Welcome to the CMA's News Site. Here you'll find great updates on legal and regulatory issues that you need to be aware of.
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  • Tuesday, July 16, 2013 10:22 AM | Anonymous
    By: Mortgage Professional America

    The wholesale market is due for a significant increase in the near future, an industry executive has said. Louis Amaya, co-founder and president of iServe Residential Lending, a California-based mortgage company with 30 branches, has told MPA wholesale lending will be returning in strongly within the next couple of years."I think that, in general, the market is going to switch back to the wholesale market in the next two to three years.  Wholesale is the cheapest way to do business," Amaya said.

     Amaya said that as the mortgage market normalizes, origination business is set to shift back toward wholesale, and eventually correspondent business. While he conceded that the market had been difficult for brokers, he said those still in business had likely found some stability.

    "If you have survived as a broker at this point, it probably means they are doing good quality business. If you aren’t already attached to a banker, it’s likely you will stay in business," Amaya said.
    But some brokers who are producing low volumes may still have to become bankers, he said.
    "For specialized brokers, for instance, a small broker that focused on FHA loans, you might be in a tight spot. FHA used to be the non-prime giant, but after it raised its fees and minimum net worth requirements [to be an FHA-approved lender], small FHA lenders may have to move to banking."
  • Thursday, June 20, 2013 1:14 PM | Anonymous

    By: National Mortgage Professional Magazine

    Data through May 2013, released by S&P Dow Jones Indices and Experian for the S&P/Experian Consumer Credit Default Indices, a comprehensive measure of changes in consumer credit defaults, showed no change in national default rates during the month. The national composite was at its post-recession low of 1.42 percent in May 2013. The first mortgage default rate was 1.31 percent in May; it showed no change since April. The bank card rate was 3.63 percent in May vs. 3.61 percent in April.

    “Consumer credit quality looks healthy," says David M. Blitzer, managing director and chairman of the Index Committee for S&P Dow Jones Indices. “The first mortgage default rates remained at its post-recession low of 1.31 percent in May. Bank card rates were marginally higher while the second mortgage and auto loans were a touch lower this month. The second mortgage default rate hit a new low of 0.60 percent since the indices began in 2004. All loan types remain below their respective levels a year ago."

    The second mortgage and auto loan default rates decreased in May posting 0.60 percent and 1.04 percent; they were marginally down from their respective 0.62 percent and 1.07 percent April levels.

    “Three of the five cities we cover saw decreased default rates in May–Chicago and Dallas were down by 15 basis points each and Miami was 33 basis points lower," said Blitzer. "Chicago and Miami reached post-recession lows. New York was up 26 basis points and Los Angeles rose nine basis points. For the first time since 2006 New York had the highest default rate of 2.04 percent among the five cities covered. Dallas hit a historic low of 0.85 percent and has the lowest rate among the five cities. All five cities remain below default rates they posted a year ago, in May 2012.”

  • Wednesday, December 12, 2012 5:56 PM | Anonymous

    Mortgage News Daily

    Rental housing is a growing crisis according to the Center for American Progress, but policymakers have made it "an afterthought in the debate over the future of mortgage giants Fannie Mae and Freddie Mac." David M. Abromowitz, a Senior Fellow at the Center, said that the U.S. housing market appears on the road to recovery but any mention of a broad "housing recovery" ignores the far less rosy future of roughly a third of the U.S. population, the 100 million people who rent.

    Renters face a long-term and growing affordability crisis. The demand for rental housing has skyrocketed and production has failed to keep up. As a result rents have climbed 4 percent this year while middle class wages have stalled and now one of every four renters spends more than half their monthly income on housing. Rents are projected to increase by at least another 4.6 percent next year and 4 percent in both 2014 and 2015.

    The percentage of Americans who rent is at the highest level since 1995; 1 million new renters were added in 2011 alone. Two major causes for the increase are that both Baby Boomers and Millennials are entering ages likely to rent and household formation is growing again after the recession. Over one million new households formed in the 12 months ending in September 2012.

    Foreclosures have changed millions of families from homeowners to renters, especially among the working class and in communities of color. According to the San Francisco Federal Reserve, it could take more than a decade for many of these families to return to homeownership, so they have no option but to rent. Finally, tight lending standards make mortgage credit less accessible than at any time in the recent past. This is paradoxical given how affordable owning a home is today.

    While the number of low-income renters grew by 2.2 million over the past decade, Harvard's Joint Center for Housing Studies says the number of adequate and affordable rental units actually decreased and analysts project that the current pace for rental construction will fall well short of what is needed to meet demand between now and 2015. Freddie Mac notes there will be a net 1.7 million new renters between 2011 and 2015, but only about 200,000 new multifamily units per year. The numbers could increase even faster over the following five years, with perhaps as many as 2.3 million new renters added between 2015 and 2021. The result will be an increasingly tight rental market and higher rents for many Americans.

    Abromowitz notes that even though there is a glut of vacant single-family homes, most the result of foreclosure,converting them to rentals will only help certain groups of renters. Many are located in outlying suburbs or in overbuilt markets and others are in economically distressed areas with little housing demand because there are no jobs. The populations driving the demand for rentals, downsizing seniors, young adults, and immigrant families forming new households, are more likely to want rentals in larger multifamily buildings or in urban areas and areas where jobs are plentiful.

    This mismatch of supply and demand have forced rents up and vacancies to fall from 8 percent at the end 2009 to 4.7 percent in the second quarter of 2012. Meanwhile wages for the vast majority of workforce renters remain fairly stagnant. Fifty-three percent of renters now pay more than 30 percent of their income for housing, while 27 percent of renters pay more than half.

    When households spend so much for rents it depresses demand for other goods and services. One analysis found that housing-cost burdened families spend 50 percent less on clothes and health care, 40 percent less on food, and 30 percent less on insurance and pensions compared to families in affordable units.

    Abromowitz says we are reaching acrossroads in multifamily housing policy. Many of the roughly 4 million apartment units built during the 1970s and early 1980s under a variety of Nixon-era federal programs are nearing or at the end of their subsidy periods, leaving many lower-income tenants at risk for sharp rent hikes. Affordability restrictions on another 1 million apartments produced under the low income housing tax credit program will also soon expire. These nearly 5 million apartments represent roughly 15 percent of the nation's apartment stock.

    In addition to direct subsidy programs, the federal government has long supported a multifamily housing market through Fannie Mae, Freddie Mac, (the GSEs) and the Federal Housing Administration. Specifically, the GSEs purchase and guarantee conforming multifamily mortgage loans, package those loans into pools and sell the resulting mortgage-backed securities (MBS), to outside investors. They also hold some multifamily loans in their own portfolios.

    In good economic times, Fannie and Freddie tend to back a smaller portion of the multifamily market because private lenders and investors are eager to invest. In bad times however Fannie and Freddie step in to keep the rental market afloat. Most recently, as private investors fled the housing market in 2007 and 2008, the GSEs share of the multifamily market shot up to fill the gap, and then eased back.

    Without government-backed credit for multifamily mortgages, the rental market would have completely collapsed. In 2009 Fannie and Freddie facilitated 85 percent of all multifamily loans, tripling their share of the multifamily loan market from two years earlier. They continue in this rule, supporting 57 percent of multifamily loans in 2011.

    Even with this support multifamily unit construction dropped from 284,000 starts in 2008 to 109,000 in 2009, a near 30-year low. Without government backing to attract private capital it is likely that many of these units would not have been built and rents would have increased faster. Thousands of much-needed construction jobs would also have been lost during the downturn and, as a result, the current affordability crisis would be an economic catastrophe.

    GSE loans performed far better than most originated in the private market. They experienced delinquency rates of 0.45 percent at the end of 2009 compared to 6.5 percent for private-label Commercial MBS multifamily loans and 5 percent for commercial banks' multifamily loans. The GSEs also made loans available for smaller buildings in markets not as popular with institutional private lenders.

    A healthy market for decent rental housing requires wide access to multifamily mortgages under a range of market conditions. This financing spurs the construction, maintenance, and resale of apartment buildings; expands supply where there is pent-up demand, and helps keep rents more stable for families at all income levels. Despite the role the government has played in keeping this market alive, some policymakers are considering significant reductions of government support for all housing finance including multifamily housing. Some are even calling for the federal government to withdraw from Fannie and Freddie's multifamily business entirely.

    The Federal Housing Finance Agency, conservator of Fannie and Freddie, appears ready to privatize the multifamily mortgage market, announcing it was reviewing the possible impact of eliminating the GSE-issued government guarantee on multifamily MBS. If this reduces construction of new rental units it could lead to increased rents for millions of low- and moderate-income families. Abromowitz said that this and similar congressional proposals for withdrawals of all government support for apartment finance would be a big mistake.

    He suggests instead that lawmakersshould focus on smart reforms. He referred to an earlier Center for American Progress plan to preserve a secondary market for multifamily mortgages. The plan includes an explicit, privately paid for, and limited guarantee on strictly underwritten MBS issued by private firms. In addition, to assuring that renters benefit from any government backstop to the apartment finance market, the plan proposes that at least 51 percent of the rental housing units financed in the overall portfolio of private firms in a given year have rents no more than 29 percent of the income of occupants falling below 80 percent of local median income.

    While most analysts agree that a healthy multifamily market requires a strong government role, not everyone things this includes an explicit government guarantee. The Center recently reviewed 21 plans for mortgage market reform and only eight maintained an explicit guarantee on multifamily securities. Most of those plans simply mentioned the rental market in passing.

    Abromowitz said too many Americans including many of the most vulnerable rely on the rentals for their housing and cannot remain an afterthought in deciding the future of the housing market. "We must pursue approaches that create a lasting 21st-century finance system and meet the needs of both renters and homeowners," he said.

  • Wednesday, December 12, 2012 5:44 PM | Anonymous

    By Kerri Ann Panchuk
    Housing Wire

    Longer foreclosure timelines will keep the nation's mortgage delinquency rate above 5% next year, according to credit rating firm TransUnion.

    The credit bureau says the national mortgage loan delinquency rate for 2012 is likely to come in at 5.32%.

    While it is expected to decline slightly to 5.06% in the coming year, the projected 2013 rate reflects the ongoing trend of borrowers remaining in their homes longer, which creates longer-term delinquencies, TransUnion said.

    "The slow improvement pace we are experiencing right now seems to be less about new borrowers not being able to make their payments and more about existing borrowers who have been delinquent for a very long time," said Tim Martin, vice president of U.S. housing for TransUnion's financial services business unit.

    If TransUnion were to exclude borrowers who haven't made a mortgage payment in over a year, the national mortgage delinquency rate would plummet to 2.5%. With that in mind, analysts are wondering if today's higher delinquency rate reflects poorly on longer foreclosure timelines or if it means borrowers are obtaining time to save their properties. The general consensus is everything turns on a case-by-case basis.

    "It's like everything else, there are always two sides," said Michael Woods, assistant vice president and managing attorney with default law firm Potestivo & Associates in Michigan. "One person may say the delinquency rate is above 5% and that is too high," he added. On the other hand, others may say the facts behind the numbers are more crucial. Are long-term delinquent borrowers getting a shot at saving their homes and maybe saving local property values via mediation programs and foreclosure regulations, or do the longer periods delay the inevitable?

    Doug Duncan, chief economist for Fannie Mae, says seriously delinquent loans remain high in states with judicial foreclosures, while many nonjudicial foreclosure states are already seeing real estate recoveries. The steepest delinquency rate declines for 2013 are expected to occur in the recovering states of Nevada (18.62% drop in late payments); Minnesota (-13.58%); California (-12.4%) and Arizona (-11.61%), according to TransUnion.

    "For the overall health of the housing market, the more rapidly the distressed property is eliminated, the healthier the market will be," he added.

    Duncan said he recognizes the possibility that longer timelines and new rules give some distressed borrowers time to recover. But he said, when a borrower is unable to recover within a reasonable period of time, "one wonders if they are not qualified for any of the government housing programs and whether the longer time frame will help them get into one of the programs."

  • Wednesday, December 12, 2012 5:16 PM | Anonymous

    By Karen Deis, Publisher,

    Before I get started with the updates for December, what I’ve noticed over the last few months is that Fannie, Freddie, FHA, VA and USDA have issued quite a few clarifications and updates in the form of FAQ’s and enhancements to cover the “grey areas,” so underwriters and LO’s have a clearer picture of exactly what a rule change means in plain language (just so there is no misunderstanding).

    Here are some of the highlights, because these affect your files in process right now.

    • · If you are refinancing a loan, the property taxes are 60 days past due and you are paying the back taxes by including them in the loan amount, it triggers a mandatory escrow account.
    • · Fannie went on to talk about “their indication of borrowed funds.” The trigger here is that if there is a large deposit that exceeds 25% of total monthly qualifying income, additional backup documentation is needed.

    • · Retirement funds used for cash reserves may be discounted by up to 40%, depending on the volatility of the type of retirement account.

    • · Additionally Fannie indicated that you no longer have to get a letter or back-up documents that say the collection poses no threat to their first lien position. This will make it easier on you and your borrowers.

    • · You’ll find five more updates in this announcement, including the treatment of capital gains or losses – you no longer have to count them, even if they are reoccurring. And Fannie says you no longer have to count the Treatment of Capital losses as a liability (or income), even if the losses are reoccurring.

    Let’s talk about the Consumer Finance Protection Bureau. The latest warning is their findings when it comes to deceptive advertising practices. They are relying on Reg Z advertising rules, which cover mortgage companies, and the Mortgage Acts & Practices rules, which apply not only to mortgage companies, but to real estate agents and builders as well.

    My personal observation is that CFPB is asking their examiners to review ALL types of advertising and then to create a section in their examination manual for everyone to follow. That’s why, for right now, they are sending out warning letters instead of fines.

    Other updates this month

    • · A joint venture between FHFA and CFPB to monitor the mortgage market
    • · HARP program extension
    • · Updates to the Fannie Appraisal messaging system
    • · No increase in loan amounts for Fannie/Freddie
    • · HUD and NMLS team up to collect data when you order a case number
    • · VA updates to form 26-8937
    • · FHA Extends Anti-Flipping Rules

    In recapping this year, we wrote 114 updates – or about 10 per month. In addition, we posted 136 most frequently asked questions that we hoped would help you get more of your loans approved.

    I hope that 2013 is your best year ever in the mortgage industry – and remember, getting a loan approved and closed these days… is rocket science.

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