Plenty of people are on the roads in December, traveling for the holidays. Ever curious about the basic differences between a road, a street, a boulevard, etc.? Well, here is a short, easy description.

With 2018 a mere 13 months away, and the new Administration coming in, talk has resurfaced concerning the two geese laying the golden eggs: Freddie Mac and Fannie Mae. Employees from neither company officially comment on their future, but that certainly hasn't stopped tongues wagging and opinions being given.

For example, Treasury Secretary nominee Steve Mnuchin said that Fannie Mae and Freddie Mac should exit government control, which puts him at odds with several Republicans like Jeb Hensarling who want to see the GSEs wound down. "We will make sure that when they are restructured, they are absolutely safe and don't get taken over again. But we've got to get them out of government control," Mnuchin said on an interview with Fox News. What "exit government control" means is an open question, however he believes that Fannie Mae is crowding out private lending. 

Brent Nyitray, Director of Capital Markets with iServe Residential Lending, reminds us that, "Getting private lending back into the mortgage market has been a priority since the financial crisis since 96% of all new origination still goes Fannie, Freddie, or Ginnie. I would also wager that the biggest ultimate lender to the mortgage market is the Fed, via their QE holdings of MBS. So, the US mortgage market is for all intents and purposes nationalized at this point. Fannie Mae stock was up 46% on the statements. One big issue for privatizing Fannie and Freddie: Now, all their profits go to the government. By 2018, they will probably have no equity left, which isn't good news for common stockholders."

A.W. Pickel, President, Midwest Division, at AmCap Mortgage, Ltd., observed, "Fannie Mae and Freddie Mac need to be taken out of conservatorship. This was only intended to be a short-term solution, anyway. Bringing in private capital to the secondary market is also a high priority. It seems to me the best for all would be private guarantors which would assume the majority of the mortgage risk while retaining a government insured backstop that would keep the liquidity in the capital markets. Also, the government backstop would be paid by a form of basis points to the government."

Compass Point Research & Trading's Isaac Boltansky weighed in with, "Shares of Fannie Mae and Freddie Mac were both up ~45% in response to the nomination of Steven Mnuchin to be Treasury Secretary and subsequent comments he made regarding the GSEs. Specifically, in reference to the GSEs, Mr. Mnuchin said: 'We will make sure that when they are restructured, they are absolutely safe and don't get taken over again. But we've got to get them out of government control.' 

"Our thoughts are as follows: (1) the reaction in shares is rational given the incoming administration's tone on markets generally, and the GSEs specifically; (2) we remain committed to our view that GSE capital retention through an alteration to the PSPAs is likely in the near-term; (3) the D.C. Circuit Court of Appeals decision in the Perry Capital case is imminent and we believe the odds of a remand - a positive development for shareholders - are ~80%; (4) we continue to believe that president-elect Trump's Department of Justice will be far less obstinate in its defense against GSE shareholder claims; (5) both the Jumpstart provision, and the embedded Congressional opposition to the 'recap and release' effort, remain in place; and (6) we remain committed to our view that there is still neither the political will nor the procedural urgency necessary to enact legislative GSE reform in the next Congress."

As announced November 23, 2016 in Lender Letter LL-2016-05, FHFA has established the general and high-cost area loan limits for 2017. The new base loan limit in most of the country will be $424,100, a 1.7% increase from 2016. The new limits are effective for whole loans delivered to Fannie Mae on or after January 1, 2017. Detailed information and updated resources, including the Loan Limit Look-Up Table, are available on the Loan Limits page.

Parkside Lending told its brokers that, "Loan casefiles submitted on or after the weekend of December 10, 2016, will be underwritten with the new general loan limits. Loan casefiles submitted on or after January 1, 2017, will be underwritten with the new high-cost area loan limits. FHLMC LPA will be updated on December 2 to reflect the 2017 loan limits. Parkside Lending will begin to accept locks and submissions with new loan amounts beginning December 5, 2016. Loans previously locked or submitted can be changed to the new higher limits, after December 5, using the standard change request process. In addition, loans may fund and be purchased effective December 5, 2016.

Fannie Mae has issued Lender Letter LL-2016-05 to confirm the general and high-cost area loan limits announced by the Federal Housing Finance Agency (FHFA). The base loan limits have increased for the first time since 2006. This represents a 1.7% increase over the 2016 limit. The new loan limit in most of the country will be $424,100 and all but 87 counties (or county equivalents) will see a loan limit increase. The new limits are effective for whole loans delivered to Fannie Mae and loans in MBS pools with issue dates on or after January 1, 2017. Detailed information and updated resources, including theLoan Limit Look-Up Table, are available on the Loan Limits page.

And the Federal Housing Administration (FHA) announced the agency's new schedule of loan limits, and due to an increase in housing prices levels increased in 2,948 counties, stayed the same in 286 counties, and went down in none. These loan limits are effective for case numbers assigned on or after January 1, 2017, and will remain in effect through the end of the year. "In high-cost areas, the FHA national loan limit 'ceiling' will increase to $636,150 from $625,500. FHA will also increase its 'floor' to $275,665 from $271,050. Additionally, the maximum claim amount for FHA-insured Home Equity Conversion Mortgages (HECMs), or reverse mortgages, will increase to $636,150. This amount is 150 percent of the national conforming limit of $424,100.

"FHA's minimum national loan limit "floor" is set at 65 percent of the national conforming loan limit of $424,100. The floor applies to those areas where 115 percent of the median home price is less than 65 percent of the national conforming loan limit. Any areas where the loan limit exceeds the "floor" is considered a high cost area. The maximum FHA loan limit 'ceiling' for high-cost areas is 150 percent of the national conforming limit.

Yesterday the commentary mentioned FHA's funding, prompting Jerry Jalbert wrote in to say that anyone saying "the FHA insurance fund is self-funded is off a little. In September of 2013 the FHA received $1.7 billion in taxpayer funds to cover projected losses above and beyond the insurance fund balance. This was the 1st time in 79 years that the FHA looked for taxpayer funds, in part due to the FHA continuing to provide a means for low down payment loans even after the 2008/2009 real estate market crash."

The CFPB made some news yesterday by publishing an updated version of the Mortgage Servicing Small Entity Compliance Guide on its Mortgage Servicing implementation webpage. "The updated guide incorporates amendments made to mortgage servicing provisions in Regulation X and Regulation Z by the 2016 Mortgage Servicing final rule. Most provisions of the 2016 Mortgage Serving final rule take effect on October 19, 2017. The provisions relating to successors in interest and the provisions relating to periodic statements for borrowers in bankruptcy will take effect on April 19, 2018. The previous version of the guide, which provides a summary of the rules that are effective prior to the effective dates of the 2016 Mortgage Servicing final rule, will remain on our website until all of the provisions of the 2016 Mortgage Servicing final rule are effective."

When will rates stop going up? Darned if I know. Suffice it to say, any company whose profit was based solely on refis should be very anxious right now. Bond prices went down yesterday, and rates went up, primarily due to higher oil prices, strong sentiment at Eurozone manufacturers, and a better-than-expected ISM U.S. Manufacturing Index reading (a 5-month high). That Initial Jobless Claims stat jumped to a five-month high today but the data series remains consistent with steady labor market growth: Initial claims have been below 300K for 91 consecutive weeks, the longest streak since 1970. And U.S. Construction Spending grew by 0.5% m/m in October ending three straight months of declines.

Today we've had what normally is a very important number. But with everything else that is going on, its lost a little impact. The November Employment Situation Report showed the Unemployment Rate plunged to 4.6% from 4.9%, Non-Farm Payrolls were +176k, less than expected, and Hourly Earnings were -.1%. After the employment data the 10-year is priced to yield 2.41% and agency MBS prices are better by .250-.375 versus last night.

Jobs and Announcements

"Western States Opportunity! The Wholesale Division of Impac Mortgage Corp., a publicly traded lender, is looking for established Account Executives or a Sales Leader with a team in place to dominate the West Coast market, specifically Northern California, Oregon, Washington, Nevada, Arizona, and Idaho. We'll set you up for success with a full line of competitive products, talented backend support, top notch marketing and a compensation package that leads the industry. If you are interested in exploring new opportunities for 2017, and are serious about your career,  submit your resume and describe yourself or your team to Todd Kesterson, National Sales Director."

National MI is searching for a Sales Account Representative who will reside in Wisconsin and is responsible for promoting the sale of National MI products, services and programs to clients through a consultative selling approach via personal sales calls and email/phone contact. This individual will also assist in sourcing new business from originators, and will manage the relationships of specific clients by serving as a customer advocate, educator, and loan issue problem-solver. Experience in client relationship management and training is imperative, and strong research, process improvement, and presentation skills are required.  Headquartered in the San Francisco Bay Area, National MI is a U.S.-based, private mortgage insurer enabling low down payment borrowers to realize homeownership. For the complete job posting, see National MI's careers page.

A veteran independent mortgage bank, headquartered along the Atlantic Seaboard, is searching for lenders or brokers operating in the Mid-Atlantic or Southern region who would like to merge or sell. The company has over 40 offices located throughout the Eastern United States, and offers a broad product range that includes all government products but also manufactured housing, reverse mortgages, rehab, and an in-house construction product. There are several purchase options available depending upon the situation. For a confidential discussion, please email me to be connected with the principals and specify the opportunity.

FirstREX, the leader in the home ownership investment industry, unveiled a new corporate name and website as part of a rebranding. The company's new name is Unison and its website is www.myunison.com.  The company's Unison HomeBuyer program makes home ownership available to more buyers by contributing up to half of the required down payment. The cash provided by Unison is not a loan, so there are no interest charges or monthly payments. Instead, Unison shares a portion of the home's change in value when the homeowner eventually sells. Unison offers the program in partnership with leading purchase-focused mortgage lenders. Per Unison Co-CEO Jim Riccitelli, the rebranding is the latest step in the company's push toward greater visibility and rapid growth across the U.S.  Building upon its strong presence in California, Oregon and Washington, Unison recently expanded into Illinois, Maryland, New York, New Jersey, Massachusetts, Virginia, Washington D.C. and Connecticut, and is expanding further in early 2017.

loanDepot announced it has completed the acquisition of Closing USA (CUSA), a national title, escrow and settlement company, and it has entered into a definitive agreement to acquire its affiliate, American Coast Title (ACT). Upon closing of both companies, loanDepot's national licensing footprint for title, escrow and settlement services will expand to more than 30 states and Washington, DC, while driving increased revenues through both loanDepot and business partner channels. The ACT transaction is expected to close in the second quarter of 2017, pending regulatory approval.