Clearing Up Some G-fee and HARP 2.0 Confusion; More Conferences and Companies Expanding

Welcome to
Fat Tuesday, or Mardi Gras, a rowdy day of hedonism where shipping departments
across the nation have great parties and throw bead necklaces at underwriters.
Lent begins tomorrow and ends Thursday, April 5 (two weeks prior to the MBA’s
National Advocacy Conference is April 18-19 in Washington DC) – perhaps lawmakers
will give up creating laws about mortgage banking for Lent.

One thing not being given up for Lent is hiring. 1st Advantage Mortgage is looking to grow its origination channel
by adding seasoned retail loan originators and origination branches. 
Licensed in 22 states, 1st Advantage Mortgage, a Draper and Kramer Company
headquartered in Lombard, IL, has a strong presence in the Midwest and is
targeting originators and branches in Texas, Iowa and Minnesota in addition to
adding to the production units in Illinois, Wisconsin and Arizona.  1st
Advantage Mortgage has averaged $1.96 Billion in volume over the last 3 years
and underwrites with no overlays as they sell direct to Fannie Mae, Freddie Mac
and Ginnie Mae.  Transition guarantees are available to qualified
producers.  Visit for
more information and contact JT Current at to discuss this

champagne corks should have been popping at the news last week when the
permanent payroll tax cut extension was put into place without guarantee fee
increases. There was some confusion
about guarantee fees.
(“After months of wrangling, the House and Senate
passed a permanent payroll tax cut extension Friday without imposing
controversial guarantee fees for lenders with government-backed mortgages.”) The
two months of temporary extension was paid for, and will be paid for, by the
g-fee increases already put in place. These
fees will remain in place for several years in order for the government to pay for
the two months
. Not only that, but, depending upon the FHFA, it may be more
than 10 basis points if g-fee income in the first part of 2012 falls below
expectations. And as rates sheets everywhere will tell you, a change in g-fees
is the same as a change in rate – thus impacted by the market buy-up or
buy-down ratios. And lastly, they’re
still trying to figure out what to do with FHA’s g-fee
. Hey, don’t shoot
the messenger!

Folks are
talking about HARP 2.0, but I, for one, am not convinced anyone knows quite
what to say – but HARP 2.0 rolls on.
Matt Lind with STRATMOR writes, “Based on three HARP 2 workshops STRATMOR
has recently conducted with lenders, it appears that large aggregators have not yet decided whether or not to purchase HARP
2 loans originated by their correspondents
, including loans that they (the
aggregators) are currently servicing.  Despite a tremendous surge of HARP
2 inquiries from existing borrowers, the attitude of some aggregators seems to
be that their existing borrowers — especially those with high LTV loans —
will have no other place to go and so “we’ll get to them when we get to them.”
If this attitude persists, then non-servicing correspondents — especially
those lenders without Agency approvals — will be faced with few outlets into
which to deliver HARP 2 loans; in effect, making HARP 2 a “big servicer”
refinance program. With purchase originations remaining anemic, this could make
2012-2013 unnecessarily tough years for mid-size and smaller lenders, who
otherwise could use readily available data base marketing services to receive
timely and cost-effective HARP 2-eligble leads if they had outlets for HARP 2
loans. We think, however, that the large lenders will likely succumb to
external pressures to open up HARP 2 originations to their wholesale channels.
Making their existing, good payment-history borrowers wait months before
starting an in-house refinance will delay such borrowers the substantial
payment reductions of a HARP 2 refinance and both draw and deserve public

And don’t
forget that most non-depository mortgage banks use warehouse lines. So far I
have not heard of any warehouse lenders
anxious to extend monies on 125% LTV (and higher) loans.

On the
other hand, I saw this from a research firm on Wall Street. “It’s looking
likely that small loan originators will benefit from modifications, even as
refinance share of activity is beating market expectations.  HARP 2.0
refinancing activity appears to be exceeding earlier projections, with analysts
predicting that the surge will continue throughout 2012, and smaller
originators will be ideally positioned to pick up market share. The latest
figures from DC think tanks suggest that up to 6 million loans could become
eligible for refinance activity and that 3.5 to 4 million loans will enter HARP
2.0.  If those numbers hold true, 900,000 to 1.6 million loans could trade
up for rock-bottom interest rates. Big banks stand to benefit as well, as HARP
could expand by $140 to $200 billion, with $1.1 to $1.2 trillion in
out-performances from Chase, Wells, PNC
Financial Services, and U.S. Bancorp

Coester VMS and Weiner Brodsky Sidman
Kider PC will be hosting a webinar on the new HARP 2.0 mortgage program
offered by the current administration.
“Learn what it means to you, your borrowers and your company as well as best
practices, limiting risks and valuation practices. In this webinar we will
outline FHFA’s and the GSEs’ announced expansion of HARP resulting in HARP 2.0,
which loans are covered by HARP 2.0, further GSE guidance issued since the
October 24, 2011 HARP 2.0 announcement and HARP 2.0 requirements, and what
future enhancements to these programs might mean for borrowers and mortgage
lenders.” The webinar is tomorrow from 2-3PM EST; register here.

Last week
I noted some upcoming conferences. If you’re near Vermont on April 18 & 19,
you should know that the Mortgage Bankers/Brokers
Association of NH and the VT Mortgage Bankers Association
are hosting a “Joint
Mortgage Compliance Conference” at the Lake Morey Resort in Fairlee. “Cultivating
Success Amid Growing Regulation” – more information can be found here.
And the following month in Maryland, the MMBA’s
Annual Conference
takes place May 10th. Speakers include Dave
Stevens, the MBA President & CEO.

Most would
agree that “data is power.” A few weeks ago I spoke at FNC’s customer event. FNC, for more than a decade, has been
tracking the data from millions of appraisals nationwide.
“As the
technology platform for valuation ordering and delivery, FNC blended that data
with public record information to give the real estate industry the most
up-to-date, most comprehensive property data available. Compiled into FNC’s
National Collateral Database, the data supports powerful analytic products that
loan originators and servicers can use to gain a competitive edge through more
accurate valuation decisions.” And now FNC has rolled out its “FNC Residential
Price Index” which will come out on the 15th of every month – check
it out at

some good news, and a sign of the times. Digital
, “the nation’s leading and largest risk management and compliance
solutions provider,” has plans to add more than 1,000 full-time US-based,
professional, positions in 2012. “Positions will include experienced
underwriters, attorneys, processors, compliance experts and appraisers…As the
company reaches maximum capacity at both its Orlando and Jacksonville
facilities, it will either expand existing operations in Texas, Colorado or
California, or open new facilities in Florida as soon as March.” Sometimes I comment that at some point
compliance and legal personnel will outnumber originators
– I guess that it
is a sign of the times.

out attention to the markets, at the end of last week we learned that the Conference
Board’s Leading Economic Index increased 0.4% in January, following increases
in December and November. Few can deny that there are sporadic signs that parts
of our economy are improving slightly. But overseas news took center stage
again: Eurozone finance ministers sealed
a deal for a second bailout for Greece
, including €130 billion ($173
billion) in new financing. Put another way, the finance ministers from the 17
nations that use the euro, known as the Eurogroup, gave Greece the funding it
needs to avoid a potential default next month. But the problems will be with us
for years: the Greek government needs to trim debt to 121% of the country’s
gross domestic product by 2020. Greece’s debt now stands at about 160% of GDP,
and it doesn’t help that Greece is in its fifth year of recession and that its GDP
fell 6.8% last year.

Every two or three weeks, here in the U.S. we can take a breather from the
usual onslaught of economic news – this is one of those weeks. Monday was a
holiday, today is nothing aside from a $35 billion 2-yr auction, tomorrow is
Existing Home Sales, Thursday is Jobless Claims and yet another housing price
index (this one brought to us by the FHFA), and then on Friday the 24th is New
Home Sales and another consumer sentiment survey from the University of
Michigan. In the early going our 10-yr
is up to 2.04% and MBS prices are worse about .125-.250.

In honor of President’s Day, yesterday’s commentary had some presidential
salary trivia. I was all set to have a joke today, but Mr. Hurst with FNC sent
me some astounding trivia that was too good to pass up. From Yahoo: “This
story sounds too impossible to be true, but it is. John Tyler was born in 1790,
and he was the 10th president of the United States in 1841. Believe it or not,
he has two living grandchildren. For perspective consider this: When Tyler was
born, George Washington was giving his State of the Union address. When Tyler
became president, the civil war was still 20 years away! But how is this
possible? Here’s some math for you: Tyler had 15 children, and in 1853 he was
63 when his son Lyon Gardiner Tyler was born. Lyon had six children, with two
of them, Harrison Ruffin Tyler and Lyon Gardiner Tyler Jr., born when he was in
his 70s in 1924 and 1928 respectively. Both men, now in their 80s, still live
in Virginia.”  

If you’re
interested, visit my twice-a-month blog at the STRATMOR Group web site located
at The current blog discusses
residential lending and mortgage programs around the world, part 2. If you have
both the time and inclination, make a comment on what I have written, or
on other comments so that folks can learn what’s going on out there from the
other readers.

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