eClosing, Compliance, IRRRL Products; Plethora of Disaster Policy News; Rates Hardly Budging
Before the pandemic I used to spin that toilet paper roll like I was on Wheel of Fortune. In March and April I turned it like I was cracking a safe. Now things are back to normal, and the toilet paper area at Costco isn’t the Mecca it became six months ago. Economies have a way of correcting back to normal supply and demand functions. Whale oil was largely replaced by the cost and abundance of petroleum in the 1860s (although it was used in cars in the U.S. as a constituent of automatic transmission fluid until it was banned by 1973). I mention this because softwood lumber prices increased nearly 15% in August, driving the price paid for goods used in residential construction up 0.9% during the month. Housing has been a bright spot for the overall economy in recent months, with U.S. new-home sales jumping to a 14-year high earlier this summer, but there are some unintended consequences. Lumber futures have climbed 57 percent this year, and even after falling from a record high last month, prices are still on pace for the largest gain since 1993 due to pent up demand. The industry has been hit by two disasters this year: first, the idling in mill production from the coronavirus lockdown, and now wildfires eating up the West. And let’s not forget demand from restaurants building outdoor seating. Let’s hope it doesn’t impact toilet paper supplies and prices: we don’t need that again. Will home builders move away from wood?
Lender and Broker Services and Products
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Are you ready for VA IRRRL and FHA Streamline refinance opportunities in this market? Learn how to efficiently submit your files once for a final approval! Join Freedom Mortgage Wholesale for live webinar training sessions on VA IRRRL or FHA Streamline mortgage products and origination processes. Ideal for new or experienced government originators. Sign up for a VA IRRRL or FHA Streamline webinar on 9/21 (FHA SL), 9/23 (VA IRRRL) or 9/24 (VA IRRRL).
Did you know the FFIEC has outlined that lenders MUST have a social media risk management program? Surprise! Under this guidance, lenders are required to monitor, and control social media related to their brand as if it were traditional advertising. This also means social media must be archived to meet state advertising record retention laws. Failure to meet these requirements may result in regulatory audits, penalties, and even citations. ActiveComply helps lenders meet both responsibilities through our compliance system technology: find all company and LO accounts related to your brand, examine profiles for NMLS IDs & Equal Housing logos or verbiage, and ensure posts are compliant (image scanning included). Too busy with the industry boom to tackle social media monitoring on your own? ActiveComply now offers a Managed Services option to partner with individual lenders to better understand their risk level tolerance and company policy. Contact Melissa at ActiveComply today!
Something BIG is happening at QLMS. Social media has been buzzing about it for the last week and, personally, I can’t wait to see what it is. Austin Niemiec, the lender’s EVP, will be making a major QLMS announcement on September 22, at 1 p.m. Eastern Time. The news is sure to affect every one of the 40,000 LOs that currently partner with QLMS. Even if you’re not already working with the lender, Quicken Loans does everything big, so every broker should take some time out of their busy day to tune in and see how QLMS will raise the bar. Click here to set a reminder so you don’t miss the announcement.
Last month SimpleNexus launched an eClosing feature that makes it quick and easy to conduct eClosings for purchase and refi loans. Mortgage 1 was an early adopter. CEO Mark Workens says SimpleNexus eClosing has already made Mortgage 1 more competitive with the “unbeatable safety and convenience” of digital loan closings in the same branded app customers use to search for a home, fill out a loan application, upload documents and sign disclosures. With 38 states already allowing full eClosing (and hybrid closings allowed in all 50), there’s no going back to pre-pandemic closing practices. Request a demo to learn more about SimpleNexus eClosing today.
Investors and Lenders React to Disaster Declarations
We are dealing with disasters coast to coast, and FEMA’s declarations trigger lender’s and vendor’s policies.
Built is launching a tool that allows lenders to track construction projects in counties where an open FEMA disaster declaration is in effect or was reported in the last three years. Currently, 2% of loans in Built’s system totaling nearly $300 million in construction projects have been impacted.
Wells Fargo Funding (correspondent) let its clients know that, “In response to the California wildfires, effective immediately, Sellers must follow our disaster policies for all properties located in ZIP codes that Wells Fargo Funding has determined were impacted. Wells Fargo Funding’s identified list of impacted ZIP codes below is a reduced subset of the Federal Emergency Management Agency’s (FEMA’s) declared counties. Disaster policies are effective with the FEMA declaration date or applicable amendment date.”
Regarding Sally, WF said, “At this time, continue to refer to our disaster policies in the Wells Fargo Funding Seller Guide (Seller Guide) and to disaster declarations listed on the FEMA website. Additionally, in the coming days, watch for communications from Wells Fargo Funding and from FEMA with specific details for properties impacted by the storm.”
Effective September 16, Flagstar Bank is suspending funding for properties in counties/parishes affected by Hurricane Sally. Once closing and funding has resumed, Flagstar will provide the re-inspection requirements, as applicable. Read Memo 20092 for detailed information. The Bank addressed the wildfires in Washington and California which have prompted the suspension of property fundings for some counties. Flagstar Bank issued Memo 20091 regarding Washington and Memo 20079 regarding California.
Due to the recent declared disaster in California caused by wildfires on August 14, 2020. Flagstar Bank will now require satisfactory re-inspections in based on effective date. Refer to Natural Disaster Procedures, Doc. #4915, for re-inspection requirements.
Mortgage Solutions Financial Correspondent and wholesale posted Announcement 19-20C regarding the Oregon Wildfires and Straight-line Winds, Announcement 14-20C regarding the California Wildfire, Announcement 16-20Cregarding Louisiana Hurricane Laura, and a revision, Announcement 13-20C regarding the Iowa Severe Storms Disaster Alert.
Caliber Home Loans reminded Sellers to review its Seller Guide for disaster inspection requirements. FEMA declared disasters include: For the incident period beginning September 7th and continuing, the Oregon counties of Clackamas, Douglas, Jackson, Klamath, Lane, Lincoln, Linn, and Marion have been declared major disaster areas. Caliber is requiring a standard disaster inspection for several counties in Louisiana to confirm that no damage has occurred to the subject property. Correspondents may utilize inspection options to satisfy the post standard disaster inspection requirement. Consult the Sellers Guide for additional details.
FEMA disaster declarations have been expanded for Iowa and Louisiana. is encouraging Sellers to make contact for disaster inspection requirements.
AmeriHome addressed the fires in Oregon. “Sellers are reminded that they are responsible for determining potential impact to a property located in an area where a disaster is occurring or has occurred. Irrespective of whether a property was included in the area covered by the declaration. If a Seller has reason to believe that a property might have been damaged in a disaster the Seller must take appropriate action to ensure that the property is free from damage and meets AmeriHome requirements at the time of purchase by AmeriHome. Employment Re-Verification Employment re-verification requirements for declared disaster areas are not necessary at this time.”
Louisiana flooding: Review AmeriHome Mortgage’s Announcement 20200809-CL inspection requirements.
On September 2nd, AmeriHome is clarified Property Inspection Requirements for Agency transactions without appraisals where the property is located in a Presidentially Declared Disaster Area granted Individual Assistance. For transactions requiring a Property Inspection, please note that Third-Party Inspections and Seller Certifications are acceptable property inspection types. Please see Seller Guide 10.10.7.3 Seller Damage Certification and Third-Party Inspection Requirements for additional requirements. The Seller Guide will be updated shortly to reflect this clarification. For Questions Please contact your AmeriHome sales representative, Operations Account Representative (OAR), or [email protected] with any questions.
AmeriHome updated FEMA’s September 9th addition of two more Louisiana parishes affected by Hurricane Laura. Federal disaster aid with individual assistance has been made available to both Morehouse and Union parishes. Disaster inspections are required.
Mountain West Financial Wholesale posted re-inspection requirements for properties in FEMA-declared disaster areas are as follows: Conventional, VA and USDA loans require an exterior only disaster inspection report to certify that the property was unaffected by the disaster. Conventional loans with property inspection waivers VA IRRRLs and USDA Streamline loans will require a re-inspection if the property is in a FEMA-declared disaster area.
FHA requires an interior and exterior disaster inspection report and photos. FHA Streamlines do not require re-inspection. VA requires both the lender and the veteran to certify the property is not damaged.
Mountain West Financial Wholesale issued Bulletin 20W-108 Revised August 2020 California Wildfires.
Louisiana flooding was addressed by Sun West. For loans submitted with an appraisal dated on or before the incident period end date or for those submitted without an appraisal, Sun West will require an interior and exterior inspection prior-to-funding or purchase of any loans with subject properties that are determined to be at risk. The inspection must verify that the property is sound, habitable and in the same condition as when it was appraised. Partners can access Sun West Seller Guide under HELP section in sunsoft. Refer to Sun West Forward Mortgage Seller Guide (Section 404.07) and Sun West Reverse Mortgage Seller Guide (Section 3.23) for more details.
Sun West Mortgage also reminded clients that counties in Puerto Rico have been declared by FEMA as Major Disaster Areas on September 9. Designated Disaster Areas include Aguada, Hormigueros, Mayaguez, and Rincon.
California fires? For loans submitted with an appraisal dated on or before the incident period end date or for those submitted without an appraisal, Sun West will require an interior and exterior inspection prior-to-funding or purchase of any loans with subject properties that are determined to be at risk. The inspection must verify that the property is sound, habitable and in the same condition as when it was appraised.
With relatively light economic data over the last week, much of the market’s attention remained focused on unemployment. Although people are returning to work and unemployment has decreased significantly from the lows seen in April, many expect the trend to moderate throughout the remainder of the year. Initial state jobless claims were unchanged last week at 884,000 while claims for Pandemic Unemployment Assistance increased to 839,000. For all programs, total continuing claims rose to 29.6 million during the last week of August; signaling that a full recovery is still a way off. The recent job opening report showed 6.6 million job openings and roughly 2.5 workers per opening. As Covid-19 continues to be a cause for concern for consumers, business owners remain optimistic that conditions will continue to gradually improve. Hiring plans over the next three months are back near pre-COVID levels suggesting that employment is poised to maintain its upward trend. As those sidelined employees head back to work there is the potential that they may soon be able to take advantage of the low interest rate environment to purchase a new home or refinance.
Despite a gradually improving economy and labor market, activity remains well below pre-virus levels, and inflation is still being suppressed by weak demand. The path of the economy will depend significantly on the course of the virus, which continues to weigh on economic activity, employment, and inflation in the near term, and poses considerable risks to the economic outlook over the medium term. Interestingly, and breaking from the usual unified front, two committee members dissented but were more concerned with the nuanced language related to the inflation target and employment goals rather than the decision to leave rates unchanged. The Fed’s new framework to keep rates low until inflation visibly rises means it will allow the unemployment rate to fall even further than the 50-year low we saw in February.
This week has been welcomed by capital markets folk across the industry. U.S. Treasuries, MBS, and mortgage rates have traded in an extremely narrow range, and volatility has drastically subsided from earlier in the year. If it can remain that way up until the election in November is anybody’s guess (though that never stops people from acting like they know). Yesterday was another day with no real action, with the big news being another disappointing initial jobless claims report, though the number did decrease marginally from the previous week. Surveys show rates holding near the lows: about 2 7/8 percent.
We have just a few releases on the economic calendar to close out this week. We’ve already seen that Q2 Current Account Balance ($170 billion, whatever that means). Black Knight reported that the total number of mortgages in active forbearance declined another 26K (-0.7 percent) this past week, the fourth consecutive week of improvement, and declining volumes for 10 of the last 12 weeks. Later this morning brings August Leading Indicators and the preliminary reading of the September Michigan Consumer Sentiment Survey. Following the FOMC blackout, Fedspeak returns with St. Louis Fed President Bullard and Atlanta Fed President Bostic delivering remarks. The Desk will conduct three operations targeting up to $5.2 billion, starting with $669 million UMBS15 2 percent followed by $2.9 billion UMBS30 2 percent and 2.5 percent and $1.7 billion GNII 2 percent and 2.5 percent. We begin the day with Agency MBS prices better a smidgeon and the 10-year yielding .67 after closing yesterday at 0.68 percent.
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“Magnolia Bank has remained an independent community bank since its founding in 1919. We currently have fourteen Mortgage Loan production offices across nine states. As we look to our rich tradition in the past, we also look to the future with great expectations for our community, our customers, and our Bank. Our motto, ‘We Have A Personal Way,’ is demonstrated by the actions of our employees every day. If you are interested, please email [email protected]”