My father was in the U.S. Navy for 20 years (1942-1962) and his first home loan in 1967 was a VA 30-year fixed rate mortgage. That was obviously pre-internet, and now there are tools on the web to help veterans. For example, want to help your VA borrower manage their housing benefits? Here’s a nifty site: https://www.ebenefits.va.gov/ebenefits/manage/housing. There’s a lot going on in VA, and FHA, lending – more below.
FHA/VA News
Yesterday Bloomberg published, “U.S. Is Restricting Lenders in Veterans' Mortgage Crackdown.” “Two lenders have been punished by a top U.S. mortgage agency amid its concern that they enabled costly rapid refinances of veterans’ home loans. NewDay USA and Nations Lending Corp. have been restricted effective this week from issuing Ginnie Mae bonds that are intermingled with loans from other lenders…The move follows an examination by Ginnie Mae, a government-owned corporation that guarantees about $2 trillion in mortgage-backed securities, including loans backed by the Department of Veterans Affairs… Under the restrictions, NewDay and Nations Lending can still issue Ginnie Mae-backed securities but only in ‘custom pools’ that aren’t mixed with loans from other lenders. Those bespoke securities are likely to get worse prices from bond investors.”
One company was quick to react. “NewDay is proud of its established track record in providing veterans access to their VA home loan benefits. NewDay will continue to issue Ginnie Mae II MBS Custom Pools. Our record is clear - NewDay does not churn veteran loans. We have been an outspoken supporter of measures to end the shameful practice of loan churning.
“Policy changes recommended by Ginnie Mae will do virtually nothing to stop the unprincipled practice of veteran loan churning but likely will force the elimination of much needed benefits and financial services for tens of thousands of veterans – especially those veterans struggling with poor credit.
“Last October, NewDay offered Ginnie Mae and the VA several recommendations, practices we already implement, that could virtually end loan churning. Those recommendations include:
End loan origination fees charged on the VA Interest Rate Reduction Refinance Loan program (IRRRL). These unnecessary fees represent a substantial cost – thousands of additional dollars - to veteran families. Only allow lenders the ability to refinance a borrower using the IRRRL program once a year. Under existing rules, these loans can be refinanced after just six months.
Ensure veterans have a tangible benefit – when they refinance their home loans. Negligible reductions in interest payments don’t help them.
“Sadly, to date, none of these recommendations have been implemented.
“Roughly one out of four customers of NewDay says they have been rejected by major banks while applying for the VA benefits they are entitled to receive. When veterans cannot access their VA financial benefits, they are forced to pay much higher credit card interest rates (plus 20%) or are use extremely high-interest, payday lenders.
“NewDay has always complied with every requirement of the MBS Guide. Our loan delinquency rate is less than one percent, which is far below the five percent rate allowed by the MBS Guide. NewDay’s loan default rates are low due to our state-of-the-art predictive analytics and a disciplined underwriting process that all work to safeguard our loan portfolio.”
Todd Jones president at BBMC Mortgage (a division of Bridgeview Bank Group), former Army Captain and West Point graduate, sent me, “Bottom-line up front, the actions taken by Ginnie Mae against specific lenders will have a positive impact for veterans and the responsible lending community as a whole. In this most recent line up of restrictions, Ginnie Mae has identified two very specific and unique models that led to VA loans being originated with little concern for the veteran’s best interest. In one model, aggressive and perhaps misleading direct mail was used to convince veteran borrowers to take out loans that had little to no benefit other than increased profits for the lender. In another model, maxing out allowable rates and fees to veteran borrowers led to greater run-off rates from the blended pools, when these excessive run-off rates were brought to light, a strategy of aggressive remarketing was implemented resulted in a similar ‘churn’ effect.
“Despite a generally skeptical impression of harsh regulatory action (as it often misses the intended target, and limits access to or increases costs of capital for borrowers), the concept of letting specific lenders have their custom pools ‘stand on their own two feet’ will absolutely protect the larger infrastructure, will keep the cost of funds lower for veterans, and will specifically force lenders to bring their margin structures and/or marketing tactics in line with the majority of the industry who strive each and every day to serve our veterans as fiduciaries.” Thanks Todd!
In FHA news, a new report from the OIG finds that the Federal Housing Administration incorrectly insured approximately 9,507 borrowers who were actually ineligible.
Mortgage Solutions offers options allowing an "Approve" status on VA and FHA loans that require manual underwriting. Detailed information can be viewed by clicking a link provided.
Carrington recently lowered its minimum FICO score requirement to 500 for FHA and VA loans “to provide the widest possible range of opportunities to help underserved borrowers more easily become homeowners."
Capital Markets
Ginnie Mae mortgage backed securities (MBS) issuance totaled $33.22 billion in February composed of $31.512 billion of Ginnie Mae II MBS and $1.708 billion of Ginnie Mae I MBS. Together, they “provided access to $33.561 billion in capital for single family home loans and $1.387 billion for multifamily housing. Issuance was down from January’s $36.41 figure. For the fiscal year through the end of February, issuance totaled $186.639 billion. Outstanding principal balance increased from $1.798 trillion in February 2017 to $1.934 trillion.
And Ginnie posted its "ARM Reset Data for Platinum WAC Pools: March New Issuance”.
Looking at the daily bond market activity, rates bounced around and then ended Wednesday flat after China's Ministry of Commerce announced tariffs on $50 billion worth of imports from the United States. The stock market recovered some of the losses from earlier in the week, while investors were left to wonder how many FOMC voters share the same view as St. Louis Fed President James Bullard who said he would like to see a pause in rate hikes. This comes as the 10-year yield seems range-bound between 2.74% and 2.830%, while the 2s/10s curve has pushed back above 50bp (after the close) and is well off the recent tights.
Following up on some economic releases from yesterday, the ISM Non-Manufacturing Index clocked in at 58.8 for March, slightly below expectations and the 59.5 in February. The services sector is still growing nicely, as any reading above 50.0 signals expansion. Factory orders increased 1.2% in on the heels of an upwardly revised 1.3% decline in January, though this fell below expectations of a 1.8% increase.
Turning to today, the economic calendar kicks off with labor market indicators ahead of Friday's payrolls report. March layoffs from Challenger, Gray & Christmas were 60.4k, +39% from last March. We’ve also had weekly Initial Jobless claims that jumped to 242k. The February trade deficit, expected to be narrowly changed, widened to $57.6 billion. Thursday starts with agency MBS prices little changed versus last night’s close and the 10-year yielding 2.81%.
Lender Products
Lakeview is helping originators expand their client base in today’s low inventory purchase market with its “Agency No MI program.” “Many MI providers are tightening credit boxes. Find success with Lakeview’s flagship product. With DTI’s up to 50%, 97% LTV, and a 680 minimum FICO, the Lakeview Agency No MI program is the perfect solution for high LTV borrowers looking for the lowest payment possible. Learn how to sell payment like a boss. Contact Lakeview Wholesale or Lakeview Correspondent today. With the Lakeview Agency No MI Program, It's All About the Payment.”
Cybersecurity certifications for companies in the mortgage industry. Mitch Tanenbaum, partner in CyberCecurity LLC and a regular contributor to the Chrisman newsletter, has launched the Mortgage Industry Cybersecurity Certification. Four levels of cost-effective certification levels available from Bronze (starter level) to Platinum (NY DFS compliant). MICC benefits include gaining a competitive advantage over security-challenged competitors and building trust and reputation with clients, staff, vendors, regulators, and partners. Pricing from $195/yr. to $795/yr. Proudly display your cybersecurity certification on your web site and increase trust and sales. Who would YOU prefer to get a loan from? A company that was proud of its cybersecurity achievements, or a company that did not want to discuss it? CyberCecurity is your partner in improving your Cybersecurity program, whether you are a big company or small. Check out our Small Mortgage Broker Cybersecurity Program - only $3,950.
Mortech, providing a suite of easy to implement mortgage pricing engine APIs for over 6 years, has recently seen sizeable industry adoption of their product and pricing data APIs for wholesale, retail, and consumer direct applications. Without having to switch from their current Pricing Engine provider, lenders can leverage Mortech's APIs to get their eligible product, and pricing strategy specific rates live to proprietary websites, point-of-sale solutions, smart applications, and more. With a streamlined onboarding process, Mortech’s API platform can get your live rates where you want to quote within a week. FinTech vendors MortgageHippo, TotalExpert, and more have all integrated Mortech’s rate data APIs into their platforms for a streamlined digital mortgage experience. Mortech is also the trusted source to get your mortgage rates out to sites like Zillow, LendingTree, and QuinStreet, processing millions of rate transactions to mortgage marketplaces daily. Interested in learning more? Reach out to Mortech Sales via email, or call: 1.855.298.9327.
ACES Risk Management (ARMCO), the leading provider of financial risk mitigation and compliance solutions, has announced that it has launched The Compliance NewsHub, the mortgage industry’s first free comprehensive searchable online resource for regulation-related news and information. The Compliance NewsHub provides mortgage lenders with fast and easy access to the most comprehensive source of current information on a full range of regulation-related topics—from investor guidelines to state law and CFPB mandates. ARMCO’s Compliance NewsHub provides the latest compliance news and announcements, categorized according to the following segments: federal legislation, legal, industry, agency/GSE and state. The Compliance NewsHubCalendar offers a searchable library of past and future regulation announcements that users may search according to date, industry and regulating body. Subscribe to the ARMCO Compliance NewsHub Bulletin and get a free “Checklist on How to Survive an Onsite Audit.”
Changing Landscape
When you read through Scotsman Guide’s Top Originators rankings this week, you may have noticed a new name on the list: LendUS. Still in its first year, LendUS is a national collective of four industry standouts: RPM Mortgage, American Eagle Mortgage, Mortgage Financial, and Regency Mortgage. CEO Rob Hirt noted, “LendUS is celebrating 10 Loan Advisors from its family of companies who made Scotsman’s list: Ben Anderson, Lauren Maxwell (#1 in FHA volume), Hunter Marckwardt, Shelly Logemann, Joe Polizzi, Chad Baker, Brandon Knapp, Kyle Rohrbaugh, and Rob Berg, who, along with Shane Burris, made the list for USDA volume. LendUS had a tremendous Q1, up 12% versus 2017. It’s an incredible time for LendUS. Our companies have only been together for a year, but we’ve already seen solid growth and success. I’m very proud of our collective and the Loan Advisors who were honored by Scotsman Guide.” Congratulations to LendUS and best of luck for continued success in 2018.
Employment and Promotions
Chain Bridge Bank, N. A. (CBB) a community bank with $ 615,000,000 in assets and 50 employees based in McLean Virginia has openings in its mortgage division: Loan Officer Assistant and Encompass Administrator. The ideal candidate will have 3 plus years of experience as a loan officer assistant and have experience in using Encompass. CBB will pay for the candidate to receive training from Encompass to become an Encompass Administrator. Mortgage Lending Officer: The position offers a salary, annual bonus and excellent benefit package. CBB specializes in portfolio lending. The ideal candidate will be local to the Northern Virginia market and have mortgage lending experience and experience in evaluating income for self-employed borrowers. This is an excellent opportunity for a career minded professional who is looking for income stability and the opportunity to work for a community bank. Salary range is $ 90,000-$ 145,000. Please send resume to Joe Nelson.
AmeriFirst Home Mortgage, a division of AmeriFirst Financial Corp., announced the appointment of Ron Bergum as president of its newly formed Southwest Division. The new full-service home loan center is operating under the name “AmeriTrust Home Mortgage,” to avoid confusion with Amerifirst Financial, Inc., which also operates in the southwest region.
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