Imagine being able to keep the money you earn!? Per Mr. Mel Watt, Fannie & Freddie might have to keep their profits to avoid rescue. Mr. Watt, who happens to be speaking here in North Carolina at the AMC and who happens to be the director of the Federal Housing Finance Agency, has testified before lawmakers that Fannie Mae and Freddie Mac might have to retain profit to avoid another taxpayer rescue. Watt says the move would ease concerns in the mortgage-backed securities market. Lots more on Freddie & Fannie below.

Freddie and Fannie, conventional conforming news

The Agencies are not supposed to stay in conservatorship forever. Good luck with that, as insiders tell me that Congress & Washington are the definition of dysfunctional at this point. As mentioned above, the head of the FHFA has suggested he may order FNMA and FHLMC to maintain their earnings rather than send everything over to the Treasury. That would be an interesting shift.

Several politicians are urging the FHFA to no longer sell foreclosed homes to firms that intend to follow "rent to own" or contract for deed transactions. The objection to these transactions is that the properties are sold as-is and the onus is on the renter to fix any issues like lead paint. This allows the landlord / lender to skirt property maintenance laws. Ultimately, this could be good for the market in that it brings some much-needed supply to the starter home space (and perhaps demand for 203k loans).

Wells Fargo Funding has updated its credit score requirements for conventional Conforming Loans to include Loan Product Advisor (LPA) Accept without ineligible messaging Loans without a credit score. In preparation for upcoming changes to Home Mortgage Disclosure Act (HMDA) requirements under the Home Mortgage Disclosure (Regulation C) final rule (HMDA final rule), Wells Fargo Funding has added an optional Universal Loan Identifier field at the end of the Best Effort Registration page on its website. And in Newsflash C17-025, dated April 28, 2017, Wells Fargo Funding announced that Fannie Mae's student loan cash-out refinance feature is not currently eligible for purchase by Wells Fargo Funding. Wells is now clarifying that Loans using this feature are eligible for purchase as standard cash-out refinances, subject to cash-out refinance adjustors.  Wells is assessing the change and build the necessary system enhancements to fully support it, including support to correctly price the Loans.

Wells Fargo Funding has made a correction to its article published in Newsflash C17-023, dated April 18, 2017. The section regarding the new conventional Conforming LTV adjuster has been corrected to exclude Fannie Mae DU Refi Plus and is being republished.

PennyMac has made revisions to the sample rates sheets in relation to the previous announcement 17-19 pertaining to Fannie Mae's HomeReady and Freddie Mac's Home Possible programs.

The AmeriHome program guides and overlay matrix have been updated with changes, where applicable, in accordance with Fannie Mae's published Seller Letter SEL-2017-04 announcing multiple Selling Guide changes.

MB Financial Bank N.A. has added the Home Possible 30-year Fixed program to its product offerings.

Pacific Union Financial, LLC is removing its Verbal VOE overlay. Non-Delegated Correspondents should note on Conventional and Government products, the Verbal VOE must be completed within 10 days prior to Note Date. Refer to the program guide for Non-Agency products. Conventional and Government products for Delegated Correspondents must complete the verbal VOE prior to delivery of the loan to Pacific Union, but may not be completed more than 10 days prior to the Note Date. 

Effective dates that U.S. Bank Home Mortgage will be implementing on Freddie Mac's bulletins are as follows: Freddie Mac Bulletin 2016-19 outlines the reorganization and changes made to the Income section of their guide which had an original effective date of March and a later optional effective date of settlements on or after July 6. USBHM has elected to use the later effective date for Freddie Mac Settlements. Freddie Mac Bulletin 2016-20 addressed several topics and was effective with Settlement Dates on and after March 1, 2017. The most notable change was for the inclusion of all lease payments (not only car lease payments) in the debt to income ratio. Freddie Mac Bulletin 2016-23 provided the extension option for 2016-19 and outlines the reorganization and changes made to the asset section of the guide with an effective date for settlements on or after July 6. 

Congratulations to Dovenmuehle for receiving the Fannie Mae Servicer Total Achievement and Rewards (STAR) Servicer Award for outstanding servicing performance during the 2016 program year. The STAR Performer recognition is reserved for those top performing servicers within one or more of three STAR Performer categories: General Servicing, Solution Delivery and Timeline Management. This award is granted to servicers who achieve operational excellence across a wide variety of key performance metrics under Fannie Mae's STAR Program. 

The Fannie Mae Servicing Guide has been updated to simplify servicing and make it easier to do business with us. These changes Align with Consumer Financial Protection Bureau rules that impact servicer communication responsibilities, borrower contact and workout attempts, and more.

M&T Bank has updated the pricing for a Fannie Mae loans included in Cash-Out-Refinances located in MEME. Lenders will continue to register the loan on MEME as a cash out refinance. To get accurate pricing, email nationalcorrespondent@mtb.com with the loan information. The loan level pricing adjustment for cash out will still apply if the borrower is receiving cash out in addition to paying off a student loan with the refinance.

Effective May 5 Flagstar Bank announced the availability of the One-Close Construction High Balance. The One-Close Construction High Balance program incorporates a construction period of 6, 9 or 12 months followed by a fully amortized loan term with a single closing. Flagstar Bank has also increased the allowable time to complete renovations from 6 months to 12 months for loans closed under the Fannie Mae HomeStyle Renovation. Closing documents generated on and after May 12 will now allow the borrower 12 months to complete renovations.

Misc. company and event news

If anyone wants a good place to learn about how mortgage finance systems operate in other countries, and to compare strengths and weaknesses in ours and other systems, there's an event next month for you: the "International Union for Housing Finance World Congress."

Although not mortgage related but a sign of the times, if you know of anyone looking to buy a company, here's your chance: Earnest Inc., the financial-technology startup backed by venture capital firms including Andreessen Horowitz, is looking for a buyer as the market for peer-to-peer lending matures, and it struggles to raise new funds. The San Francisco-based company, which offers student loan refinancing as well as personal loans, is shopping itself for about $100 million, according to people familiar with the matter. Earnest last raised $75 million in equity and $200 million in debt in 2015, bringing the total to just over $300 million since it was founded in 2013, according to research firm CB Insights. 

MERSCORP Holdings, Inc. announced that it has entered into a new partnership agreement with The Depository Trust & Clearing Corporation (DTCC)'s subsidiary operating the Global Markets Entity Identifier utility (GMEI utility) to facilitate legal entity identifier (LEI) registrations and renewals for MERS System Members and other mortgage participants. The company is on target to provide the web-based service in the summer of 2017. This initiative will enable MERSCORP Holdings to support the mortgage industry's efforts to comply with the Consumer Financial Protection Bureau's Home Mortgage Disclosure Act (HMDA) requirements. These requirements include a Universal Loan Identifier (ULI) that contains the financial institution's LEI. MERSCORP Holdings will provide the LEI registration and renewal service through DTCC's GMEI utility.

Capital markets

Mortgage rates are determined by supply and demand, and if the demand improves for a certain product, it can help borrowers. In a world filled with acronyms, Fannie Mae issued a proposed enhancement to its credit risk transfer offerings, Connecticut Avenue Securities (CAS), which could likely make the deals REIT-eligible assets. The proposal is meaningful for mortgage REITs, since REITs have only participated in the CRT market in limited size since issuance began in 2013. But given tight credit spreads on CRT currently, even under near-term tax relief most expect acquisitions from REITs would be limited. Several mREITs currently own CRT, including NLY, IVR, and MFA. Others including AGNC have expressed interest in potentially building positions in CRT over time. While spreads on CRT have tightened, in earlier periods REITs expected levered ROEs on CRT to be in the low- to mid-teens.

Looking at the bond markets, the probability for a June rate hike has fallen significantly, but is still above50/50. The Treasury market is betting on a "Yellen put" for stocks, meaning that the Fed will be dovish as stocks slip. The continued political drama suggests that pushing any type of significant fiscal stimulus and changing the Fed's narrative on the economy will be even more difficult now. Sure enough, yesterday Treasuries and agency MBS prices were sharply higher as U.S. equity indices headed lower due to political uncertainty. The yield curve is flattening because the "risk-off" move is not nearly enough yet to derail rate hikes but certainly makes investors think twice about shunning 30-year Treasuries at 2.94% in favor of stocks. Volatility has been incredibly low for months now and when the ranges finally open, there could be liquidity gaps.

This morning we'll had Initial Jobless Claims, the Philadelphia Fed Index, and Leading Economic Indicators. We start the day with the 10-year risk-free T-note yielding 2.20% and agency MBS prices better .125-.250 versus Wednesday's close.

Jobs and Announcements

In correspondent news, JMAC Lending has hired Michael D. Falce as Vice President of Correspondent Lending. Falce will be responsible for building the company's delegated and non-delegated correspondent business while expanding non-agency product and service offerings for mid-sized mortgage companies, credit unions and banks. A mortgage industry veteran, Falce brings more than 27 years of correspondent lending and capital markets experience to JMAC Lending. Please contact Michael D. Falce directly for all your delegated and non-delegated correspondent needs (949-390-2617).

In personnel and job news, Sierra Pacific Mortgage is excited to welcome Corey Moore. Based out of Minneapolis, MN, Corey's focus will be on building the company's wholesale presence in the Midwest, specifically in Minneapolis, Detroit, and Chicago. Hiring Corey is part of Sierra's initiative to expand their Account Executive sales team and nationwide presence. With over 23 years of experience in the wholesale channel, Corey has been an Account Executive, Sales Manager, and most recently was a Regional Vice President at Stearns Lending. On choosing to work for Sierra Pacific Mortgage, Corey said, "I chose Sierra Pacific as the final destination for my career because of the company's reputation in the industry, the quality of the people who work here, the culture the company breeds, and their commitment to their employees." If anyone wants to join Corey in one of these cities, please contact Sierra Pacific today. 

Exciting opportunity to join one of New Mexico's Top Work Places! "Nusenda Credit Union is seeking an Assistant Vice President of Mortgage Operations to join our growing organization. This individual will direct and coordinate all activities of the Mortgage Services Loan Operations staff (loan processors, underwriters, closers and other non-mortgage loan originator staff) and be responsible to improve the efficiency and effectiveness of all mortgage loan origination activities. Nusenda Credit Union is one of the state's largest credit unions, with assets of over $1.8 billion, 19 work locations statewide and over 167,000 members. We have been voted one of the Top Workplaces and Healthiest Places to Work for multiple years! Nusenda Credit Union also contributes to statewide efforts in financial capability and economic development. Please visit our website for more information and to apply."

VidVerify is proud and delighted to announce the appointment of Matt Goers to Senior Vice President of Sales and Marketing. Reporting to CEO Ben April, Goers will lead the expansion of VidVerify's sales team nationwide and oversee strategic account planning and client services. Goers and his team will enable clients to leverage the technology platform to fulfill both compliance obligations and marketing strategies through the automated deployment of video content and audit-ready reporting. "Matt brings a combination of mortgage, technology, and strategic sales planning experience that is crucial to successfully lead our sales division and accelerate VidVerify's rapid growth," said April. "Matt's commitment to the mortgage industry and his proven ability to execute against business objectives to drive significant revenue will make him an asset to the VidVerify team."