Want a very telling pictorial of the current state of banking?.
The MBA
conference has ended, and it is off to New Mexico for me, and then Seattle.
Hopefully in those locations no one knows the phrases, "I'll reach
out to you later this week," "I'd like to circle back with you on
that," "Let's do a meeting first thing next week," and,
"I'd like to deploy resources on changing that procedure."
But I also overheard some edgier phrases.
"Every aspect of my life is being over-regulated." "I don't mind
higher taxes, but I have no confidence that the government is going to do
anything more worthwhile with my money than I would." "With BofA
leaving correspondent, is someone like Chase going to be next?" "The
government is holding QRM over our heads like a sword - we're just waiting for
it to drop."* "The government can't even approve a chairman of the
CFPB - and with QR I am supposed to listen to their DTI and LTV
requirements?" "The White House says it supports housing - maybe it should
take a look at the latest MBA estimates for 2012 production (below)."
(* Speaking of QRM, it is rumored that regulators received so many comments on
their risk-retention rules, and concerns about some of the provisions, that some expecting the agencies to issue a
whole new proposal. The lack of clarity about whether the amount of risk
retained is based on par or fair value is one such aspect. Regulators will take
heat for ignoring the feedback if they advance the current proposal, so here we
sit...)
A "sluggish growth" environment. Our economy is "weak but not
collapsing." "Not bad is the new 'good'." These are the terms
that economists and Wall Street analysts are using to describe the current US
economy. Less bad might be good, but the fact remains that it boils down to
jobs and housing, and housing and jobs. And the fact that the consumer is not
going to spend until the economy improves, and the economy is not going to
improve until the consumer spends. In mortgage land, the MBA estimates that $900 billion in mortgage originations are
expected for 2012 - the lowest volume for the industry since 1997, and down
2011's $1.2 trillion. Next year, refinancing is expected to drop significantly,
coupled with only a slight increase in mortgages to purchase a home - experts think
the $900 billion will be 50% purchase and 50% refi.
What is going on out there among
originators? After all, rates are at historic lows, but volume of new
originations is below the expectations of originators and investors.
Everyone has a #1 reason. One is that traditional mortgage brokers have seen
their ranks decimated, or folded into larger lenders, and a good percentage of
loan agents have significantly reduced commissions. In addition, everyone tells
me that there are few easy loans - every loan is a potential land mine and
appraisals, credit docs, & supporting documentation are tougher than ever.
Recent borrowers have some equity, but many don't have enough for a down
payment, and borrowers from between 3-7 years ago don't, and can't refinance,
and anyone who has undergone a short sale or foreclosure is eliminated from the
pool of potential borrowers for years. Agents hear that some existing
mortgagors are anticipating a substantial mortgagor bailout from our
government, so why go through the cost and hassle of refinancing now,
especially when renting might be a better alternative. And some are nervous
enough about housing prices and the job markets to make them hold off for now.
Ernst
Publishing Company has reported that a survey the firm conducted shows that 80
percent of respondents considered recording fees and transfer taxes to be the
top challenge that the Good Faith Estimate (GFE) and HUD-1 present to them. The
Ernst survey was e-mailed to more than 8,600 clients of the firm, of which
almost six percent responded.
The U.S. Supreme Court & RESPA:
it agreed to clarify the circumstances in which home buyers can sue mortgage
lenders for allegedly charging them unearned fees during the closing process. The
case centers on a group of lawsuits from Louisiana in which borrowers alleged Quicken
Loans Inc. charged them loan-discount fees but did not provide reduced interest
rates in return. Quicken Loans said the fees were legal and denied allegations
that the fees were unearned. The plaintiffs argue the law was meant to forbid
both kickbacks and unearned fees. The Obama administration is supporting their
position, saying that HUD has consistently interpreted the law to prohibit the
charging of any unearned fees. Clarifying RESPA: Freeman v. Quicken Loans,
10-1042. Oral arguments will take place early next year, with a decision
expected by the end of June.
Plaza Home Mortgage added a new AMC to its approved panel. "As of Wednesday, October 12, Axis Appraisal Management Solutions will be providing appraisals for our Sacramento Office. ALL appraisals MUST be ordered through the Plaza website to ensure compliance and that each order is directed to the correct AMC."
But things aren't so rosy farther south in the state. In San Diego it seems that AppraiserLoft's employees were told last week that it is insolvent by CEO Aman Makkar. "The GSEs are taking longer and longer to pay, and as a result payments to appraisers are delayed," Makkar said in an interview with HousingWire.
360 Mortgage out of Austin, Texas announced to its brokers, "No more overlays! (On Standard Conforming Products) 360 makes mortgage lending so easy. If you can spell "DU", you can get a loan done at 360. Forget about Standard Conforming Product overlays, & zip through the loan process even faster than a turtle strapped to a rocket. We make our brokers look good."
Companies such as Bay Equity (San
Francisco) and PHH Mortgage sent out clarifications on VA Funding Fees. Namely, since the bill was not
signed into law until October 5, 2011, loans closed between October 1 and
October 5, 2011 would require the lower funding fee factors previously
announced. "Loans closed on or after October 6, 2011 will require the previous/higher
funding fee factors. "The VA circular also provided the factors that will be
effective on November 18, 2011. However, the VA also indicated there would be
congressional efforts to change these funding fee factors in the coming weeks."
(Bay Equity points out that funding fees for Interest Rate Reduction
Refinancing Loans (IRRRLs) and Assumptions will not change. They will remain at
.50 percent.)
After November 1 GMAC Bank
Correspondent Funding told approved delegated clients that it has increased its
underwriting fee from $225 to $400 "on all conforming, conventional loans
underwritten through GMACB's Prior Approval Department. The underwriting fee
for HomePath and Jumbo products will remain at $225. An explanation must be
included with the file as to the reasoning for using the Prior Approval
process. Please note that under current reps and warrants, the client is held
responsible to alert GMACB if the loan may not be eligible for sale to the
agencies."
HSOA got the word out to its brokers that, "Due to investor changes, the following changes apply to VA loans: Wholesale loans are now accepted in Oregon. The restrictions in Rhode Island and Michigan remain in effect. Refinances on properties currently listed for sale are not permitted. And that for full doc (non-IRRRL) refinances, six months to application date if borrower receives cash back or consolidates debt. Three months to application date if borrower only pays off existing first lien and receives no cash back. For IRRRLs, the listing must be cancelled prior to application date."
Looking at the markets, yesterday's 3-year note auction went fine, coming in at .54% and with the highest bid-to-cover ratio in over a year. There really wasn't too much in the way of news, and although they did pretty well relative to Treasury securities MBS finished the day worse by about .125. The only news out so far was the weekly MBA mortgage applications number which was up 1.3% last week. Both refinancing and purchase applications were up slightly, with refi's still constituting about 79% of all apps. Later we have the release of the FOMC minutes form the September 20-21 meeting, and the second leg of the auctions with $21 billion of 10-yr notes. Ahead of those the 10-yr is at 2.22% early on and MBS prices aren't doing much.
Blonde's Year in Review:
January: Took
new scarf back to store because it was too tight.
February: Fired from pharmacy job for failing to print labels. Helllloooo!!!
Bottles won't fit in printer!
March: Got really excited.....finished jigsaw puzzle in 6 months.....
Box said '2-4 years!'
April: Trapped on escalator for hours - Power went out!
May: Tried to make Kool-Aid - wrong instructions - 8 cups of water won't
fit into those little packets!
June: Tried to go water skiing but couldn't find a lake with a
slope.
July: Lost *** stroke swimming competition. Learned later that the
other swimmers cheated, they used their arms!
August: Got locked out of my car in rain storm..... Car swamped because soft-top
was open.
September: The capital of California is 'C'.....isn't it?
October: Hate M & M's - They are so hard to peel.
November: Baked turkey for 4 1/2 days. Instructions said 1 hour per pound
and I weigh 108!
December: Couldn't call 911. 'Duh'.....there's no 'eleven' button on the phone!