet to adopt RON regulations of any form.

While several states including Minnesota, Nevada and Ohio enacted RON legislation prior to the pandemic, states like Louisiana quickly pushed new RON orders in a reactionary method to COVID-19. In March, Louisiana’s governor amended his emergency executive order to allow the use of RON – by June he called for implementation of it no later than August 1, 2020.

For four years, the Land Title Association of Colorado pushed for RON legislation in Colorado, however, it would take less than four months from March, 2020 to June for the state to pass a bill allowing the use of temporary RON. In June, Colorado Governor Jared Polis declared the bill will effectively turn into law December 31, 2020.

Alaska also expedited RON legislation after an April bill backed the validity of electronic documents and signatures for notarizations, however, it will not be effective until January 2021.

Other states like Indiana, Iowa and Maryland were in the process of enacting RON when COVID-19 hit, advancing the process along in a bid to protect employees and homebuyers. One state in particular, Washington, passed RON legislation in April last year and was slated to go into effect Oct. 1, 2020. With stay-at-home orders being implemented across the country the governor issued a proclamation for immediate use of RON.

Whereas many states already adopted RON, others are making use of its close cousin remote ink-signed notarizations (RIN). In a RIN transaction, notarizations take place via a video platform and do not include e-Sign technology. Instead homebuyers receive closing packages via mail or email, and wet-ink sign the physical documents while a notary witnesses the events.

States like Connecticut, Hawaii, Maine, New Mexico and North Carolina opted for RIN transactions instead amid their emergency orders with several under certain restrictions.

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[PULSE] Irrefutable principles of high-performance mortgage and real estate practices

Note: This is part one of a five-part series. Over the next five weeks, Todd Duncan, sales entrepreneur and New York Times best-selling author, will showcase five principles for mortgage and real estate professionals to embrace for success.

What if success, massive success, all came down to one simple concept? What if I told you there is only one word you need to understand, and apply, to have all the success you’ve ever dreamed of?

Would you want to know the word? Sure, you would. Who wouldn’t? 

I’m guessing the reason you chose this business was because you saw an opportunity, felt excited and energized, and knew you could “make it,” and “make it big.” 

You might have had some ups and downs along the way. It’s a dynamic industry with ever changing markets, prices, demands, rules, ethics, compliance and challenges. And, that is a given. But high-performers know that, and they have arrived at a mindset that follows this thinking – it’s never the market that determines my success, it is how I am in that market!

Todd Duncan
Todd Duncan
Guest Author

When I was 23, newly minted with a college degree, my childhood baseball coach – who happened also to own the largest independent real estate company on the West Coast along with a mortgage company – talked me into my first career at a July 4th BBQ. No visions as a kid for this career path! Fireman, policeman, doctor, yes. But I never dreamed about selling, listing or financing property for people. I got my brokers license and started down the path.

My first mentor sat down with me shortly thereafter and he asked me, “If I could tell one word that you need to embrace that will guarantee your success, would you want to know what that word was?” I said, “Yes,” just like you did. And that one word changed everything. Principles! 

That’s it: Principles! 

He went on, “That is the only word you ever need to know to succeed.” I grabbed it and never looked back.

Early on this became the guiding force in my life and it was the difference maker that allowed me to be involved in nearly 6,000 transactions in 10 years. I ate this word up and, in that pursuit, I stumbled across the work of Harrington Emerson. He is the author of The Twelve Principles of Efficiency which he wrote in 1913.

According to him, this is how you change your game…

“As to methods there may be a million and then some, but principles are few. The man who grasps principles can successfully select his own methods. The man who tries methods, ignoring principles, is sure to have trouble.” — Harrington Emerson

Over the next five weeks, I will showcase the five principles I have embraced, taught and coached thousands of mortgage and real estate professionals to embrace in order to crush it in business and life.

Principle No. 1: Everything Can Be Improved

As first glance, I can say you might be taking too long to get your results. And, if you are not measuring the things that matter most, you can’t begin to improve those things. I learned that this principle will produce three specific business results; more money, in less time, with less stress. There is no “silver bullet” to success, but one truth is you can only improve what you measure.

A real estate agent named Jim told me recently that when he finally understood this principle his business went from $8 million in sales to $40 million in sales in three years. A mortgage professional we coach went from 118 transactions to 184 transactions a year in less than 12-months and she shortened her workweek to 28-hours. 

There are two key points to this principle:

1.  If you want to make more money, you need to spend more time on what makes you money, the most money, per minute. 

According to Indeed.com, the average real estate agent in America is making $18.49 an hour and the average loan originator in America is making $37.52 an hour. 

So, the truth is, the hours you work are nowhere as important as the work you do during those hours. What makes you the most money is meeting with, connecting with, and converting prospects to customers to clients, and then keep them for life. The better you get at that, the easier, faster and more permanent those results are. That’s it. 

We measure hourly rate every two weeks with our coaching clients. It is not uncommon for them to go from $50 dollars an hour to over $500 an hour in under six months. They measure everything; how many hours with clients, showings and presentations. They look at how many hours they spend on interruptions, email and low-income tasks.

 It starts with the “x-ray” of where time is going and then, over time, how to reverse those trends by applying focus, skill mastery and delegation of the lowest income time robbers. 

There is a crazy mindset to this, bordering on obsession with all top performers, and it sounds like this, “Why take 40 years to do what I could do in 10 years? Why take a week to do what I could do in a day? Why take a day to do what I could do in an hour? Why take an hour with a client when I could do a better job and cut that in half and see twice as many people. Why talk to 10 prospects to get one deal when I could do a better job with one prospect and get 10 referrals/deals? Why show 10 properties, when I could show two to three? Why take three hours to do one open house when I can do three open houses, an hour each, and triple exposure and create a buying frenzy?” 

Are you getting this principle?

2. There is no limit to how much money you can make per hour, which is the most important metric you measure. (While producing extraordinary customer experiences.)

If everything can be improved – and it can – what is preventing you from earning in an hour what you usually make in a day? The answer is your head – and the belief that you can. Thomas Dreier said, “The life each of us lives is the life within the limits of our own thinking. To have life more abundant, we must think in limitless terms of abundance.”

Mindset is everything! Everyone has an income gap. The gap is large if the mind is small and if the skills are poor. Not so much, when belief is high. And once you move to increasing revenue “per minute”, you never want to go back. If you’re making a dollar an hour, and you embrace the first teaching point, once you are at ten dollars an hour, going back to a dollar an hour is not going to happen…unless you stop measuring and improving.

We teach that the better you get at business, the better business gets for you. What’s required? Spend the most time on the fewest things that produce the greatest revenue for your time. 

When I was 13, I went with my dad to one of his hospitals. He was a radiologist and when he showed me the x-ray room where a technician was taking x-rays, I asked him, “Dad, why don’t you take the x-rays?” He said, “Because I get paid to read them.” That impacted me and I never forgot that.

So, the prescriptive idea here is do what you get paid to do. Do as much of it as you can, efficiently and profitably. Don’t do things that fall outside of your core talent areas, or things that others can do better and less expensively than it will cost you to do it. And be vigilant and courageous because when you don’t follow this principle, you will work too hard, too long and when you are trading time for money, and you can’t get more time, the only thing that makes reasonable sense is make more money for the time you put in. 

One of our clients sent me this recently, “I have bought 101 rental properties in the last five years, live off 25% of my income, and have no debts other than my mortgages, plus I take 20 weeks of vacation per year, thanks to you.”

That’s what happens when you embrace Principle No.1: Everything can be improved.

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