The homeownership rate in the US fell again last quarter, to 64.7%, the lowest rate in almost 20 years. Separately, the rental vacancy rate fell to 7.5%. Every weekend babies are born, offers are made on houses, new households formed. Here's a program that attempts to tie it all together - after all, why register for place settings when couples can register for a down payment? And how about crowdfunding downpayments - yes, that is catching on too, apparently.

Remember when New York stopped a $39 billion Wells Fargo sale of servicing to Ocwen earlier this year? Tongues were wagging yesterday after news broke of a review of Ocwen's mortgage servicing operation showed a "troubling" transaction involving Altisource Portfolio in New York. The Superintendent of Financial Services, Benjamin Lawsky, wrote a letter to Ocwen's general counsel Timothy Hayes. The letter noted that "Forced-place" insurance transaction appears "designed to funnel" as much as $65m annually from "already distressed" homeowners to Altisource for "minimal" work. The Superintendent is also looking at role that OCN CEO William Erbey played in approving the arrangement, and it appears to be "inconsistent" with public statements made by Ocwen.

"Forced-place" insurance (or force-place; I've seen it both ways) has been a hot button with regulators for decades, and continues to be an issue. This latest event, where Lawsky's office alleges that inter-company dealings between Ocwen and Altisource Portfolio Solutions (ASPS) inappropriately benefit ASPS is no huge surprise. In particular, the letter outlines historical background on Ocwen's force-placed insurance arrangement with ASPS. According to the letter, a go-between entity was set up between OCN and ASPS, known as SWBC, so that the companies would not transact directly with each other. The NY DFS alleges that ASPS then received certain fees (including insurance commissions and per loan fees) while not providing commensurate services. The letter notes that the transaction was approved by Bill Erbey, chairman of OCN, among others, but seeks to answer several questions including information regarding the services provided by ASPS in return for payments under the arrangement and the decision-making process that led to the arrangement.

Hey, what lender doesn't want to do a perfect loan? On the other hand, what lender wants to pay for that? Here are Collingwood's thoughts on the issue.

I've lost count of how many articles I've read either predicting the equivalent of a real estate apocalypse, or a real estate big bang...my scale on what is a good article, versus what is a bad article, rests upon a sole question: Were they able to distract my attention away from Tetris on my laptop, or the Rubik's Cube which has sat idle on my desk for the past 22 years mocking me. Quantitative data helps, and Zillow is a driver of data on a number of levels. Their recent article on the housing market, Why Rising Mortgage Rates Could Mean Falling Homes Sales, is another slant on a popular opinion; that is to say, at some point normal market behavior will become the norm. They write, "Existing home sales have recovered slowly and have struggled to gain momentum over the past half-decade as the United States economy emerges from the Great Recession. Countervailing economic currents have pushed existing home sales in opposite directions. Low and declining interest rates-the result of extraordinary monetary policy actions-have been broadly supportive of home sales, but broader economic trends-including low homeownership and household formation, high unemployment and slow income growth-have been a net drag on home sales." Their main conclusion is very eloquent, actually, as they predict that over the next year, the underlying drivers of the housing market will approach a delicate handoff as a market driven by accommodative monetary policy gives way to one driven by macroeconomic fundamentals.

Lender/investor changes and upcoming events/training

Arch MI is offering Economic and Housing update complimentary Webinar August 6th and 8th led by Ralph DeFranco, Ph.D., a recognized authority on the housing market, Arch MI's Senior Director of Risk Analytics and Pricing to its existing customers.

MERS is offering an interesting set of "Regional Workshops". "Learn more about MERS® System transactions and reports, including how and why to use reports. You'll also dive into procedures-learn how to write and maintain procedures for your organization, as well as why and when the MERS® System Procedures Manual is updated and how you can provide feedback. Lastly, tackle common scenarios encountered by MERS System® members and learn about resources you can use to help solve these problems. The workshops cost only $95 and it includes the training manual and meals. Join us in one of four locations: Hyatt Regency Bethesda, MD September 11, Denver Marriott Tech Center, CO, October 7, Hyatt Regency St. Louis at the Arch, MO, November 5, Hilton Tampa Downtown, FL, November 13."

Fannie Mae's Learning Center hosts a variety of education opportunities throughout August and September Calendar of Classes. Scheduled for release the weekend of Aug. 16, 2014, DU Version 9.1 Webinar registration  will review the updates being made to DU.

Fannie Mae handles the pipeline management and interest rate risk in a best efforts commitment for more information view Best Effort Tutorial.

If you're in San Francisco in late November, the MBA Accounting & Financial Mgmt. Conference provides you with targeted, real-world strategies for solving the accounting, regulatory and finance challenges you face in this changing environment.

First Community Wholesale posted updated product and pricing changes as of June 30th. These updates include large deposit definition 50% of qualifying income, clarification of gift fund transfer documentation when given at closing, and cash-out increase on Non-Conforming Jumbo. To view the bulletin: FCMKC.

Fifth Third Correspondent has clarified land contract requirements on all products. Fifth Third does not lend to borrowers who have sold the subject property through a land contract agreement. FTMC continues to lend to borrowers when the proceeds of the mortgage loan are used to pay off the outstanding balance of an installment land contract. Contact your Account Representative for the latest update information.

Urban Financial of America, LLC, one of the "top lenders" of reverse mortgages in the United States, is now licensed to conduct its retail and wholesale reverse mortgage business in the state of Hawaii.

US Bank Correspondent Respa Homeowners Disclosure reminder, US Bank will continue accepting applications that demonstrate compliance with RESPA requirement by accomplishing either of the following: provide a compliant disclosure within 3 business days of initial application, which contains a current list of 10 counseling agencies based on the applicants current zip code or if a lender is still working on its software vendor in good faith to incorporate the list of counseling agencies into its origination system, the lender may provide a disclosure which contains a link to the CFPB housing counseling website. Effective with loans dated on or after July 10th, if the name and NMLS information is missing on the note and security instrument, the loan will be ineligible for purchase.

ECOA Valuation Rule acceptable proof of delivery on all USBHM underwritten files, the lender must use the provided model form Appraisal Delivery Certification. On delegate-underwritten files, the appraisal delivery certification form or other proof of delivery are acceptable. Flood insurance requirements with applications dated on or after July 7th, updated procedures calculating flood insurance coverage on properties located in special flood zone are applicable. Flood insurance must be at least the lower of unpaid principal balance of all liens against the property, the insurable value of the property or the NFIP insurance maximum. For complete details on any of the requirements, contact your Account Executive.

WesLend Wholesale Financial weekly product updates include USDA, WesLend Direct Fixed, WesLend Direct FHA, WesLend Direct VA, and WesLend Jumbo products. USDA program enhancements include 600 minimum FICO and 100% maximum LTV and no maximum loan amount as long as the income requirement and DTI requirement are met, the loan amount is eligible.  Weslend Direct Fixed product updates includes Investment Properties are allowed on Non-Arms Length transactions, there is no longer a minimum tradeline requirement. All loans require a DU approval, so Fannie Mae's requirements will be followed. Texas 50(a)(6) Cash Out refinances are now eligible. Contact your Account Representative or visit the website WesLend for weekly product update information.

Fifth Third  Mortgage no longer requires that non-taxable income must be grossed up if tax returns are obtained and the income is tax exempt provided the 25% grossed up amount is not required for loan qualification effective immediately.  If the grossed up amount is required for loan qualification, tax exempt status must be verified. Regarding Homepath product, effective October 7^th, the product will no longer be available. Purchase contracts must be dated on or before October 6^th. Homepath loans must close and fund by December 31^st.

Suddenly the securities market is "en fuego" with structured deals. Not all of them are non-agency, but it is hard to keep track of them. So with IFR/Thomson Reuter's help..."Banks will launch up to 14 new bond deals in the structured finance primary market this week, including Freddie Mac's latest risk-sharing trade and auto ABS issues from CarMax and Enterprise Fleet Financing." Those clever Wall Street folks are securitizing CarMax vehicle deals, Enterprise fleet lease deals, Orange Lake Country Club's timeshare ABS, First Investors Auto's subprime auto securitization, Susquehanna Bank's prime auto loan trade, Salle Mae's private student loan deal, and DineEquity's US$1.4bn IHOP and Applebee's whole business transaction this week.

Turning back to mortgages, since that is what this commentary is about, Freddie Mac announced a US$1.2bn K series CMBS as well as a new US$1.1bn risk-sharing RMBS from its Structured Agency Credit Risk (STACR) series. But the flooding of the market is causing prices to drop, therefore the required yields to rise. "The latest evidence of bigger pricing concessions came Monday after Blackstone Group priced its latest single family rental bond (SFR) 10-75bp wide of its May issue."

For thrilling news today we have....Factory Orders! We closed the 10-yr Friday at 2.50%; we started Monday with it around 2.49%, which is where it closed. There just isn't much going on, here or overseas, to push rates one way or the other. And thus we find the 10-yr at 2.49% in the early going this morning, and agency MBS prices roughly unchanged - at this point from Friday afternoon.

Jobs

On the jobs side, Wintrust Mortgage, a national mortgage lender headquartered in Rosemont, IL, is expanding its Quality Control team. Management is seeking to employ a Vice President of Quality Control.  This person should have a minimum of three years of quality control, auditing or compliance experience in the mortgage banking industry.  A thorough knowledge of agency guidelines is strongly preferred.  Wintrust Mortgage is also hiring a staff level Quality Control Specialist. Interested candidates should contact DeAnn Kovalan, Executive Vice President of Wintrust Mortgage, for confidential inquiries.

(Maybe Wintrust and others can pick up some talent in Ohio, since Huntington Bank cut nearly 200 jobs.)

And for those looking for alternatives, "As the market continues to consolidate and the cost of compliance gradually increases, it leaves a significant opportunity for acquiring strong retail talent and origination market-share", says Dr. Rick Roque, principal of MENLO, an investment banking consulting firm whose efforts help mortgage lenders raise capital, be acquired or seek to attract/expand their production. "Origination teams, divisions of other companies, or independent mortgage banks are calling me because their present circumstance is either under-capitalized or uncertain - they know they can have better products, pricing and improved execution with less risk, but filtering through the companies who are high risk versus those who are the right fit, is too risky of a decision to get incorrect. So if you are a team of LOs doing $3-5M/month in volume, OR an independent mortgage bank / broker doing $5M per month to $100M/month in volume (~$60M to $1B+ annually), contact me to review acquisition options. Specific markets of interest are the North East/New England, Arizona, California, Florida, Wisconsin, Minnesota, Illinois, Kansas/Missouri, Wyoming, Virginia and Maryland." Inquiries can be directed to Dr. Roque.

Who says wholesale is a dying business model? Certainly not Essex Bank, which started doing wholesale.