Fannie and Freddie Future Plans; NMLS Licensee Stats on the Rise

Under the
title, “Too much time on one’s hands”, anyone involved in the
residential construction/remodeling business might find this, uh, interesting.

Hiring in
the “mortgage space” continues. Altisource’s
Origination Services Division is currently hiring DE Underwriters in Missouri,
Texas and Ohio to support its growing Correspondent and Quality Control
businesses.  Altisource is a “global provider of services focused on
high value, knowledge-based functions principally related to real estate and
mortgage portfolio management, asset evaluation and customer relationship
management.” Any interested parties should forward their résumé to amy.boblet@altisource.com.

I have been retained by an Orange
County, California-based lender that is looking for a highly skilled
director/manager that can develop and lead a national wholesale operations team
to be “Best in Class” with strong customer centric focus. The lender, which has
been in the news lately for its growth, has a very strong balance sheet
including servicing portfolio, is a direct GNMA seller/issuer and has no legacy
loan liabilities. The candidate should either live in Southern California, or
be prepared to relocate. If you know someone who is interested, they should
send their resume to me at rchrisman@robchrisman.com.

My Dad is fond of saying, “Hard work may pay off in the future. Laziness
will pay off now.” But many LO’s who have built their livelihoods around
FHA production are dreading what is coming up. Last week, President Obama
released his budget for fiscal year 2013. As part of the overall budget, and as
the commentary reminded folks of yesterday, HUD stated that it will be implementing a 10 basis point increase to
annual premiums for single family loans, and a further 25bp increase for loans
over $625,500
. So even though the FHFA has already implemented this for
Freddie & Fannie, it is only a matter of time until the change hits
government production.

Based on
comments made by HUD Secretary Shaun Donovan and the current state of the FHA
fund, some believe that there is a fairly
high likelihood that the FHA premium increase will be more than the 10 basis
points
mandated by the payroll bill from a few months ago – perhaps as high as
25 basis points
. If FHA premiums increase by that much, prepayments will
drop, as will new production, which investors like, but one would expect that LO’s
and borrowers will try to “front run” any increase in FHA premiums and push
through production. Finally, it is worth highlighting that HUD and FHA will
constantly be monitoring the performance of the insurance fund and if losses
continue to exceed their base case expectations, we are likely to see further
increases in FHA premiums, and potentially an increase in FHA putbacks.

Speaking of the agencies, occasionally I will ask the question, “Why have
both Fannie Mae and Freddie Mac?” especially as they are on parallel
paths. I’ll even occasionally call the agencies “Frannie.” Yesterday
they were back in the news when the FHFA said that, with its conservatorship of
F&F now in operation for more than three years “and no near-term
resolution in sight,” it was time to assess its goals and
directions.  Few think anything will happen ahead of the November
election, but Acting FHFA Director Edward
J. DeMarco set out a
Strategic Plan for Fannie Mae and Freddie Mac
Conservatorships
with three goals: build a new infrastructure for the
secondary mortgage market, gradually contract the Enterprises’ dominant
presence in the marketplace while simplifying and shrinking their operations,
and maintain foreclosure prevention activities and credit availability for new
and refinanced mortgages.

It is important for us average folks to remember that the agencies are
currently carrying out two basic roles: a guarantee role and a portfolio role.
And the suggested plan from DeMarco, basically, peels off one of those roles. The
MBS prices for each agency jumped a little on the news, but if you think about
it, this is all a much longer term process and any Gold (Freddie) and Fannie
MBS price movement will really be determined by simply supply/demand – just
like always. If the two are combined into one Enterprise (Frannie), this equals
potential selling of the portfolios, which in the very long run is a net
negative for MBS’s. There are still slight underwriting differences on the
production side, and slight differences on the back side the way pools are
guaranteed and handled, so combining the two will take some work if it happens
at all. You can read the actual statement here .

There are numerous ways, too many to list, to make money from real estate and
mortgage origination. But one way is to invest in the finished product – and folks
sense that some MBS’s are “cheap.

People
need a place to live, right? And second, if you own a lot of places, why sell
them one at a time when you could sell hundreds at a time? Freddie Mac has
begun talks with institutional mortgage-bond investors interested in buying
hundreds of distressed single-family residential properties
across the US in
order to convert them to rental units.

American Home Mortgage Servicing knows people need a place to live,
and the nation’s #13 servicer is changing its name to Homeward Residential. The name change reflects the firm’s expansion
into home lending and other real estate finance-related activities. In the past
12 months American Home/Homeward Residential has added loan closing services,
REO management, special servicing, subservicing, risk management, a correspondent
and warehouse lending division, and so on.

At the
other end of the spectrum, commercial real-estate firm Grubb & Ellis Co. filed for Chapter 11 bankruptcy protection,
requesting an expedited sale as it faces $30 million in debt that matures on
March 1 and insufficient cash to make it through the first quarter. BGC
Partners Inc. has agreed to acquire Grubb & Ellis with a $30 million credit
bid, or the use of debt as currency, plus $4.8 million in bankruptcy financing.
(BGC Partners just purchased Newmark Knight Frank late last year, another large
commercial real-estate firm.) Based in Southern California, Grubb & Ellis
blamed the loss of a major facilities account, a merger gone wrong and
continued operating losses resulting from the economic crisis and slow recovery
for its financial woes.

The publication “Mortgage Currentcy” sent out some recent statistics from the NMLS,
specifically a comparison of licensee stats during the last six months of
2011.  In June 2011 there were 16,153 companies holding 30,945 licenses,
and at the end of 2011 there were 17,155 companies holding 33,106 licenses. The
number of branches also increased from June to December, going from 17,387 to
18,902, although the number of licenses those branches held dropped from about
267k to 226k. But, per NMLS and Mortgage Currentcy (edited by Karen Deis), the
individual licenses shot up from 201k to 376k. And their research showed that
the top 3 lending institutions hold 43% of all licenses, and there are nearly
3,000 MLOs licensed in 11-21 states…

…(read more)

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