ABA Strikes Mortgage Correspondent Deal with Wells

July 14, 2010

The American Bankers Association has opened the door for more of its members to sell residential mortgages to Wells Fargo Funding under a special pricing arrangement. "Under the terms of the agreement, Wells Fargo Funding will offer eligible ABA member banks a full-range of products at advantaged pricing levels," according to ABA Business Solutions, a division of the trade group. Wells Fargo Home Loans has been a "preferred" secondary market investor for ABA's mortgage cooperative, Community Bank Mortgage LLC since 2007, but only 55 ABA member banks are co-owners of the cooperative. Nearly 1,000 banks have signed up for the free services offered. (ABA Business Solutions and 700 banks are active members.) "Now all eligible ABA member banks can take advantage of the strong Wells Fargo offerings," said ABA Business Solutions president William Kroll. Business Solutions also has alliances with Fannie Mae, Freddie Mac, Farmer Mac, Bank of America, Mortgagebot, Genworth Financial and MetLife.

Study: Renters Still Want to Buy

July 13, 2010

A substantial percentage of consumers who are becoming new renters are actually still in the market to purchase a home, according to a survey conducted by Relocation.com. Sharon Asher, Relocation.com chairman, said the survey findings suggest that more Americans are getting ready to reenter the housing market this year. Of the 60% of individuals moving into rental properties, 24% are previous homeowners who are renting temporarily while looking for a new, more desirable home to buy. Foreclosure was not the reason these former homeowners elected to rent. The survey found that the number of people who moved due to foreclosure dropped by 70%. In addition, one-third of those moving stayed in the area they were familiar with, where they knew schools, shopping and prime neighborhoods.

Somewhat Positive News on Home Prices

July 13, 2010

U.S. home prices rose 0.9% in May after a 1.3% monthly increase in April, according to the CoreLogic housing price index. The CoreLogic HPI, which is not seasonally adjusted and includes distressed sales, is up 2.9% since May 2009. Excluding distressed sales, the year-over-year price increase for May was 0.9%. "Home price appreciation stabilized as homebuyer tax credit driven sales peaked in late spring," said Mark Fleming, chief economist for CoreLogic. "But given that the labor market and income growth remain tepid, we expect prices to moderate and possibly decline the rest of the year," he said. The top five states with the highest price appreciation in May, including distressed sales, were: California (7.9%), Virginia (6.8%), Massachusetts (5.7%), Rhode Island (5.5%) and Vermont (5.1%). The top five states with the greatest price depreciation in May, including distressed sales, were: Idaho (-6.6%), Alabama (-5.3%), New Mexico (-4.2%), Maryland (-3.1%) and Wyoming (-3.1%).

Post-Bubble, Alternatives to Credit Scores in Greater Demand

July 13, 2010

Banks and mortgage funders are looking for more data to help them make lending decisions, beyond the simple matter of whether prospective borrowers pay their bills on time. The focus on "alternative" data to credit scores in underwriting is not new but has intensified after the lessons banks learned from the credit bubble." In the marketplace right now everyone is talking about rethinking underwriting," said Peter Carroll, a partner in the retail and business banking practice of the management consulting firm Oliver Wyman. "Everyone realizes that credit scores, as clever as they are, have in some respects left out of the credit-assessment equation certain aspects of the borrower," Carroll said. Though more data about people is available today than ever before, sifting through it is arduous. "Basically people are saying we can either go back to human underwriting, which is cost-prohibitive and not that good anyway, or we can find data sources that potentially shed light on these other dimensions of the borrower," Carroll said.

MI Startup Secures $100MM in Additional Capital

July 13, 2010

Essent Guaranty, which wrote its first mortgage insurance policy in the second quarter, said it has lined up $100 million of fresh capital, bringing its total equity commitments to $600 million. The Radnor, Pa-based MI declined to identify its new investors, though a spokeswoman for the company said some of its initial investors -- a group that includes Pine Brook Road Partners, Goldman Sachs, J.P. Morgan, PartnerRe, and RenaissanceRe Ventures Ltd. -- supplied commitments for the second capital raise. "At least one new investor is involved," said the spokeswoman. Essent is licensed in all 50 states and has approvals for coverage from Fannie Mae and Freddie Mac, which control 70% of the origination market. Although Essent is finally writing policies after a two-year startup period, it declined to provide any details on how many policies it has written or its policies-in-force. The MI business has suffered tremendously during the housing downturn with not only the PIF number declining but with at least one firm going out of business, Triad Guaranty of Winston-Salem, N.C. With Essent's entry into the MI space there are now seven firms actively writing policies. At least one other new MI firm is in the process of forming.

Senate Extremely Close on Final Passage of Reg Reform

July 13, 2010

Picture of Barney Frank Senate Democratic leaders have rounded up three Republican votes and are close to securing passage of the Dodd-Frank Wall Street Reform bill. The three Republicans are Sen. Scott Brown of Massachusetts and the two Maine Senators, Olympia Snowe and Susan Collins. The Democrats need 60 votes to break a filibuster and clear the way for the Senate to vote on final passage. The House passed the landmark financial regulatory reform bill before the July 4 recess. "We are steadily marching toward the 60 votes," Sen. Jack Reed, D-R.I. told reporters on Tuesday. One Democratic holdout, Sen. Ben Nelson, D-Neb., also said he will vote for the bill. "I will support the Wall Street Reform bill to end bailouts, add common sense consumer protection and make sure Nebraska Main Street businesses are not adversely affected as we rein in recklessness on Wall Street," Nelson said. There are some reports that the Senate will vote on the bill this Thursday. The bill, named after its principal sponsors Sen. Christopher Dodd, D-Conn., and Rep. Barney Frank, D-Mass., creates a new regulatory and enforcement regime over the mortgage industry that will impact everything from the origination to the securitization of residential mortgages, including the compensation of loan officers and mortgage brokers.

Change in FHA Rules Creates Demand for Brokers

July 13, 2010

Picture of David Stevens The Federal Housing Administration's efforts to shift the burden of supervising mortgage brokers to actual funders is creating a mini-boom in demand for brokers to bring in homebuyers and refinancing customers. Some observers had warned that the plan would drive brokers from the lending process. Instead, many lenders have already come up with guidelines to recruit and oversee them and are actively looking to hire. Wells Fargo & Co., for example, is encouraging brokers to sign up with the lender to originate FHA loans. The agency's new policy is "excellent news for any brokers who would like to submit FHA business but have never received FHA approval," since now they only need a government-approved lender to sponsor them, Wells Fargo said in a memo to wholesale clients last week. Similarly, at 360 Mortgage Group LLC, "we've been flooded with applications [from brokers] since the start of the year and we haven't seen a slowdown yet," said Andrew Weiss Malik, the Austin lender's chief operating officer and vice president. The Department of Housing and Urban Development "is doing it right by putting the liability on those that have the money" — the lenders. Lenders' broker recruitment would bolster FHA Commissioner David Stevens' argument that eliminating the agency's so-called "mini-Eagle" designation for brokers would open FHA's door to more of them. "I believe that is the reaction HUD intended when [it] decided to transfer oversight of these third-party originators from HUD to the approved lenders that are accepting loans from them," said Lisa Klika, a vice president of compliance and quality assurance at Guild Mortgage Co. in San Diego. At a conference in San Francisco last week, Stevens reiterated his rationale for the transfer of oversight: HUD, which runs FHA, simply lacks the resources to police brokers.

ProLender Links to FHA

July 12, 2010

Origination vendor ProLender Solutions Inc. has released an FHA Connection interface. The interface allows ProLender users to send information from the ProLender software directly into FHA Connection eliminating the need for users to log into FHA Connection and manually complete the screens. The ProLender team, working together in partnership with their clients, created the new FHA Connection screen within the ProLender application to include the ability to validate the subject property address, obtain a CAIVRS authorization, request a case number assignment and submit the appraisal logging. With a few clicks of the mouse, the user can send the required information over to FHA Connection and receive a response back.

WKFS Expands Ethnicity Proxy

July 12, 2010

Wolters Kluwer Financial Services has updated its Fair Lending Wiz software to include an ethnicity proxy functionality. The enhancement allows financial institutions to make a determination of whether or not a loan applicant is Hispanic when this race information is not available in the loan file. The new feature further extends the Fair Lending Wiz solution's current ability to provide gender and minority proxies. These proxies help improve the quality of Home Mortgage Disclosure Act loan data to detect potential problems that may contribute to discriminatory loans.

Vendor Reaches E-Signing Record

July 12, 2010

SureDocs, a la mode's e-signature system, has applied its 3.5 millionth e-signature. SureDocs has been used by thousands of mortgage professionals to apply secure e-signatures on mortgage disclosure docs, substantially speeding the process since originators can have signatures in minutes rather than days. SureDocs has also saved mortgage originators from escalating shipping fees and the wasted time involved in manually mailing packages. With increasing regulatory scrutiny on mortgage professionals, SureDocs' audit trail has become as important as the time and cost savings associated with e-signatures. SureDocs' audit trail helps mortgage originators document HERA compliance, prevent GLBA violations and provide safeguards against mortgage fraud.