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Breaking News: The Senate voted to attach a proposal to a spending bill that could restore the size of loans the government buys or insures to a maximum loan amount of $729,750 in many markets. The higher conforming loan limits expired at the end of September, reverting to a maximum amount of $625,500, despite mass calls from the industry that doing so could potentially weaken the housing market, particularly in high-priced areas. The lower loan limits are making it more difficult for “middle class home buyers to get credit when credit is tight," says Robert Menendez, D-N.J., who introduced the bill amendment. "Getting our housing market moving again is one of the most important tasks facing the country.” The Senate voted 60-38 on the spending bill. It’s expected to go before the House later this year. The National Association of REALTORS®, along with several other housing groups, have been urging Congress to renew a two-year extension that would maintain the GSE maximum loan limit at $729,750. Source: Reuters For more up-to-date news on this and other important legislation, visit the OriginationPro Blog--www.originationpro.wordpress.com.

Arizona has taken over PMI Group, whose mortgage insurance arm now will pay just 50 percent of claims in cash with the remainder deferred. The firm had been paying about $1.5 billion a year in claims to lenders and investors to cover some of their losses when homeowners default but was ordered two months ago to stop selling new policies. The struggles at PMI signal that lenders and investors may face more losses, and Mortgage Bankers Association CEO David Stevens said the moves by Arizona were a surprise for the industry. "America needs a stable and fiscally sound MI industry, which is so critical to providing financing for low-down-payment buyers," he added. Source: The Wall Street Journal

Analysts expect results from the changes to the Home Affordable Refinance Program announced to be modest, but the Obama administration said it is working to expand the number of reachable borrowers even further. The Federal Housing Finance Agency removed a series of barriers to help more underwater borrowers with Fannie Mae and Freddie Mac loans refinance. The agency itself could not give a specific estimate of how many borrowers could be reached but did say the changes could double the 838,000 who already went through the program. "While some potential changes, such as a waiver of reps and warranties on HARP loans, could be meaningful in terms of raising HARP volume sharply, the numbers are still likely to be small relative to the residential finance market as a whole," said analysts at the investment bank Keefe, Bruyette & Woods. The Department of Housing and Urban Development Secretary Shaun Donovan said in a conference call the changes would help borrowers save roughly $2,500 per year on their housing payment, the equivalent of a massive tax cut, he said. "There is still significant work to be done," Donovan said. "We believe the benefits of streamlining HARP could be applied to those loans below 80% LTV, for example reducing closing costs and other issues even further. We look forward to working with FHFA in coming weeks on this." Donovan also said the Treasury Department began discussion with states that received the $7.6 billion in Hardest Hit Funds to see if new programs could be developed to help more borrowers with closing cost assistance. Source: HousingWire

The Community Associations Institute say a series of rule revisions by the Federal Housing Administration has caused thousands of condo projects to become ineligible for FHA loans. This, in turn, has abruptly shut off loan money for would-be buyers and refinancers, forcing them to pursue conventional bank loans requiring much higher down payments — sometimes 20 percent and higher compared with the FHA’s 3.5 percent minimum — which they often cannot afford. FHA says its rule changes, which focus on project budgets, insurance and financial reserves, have been prudent and are designed to avert losses from delinquencies and foreclosures. But the agency confirms that thousands of condo projects have failed to obtain or apply for required recertifications under the new rules. Out of approximately 25,000 condo projects nationwide with expiration dates for FHA eligibility between last December and Sept. 30 of this year, only 2,100 have been approved or recertified by the agency, according to Lemar Wooley, an agency spokesman. Source: The Washington Post

United Guaranty Corp. is expanding its underwriting requirements to allow greater flexibility on broker-originated loans. The Greensboro, N.C.-based company issued a bulletin outlining the revised third-party originator requirements for brokers. MI applications received after Nov. 13 are eligible using United Guaranty's risk-based Performance Premium pricing. Fixed-rate and adjustable-rate loans with no rate adjustments during the first five years can be insured by the American International Group subsidiary. Loan amounts in excess of $417,000 are eligible for broker origination, as are two-unit properties, second homes and cashout refinances. United Guaranty needs the full submission file to insure loans under the expanded requirements. Source: Mortgage Daily

Residential delinquencies fell to 8.09% in September, a slight decline from the prior month but an almost 13% improvement from the same month a year ago, according to new "First Look" figures compiled by Lender Processing Services. The delinquency numbers include all loans that are 30 days or more past due but exclude foreclosures. The company's findings are based on an analysis of 40 million loans – out of a possible universe of 56 million units. In total, 4.2 million home loans are "late." Although the decline in late payments appears to be good news, foreclosures are still exceedingly high. According to LPS, 1.84 million homes are considered 90 days or more past due – but are not in foreclosure. It measures the foreclosure "pre-sale" inventory at 2.17 million units. Source: National Mortgage News

As the Obama Administration examines options to expedite the sale of foreclosed properties, the Federal Housing Administration is weighing a tweak to its 203(k) program, opening it once again to investors. FHA acting commissioner Carol Galante told National Mortgage News that re-opening the 203(k) to investors is under consideration, but a decision has not been made yet. "It's still on the table," Galante said. For 15 years FHA has maintained a moratorium on allowing investors to use the 203(k) program because of past abuses. Owner-occupants continue to use 203(k) loans, which allow the borrower to finance both the purchase of the property and upgrades into one high LTV home loan guaranteed by the government. In the current REO market small investors are playing a significant role in turning foreclosed homes into rental properties, but many are using cash. Under present rules Fannie Mae limits financing per-investor at 10 loans and Freddie Mac has a five-loan limit. Source: National Mortgage News Update: Re-opening the Federal Housing Administration property rehabilitation loan program to investors will not happen anytime soon, according to Department of Housing and Urban Development Secretary Shaun Donovan. For more information on this statement, visit the OriginationPro Blog, www.originationpro.wordpress.com.

The Federal Housing Finance Agency is likely to provide detailed plans for a refinancing program in the next couple of weeks, reports Treasury Secretary Timothy Geithner. Speaking to the Senate Banking Committee, he said the initiative would allow more homeowners to refinance into loans with better interest rates; and it could have a significant impact on the housing market. He declined to quantify how many homeowners would benefit, noting that there have been dramatic overestimates of the impact of past housing programs. Source: American Banker

Freddie Mac was not aggressive enough in conducting loan reviews and demanding buybacks of toxic home loans from loan sellers, finds a Sept. 27 report from the Federal Housing Finance Agency. Instead of maximizing recovery of money from banks that sold flawed loans, the report said Freddie Mac chose to preserve its business relationships with those firms at the expense of taxpayers, who are keeping it and sister company Fannie Mae afloat. FHFA has put loan repurchase agreements on hold while it and Freddie Mac look into strategies for detecting more troubled loans. Source: Business Week

Residential home loan fraud soared during the second quarter, as debt elimination scams and cases of misrepresenting income, occupancy, or debt led the pack, the Financial Crimes Enforcement Network reports. Another common fraud scam found in the second quarter involved fraudulently using Social Security numbers on loan documents. Overall, loan fraud suspicious activity in the second quarter of 2011 reported by financial institutions totaled 29,558 items -- up from 15,727 in the same quarter of 2010. A lot of the spike was from loans that had closed during the height of the real estate boom, FinCEN reported. About 81 percent of the suspicious activity filed during the second quarter involved activities that had occurred prior to 2008. "We're continuing to see a large number of [suspicious activity reports] filed on activity that occurred more than two years ago, an indication that financial institutions are uncovering fraud as they sift through defaulted loans," FinCEN Director James H. Freis Jr. said in a statement. "But we also continue to see indications of ongoing fraud activities.” Other common scams for fraud included identity theft, false statements and false documents, fraud involving short sales and appraisals, forged rescission of notice of default, advance fee scams, buy and bail schemes, and money laundering, according to FinCEN’s second quarter report. Source: Realtor® Daily News

Fannie Mae's rate of seriously delinquent single-family home loans fell 5 basis points in August to 4.03 percent, according to home loan financier. Freddie Mac, meanwhile, disclosed that its share of loans at least 90 days past due fell to 3.49 percent, down 2 basis points. Delinquencies at Fannie Mae and Freddie Mac crested at 3.359 percent and 4.20 percent, respectively, in February of last year. Source: Investor's Business Daily

The number of Americans struggling to make their home loan payments is at traditional highs, while properties remain at high levels of negative equity. Popular strategies for helping distressed borrowers include loan modification and refinancing, to name a few. But at the largest player in the nation, Fannie Mae, there is one option that the government-sponsored enterprise has no plans to use. Michael Williams, the CEO of Fannie Mae, tells HousingWire magazine that the firm will not ask servicers to reduce the principal on distressed loans. "We do not do principal reduction," Williams said. "When we look at the toolset that we bring to the table, we really look at the rate, term and then forbearance of principal but not forgiveness of principal." Source: HousingWire

 Anyone Know How To Control a Yoyo?

There are rumors that half of Wall Street had to visit emergency rooms this past week. They were all suffering from motion sickness. And what a wild ride it was. From a budget deal to a credit downgrade to a Federal Reserve Meeting all in one motion. Really, no one knows how this will all play out, but we do know this -- Stocks have undergone a significant correction and the bottom line is that we finally have a reaction to the slowdown in the economy. The pieces are falling into place with extraordinarily low rates and oil prices down 20% from their recent peak. We also know that everyone is afraid to blink because all of these numbers could reverse themselves in a few hours due to extreme volatility. The Fed statement regarding rates and the economy was also extraordinary. Typically the Fed does not give a hint with regard to the future direction of rates, at least beyond a month or two. Now they are all but guaranteeing low rates for two years and will consider future actions to bolster the economy.

The Fed definitely acknowledged that the economy was growing too slowly and that there is more risk to the downside at the present time. One factor after another has affected the economy's performance, from earthquakes to floods to the European debt crisis. Now budget cuts stand to take some more air out of the recovery. Many are asking, are we heading for another financial meltdown? "Not likely" say most analysts. This is not 2008. The economy is growing, albeit slowly. We added just 100,000 jobs last month, but it was better than the hundreds of thousands we were losing monthly a few years ago. Retail sales grew by 0.5% in July which means that consumers are spending. Companies, including many banks, are flush with cash and have the ability to hire as soon as it is evident that the economy will not fall back into recession. Finally, it should also be noted that the Fed controls short-term rates directly and long-term rates indirectly. Even with the Fed holding short-term rates low, if the economy does start to heat up, long-term borrowing costs will go up regardless of the Fed's efforts. This is a great time to refinance, purchase a house or a car and help get the economy rolling.

Rates on home loans fell again in the past week. Freddie Mac announced that for the week ending August 11, 30-year fixed rates averaged 4.32%, down from 4.39% the previous week. The average for 15-year fixed fell to a record low of 3.50%. Adjustable rates also moved to record lows, with the average for one-year adjustables decreasing to 2.89% and five-year adjustables falling to 3.13%, also a record low. A year ago 30-year fixed rates were at 4.44%. Attributed to Frank Nothaft, Vice President and Chief Economist, Freddie Mac, "Renewed market concerns about the European debt markets led investors to shift funds into U.S. Treasuries, pushing long-term yields lower. Further, in its August 9th Federal Open Market Committee statement, the Federal Reserve noted that economic growth so far this year had been considerably slower than it expected and that overall labor market conditions had deteriorated in recent months, leading the Committee to conclude that an exceptionally low federal funds rate should be maintained at least through mid-2013. These developments helped to ease rates on home loans lower this week. Lower rates will help to maintain the high degree of home-buyer affordability in the market. The National Association of Realtors® reported that its affordability index over the past three quarters has indicated the highest affordability since the inception of the index in 1970." Rates indicated do not include fees and points and are provided for evidence of trends only. They should not be used for comparison purposes.

The debt ceiling agreement signed into law on August 2 has no direct impact on real estate tax rules or spending provisions, but the industry isn’t out of the woods yet, because the deal includes authority that could make it easier for Congress to make tax law changes in the months ahead. The new law increases the debt ceiling in two steps. The first is automatic through the end of the year. The second increase is contingent on a number of factors, including recommendations for cuts and tax increases from House and Senate committees and a new super committee that will package together the recommendations or make its own as needed. The super committee is given the authority to identify up to $1.5 trillion in deficit reductions over 10 years. This deficit reduction is on top of almost $1 trillion in cuts to be made over the next few months, for a total of about $2.4 trillion in cuts over the 10-year period. The almost $1 trillion in cuts over the next few months include no tax increases, but the $1.5 trillion second phase can include a mix of cuts and revenue increases. If the $1.5 trillion target in the second phase of cuts isn’t met, a mechanism for automatically making cuts kicks in. A significant portion of those cuts must be to military spending. The next 100 days could be the most important part of the battle for real estate, because it’s in this period that the mortgage interest deduction and tax rules for carried interest are expected to be most at risk. Under the carried interest provision, the income of general partners in real estate partnerships is taxed at the capital gains rate. Under changes that have been proposed in the past, that income would be taxed as ordinary income, a higher rate. Source: Realtor® Magazine Daily News

Freddie Mac reported a second-quarter loss of $2.1 billion, down from a loss of $4.7 billion a year ago. The company paid $1.6 billion to the government and requested $1.5 billion in new aid, marking the fourth period in a row that it did not incur a loss for taxpayers after making its regular dividend payment to the Treasury. Freddie Mac continues to show signs of stability, partly because it has a smaller loan book and guaranteed fewer risky loans than Fannie Mae. Source: The Wall Street Journal

The J.D. Power and Associates 2011 primary servicer satisfaction study showed "frustration continues to mount for homeowners who originated their loans during the peak of the housing boom" and are unable to refinance despite historically low rates. The survey of 4,516 homeowners measured consumer satisfaction with the billing and payment process; escrow account administration; website; and phone contact. J.D. Power and Associates said respondent satisfaction declined in all four areas from a year ago. "Many homeowners who are still in home loans that were originated between 2006 and 2008 — when home values peaked and credit standards were the most lax — would like to refinance, but can't because they either don't have enough equity in their home due to falling home prices or their credit profile doesn't meet today's tougher standards," according to David Lo, director of financial services at J.D. Power and Associates. Source: HousingWire

National banking, realtor and homebuilding associations -- along with nine other housing industry trade groups -- have signed a letter calling for a one-year extension of current FHA loan limits, which expire on Sept. 30. According to the letter, most recently endorsed by the National Reverse Mortgage Lenders Association, some lenders are no longer taking applications at current limits out of concern that the loans will not close prior to expectations -- a move that has disrupted home sales. Reverse Mortgage Daily

Mortgage Insurance Cos. of America reports that MI firms wrote $4.8 billion of primary new business last month, up from $3.9 billion in May. The strong performance suggests that purchase money originations may be growing and that private insurers are beginning to win market share from FHA. However, primary insurance in force continues to fall, at a rate of $5 billion a month; and new notices of default are on the rise. Source: American Banker

Freddie Mac says 77% of homeowners who refinanced first-lien home loans in the second quarter either reduced principal loan amounts or maintained the same loan value while benefiting from historically low rates. Of those who refinanced, 51% ended up with the same loan amount, while 26% lowered their principal balance in 2Q, according to second-quarter refinance analysis from Freddie Mac. Meanwhile, the median rate reduction for a 30-year, fixed-rate loans was about one percentage point, or a savings of 18%. Those same borrowers will save about $1,550 in payments on a $200,000 loan during the first year of the refinanced loan's life, Freddie said. “Savvy homeowners are taking advantage of some of the lowest fixed-rates in more than 50 years to lock in savings," said Frank Nothaft, Freddie's vice president and chief economist. Source: HousingWire

They answer is "yes" and "no." Could I be any more wishy-washy? I believe only 20% of originators are candidates to succeed, though the number may be higher now that we have culled many of the weak from the industry. So if you are recruiting randomly, 1 out of four is almost on target in a tough market. In a better market you would do better (until things got worse). On the other hand, because you are asked to produce and recruit as a manager (plus perform about four other full time jobs)--most do worse than the random average because they don't have the time to devote to a quality recruiting strategy.

So what is the answer? It is synergy. Knowing your objectives. Most who hire really have not really defined the characteristics of a successful loan officer candidate. If you don't know where you are going, how do you know when you arrive? We will cover this topic in more detail in my complementary webinar: Great Manager and Recruiting Skills For Leaders scheduled for tomorrow July 27. Register at no cost using this link: https://www2.gotomeeting.com/register/440140058.

Foreclosure filings fell dramatically during the first half of the year as processing delays at the banks, which are strapped with excess inventory of repossessed homes, continued to skew the numbers -- and falsely raise hopes that the housing market is staging a recovery. Foreclosure filings plunged 29% compared with the same period a year ago and were down 25% from the last six months of 2010, according to the latest report from RealyTrac, an online marketer of foreclosed properties. Through June 30, 1.2 million U.S. homeowners -- or one in every 111 households -- received a foreclosure filing, according to RealtyTrac. The deceleration in defaults continued as the year wore on with second quarter filings -- at 608,235 households -- marking the lowest quarterly total since the end of 2007, when the real estate meltdown was still in its youth Ultimately, the artificial foreclosure delays are prolonging the housing market's ills, said Arnold Kling, an economist with the Mercatus Center at George Mason University and formerly with Freddie Mac. "The government should be trying to speed foreclosures, not stop them," he said. "Postponing foreclosures may simply be putting off the inevitable market bottom. We need to remove barriers to foreclosures." Source: CNN/Money

The House easily approved the Flood Insurance Reform Act, a bill that enjoyed rare bipartisan support even though it could result in higher flood insurance premiums at a time of significant flooding in the middle of the country. The bill, H.R. 1309, was approved in a 406-22 vote. Several members of both parties agreed that a top priority of the bill is eliminating the red ink that the National Flood Insurance Program (NFIP) has generated over the past several decades. Members noted that the NFIP is nearly $18 billion in debt, and spoke in favor of the bill that would require the phasing in of actuarially sound rates for flood insurance policies, and phasing out taxpayer subsidized rates. This change is expected to raise $4.2 billion over 10 years, giving the NFIP a start at paying down its debt. Republicans in particular noted that just 1 percent of the claims brought under the NFIP come from 40 percent of the policyholders, a sign that the NFIP was not pricing risk appropriately. This fix, more than any other, seemed to bring the parties together on a bill that would extend the NFIP until September 30, 2016. Without an extension, the NFIP expires at the end of this September. Source: The Hill

The Federal Reserve Board has not changed its interpretation regarding the loan officer compensation rule in a consumer-paid transaction, as initially thought. At a congressional hearing, Rep. Brad Sherman, D-Calif., indicated that brokers could compensate their employees through commissions in consumer-paid transactions. "I understand this represents a change in their policy," Rep. Sherman said at a House Financial Services subcommittee hearing Wednesday afternoon. The congressman cited written testimony by Fed consumer affairs director Sandra Braunstein for his conclusion. But it now appears to be a misunderstanding. "The Federal Reserve Board has not revised its regulations or the staff commentary that interrupts the rule," a Fed spokesman said. At the hearing, Rep. Sherman asked National Association of Mortgage Brokers vice president Mike Anderson to comment on the Fed's new interpretation. But Anderson said he was not aware of the change and needed to review the Fed’s interpretation before commenting. Contacted on Thursday by National Mortgage News, Anderson said there must be a misunderstanding because Braunstein's testimony states that a brokerage firm cannot pay a commission to a loan officer if the brokerage is paid directly by the consumer. Her testimony goes on to say a broker can pay an “incentive fee” to an employee in transactions where the consumer pays origination fees directly to the brokerage firm. But an incentive fee is not the same as a commission. "There is no change," Anderson said. Source: National Mortgage News

Rep. John Campbell (R-Calif.) and Rep. Gary Ackerman (D-N.Y.) introduced a bill that would extend the current conforming loan limit for government-backed home loans for another two years. The Conforming Loan Limits Extension Act, or H.R. 2508, would allow the government-sponsored enterprises and the Federal Housing Administration to guarantee or buy home loans worth as much as $729,750 in most neighborhoods. If Congress does not pass this bill, the loan limit will drop to $625,500, though the limit will vary by county. A recent report from the National Association of Home Builders showed 17 million homes would become ineligible for less expensive federal funding. The drop could affect as many as 669 counties across 42 states. Federal Reserve Chairman Ben Bernanke, however, told the House Financial Services Committee this week that he believed the private market, including investors and insurers, was ready to take over for the government — albeit at a higher cost to the consumer. How far the bill makes it through the Republican-controlled House Financial Services Committee remains a question. When the Obama administration submitted its white paper on the future of housing finance, it suggested winding down Fannie Mae and Freddie Mac, and the initial step could be allowing elevated conforming loan limits set in 2008 to expire. Source: HousingWire

Millions of underwater homeowners could be helped under a bill that is gaining momentum in the U.S. Senate. The bill, authored by California Senator Barbara Boxer, would remove barriers that have halted millions of upside down homeowners from refinancing their homes. “The Helping Responsible Homeowners Act” would order government backed home lending giants Fannie Mae and Freddie Mac to waive fees and remove barriers keeping borrowers from refinancing to lower rates. The bill would aid millions of underwater homeowners trying to hold on to their properties and aid the lending industry, troubled by the financial crisis and the real estate crash. The provision would remove refinancing limits on homes that are upside down on their home loans or owe more on their loan than the home’s current value. The bill gained momentum when a Republican Senator joined Boxer, a veteran Democrat with a flair for being dramatic as a co-sponsor of the bill. Senator Johnny Isakson (R-GA), who ran one of the country’s largest independent real estate brokerages, joined Boxer to sponsor the proposal before Congress. Source: Housing Predictor

The FHA may tighten debt-to-income ratios in an effort to reduce its delinquency rate and stabilize its insurance fund, but some say a hard cap on DTI ratios would keep the most highly leveraged consumers out of the housing market. "It doesn't do anybody any good if the borrower can't meet their debt obligations," FHA Acting Commissioner Robert Ryan insists. Mortgage Bankers Association President and CEO David Stevens says the agency is seeking "reasonable" caps on DTI, with a borrower with 10 percent down perhaps qualifying for a higher ratio but the threshold lowered for young, first-time buyers. Source: American Banker

Home owners who have lost their jobs will get more relief. The Obama administration has announced that two programs for unemployed home owners will extend the forbearance period on home loans to 12 months. For unemployed home owners with a Federal Housing Administration loan, the forbearance period will be extended from four months to 12 months. The Obama administration also said it will remove hurdles to make it easier for unemployed borrowers to qualify for FHA’s Special Forbearance Program. “The current unemployment forbearance programs have mandatory periods that are inadequate for the majority of unemployed borrowers,” U.S. Housing and Urban Development Secretary Shaun Donovan said in a statement. “Today, 60 percent of the unemployed have been out of work for more than three months and 45 percent have been out of work for more than six. Providing the option for a year of forbearance will give struggling home owners a substantially greater chance of finding employment before they lose their home.” The administration also announced that it will extend the minimum forbearance period in the Making Home Affordable Program from three months to 12 months for eligible unemployed home owners, when possible under regulator and investor guidelines. Forbearance will also be available to borrowers who are seriously delinquent. All FHA-approved servicers are required to participate in FHA’s Loss Mitigation Program, which includes the Special Forbearance program Source: The Washington Post

Employment in the home loan sector rose one percent in May from April to 241,500 full-time workers, reports the Bureau of Labor Statistics, with residential companies adding 2,600 new jobs but losing 1,600 brokers. In the second half of 2011, hiring could pick up at smaller firms hoping to boost market share, speculates Mortgage Bankers Association chief economist Jay Brinkmann. Servicing jobs are up as firms reach out to delinquent borrowers, MBA says, but hiring could be limited because late payments have declined. Source: American Banker

An $8 billion program launched by the Federal Housing Administration in September to help underwater borrowers refinance into a new loan has quietly sputtered out of the gate. The FHA Short Refi program was initially expected to reach between 500,000 and 1.5 million borrowers, according to a letter sent to lenders when the program was announced. Analysts were more pessimistic. More than $50 million has already been spent, but according to the Department of Housing and Urban Development, only 246 borrowers made it through the program so far. Under the program, eligible borrowers can receive an FHA-insured loan if the lender or investor writes off the unpaid principal balance of the original first-lien by at least 10%. To be eligible for the new loan, the homeowner must be underwater but still current on their home loan, which cannot be already insured by the FHA. A score of 500 or better is required. The new refinanced loan must have a loan-to-value ratio of no more than 97.75%. After receiving the new refinancing through the program, the borrower's combined loan-to-value ratio on the re-subordinated loans cannot exceed 115%. The new FHA loan can only be used to refinance the unpaid principal balance on the first lien. Source: HousingWire