TEAM EMPOWERMENT MORTGAGE CHATTER: May 05, 2009: Chase DU Refi Plus news; Appraisals for VA Streamline; GMAC

“Until you try, you don’t know what you can do.”

~Henry James



Although this has nothing to do with mortgage banking, in mid-April I noted the website where one can track the currency found in their wallet, (The government also tracks cell phones, by the way.) It would appear that health officials are using the site to estimate the spread of Swine Flu. Computers are amazing things. (Thanks to Forrest at Monterey Bay Mortgage.)


US Bank notified their clients that “we have reintroduced 2008’s temporary limits up to $729,750 (depending on county).  CLTV’s still allowed to 75% CLTV in California!  With exceptions on HELOCS still available up to $350,000 this is still the best jumbo pricing for your borrowers.”


HVCC for FHA loans? Let’s hope not, but we have heard some rumblings from some investors that they believe that the market is heading that direction and that the industry would be well served to implement it sooner than later. Having said that, I can’t find anyone requiring it yet, but with the concern about the quality of FHA loans don’t be surprised…


Chase Correspondent “is making a very significant change to our DU Refi Plus offering and is delaying the implementation of the maximum LTV to 105%. In DU 7.1 May Update Release Notes, Fannie Mae announced the availability of the DU Refi Plus program up to a 105% LTV through DU effective the weekend of May 2, 2009. After careful re-evaluation of the opportunities and risks associated with the DU Refi Plus program, Chase Correspondent Lending will make the following revisions to our DU Refi Plus offering: At this time, Chase will not expand DU Refi Plus to a 105% LTV. Additionally, Chase will now require that the original loan must be Chase Serviced in order to be eligible for delivery to Chase as a DU Refi Plus.”


VA Streamlines – are investors requiring an appraisal? Wells Correspondent, for example, “in an effort to mitigate the risk of declining home values on VA IRRRL transactions on May 18th will require the seller to obtain and deliver a conventional appraisal to Wells Fargo. Please Note: VA has indicated this appraisal should not be submitted to the VA with the guaranty package.” Some originators feel that requiring an appraisal on a VA Streamline loan pretty much “kills the deal”. GMAC and Citi still purchase them, but to the best of my knowledge BofA does not. At least one investor is saying that if the existing loan is already with them, then the appraisal will be waived. Anyone heard anything?


GMAC Financial Services reported a first quarter 2009 net loss of $675 million, compared to a net loss of $589 million in the first quarter of 2008. They attributed the losses to “continued pressure in mortgage operations related to valuation adjustments on mortgage servicing assets, weaker credit performance on both auto and mortgage assets, mark-to-market adjustments on derivatives, and an original issue discount related to the fourth quarter debt exchange.”  In similar fashion, Radian Group (the #2 mortgage insurer) posted a first-quarter loss of $217 million, hurt by unrealized loss on derivatives and continued increase in mortgage-insurance defaults.


Back to the markets! As long as the Federal Reserve Bank of New York keeps buying agency MBS’s, everything is ok, right? Let’s hope so, since they continue to be the dominant buyer by far. Last week they had “net purchases” of $23.1 billion, gross purchases of $59.6 billion. 97% of purchase activity is limited to 4.0% and 4.5% MBS’s, which typically encompass 4.25-5.125% mortgages – and only 7% of the securities are Ginnies comprised of FHA and VA loans.


Yesterday we had some good economic news, and the markets moved accordingly. Pending Home Sales rose 3.2%, and the Housing Affordability Index remained near record highs – certainly much higher than it was a year ago. Construction Spending was +.3% in March, which is the first increase in six months. Yes, most of it was increases in commercial and government projects, but we’ll take what we can get. Today we have the small issue of selling $35 billion in 3-yr Treasury notes, which may keep rates a little high in spite of the market being technically oversold. Currently the 3-yr yield is 1.39%, the 10-yr is 3.15%, and mortgage prices are better by .125-.250.

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