“The living moment is everything.”
~ D.H. Lawrence
One of the things that impacts the value of servicing is the length of time that the company servicing the loan (i.e., collecting the payments) expects to have the loan on their books. No one wants to pay a 2 or 3 point premium for a loan that they service for only 3 months, so loans paying off early (“prepayment”) is watched carefully. Last weeks’ prepayment speeds indicated a pick up in early pay offs. Interestingly, the Fed’s purchases of mortgage-backed securities, along with the plan to make high LTV loans eligible for refinance has led to increased speeds, and faster expectations moving forward – which has not helped higher rate mortgage prices.
Anyone trying to modify a mortgage, and then having the borrower (who misled the broker during the original process) mislead them is in a difficult position. So what would you call a modified loan to a borrower who exaggerated (lies) about how little he/she makes (and has) to get a loan modified after lying to get the loan in the first place? A reverse-liar loan? An inverted-liar loan? A double-prevaricator loan? A pathological liar loan? A serial falsifier loan? A storyteller loan? A fibber note? A reverse truth loan? Stay tuned…
Are brokers and loan agents rolling in business these days? Not really. What one loan agent said, “I am working 10 times as hard for 1/10th as much business, and I am having to leap over the tall buildings of credit scores and appraisal to make things work.” Another told me, “Every deal continues to be difficult – there are few slam-dunk borrowers or properties out there right now.”
Chase told their correspondents, “After careful consideration of the current market, Chase Correspondent Lending has made a business decision to discontinue the availability of our Non-Agency products effective Thursday, March 19, 2009. Effective March 19, 2009, Chase Correspondent Lending is making the following revisions to our Agency products and programs: Increasing the cash-out limit on Freddie Mac Fixed Rate High Balance loans from $100,000 to $200,000; Reducing the LTV on Fannie Mae and Freddie Mac Amortizing Fixed Rate Primary Residence Cash-Out Refinance Co-ops from 85% to 80%; Reducing the LTV on Agency High Balance Interest Only 5/1 ARM Primary Residence No Cash-Out Refinance Condos from 90% to 80%; Eliminating Subordinate Financing on Agency High Balance Amortizing 5/1 ARM Primary Purchase Co-ops.”
Thornburg Mortgage, whom every broker in a high cost area remembers with great fondness, said yesterday it may file for Chapter 11 bankruptcy protection. The lending banks are giving Thornburg until the end of the month before calling in the lines.
The news out this morning consisted of the U.S. consumer prices. The CPI rose in February, according to the Labor Department, by 0.4%, about as expected. It is the biggest monthly gain since last July, after increasing 0.3 percent in January. Core prices, which exclude food and energy items, were +0.2 percent in February after rising by the same margin the prior month. On a year-over-year basis, consumer prices were up 0.2 percent. We still have the Fed’s announcement later today, but for now the 10-yr stands at 2.98% and mortgage prices are a shade better.