There’s a lot of airport travel coming up. It is best to stay cool, calm, and collected. Unfortunately, something else that is cool, and calm, is the entry level market for homes. Thousands of housing stats are spit out every year, and here's another one: Zillow finds about 270,000 fewer homes are sold each year compared to 2006, owing to the rentals. Put another way, the number of single-family homes that are rented out grew by 5 million between 2006 and early 2017. (For perspective, Michigan has 4.6 million units total.)

Jumbo, Non-conforming, and High Balance Updates

Plaza has a Solutions Program that offers a solution for your borrowers with DTI > 43%, self-employed borrowers with difficult income to document, or for transactions that do not fit standard Agency or Jumbo guidelines.

Sellers are reminded that to be eligible for purchase by AmeriHome, loans in the Core Jumbo program must be locked on or before the Note date. 

Ditech is increasing the 2018 conforming loan limits in alignment to Federal Housing Financing Agency (FHFA) Fannie Mae and Freddie Mac. Due to the change in the eligibility on loan limits, it will be removing the 1.000 LLPA for conforming high balance and super conforming 1-unit products effective Monday, December 4, 2017.

Mountain West Financial is now offering HomeReady High Balance programs. This includes High Balance 30-year, 20-year, 15-year, 10-year, 10/1 ARM, 7/1 ARM and 5/1 ARM. The product matrices and pricing engine are updated with these changes.

Taxes?

Remember a while back when Treasury Secretary Mnuchin, in his prepared statement before the House Financial Services Committee, said that housing finance reform remains a priority for the Administration saying the current system is not sustainable and leaves taxpayers at risk? He added that the issue is being studied with conversations between public and private stakeholders "in advance of providing recommendations." How's that working out?

The latest news has the tax bill expand a proposed $10,000 cap for state and local property tax deductions to include income tax. It was also expected to limit the mortgage interest deduction (MID) to home loans of no more than $750,000. That agreement would allow taxpayers to choose a property tax deduction along with either an income or sales tax deduction, with a $10,000 limit. The issue has been a major snag throughout the tax fight, with Republican lawmakers from the Northeast clamoring for the property tax deduction and those from California insisting on the income tax write-off. Republican leaders originally wanted to abolish the entire state and local tax deduction.

Mountain West Financial spread the word that due to the Proposed Federal Tax Reform, there is uncertainty of the future of the Mortgage Credit Certificate ("MCC") programs which provide benefits to first-time homebuyers by increasing affordability through a federal tax credit. Unfortunately, the current version of the House Bill includes elimination of the MCC program, and currently reflects an effective date of December 31, 2017. As the legislative process moves forward, it is unclear what the ultimate impact the tax reform efforts will have on MCCs. Given these uncertainties, both TDHCA and CalHFA have already issued their direction to lenders and we suspect other MCC offering agencies may as well.

Wells Fargo Funding expanded its documentation requirements as of December 5th for self-employed borrowers on conventional Conforming Prior Approval Loans to require only the first two pages and the applicable self-employment schedule(s) of the borrower's most recent individual tax return, instead of the borrower's entire tax return. 

Royal Pacific Funding will no longer require W2 transcripts when all qualifying income is made up exclusively of wage earner (W2) income.

State News

Effective November 6, 2017, the state of Maryland has amended regulation .08 under COMAR 09.03.12, Foreclosure Procedures for Residential Property. The amendment provides a model form to be used to expedite foreclosure proceedings for vacant and abandoned properties. The purpose of the form is to notify borrowers of their right to contest a finding that a property is vacant.

Texas approved a proposed constitutional amendment that includes, but is not limited to, establishing a lower amount for expenses to borrowers and removing certain financing expense limitations for a Home Equity Loan (HEL), authorizing certain lenders to make HELs; changing certain options for the refinancing of HELs; amending the threshold for advances on an HEL; and expanding HELs to loans on agricultural homestead properties. These changes in Senate Joint Resolution 60 are effective on January 1, 2018.

Capital Markets

Blame a weak core Consumer Price Index number before the Fed even announced its decision, but the 10-year note yield fell to 2.35% and agency MBS prices rallied Wednesday. Yes, the Fed decided to increase the fed funds rate range to 1.25 - 1.50 percent. The FOMC stated that economic activity has been rising in the fourth quarter and that core inflation remained below their 2 percent threshold. Its economic projections now estimate real GDP growth for 2018 will be 2.5 percent, up from the September projection of 2.1 percent. BJ Necel had some thoughts on the rally: "Bond prices rallied due to the Fed's continued stance on inflation remaining low, as well as 3 expected rate hikes for 2018. Considering the dual mandate of fostering employment and controlling inflation, we have the employment, but not inflation. I think the market reacted to the inflation outlook and dot plots."

To sum it up, the US Federal Reserve has voted 7-2 to increase its benchmark interest rate by one-quarter of a percentage point to a range of 1.25% to 1.5%. The central bank stood by a forecast of three rate increases in 2018 but omitted from its post-meeting statement previous language of expectation the labor market will strengthen. 

Yes, the FOMC released a new dot plot (page down once or twice), which showed three potential rate hikes in 2018. This plot was similar to September's, which also expected three hikes in the upcoming year. Four times a year, Federal Reserve policymakers at the Federal Open Market Committee submit their projections about where short-term interest rates are headed. The results are the central bank's so-called dot plot: a visual representation of how many members think rates will hit a given level over the short, medium and longer run.

Today four central banks - Swiss National Bank, Norges Bank (Norway), Bank of England, and European Central Bank - released monetary policy decisions. The Bank of China raised its rates slightly. Comments around inflation and quantitative easing will be watched. This morning we've already had the usual Thursday jobless claims (-11k to 225k), Retail Sales (core +.8% in November, stronger than expected, overall +1%), and import prices (+.7%). We begin the day with the 10-year at 2.37% and agency MBS prices worse .125-.250 versus last night's close.

Jobs and Promotions

Sierra Pacific Mortgage is proud to announce that the company's Chief Operating Officer, Gary Clark, has been elected to the Residential Board of Governors (RESBOG) at the Mortgage Bankers Association (MBA). RESBOG is a committee of industry leaders who set the priority of issues for the MBA in the coming year. As one of 31 voting members of RESBOG, Clark will help shape the MBA's position on various issues that will impact the mortgage industry. The MBA is a respected and trusted organization whose opinion is highly valued. Their reputation as a fact-based organization, whose thoughtfulness and strategic prowess precedes them, and they are often called upon to testify before congress when addressing various housing issues. The MBA represents One Voice, One Vision, One Resource. Congratulations Gary.

Alpha Mortgage is growing! We seek to create a corporate culture that fosters and rewards excellence, encourages creative thinking and respects diversity - an environment where team members are engaged, supportive of one another and enthusiastic about serving our customers. Alpha Mortgage Corporation is seeking senior EXPERIENCED Mortgage Loan Officers with proven track records of sales for several locations in NC including Wilmington, Asheville, Jacksonville. Candidates must be an NC Licensed Mortgage Loan Officer with NMLS. Also, Myrtle Beach, SC for SC Licensed Loan Officers! The Loan Officer will be responsible for discussing client's needs, recommending the best loan products, helping customers put together a complete loan package and working with the underwriting team throughout the loan process while adhering to all mortgage compliance laws and regulations. The Loan Officer acts as a liaison between clients and Alpha Mortgage and will help qualified applicants acquire loans in a timely manner. 

Community banks and credit unions, listen up. If you have a Fannie Mae or Freddie Mac servicing portfolio between $10M and $250M in size and are potentially interested in selling as part of your strategic plan, an established national bank owned mortgage company is continuing to acquire these servicing portfolios and would love to hear from you. They do not solicit or cross sell the borrowers for any other banking product or service and have already completed a significant number of these transactions. If you are interested, email me to forward your note; specify opportunity, please.

For those companies using Dovenmuehle as their subservicer, Richey May & Co., a public accounting and advisory firm recognized as a leader in the mortgage industry, will again be conducting their annual subservicer oversight review to assist lenders with their monitoring and oversight responsibilities. Their on-site review at Dovenmuehle's facility is scheduled for January 30 and 31. Richey May's review is performed on behalf of multiple clients at the same time, thereby sharing expenses and creating cost savings that are passed on to participating clients. Please contact Kurt Blohm to learn more about this comprehensive oversight review program. Richey May has also released its latest whitepaper, "Mortgage Subservicer Oversight: Understanding Your Selection and Oversight Responsibilities," which provides guidance on selecting a subservicer, as well as recommendations regarding the timing and frequency of oversight procedures.

GSF Mortgage Corp. has recently launched its Single Close Construction Program for FHA, VA, and USDA construction lending. Since its launch, GSF has approved more than 60 builders to offer its products. This low down-payment construction option is a great alternative in markets that are strapped for inventory. GSF Mortgage is one of the few lenders in the country offering new construction lending for the 100% LTV USDA product. If you are a branch manager, loan originator or processor with construction lending experience or would like to offer construction lending products please, reach out to Rich Obermeier at (262) 957-8901.

Wells Fargo laid off about 60 employees in its mortgage division, mostly in its QC area due to process changes.

We wish George Karousos well. He resigned as president of Village Bank Mortgage, a post he took earlier this year.

Companies being fined for mortgage issues is not limited to those in the United States. In Australia Westpac has committed to pay a total of $11 million in compensation to customers who held one of 13,000 owner-occupier, interest-only home loans affected by a mortgage processing error.