"Rob, do you have an easy article about who is responsible for the condition of a property after a foreclosure?" Yes - according to Henry Chuang in this article, the lender is! Foreclosure, or the problems with foreclosing, is often brought up when discussing reverse mortgages - but the channel is alive and well. The Reverse Mortgage Market Index (RRMI) has reached 178.91, which is the highest level since 2007, having risen 9 successive quarters. This means homeowners that are 62 years old or older, have more equity in their homes than ever before. Since Q2 of 2012, senior home value has increased $699 billion, with the largest quarterly increase seen in Q2 of 2014 at $125.2 billion. The National Reverse Mortgage Lenders Association also reported that over 3/4 of home equity for seniors is paid. Currently, more than 870,000 seniors have obtained an FHA-insured reverse mortgage (that's a lot of Gray Panthers!), with more than 575,000 using them as a means for "financial stability" per Reverse Mortgage.

Technological changes are alive and well in mortgage banking. Earlier this year Roostify, a Bay Area based company that is accelerating and simplifying the mortgage experience for consumers and mortgage originators, launched a dynamic mortgage application that streamlines the manner in which a borrower creates a mortgage application and loan package. Its automated closing workflow spells out the tasks that a borrower and loan officer need to perform in the closing process based on data in their mortgage application and purchase contract (in the case of purchase originations). Roostify just announced its integration with Ellie Mae Encompass. Rajesh Bhat, Roostify's co-founder and CEO, will be at the MBA Annual Convention in Las Vegas and is available to meet with mortgages executives looking at technology to support the build-out of their retail and consumer-direct operations. Please contact Rajesh directly if you are interested in a meeting.

The USDA's program is going through its usual gyrations, and plenty of lenders are sending out notices like, "As happens at the beginning of each fiscal year, funding for the Single Family Housing Guaranteed Loan Program (SFHGLP) will not be available for a short period of time at the beginning of Fiscal Year 2015 (FY 2015), which starts October 1, 2014.  During the temporary lapse of funding, Rural Development will issue Conditional Commitments "subject to the availability of commitment authority" for purchase and refinance transactions.  An upfront guarantee fee of 2 percent accompanied by an annual fee of 0.5 percent will apply to both purchase and refinance transactions in FY 2015."

For those tracking these things, the New York State Department of Financial Institutions and the Ohio Division of Financial Institutions have begun using the National SAFE mortgage loan originator (MLO) test with Uniform State Content  on the Nationwide Multi-State Licensing System & Registry (NMLS), bringing the total number of state agencies using the test to 43. Also, there is a "Request for Public Comment" on the Mortgage Call Report and Surety Bond Tracking in NMLS. SRR is inviting public comment on two proposals related to functionality in NMLS. Comments for proposed changes to the Mortgage Call Report and new electronic surety bond tracking in NMLS are due October 30, 2014. See Proposed Mortgage Call Report Changes or Electronic Surety Bond Changes.

Licensing and the tedious process are always a hot topic, so it is with some interest I note Maryland. Back and in early spring, Maryland Governor Martin O'Malley signed Senate Bill 1091, also known as the Registered Mortgage Loan Originators - Expedited Licenses, into law. The law, which took effect on October 1st, adds additional articles and requires the Commissioner of Financial Regulation to expedite license applications from Registered Mortgage Loan Originators who meet certain requirements. How does the law expedite the licensing process? Well, it directs the Commissioner to waive the State criminal history records check for Eligible Applicants. According to the Maryland Mortgage Bankers Association, the elimination of this requirement for licensing should provide faster processing of the application, assuming all other requirements are met. How does someone apply for an expedited MLO license? Submit the Maryland MLO license application through NMLS, and complete the checklist. Be sure to include the information for the most recent date of employment as a registered MLO. Forward the checklist and other application materials to the Commissioner at the address noted below. When to apply for the expedited MLO license? Beginning October 1, 2014, expedited MLO license applications may be submitted by Eligible Applicants.

Hey, if Ben Bernanke can't refinance his own mortgage, do you think credit has become too tight?

Geez there is a lot going on the FHA sector. The Federal Housing Administration wants lenders to make fewer mistakes when writing mortgages for the government insurance program. The agency also wants to serve more borrowers with low credit scores. FHA lenders have already have felt the tension between these two demands. A hard line on defects means lenders are more likely to be on the hook for losses in the event of default, and lower credit scores make defaults more likely. Many FHA lenders have been pulling back from the market for this reason. The FHA expects 75% of the loans it insures from now on will be made to borrowers with FICO scores of 680 or below, but the housing downturn took many of these borrowers out of the home buying market and the FHA is looking for ways to bring them back.

The FHA, however, thinks that the defect rate for FHA loans is still too high and defects on FHA loans appear to be on the rise. In June, the FHA provided a breakdown of 6,645 loans it reviewed in the first quarter and found that just 16% were deemed acceptable, meaning they had no mistakes. A whopping 48% were "unacceptable," with material defects, while another 36% were considered "deficient," with errors that could potentially be corrected. Lenders are still trying to get their arms around the FHA's quality assurance plan announced in March. The FHA has said its "blueprint" for evaluating underwriting defects should reduce lenders' fears of having to indemnify the agency for losses on loans to riskier borrowers. FHA's share of mortgage originations has fallen dramatically in the past year. Still, FHA officials have stressed that the agency will not roll back its 1.35% annual mortgage insurance premium or its 1.75% upfront premium, although the industry would view that quite favorably. Though such a change would make loans more affordable, the FHA had to raise premiums to strengthen its insurance fund, which must maintain a 2% surplus. The share of FHA borrowers with credit scores between 640 and 680 "is half the size of what it used to be." Lenders have essentially retreated from lending to that segment of the market, resulting in the loss of a borrower class over the last 10 years. Since 2013, the FHA has intentionally pulled back from insuring loans to borrowers with strong credit scores and ceded that market share to Fannie Mae and Freddie Mac for borrowers with FICO scores of 680 or more.

As recently as 2011, 65% of FHA's volume went to borrowers with FICO scores above 680. Those higher credit scores were something of a departure from the FHA's mission and its history. In 2007, at the beginning of the financial crisis, 55% of FHA-insured loans went to borrowers with FICO scores below 640. Moreover, 30% of those loans were to borrowers with scores 580, which ultimately hit the agency with a massive wave of defaults. The FHA now expects 25% of the loans it insures will be to borrowers with FICO scores of 640 or below. Another 50% will go to those in the middle ground of 640 to 680. The remaining 25% will be to those borrowers with scores above 680. Efforts have been underway to get lenders to remove so-called credit overlays - FICO score requirements of 680 or more that are used to screen out borrowers with a higher probability of default. Some lenders have lowered credit score requirements this year, largely to drum up business. Many others haven't budged from imposing credit overlays out of fear they will ultimately be forced to eat losses for any FHA loans that default.

FHA posted the draft Servicing section of its draft Single Family Housing Policy Handbook. This posting is a continuation of FHA's progress toward a single, consolidated SF Handbook that will make it easier for stakeholders to do business with FHA. Visit the Servicing page link on the SF Drafting Table to access the draft section content and supporting documentation. Feedback from stakeholders will be accepted from September 11 through October 17, 2014. U.S. Department of Housing and Urban Development (HUD) issued Mortgagee Letter (ML) 2014-19 introducing its new loan servicing contractor, NOVAD Management Consulting. The new contract became effective September 29.

And The Federal Housing Administration's (FHA) Single Family Office of Lender Activities and Program Compliance (OLAPC) announced the publication of the 6th issue of its Lender Insight newsletter.

Suddenly there is a lot going on in the markets. After a nice rally on Wednesday, Thursday we took a little breather ahead of this morning's employment data. In recent months attention has shifted from Ukraine to Syria to Hong Kong and now to Ebola. (Yes - epidemics like SARS do have a negative impact on GDP, which in turn serves to keep rates lower.) For mortgages, the demand continues to be good for MBS, and the supply seems to be slowing - leading to higher prices and lower rates. (Of course, rates can't go down too much given gfees and loan level price adjustments.)

This morning, however, the September payrolls and unemployment results were announced. Nonfarm Payrolls were expected at +215k (after only being up 142k last month) and came out at +248k with a back-month revision to +180k. The Unemployment Rate, expected to be unchanged at 6.1%, came in at 5.9% (the lowest since July 2008), and Hourly Earnings were roughly unchanged. The strong numbers have pushed rates higher in the early going: 10-year up to 2.48% and agency MBS prices worse about .250.

Jobs

For jobs du jour, Franklin American Mortgage Wholesale Lending is seeking Account Executives in several markets! As Franklin American Mortgage celebrates its 20th anniversary, the company is looking for Wholesale AEs "seeking to excel in a winning sales culture with a strong commitment to customer service. Franklin American Mortgage provides an excellent opportunity for seasoned Account Executives to become even more successful. We are currently looking for top talent in Utah; Minnesota; Wisconsin; Colorado; Texas; Central CA; Southern NJ; Chicago IL; Columbus OH; Cleveland OH; and Detroit MI. Please visit whyfamc.com/wholesale or e-mail Jennifer Rader for more information. Franklin American Mortgage is FHA Direct Endorsed (DE), VA Automatic and LAPP Approved, FNMA/FHLMC and GNMA approved seller servicer.

There is a lot of personnel movement out there! Congrats to Fairway Independent which brought top FHA producer Jon Tobias on board. Platinum Home Mortgage Corporation welcomed Lynnette Gilbert in to build a new sales and operations teams in the Utah and Nevada markets. (Mrs. Gilbert has been a leader in the Utah mortgage industry for nearly three decades, building successful sales and operations teams.) Angel Oak Home Loans announced the hiring of Richard Staley as the firm's Chief Production Officer, and Chris Lewis as the firm's Business Development Officer. (Angel Oak Home Loans is a traditional retail mortgage lender with offices in Georgia, Florida, and California.) Paramount Residential Mortgage Group, Inc. beefed up its Denver operation by hiring Michael Skimel (Retail Branch Manager) and Mauricio Perez (Retail Operations Manager), both ex-Chase, and Scott Thompson in Cincinnati as Retail Branch Manager.