May Day! A third of the way through with 2020 already? Seven weeks ago it was, “Use us! We have the best rates and products!” Now it’s, “During these challenging times, use us! We have the best rates and products! Stay healthy!” Lenders seem to be healthy as April is another month for lender’s record books: lots of anecdotal reports of record volumes, and loan officers helping more borrowers than ever. Meanwhile, conspiracy theories abound. China untouched by the virus (apparently it has) and what if this quarantine is just the aliens fattening us up before the big harvest? Here’s something you may not have thought of: with ship and airplane traffic dropping way off, weather forecasting has dipped in accuracy. Yup, all those planes and vessels report weather data wherever they go. And from Texas, Larry C. writes, “I am surprised someone has not incorporated a new company called, ‘COVID Mortgage.’ It would show up in every search you do on the status of the virus.”
Lender Products and Services
COVID-19 loan processing and underwriting turn-times: Gateway Mortgage Group, a division of Gateway First Bank (“Gateway”) would like to extend an enormous thank you to every team member working harder than ever amid the COVID-19 crisis. Many of our loan processors and underwriters are now full-time parents, teachers, and chefs, yet they keep a “business as usual” culture for the customers they serve. Thanks to their dedication and teamwork, Gateway has worked on over 3,400 new underwriting submissions this month, all while maintaining an impressive turn-time of six hours. “I am extremely proud to see our team stepping up to the plate in these uncertain and difficult times,” said Scott Gesell, CEO of Gateway. “I can’t put into words my appreciation for the loan officers, processors, and all the operations team that have tackled every obstacle thrown their way. They exhibit teamwork and a “get it done attitude’ to continue to deliver outstanding turn times for our customers. This dedicated effort, together with the fact that Gateway remains on strong financial ground, means we are well positioned for continued success.”
For over 200 years, Citi has been here supporting the financial needs of our clients and partners, both in good times and uncertain times, and we’re still here to help you and your clients now! While the current environment presents challenges, Citi Correspondent Lending is focused on providing solutions tailored to fit our sellers’ needs with a commitment to responsible finance. Learn more about ways Citi is cultivating deeper relationships by contacting our National Client Services Team at 800-967-2205 or for new seller consideration complete our Prospective Mortgage Correspondent Questionnaire.
COVID News
Many lenders & vendors use Spiegel Accountancy Corp., and the company has teamed up with Feeding America’s COVID-19 Response Fund in its effort to assist the millions of people in our communities turning to food banks and pantries for help. “As school closures, job disruptions and health risks continue across the country, you too can support those in our communities who are most vulnerable. Every amount is essential to reaching our goal of $100,000. Please join our mission and make your gift today. Our donation process is quick and simple, and even the smallest contribution goes a long way! Thank you from the Spiegel team.”
AIG’s RML Correspondent Lending group reminded clients that it will not purchase loans where the Mortgage Note has been impaired, waived, altered or modified in any respect, as stated in our Correspondent Lending Seller’s Guide. “If a borrower has requested a forbearance for the borrower’s loan as a result of a COVID-19 impact, the loan will not be eligible for purchase. If a loan goes into forbearance after AIG purchases the loan, while still within the EPD period, the EPD period will be temporarily suspended until the forbearance period has concluded. Once the forbearance period concludes, the EPD period will resume until the total number of required loan payments (per our EPD policy) have been made.”
Given the potential impact of COVID-19 on the economy, AmeriHome strongly recommends that Sellers employ and document additional underwriting diligence, especially as it relates to borrower employment or self-employment as well as continuity of income. And AmeriHome added a new section to its VA Guidelines based on VA’s interim guidance during COVID-19. Effective April 17th and applicable to Termite Inspections: If there is no known or visible evidence of termite infestation present, the property seller and realtor on purchase transactions and Veteran on cash-out refinance transactions, must provide a signed certification to that fact. If there is known or visible evidence of termite infestation, a clear termite report must be provided, subject to the requirements outlined in Circular 26-20-13.
Home Point Financial spread the word among clients that it is updating its Conforming Cash Out Refinance LLPA grids. Capped at an LTV of 80%, higher LTV/lower FICO loans will have a hit of 6 points.
Wednesday Wells Fargo Funding (correspondent) sent out C20-029: COVID-19 policy update: Amended tax return transcript requirements – all loans. As always, it is best to read the actual announcement for all the nuances, but apparently the IRS offices responsible for providing tax return transcripts are now open. “As a result, we are removing the temporary tax return waiver and alternative documentation requirements (i.e., verification of deposit/VOD) previously announced in Newsflash C20-017, dated April 1, 2020, and Newsflash C20-023, dated April 16, 2020, respectively, and reinstating our published tax return transcript requirements for all Loans, with a temporary allowance for Sellers to provide tax return transcripts up to 30 days post purchase to accommodate expected IRS processing delays.”
In the current market there is an increase in loans going into forbearance after loan closing and before sale to Fannie Mae. To continue providing liquidity to the mortgage market in a manner consistent with safety, soundness, and prudent risk management, Fannie Mae will temporarily accept delivery of loans in forbearance that meet specific eligibility requirements and with payment of a loan-level price adjustment, as described in Lender Letter LL-2020-06.
PennyMac issued a “strong recommendation” to brokers to review borrowers’ income and employment stability when originating new loans. Loans with any indication that employment or income stability may be in jeopardy, or any indication the borrower is interested in pursuing a forbearance option are ineligible for origination with PennyMac. Effective with loans closed on or after April 24, 2020, Brokers will be billed a $1,000 administrative fee for each loan that enters forbearance within 60 days of closing.
PennyMac issued 20-25: Updates to Government LLPAs
CK Financial told everyone: “Recently, both Fannie Mae and Freddie Mac have announced that cash-out refinance transactions entering forbearance after closing, but prior to the sale of the loan will not be eligible for purchase. This puts lenders in a very vulnerable position and CF Wholesale is not immune to the purchase risk created by Fannie Mae and Freddie Mac’s announcement. Due to the ongoing impact of COVID-19, causing volatility in the markets, we must modify our guidelines related to Conventional Cash-Out Refinance transactions, effective immediately. We are updating LLPAs for all Conventional Cash-Out Refinance Mortgages. With our rate sheet delivery on 5/1/2020, you will see these LLPA changes in place.”
CK continued. “Conventional Cash-Out Refinance Overlays: Manufactured Homes are an unacceptable property type, Second Homes are no longer permitted, Escrow Holdbacks are no longer permitted, the maximum loan amount has been updated to $410,000 for all unit counts which will eliminate High Balance options, maximum Debt to Income (DTI) updated to 36%. For locks prior to May 1, 2020, the Maximum DTI was permitted by AUS. Investment Properties: Minimum FICO is 720 and Maximum LTV/CLTV of 70%. For locks prior to May 1, 2020, Minimum FICO is 620 with Maximum LTV/CLTV of 75% It is important to note that CF wholesale will not accept loans from borrowers who are already in forbearance. All of the above overlays to all locks on or after May 1st, 2020. Your existing locks are protected from these new overlays.”
USDA issued Origination FAQs regarding its Single-Family Housing Guaranteed Loan Program.
loanDepot Wholesale has imposed credit restrictions on the following FHA programs:
FHA 203(k) Limited Program - Minimum > 680 FICO, 43% Maximum DTI, AUS Approval Required, < 680 FICO is no longer eligible, Manual Underwriting is no longer eligible.
FHA 203(k) Standard & Limited Programs Program has been suspended until further notice.
Existing pipeline may be subject to further guideline changes based on market conditions. Best efforts will be made on any submissions prior to April 24th. Here are all of the program changes and updates.
Capital Markets
When we look back on the Covid-19 outbreak, the narrative will be one of records. Maybe not in number of deaths or total people infected, but certainly of the record disruption to the global economy and magnitude of the fiscal response from the world’s governments. For the first time in history the price of West Texas Intermediate (WTI) crude oil went negative when the expiring May futures contract fell below zero as security holders feared taking possession in the face of scarce and expensive storage options. Contracts expiring further out also fell dramatically in the face of plummeting demand. The week before last, and again last week, new claims for unemployment are slowing as states work through the backlog of claims from the sectors of the economy that were forced to completely shut down. The focus has turned to the broader effects that 26.5 million (and counting) cumulative unemployed will have on the industries which weren’t directly impacted by shelter in place orders as well as the outflow up people off unemployment as some states try to slowly re-open shuttered businesses.
U.S. Treasuries exhibited little movement yesterday despite a poor dose of international data and weak data domestically, including jobless claims and personal income and spending. U.S. unemployment claims now imply a jobless rate of around 22 percent, the worst since the Great Depression, and more than twice the 10 percent peak reached in 2009. In Europe, ECB President Lagarde said the economy may shrink as much as 12 percent this year, a contraction unprecedented in peacetime, and that she sees a profound deterioration in the labor market.
Today’s economic calendar gets underway later this morning with final April Markit manufacturing PMI, ISM manufacturing PMI in April, and March construction spending. The NY Fed will conduct two FedTrade purchase operations totaling up to $8.213 billion starting with $2.933 billion GNII 2.5 percent through 3.5 percent followed by up to $5.280 billion UMBS30 2.5 percent through 3.5 percent. In the afternoon, the Desk will be out with a new MBS purchase schedule where a modest reduction is remotely possible, though not likely, versus this week’s daily average of $8 billion. We begin May Day with agency MBS prices better by a few ticks and the 10-year yielding .61 percent.
Employment
“Carrington Mortgage Services continues to hit records and as a result we are expanding our operations teams. We are hiring for DE Underwriters in California, Texas, Arizona, and Windsor CT along with Retails Processors nationally. Remote opportunities available. Please contact John Cervantes.”
Not surprisingly, industry-leader Gold Star Mortgage is ensuring there’s no need for borrowers to postpone home purchase or refinancing. As one of the first to provide what has become its award-winning end-to-end digital loan process/lending platform, Goldstar is able to safeguard both consumer PII and the personal welfare of its customers. Application and disclosures, support docs, inquiries and real-time updates all move through a secure portal, without the Borrower ever needing to leave home. Gold Star has also proactively created exceptional social distancing closing procedures alongside Settlement Agents willing to go the extra mile. Their core values of collaboration and continuous improvement show up in the Realtor®-partner power-coaching Gold Star has designed to help Realtors navigate the current digital landscape required to maintain homebuyer engagement. Call today to learn why Gold Star has been able to quickly conscientiously pivot and adapt to current market challenges: www.JoinGoldStarMortgage.com (888-696-1344).
“How are you dealing with investor Overlays? COVID-19 is driving investors to change their guidelines often, weekly or even daily. Is this impacting your loan closings? Loans that once were saleable in the secondary markets are now being sold as Scratch and Dent. You should be part of a team that has the answers and is well prepared for this environment. Highlands Residential Mortgage has a veteran, proven management team that spends the time, money, and energy to ensure our company is nimble enough to weather these uncertain times AND continue to grow. How do we do it? Highlands is a GSE Seller/Servicer and a Ginnie Mae issuer. Highlands follows AUS guidelines with minimal overlays, providing consistency to our sales force and ultimately allowing them to close loans on time every time. “Highlands is not experiencing any slowdown in our underwriting or closing department and is consistently delivering 24-48 hour turn times on all files, even during record closing months!” - Steve Peters COO. There’s a reason we were ranked by National Mortgage News as the #3 Mortgage Company to work for in 2020 and a top 100 mortgage lender by Mortgage Executive Magazine! Want to learn more about our originator focused family? Contact Howie Hall.”
“Citi is continuing to grow! Take your career to the next level and join us! Nationwide opportunities: Distributed Retail Sales Home Lending Officer, Underwriter 3,Underwriter 4), Quality Specialist, Loan Closer St. Louis opportunities: Strategic Partnerships Manager, Direct to Consumer Sales Mortgage Representative , Loan Processor Irving opportunities: Direct to Consumer Sales Mortgage Representative.”
Want to be an FHA underwriter in Atlanta, Georgia, and make $80-105k a year? Here’s your chance.
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