Orange Alerts on California’s Laws and Eminent Domain Focus; Lender Updates and Many FHA Streamline Changes

This is 70 seconds of “head shaking, jaw dropping,” why one
should never bet on cards.

Many of us enjoyed a little BBQ grub yesterday. For the meat eaters,
there is almost a 1 in 3 chance that the
hot dogs and pork sausages consumed on the Fourth of July originated in Iowa
The Hawkeye State is home for nearly 20 million hogs and pigs – almost
one-third of the nation’s estimated total. North Carolina (8.6 million) and
Minnesota (7.6 million) were also homes to large numbers of pigs. And Texas accounts for about one-sixth of the
nation’s total production of beef hot dogs, steaks, and burgers
. (Nebraska
is #2 and Kansas #3, per the USDA.) For chicken, the lion’s share (food humor)
comes from six states: Georgia, Arkansas, North Carolina, Alabama, Mississippi,
and Texas. And let’s not forget the lowly potato: approximately half of the nation’s spuds were produced in Idaho or
Washington in 2011.

industry, and servicing values in the state of California, waits to see if the governor
signs into law the “Homeowner’s Bill of Rights.”
Among other
things, “The bills also create an overly-complicated approach to prohibiting
dual-tracking, lack clarity around critical definitions, and fail to address
many industry concerns, including that a new ‘right’ to modification is being
created.” Here is the latest effort to stop it.

Nearly 20 financial services trade groups issued a joint letter protesting
a plan in California to use eminent domain to seize mortgages from private
investors. [Read: Proposal to Seize Underwater Mortgages via Eminent Domain not Well Received] These groups see this as a serious threat to the mortgage market
as it offers a way to restructure mortgages without costing taxpayers a dime. If
the program in California is successful, there is a fear it would be
implemented across the United States, meaning mortgages in most states are at a
prepayment risk. It also could impose losses on whoever holds the credit
risk on the mortgages. The success of the program could cause much higher risk
premium going forward the market as there is massive prepayment risk whenever a
loan is underwater; thus, higher mortgage interest rates and a strain on the
housing recovery. Previous permits to restructure mortgages without incurring losses
for taxpayers have run into Constitutional problems or needed taxpayer funding.
Under the Constitution, the government must pay the fair value for property
seized under eminent domain. The courts have previously said this power extends
to the seizure of mortgages. This means the holder of the credit risk would
suffer a loss on the underwater portion of the loan. The government can then
restructure the loan so the borrower is no longer underwater. The Supreme Court
has long held that states cannot tax the federal government. There are
potential losses through eminent domain as similar enough to keep investors
from trying it. Whether this could apply to loans backed by Fannie and Freddie
is a more open question as these entities are now under conservatorship and the
federal government has pledged to ensure they have positive capital positions.
But they are also private companies. Not surprisingly the financial sector
objects to the use of eminent domain
, arguing it would do more harm than
good by drying up the supply of credit and further depressing home prices. 

Switching topics, though it hasn’t issued any written guidance on the
matter, the FHA has mandated that loans are not considered eligible for FHA
financing if existing tax liens haven’t been paid off or the borrower isn’t in
a repayment plan
.  Unless a fully executed payment arrangement and
proof of 12 months’ timely payments can be provided, tax liens should be paid
in full before closing.  Satisfied tax liens should be removed before
closing, and for cash-out refinances, outstanding liens may be paid off using
proceeds if an underwriter approves the decision.

In the wake of its decision to rescind previously issued guidance on
collections and disputed accounts, the FHA has decreed that the current
guidelines remain in effect.  As per this guidance, judgments must be
paid off, but collection accounts are not required to do so
.  Disputed
credit accounts or derogatory credit on public records discerned through a
credit report must be referred to an underwriter, though for accounts of less
than $500 and more than two years old, AUS approval will suffice.  The FHA
also clarified that only eligible borrowers who sign the Note and their legal
spouses are allowed to take title to VA properties at closing and that
income-based repayment student loan payments must be included in debt
ratios.  IBR payments of over $100 require the actual payment amount to be
included.  Cases where the payment is less than $100 and 1% of the total
loan balance is more than $100 will require a minimum of $100 to be included.

Game-changing investor & agency updates continue. Remember
that it is best to read the actual bulletin, but this will give you a flavor
for what is going on out there.

Wells Fargo Funding is requiring sellers to follow the standard Disaster
with regards to any properties affected by the wildfires in
Colorado.  Properties located within seven zip codes of El Paso County and
five zip codes of Larimer County must be re-inspected for damage from fire,
smoke, heat, and ash.

Flagstar is imposing a minimum FICO score requirement for all FHA streamline
that are registered on or after July 6th.  Such loans that
aren’t serviced by Flagstar will require the borrower to have a credit score of
at least 680; note that FHA DE Delegated loans are exempt and that there are no
ARM products available for these types of loans.  Clients should register
and lock non-Flagstar serviced loans using the correct product name ending in
“other servicer,” which allows the loan to be priced accurately.

Those based in New York should be aware that Fifth Third is working with
the state government on licensing requirements and should watch for
communications on any changes.  For the time being, Fifth Third will
continue to accept new applications, registrations, and locks for New York

Mortgage, who had announced that it will no longer lock, re-lock, or extend any
FHA Streamline Refinance transactions as of June 18th
, reminded
clients that all such loans should be delivered in fundable condition prior to
July 11, 2012 and purchased by AMC before July 18, 2012.  All FHA
Streamline Refinance transactions registered before June 15th are subject to a
-2.0 pricing adjustment.

As of July 2nd, Franklin American ceased to allow FHA streamline
refinances on 2-4 unit or investment property transactions.
American also revised its pricing adjustment for USDA loans with FICO scores
over 720 to +0.250.  For loans with FICO scores between 640-679, the
adjuster has been updated from -0.250 to -0.500.


Funding has updated its offerings to include a non-credit qualified FHA
Streamline Refi loan
that will allow current FHA borrowers to refinance
without an appraisal and less in the way of documentation.  In order to be
eligible for the non-credit qualifying loan, homeowners must have a
mortgage-only credit report from all three repositories with a minimum score of
660 and 12 months’ payment history, while the credit qualifying loan requires a
minimum score of 640 and six months’ payment history.  The maximum cap for
all FHA Streamline Refinances has been updated and is now 4.25%.

Harmony Corp
., home of the borrower initiated interest rate
reset feature trademarked as the “HarmonyLoan” has been busy recently. They
just launched a web based portfolio retention solution, called HarmonyLoan
Conversion Software, which portfolio lenders can use to immediately free up
sorely needed back office personnel.  In less time than it takes to
process, underwrite, and close 1 loan, they deliver a solution to retain
thousands of loans at the “click” of a button. For additional information, please
contact Kevin Ziolkowski at kziolkowski@mortgageharmony .com
or see Kevin at the California Mortgage Banking Conference in San Francisco,
July 9-12th, 2012.

US Bank has revised its submission requirements such that applications
should include the updated version of the broker’s specific office or company
form, the Title Company Fee Sheet, a signed and dated Fannie 1003 form, the
Borrower’s Authorization Form, a fully completed Mortgage Loan Origination
Agreement, and Anti-Steering Disclosure.  For HELOCs, the Title Company
Fee Sheet and Anti-Steering Disclosure aren’t necessary.

Fifth Third has clarified its Property Fieldwork Waiver policy for DU
Refi Plus loans.  If either Fifth Third or the correspondent seller has
obtained an appraisal on a subject property in the last six months, the
appraised value must be entered into the property value field in DU. If a PFW
is not returned, the appraisal should be underwritten as per the DU findings.

United Guaranty issued a reminder that borrowers should be designated as
“self-employed” when they own 25% or more of a business and the positive income
from the self-employment is being used to qualify them.  Borrowers must
fulfill both criteria to be considered self-employed, while borrowers who own
less than 25% of a business or who aren’t using the self-employment income for
qualification do not need to be indicated as being self-employed.  When
verifying borrowers’ self-employment, UG requires a verbal verification to be
obtained within 30 calendar days prior to the note date; for regular
employment, the verbal verification should be obtained within 10 business days
prior to the note date. 

GMAC reminds correspondent clients that all loans submitted for purchase
on and after March 7, 2011 will mandate a Closing Protection Letter.  The
letter should include the names and addresses of the borrower and closing agent
and all of the necessary signatures.  In addition, the Title Underwriter
issuing the letter must be the same as the Title Commitment Issuer.  Loans
that don’t include this letter will be suspended until it is received by GMAC.

launched its Initial Disclosure Portal, a system that lets brokers more
easily request Initial Disclosure documents and create a TIL program.  The
IDP is accessible via SNAP and will be available for loans that are in the
process of locking or registering with Stearns; loans pre-locked through Quick
Pricer will not produce this option.

Weststar has updated the FICO adjusters on all FHA, VA, and USDA loans
with credit scores in the 620-639 and 640-679 ranges.  For the former, the
previous -1 adjuster has been revised to -1.5, while for the latter the
previous -0.250 has been revised to -0.500. A reminder has been issued by
Weststar that electronic signatures may not be used for FHA initial
disclosures, final applications, final disclosures, and closing
documents.  They are, however, permitted on FHA third party documents and
Fannie, VA, and USDA forms.

Turning to the markets, Tuesday, with the early close in the fixed-income
markets, MBS prices finished down/worse by about .125 – better than the US
10-yr note which was down about .375 and closed at 1.62%. But that was then,
this is now. This morning’s ADP came in better than estimates by 75% – +176k.
And Jobless Claims dropped 14k to 374k, lower than forecast.

And the MBA reported what lock desks everywhere already knew: last
week’s applications dropped almost 7%
, with refi’s down over 8% and
purchases up almost 1%. It is the third straight week of declines. The
refinance share of total mortgage activity slipped to 78 percent of
applications from over 79 percent the week before. The government refi index
had declined by 21%.

At 10AM EST is the ISM Non-Manufacturing Index for June, called lower,
and at 11AM is the Treasury’s announcement of the details of next week’s
auctions of 3- and 10-year notes and 30-year bonds – estimated unchanged at $66
billion. But tomorrow is the big day for news with the 5:30AM PST employment
reports. But in the early going, MBS prices are better than Tuesday
afternoon by about .125 and the 10-yr yield is at 1.59%.

Very punny, part 1 of 2:
52 cards = 1 decacards
1 kilogram of falling figs = 1 FigNewton
1000 milliliters of wet socks = 1 literhosen
1 millionth of a fish = 1 microfiche
1 trillion pins = 1 terrapin
10 rations = 1 decoration
100 rations = 1 C-ration
2 monograms = 1 diagram
4 nickels = 2 paradigms
2.4 statute miles of intravenous surgical tubing at Yale University Hospital =
1 IV League
100 Senators = Not 1 decision

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Drop in Refinancing Curtails Application Volume

The Mortgage Composite Index, a measure of loan application
volume, was down 6.7 percent on a seasonally adjusted basis and 6.6 percent
unadjusted during the week ended June 29 compared to the week ended June
22.  The Mortgage Bankers Association
(MBA) released the Composite and other results of its weekly Mortgage
Applications Survey this morning.

The decrease in mortgage volume was attributed to a drop of
8 percent in the Refinance Index which was in turn driven by a drop in
applications for government-backed refinancing loans.  The share of refinancing applications was 78
percent of all applications, down one percentage point from the previous
week.  Applications for HARP refinancing
which is available only to current Freddie Mac and Fannie Mae borrowers have represented
a quarter of all refinancing applications for the last two weeks.

The seasonally adjusted Purchase Index was up one percent
from the previous week.  The unadjusted
Purchase Index rose only slightly from the previous week and was down 7 percent
from the same week in 2011.  

Purchase Index vs 30 Yr Fixed

Click Here to View the Purchase Applications Chart

Refinance Index vs 30 Yr Fixed

Click Here to View the Refinance Applications Chart

Both the contract interest rate and the effective rate for
all loan types decreased during the week and several rates hit new all time
.   The average contract rate for 30-year fixed
rate mortgages
(FRM) with conforming balances ($417,500 or less) decreased to
3.86 percent with 0.41 point from 3.88 percent with 0.40 percent, the lowest
rate for those loans since MBA began tracking them. 

Jumbo 30-year FRM (balances over $417,500) dropped four
basis points to 4.08 percent with points up to 0.38 from 0.35.  This was the second lowest jumbo loan rate in
MBA’s history.   

FHA-backed 30-year FRM also set a new benchmark low with an
average rate of 3.69 percent with 0.46 point compared to 3.71 percent with 0.46

Fifteen-year FRMs set a new low at 3.20 percent with 0.47
point.  The rate the previous week was
3.24 percent with 0.44 point.

The average 5/1 adjustable rate mortgage (ARM) rate fell to 2.76
percent with 0.45 point, down from 2.81 percent with 0.41 point.  Applications for ARMs represented only 4
percent of all mortgage applications.

All rate quotes are for loans with an 80 percent
loan-to-value ratio and points include the application fee.

The MBA’s weekly survey covers
over 75 percent of all U.S. retail residential mortgage applications, and has
been conducted weekly since 1990.  Respondents include mortgage bankers,
commercial banks and thrifts.  Base period and value for all indexes is
March 16, 1990=100.

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Mortgage Rates Fight To Hold All-Time Lows Ahead Of The Holiday

Mortgage Rates were roughly unchanged today, essentially fighting broader bond market weakness in order to remain in all-time low territory.  With an early close for markets today and the Independence Day holiday tomorrow, it wouldn’t have been abnormal for lenders to be a bit more conservative in terms of pricing.  Indeed some lenders were weaker today, but only slightly.  On average, things remained right where they were yesterday with 30yr Fixed Best-Execution firmly into 3.625% territory and some lenders in 3.5% territory.

(Read More:What is A Best-Execution Mortgage Rate?)

Because of the holiday, lenders won’t be generating rate sheets again until Thursday morning.  By the time they do, markets could be decidedly different owing to a significant amount of economic data and events occurring before the time of day that most lenders put out their first rate sheet.  Granted, Friday remains the biggest deal with the extremely important Employment Situation Report standing alone as the most important piece of economic data released each month, and the only report of the day.

 But we could see a sort of “lead off” in one direction or another if Thursday morning’s data suggests it.  If Friday’s jobs data were to corroborate that move, then things could easily be very different by the time we see Friday’s first rate sheets.  Given that we’re at all time lows today, it seems like a fairly big risk to take, but we’d also note that the default expectation for rates is “low and steady” until/unless they do something to break that trend.

Long Term Guidance: We’d continue to advocate against trying to “get ahead” of current market movements due to the high degree of uncertainty.  While it’s a reasonably safe assumption that European concerns will generally help rates stay lower than they otherwise would be, that “otherwise would be” part is very much a moving target.  Best bet is to focus on the fact that rates are at their all time lows, and can change quickly based on events that aren’t “scheduled” or able to be forecast.  Risk vs reward for floating vs locking looks a bit larger than we’d like, but not out of the question for those who understand the risks and have an exit strategy if things don’t go their way.

Loan Originator Perspectives

Ted Rood, Senior Mortgage Consultant, Wintrust Mortgage

Friday is the big data day with non farms payroll report. That being said, this market seems semi-immune to domestic economic data these days due to ongoing EU issues. Would take a remarkable jobs report to swing pricing substantially, less inclined to worry about it than most previous months.

Bob Van Gilder, Finance One Mortgage

Put some burgers on the BBQ and enjoy your family and friends for this 4th of July! Rates remain sizzling. How would you like yours? Lock it if it’s what you waited for…float if you have the stomach for it.

Victor Burek at Benchmark Mortgage

I feel rates are going to continue to move sideways to lower for the foreseeable future. I see no reason to lock any loan that isnt within 15 days of closing. Have a safe 4th of July.

Ira Selwin, Vice President of Secondary Marketing

Don’t let your rate blow up before the 4th of July. Lock your rate if the rate you need is available. Though it seems rates may be invincible, you don’t want to be on the wrong side of things if that’s not the case.

Matt Hodges, Loan Officer, Presidential Mortgage Group

Locking any purchases inside 45 days and refinances certainly if they are approved and appraisal is back. I don’t know that Friday’s NFP and unemployment numbers help us at all. They may hurt if they are in line or stronger than expected. Don’t get greedy. Lock it down!



  • 30YR FIXED –  3.625%
  • FHA/VA -3.5% – 3.75%
  • 15 YEAR FIXED –  3.00%
  • 5 YEAR ARMS –  2.625-3. 25% depending on the lender

Ongoing Lock/Float Considerations 

  • Rates and costs continue to operate near all time best levels
  • Current levels have experienced increasing resistance in improving much from here
  • Rates could easily move higher or lower, but given the nearness to all time lows, there’s generally more risk than reward regarding floating
  • But that will always be the case when rates operate near all-time levels, and as 2011 showed us, it doesn’t always mean they’re done improving.
  • (As always, please keep in mind that our talk of Best-Execution always pertains to a completely ideal scenario.  There can be all sorts of reasons that your quoted rate would not be the same as our average rates, and in those cases, assuming you’re following along on a day to day basis, simply use the Best-Ex levels we quote as a baseline to track potential movement in your quoted rate).

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SunTrust Jilted; California’s Law and Basel III will NOT Help Mortgage Pricing

Tomorrow, on your day off, here is 3 ½ minutes of a few very clever
creative bets that you can win.

Speaking of clever, a veteran male trader at Chase noted, “Michigan
deployed talking urinal cakes to fight Driving Under the Influence. If one of
them sounds like my Mother-In-Law I will start wearing Depends.” That’s
darned funny.

The Census Bureau tells us that thirty-one places have “liberty” in their
names. The most populous one is Liberty, Mo. (29,149). Iowa, with four, has
more of these places than any other state: Libertyville, New Liberty, North
Liberty and West Liberty. Thirty-five places have “eagle” in their names;
eleven places have “independence” in their names. The most populous one is
Independence, Mo., with a population of 116,830. Nine places have “freedom” in
their names, one place has “patriot” in its name (Patriot, Indiana), and five
places have “America” in their names. The most populous is American Fork, Utah,
with a population of 26,263. And you wonder what those folks at the Census do
all day…

Occasionally this commentary posts job searches. Today, SunTrust is looking
for a seasoned industry veteran after being left at the altar. Must be present
to win!
Seriously, the MBA announced that instead of assuming the presidency
of SunTrust Mortgage, Dave Stevens has agreed to stay on as President and
CEO.  “The past few weeks have been extremely difficult for me
personally and professionally. After serious thought and consideration, I simply
cannot leave the MBA at such a critical time for the industry and the
association.” Stevens said.  “Frankly, at the end of the day,
stepping away now when so much progress is being made and so much still left to
be done, did not feel right.”

A statement from SunTrust noted, “We have a strong leadership team in
place, and continue to execute our business plan and serve the needs of the
clients of SunTrust Mortgage.” American Banker observed, “SunTrust’s
mortgage operations are still struggling with credit quality issues and
repurchase requests, and the Atlanta bank has been trying to reshape the
. Last month, it appointed Peter E. Mahoney as executive vice
president of mortgage strategy and Jack Wixted as executive vice president and
chief risk officer.”

On the other side of the Atlantic, Barclays CEO Bob Diamond stepped
amid increasing pressures related to investigations of possible Libor
manipulation. “The external pressure placed on Barclays has reached a
level that risks damaging the franchise — I cannot let that happen,”
Diamond said. “I am deeply disappointed that the impression created by the
events announced last week about what Barclays and its people stand for could
not be further from the truth.” Marcus Agius, who resigned as chairman
Monday, will take Diamond’s spot until a permanent successor is found.

Well, out in “the land of fruits and nuts” they did it: California
would become the first state to write into law much of the national mortgage
negotiated this year with the nation’s top five banks, and
expand it to all lenders, under wide-ranging legislation state lawmakers
approved Monday. “Majority Democrats sent the homeowner protection package to
Gov. Jerry Brown despite opposition from business and lending organizations and
most Republican legislators.” Once again, we see an illustration of the public’s
perception, and that of the popular press’s, of an issue being different than
that of the lending industry’s. On the surface it sounds great. The legislation
would require large lenders to provide a single point of contact for homeowners
who want to discuss loan modifications. It would prohibit lenders from
foreclosing while the lenders consider homeowners’ request for alternatives to
foreclosure. And it would let California homeowners sue lenders to stop
foreclosures or seek monetary damages if the lender violates state law. “The
protections would benefit all California homeowners, not just those whose
mortgages are with the five banks that signed the national settlement in
February. And many of the restrictions would become permanent, while those in
the nationwide agreement will end after five years. It applies to all
owner-occupied residences, but not commercial or rental properties.”

The new
law could easily and directly impact the price of mortgages to California
borrowers as servicers say, “If these are the new rules, we don’t want the
servicing as much, and so let’s pay less for it.”
Is the
attorney general going to persecute investors who back their prices off due to
it? The law lets homeowners sue mortgage providers if they violate state law,
but only if there is a significant violation. (What is “significant”?) Homeowners
could ask judges to halt pending foreclosures but could collect monetary
damages only if the foreclosure took place. It requires lenders to provide a
single point of contact for borrowers who want to discuss foreclosures or
refinancing, with an exemption for lenders that process fewer than 175
foreclosures per year. It bans what are known as “dual-track foreclosures” by
barring lenders from filing notices of default, notices of sale, or conducting
trustees’ sales while they are also considering alternatives to foreclosures
like loan modifications or short sales. It increases penalties for banks that
sign off on foreclosures without properly reviewing the documentation, a
process known as robo-signing.

under the “things that may increase the price of residential mortgages to
borrowers,” banks that are concerned about potential fair lending claims if
they refuse to make residential mortgage loans that are not “qualified
mortgages” or “qualified residential mortgage loans” should be equally
concerned about the new proposed bank capital rules.
On June 7,
2012, the Federal Reserve approved for publication three sets of proposed
regulations to revise the risk based capital rules for banks to make them
consistent with the new international capital standard, generally known as
Basel III, and certain requirements of the Dodd-Frank Act. The Office of the
Comptroller of the Currency and the Federal Deposit Insurance Corporation
followed suit on June 12, 2012. Conventional residential mortgage loans with
loan-to-value ratios in excess of 80%, regardless of the presence of private
mortgage insurance, could trigger material adverse capital requirements if the
loans are held for investment and do not comply with certain regulatory
underwriting criteria. Such loans could present the legal risk of loss under
the “ability to repay” rules, the credit risk of loss under the “risk
retention” rules and now increased capital charges under the implementation of
Basel III:

Here are some somewhat recent investor/agency updates,
providing a flavor for the environment. They just don’t stop. As always, it is
best to read the actual bulletin.

With the Colorado fires, and the hurricane season, it is a good idea for
underwriters and secondary marketing staffs to re-familiarize themselves with agency
rules for lending in disaster areas
. Rather than go into all the ins &
outs, Fannie’s is
and Freddie’s is

As part of its One Touch initiative, Wells Fargo Funding’s has set
a goal of minimum 50% funding for all first time clients, meaning that no more
than 50% of such borrowers’ loans could be suspended.

Wells Fargo Wholesale has issued a correction to an earlier announcement about
changes to FHA Streamline Refinance mortgage insurance premiums stating that,
for base loan amounts exceeding $625,000, the annual MIP paid monthly would
increase to 0.25%.  The annual MIP paid monthly for such loans will
increase 0.25% (25 bps), not to 0.25%. FHA Non-Credit Qualify Streamline and
Purchase Close calendars for the third quarter of 2012 are available via the
Broker’s First® website.  The calendars provide the dates by which credit
packages, conditions, and documents must be submitted.

The Wells inspection requirement for private sewage disposal systems may not
apply to some properties in Iowa as per state requirements.  In cases
where a customer states that a transaction is exempt from the inspection, Iowa
Senate File 261
should be consulted.

Under new rules that will come into effect on June 18th, Wells will be using
different credit scores to assess risk.  For loans not submitted via
Direct Express, the credit report generated by Wells and ordered from Equifax
and/or Credco will be used, while loans submitted via Direct Express will
continue to use the information from the credit report generated by Direct

As per agency requirements, construction-to-permanent transactions will not be
permitted as Purchase transactions as of June 18th.  Wells will continue
to allow construction-to-permanent transactions as Rate/Term or Cash-out
refinances.  The LTV/CLTV/TLTV calculation for construction-to-permanent
transactions has also been revised such that the value will be calculated using
the current appraised value of the property and must comply with the product’s
Rate/Term or Cash-out refinance guidelines.  Super Conforming Mortgage
Program loans, as they require construction to be complete, are not affected.

The Wells non-branded Consumer Handbook on Adjustable Rate Mortgages disclosure
has been updated and should be used for all loans registered after June
25th.  The old CHARM/ARM disclosure should be discarded.

Citibank has updated its Ineligible Originator List, which is posted on
the Citi Correspondent website in the elfno section.  The list, which
shows brokers, correspondents, and other originators and parties that are not
permitted to be involved in the origination of any loan submitted to Citi for
purchase, is revised regularly, as is the Appraiser Monitor/Ineligible List
(also in the elfno section of the site).

Loans on condos in Georgia that are registered after June 23rd will be subject
to Citi’s upcoming LTV/CLTV/HCLTV restrictions.  For borrowers with FICO
scores over 740, all of these values will be capped at 70%, while for those
with FICO scores less than 740, they will be capped at 60%.

Due to Freddie’s decision to retire the program in August, Citi will no longer
accept Freddie Mac Alt 97 Mortgage registrations on or after June 23rd.

All this continues to make the markets, and interest rates, be an afterthought –
there just isn’t much going on. Good news of stability, or hoped-for
stability, could nudge rates higher, while evidence that our economy is slow
tends to nudge rates lower.
Yesterday we learned that, for the first time
since July 2009, US manufacturing has decreased.  However, the economy has
grown for the 37th consecutive month according to the nations’ supply
executives in the latest Manufacturing ISM Report on Business. And Construction
Spending beat expectations, rising to its highest level in almost 2.5 years in
May as investment in residential and federal government projects surged.

By the end of the day, the third quarter started off with new record high
closing prices set on 30-year FNMA 3.5% through 4.5% coupons as 10-year notes
rallied nearly 3/4s of a point to 101-17+ (1.58%) per Thomson Reuters. “The
supply/demand dynamics were very strong today with the sell/buy ratio reported
at 1:3. Indeed, mortgage banker selling was light at around $1.5 billion, while
the weak data contributed to active buying from real money despite the price
levels with the Fed, of course, a steady player.” Agency MBS prices were marked
higher (better) by over 1/4 point on 30-year FNMA 4.0s to nearly 1/2 point on
3.0% coupons. But will the price improvements make it onto rate sheets?

Today we’ll have May’s Factory Orders (expected higher) and an early
close for the bond market – look for liquidity to dry up. Many companies are
closing early – do LO’s really expect to lock loans in, and lock desks to be
open, at 5PM on the day before a holiday? In the early going our 10-yr is at
1.60% and MBS prices are down.

Very punny, part 1 of 2:
52 cards = 1 decacards
1 kilogram of falling figs = 1 FigNewton
1000 milliliters of wet socks = 1 literhosen
1 millionth of a fish = 1 microfiche
1 trillion pins = 1 terrapin
10 rations = 1 decoration
100 rations = 1 C-ration
2 monograms = 1 diagram
4 nickels = 2 paradigms
2.4 statute miles of intravenous surgical tubing at Yale University Hospital =
1 IV League
100 Senators = Not 1 decision


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First Round of Pilot Rental Initiative Completed with 2,500 Homes Sold

The first round of winners has been
selected to purchase foreclosed real estate from Freddie Mac and Fannie
Mae.  The Federal Housing Finance Agency
(FHFA) announced today that 2,500 single family homes had been awarded to successful
bidders under a pilot initiative to convert real estate acquired by the two
government sponsored enterprises (GSE) through foreclosure into rental property. 

Successful candidates for purchasing properties
from the GSE’s real estate portfolio (REO) had undergone several steps in a
qualification process before being permitted to bid on the houses which they had
to agree to hold and rent for a period of time before reselling. 

The properties were offered in sale
pools which were geographically concentrated in various locations across the
United States.  The GSEs, FHFA and other federal
agencies involved, Departments of Treasury, Housing and Urban Development,
Federal Deposit Insurance Corporation and the Federal Reserve, had several
for the program.  They hoped to
relieve the GSEs of the costs and administrative burdens of managing thousands
of foreclosed properties, alleviate the blight imposed on communities by large
number of vacant and possibly deteriorating properties, increase the rental
stock, while at the same time not flooding the market with distressed

 FHFA described the response to the pilot
initiative as “robust with strong qualified bidder interest.”  Some 4,000 responses were received to the
initial “Request for Information” issued by the program sponsors last February,
however beyond announcing that the awards had been made FHFA released no
information on the names or even the numbers of successful bidders.

undertook this initiative to help stabilize communities and home values in
areas hard-hit by the foreclosure crisis,” said Edward J. DeMarco, Acting
Director of FHFA. “As conservator of Fannie Mae and Freddie Mac, we believe
this pilot program will assist us in achieving our objectives and help to
maximize the benefit to taxpayers. We are pleased with the response from the
market and look forward to closing transactions in the near future.”

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