BRIEF-Fannie Mae announces 2 credit insurance risk transfer …

DIARY-Top Economic Events to Sept 7

Political and general news
This Diary is filed daily. ** Indicates new events

Fannie Mae Speculates Home Lenders Could Feel Some Pain …

U.S. mortgage lenders are preparing for tougher competition as consumers’ demand for home loans slows, according to Fannie Mae’s (FNMA) latest quarterly survey released today, Reuters reported.

The net percentage of lenders who expect to ease credit standards was 15%, up from 3.5% during the same period last year.

About 6% of lenders expect lower profit margin in the next quarter, down from 12% the quarter before.

The margin on the share of lenders who saw a drop in consumer demand for a loan over those who saw a rise in demand fell 30%, which is the lowest in two years on a year-over-year basis.

What’s Hot On TheStreet

Unusual to hear these words: Under Armour’s (UAA) founder Kevin Plank has never been one to sound weak in a public setting. Plank is known for his motivational speeches to employees and desire to crush all competition. So, it was odd to hear Plank say rival Nike (NKE) “isn’t playing fair” on the Today Show on Sunday — it sounded like a CEO who after several below plan quarters is finally realizing how challenging it will be to dethrone Nike.

Hat tip to Ford: A noted supporter of recycling, auto legend Henry Ford would be proud to know his spirit of conservation is still alive and well in the company that bears his name.

And in fact, as TheStreet learned on a recent trip to Ford’s (F) Dearborn, MI. headquarters, the founder’s recycling efforts have been taken to a whole other level. Within Ford’s Plastics and Materials Sustainability Research Department, which is tasked with finding ways to create auto parts from things found in the Earth such as soybeans and agave plants, senior technical leader Deborah Mielewski showed off a new coin tray made from shredded cash.

It took about $400 of cash to make the coin tray, said Mielewski.

Shout out to the 1990s: It may be time to cash in those Tesla (TSLA) stock gains and go out and buy one of these new classic cars, TheStreet reports. There are several models from 1992, including the early version of the Dodge Viper, that are starting to take off in value.

Nestle rips to a high: Shares of chocolate maker Nestle touched an all-time high Monday after activist investor Third Point, led by Dan Loeb, revealed it had built a stake in the group and pressed for asset sales and increased buybacks. The stake is worth more than $3.5 billion, making Third Point one of Nestle’s top 10 shareholders. For Loeb, this is one of his boldest bets yet as he tries to shake up the staid consumer packaged goods giant.

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Fannie Mae transfers risk on $19.8 billion in single-family loans …

Fannie Mae announced it completed its second set of traditional Credit Insurance Risk Transfer transactions for 2017.

The two deals, CIRT 2017-3 and 2017-4, cover a total of $19.8 billion in single-family loans, and are part of Fannie Mae’s ongoing effort to reduce taxpayer risk by increasing the role of private capital in the mortgage market.

To date, the GSE acquired nearly $4.3 billion in insurance coverage on about $170 billion in loans through its CIRT program.

“The latest transactions of CIRT 2017-3 and CIRT 2017-4 transferred $546 million of risk to 17 reinsurers and insurers, and demonstrate Fannie Mae’s commitment to build liquidity in the risk-sharing market through the regularity and transparency of our credit risk transfer executions,” said Rob Schaefer, Fannie Mae vice president for credit enhancement strategy and management.

CIRT 2017-3 became effective on May 1, 2017. Fannie Mae will retain the risk for the first 50 basis points of loss on a $17.7 billion pool of loans. After that, reinsurers will cover the next 275 basis points of loss on the pool, up to a maximum coverage of about $486.2 million.

CIRT 2017-4 became effective at the same time, and Fannie Mae will also retain the risk on the first 50 basis points of loss on the $2.2 billion pool of loans. Once this layer is exhausted, an insurer will cover the next 275 basis points of loss, up to a maximum coverage of about $60.1 million.

Coverage for these deals is provided based upon actual losses for a term of 10 years. Depending on the pay down of the insured pool and the principal amount of insured loans that become seriously delinquent, the aggregate coverage amount may be reduced at the one-year anniversary and each anniversary of the effective date thereafter. The coverage may be canceled by Fannie Mae at any time on or after the five-year anniversary of the effective date by paying a cancellation fee.

The loans within the two pools are all fixed-rate with loan-to-value rations of more than 80% and less than or equal to 97% with original terms between 21 and 30 years. Fannie Mae acquired the loans throughout 2016 and 2017.

Home Appraisals | Fannie Mae | Freddie Mac – The Real Deal

The headquarters of Freddie Mac are seen October 21, 2010 in McLean, Virginia. (Photo by Win McNamee/Getty Images)

Do we always need an appraiser to tell us what a house is worth? The two biggest sources of mortgage financing in the country — Freddie Mac and Fannie Mae — think not.

With no formal public announcement, on June 19 Freddie Mac began phasing in its plan to transition to appraisal-free mortgage for certain loan applications. Though limited initially to some refinancings, Freddie expects to expand the concept to home purchases in the coming months. Under the program, borrowers no longer will have to pay hundreds of dollars for a professional appraisal — a reversal of long-standing mortgage industry practice. There will be no traditional appraisal charges at closing and lenders no longer will be required to assume responsibility for the accuracy of home valuations. The program currently is limited to refi applicants who have at least 20 percent equity in their homes and are not pulling out cash.

Fannie Mae, the other giant, government-supervised financing company, has been quietly offering no-appraisal refinancings for months. Both companies emphasize that they only permit waivers of appraisals when they have substantial data on the property involved and the local real estate market. Fannie says it has a database containing more than 23 million previously completed appraisal reports and uses “proprietary analytics” to come up with value estimates. Unlike Freddie Mac, Fannie Mae has not indicated whether it plans to expand its “property inspection waiver” concept to loans for home purchases, though industry sources say they expect it.

Mortgage lenders generally are enthusiastic about the two companies’ moves. Dave Norris, chief revenue officer of loanDepot, one of the highest volume retail lenders in the country, says “leveraging technology” to arrive at property valuations “gives consumers certainty” about the status of their application upfront, sharply reduces the time needed to get to closing, plus saves money. Roughly 12 percent of loanDepot’s refinancings through Fannie Mae already are proceeding appraisal-free, Norris told me.

“Consumers definitely appreciate it,” he added. There’s “more cash in their pockets” and the total experience is better.

Pete Mills, a senior vice president at the Mortgage Bankers Association, also welcomed the appraisal-free concept. “If there is a way to use technology to streamline or automate the process while ensuring the same standards of accuracy are met,” he said, “it would benefit both lenders and consumers and should be pursued.” Nonetheless, loan applicants should retain the right to request a full, walk-through appraisal if they want one, added Mills.

Not surprisingly, appraisers view the whole trend as an impending nightmare — potentially sending them to the fate of buggy whip manufacturers, travel agents and others whose industries have been decimated by new technologies. Unlike buggy whip makers in an age of automobiles, however, appraisers argue that they have a legitimate, continuing role. There is simply no technological substitute for what they bring to the table: Eyes, ears, noses and the ability to independently analyze a home, its interior, the neighborhood environment and market conditions, and arrive at an accurate opinion of its current worth. Computer programs may be jam-packed with data and algorithms but they have no clue about what damage — or improvements — may be present inside a house.

“I’ve walked into five-year-old houses that are in such bad shape that they look like they haven’t been maintained for 25 years,” says Pat Turner, a Richmond, Virginia, appraiser. Eliminating appraisals is a “a throwback” to the disastrous practices of subprime lenders during the housing boom and bust, he said. “This is a return to no doc and low doc on steroids.”

Carl S. Schneider, an appraiser in Tulsa, Oklahoma, says the path Fannie and Freddie are on is “fraught with danger,” not only for banks but for the taxpayers who may have to bail them out. The databases Fannie and Freddie are using may contain voluminous appraisal information previously submitted as part of mortgage files. But that “property data will age and change without being refreshed” if large numbers of new appraisals are not being done, he said. Without new professional appraisals that include updated information on the interior conditions of homes — plus observations on the presence of value-depressing environmental features in the area that aren’t likely to be picked up by computers — “where will it all lead?” asks Schneider.

Where indeed? Fannie and Freddie are confident that they are introducing appraisal-free mortgages carefully and responsibly. Appraisers have serious doubts. The jury is out.

Freddie Mac completes $292 million sale of previously modified …

Freddie Mac announced Tuesday that it completed the previously announced sale of approximately $292 million in previously modified loans from its investment portfolio to Towd Point Master Funding.

This sale included 1,262 seasoned re-performing loans and moderately delinquent loans that are currently serviced by Select Portfolio Servicing.

The pool of loans is comprised of fixed- and step-rate modified seasoned mortgages with an average loan balance of $231,100. The loans carry a loan-to-value ratio of approximately 101%, based on Broker Price Opinions.

According to Freddie Mac, these loans were previously modified to help borrowers who were at risk of foreclosure.

The loans were sold as part of Freddie Mac’s Seasoned Loan Structured Transaction program, which is designed to reduce Freddie Mac’s less liquid assets in its mortgage-related investments portfolio and shed credit and market risk via “economically reasonable” transactions.

Now that the loan sale is complete, the second phase of the Seasoned Loan Structured Transaction program begins.

In the second step of the program, the purchaser of the loans (Towd Point Master Funding, in this case) will securitize the loans.

Freddie Mac will then guarantee and purchase the senior tranche of the securitization, while Towd Point Master Funding will retain the first loss subordinate tranche.

According to Freddie Mac, a key requirement of these types of deal is that the buyer of the loans, and therefore the subordinate tranche, be an investor with substantial experience in managing both performing and moderately delinquent mortgage loans as well as securitizing mortgage loans.

Now, that process moves forward.

BRIEF-Freddie Mac prices $974 million multifamily K-deal, K-726

June 23 Federal Home Loan Mortgage Corp

* Freddie Mac prices $974 million multifamily K-deal, K-726

* Expects to issue approximately $974 million in K-726
certificates, which are expected to settle on or about June 29,
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ACHIEVEMENT: Council Bluffs Realtor Recognized Nationally for Protecting, Investing in Real Estate Industry





PHH finalizes sale of Freddie Mac mortgage servicing rights portfolio …

At the end of last year, PHH announced that it planned to sell off its entire mortgage servicing rights portfolio in a massive deal with New Residential Investment.

Now, that process is moving closer to being complete, as PHH disclosed Monday that it recently completed the sale of “substantially all” of its Freddie Mac MSR portfolio to New Residential.

PHH made the disclosure in filing with the Securities and Exchange Commission.

In the filing, PHH said that the closing of this sale constituted the initial sale of MSRs under its agreement with New Residential. 

When PHH initially announced the deal in December, it said it planned to sell the servicing rights on 480,000 mortgages with a total unpaid principal balance of $72 billion to New Residential.

Based on the “MSR portfolio composition” and market conditions, PHH said that it expects the proceeds of the deal to be approximately $912 million.

Of that $912 million, approximately $612 million is from the sale of the MSRs themselves and approximately $300 million is related to the sale of servicing advances.

In this deal, PHH said that it sold the servicing rights on approximately 81,500 mortgages to New Residential.

Additionally, the SEC filing states the following:

The Company sold the Freddie Mac MSR Portfolio, together with all servicing advances related to the Freddie Mac MSR Portfolio, for total proceeds of approximately $110 million, of which approximately $101.5 million was attributable to the purchase price for the Freddie Mac MSR Portfolio and approximately $8.5 million was attributable to the related servicing advances.

As part of the deal, PHH will be subservicing the MSRs for New Residential for an initial period of three years.  The SEC filing also states that in order to facilitate New Residential’s financing of servicing advances as part of the subservicer agreement, New Residential will reimburse PHH on a weekly basis for any servicing advances that PHH makes.

PHH also notes that the closing of the Fannie Mae portion of the MSR sale is expected to take place in the third quarter.

Personnel news

Downing-Frye Realty Inc.

These sales associates have joined the firm:

Susan Spedling has joined the Naples office. Originally from California, Spedling moved to Florida in 2004. She has experience as an executive assistance in the construction industry. Spedling has earned the CSA designation and is a member of the Naples Area Board of Realtors (NABOR), Florida Realtors (FR) and the National Association of Realtors (NAR).

Karena DeWitt has joined the Marco Island office. Originally from Nashville, DeWitt moved to Florida in 2013. She is a graduate of West Virginia University in Morgantown, W. Va. DeWitt has 15 years of real estate experience in Tennessee and specializes in luxury homes sales, new construction and equestrian properties. She has earned the CRS, ABR, CNE and e-Pro designations. DeWitt is a member of NABOR, the Marco Island Area Association of Realtors (MIAAOR), FR and NAR.

Rob Smith has joined the Naples office. Originally from Danville, Kentucky, he studied at Centre College in Danville, Ky. Smith moved to Florida in 2005. Before real estate, he ran a restaurant in Columbus, Ohio until 2005 when he joined the Marriott Marco Island Beach Hotel where he continues to serve. Smith is a member of NABOR, FR and NAR.

The following new agents have also joined the firm: In the Naples office: Frederic J. Kaouk, Jack Reinelt, Aida Julia Solano and Tatyana Seamans. In the Bonita Springs office: Gale Griswold.

Downing-Frye Realty Inc. announced its sales and listing leaders for May. In the Naples office: Mary Catharine White was the sales leader and Michael Dorobanti was the listing leader. In the Bonita Springs office: The Brown Realty Group was the sales leader and Phillip Pugh was the listing leader. 

John R. Wood Properties

The firm has added the following Realtors: Old Naples office: Blaine EastNorth Naples office: Michael FlaniganLisa Trubiano and Lorri BrunoBonita Springs office: Peter Simmons, Kim Venezia and Jane Newby Gruenhagen.

CRE Consultants 

Kelly Cerino has been named the real estate manager and will be based in the Naples office, where she will handle a portfolio of 11 properties. Cerino has 13 years of experience in commercial and residential lease negotiations, accounts payable/accounts receivable and bookkeeping. She is a Florida licensed CAM and holds a Florida real estate license. Cerino has been a Naples resident for more than 25 years.

Daryl Silvers Naples

Patricia G. Joyce has joined the firm. Before moving to Naples, Joyce lived and worked for 23 years in Beverly Hills, California, involved with an A-rated commercial/residential real estate and investment firm. She holds a B.A. from Goucher College in Baltimore, Maryland and is also a graduate of the UCLA Writers Program in Los Angeles. She will  enable buyers and sellers with the right tools, guidance and support.

Stevens Construction Inc.

Chris Walczak has joined the company’s Fort Myers team. He has 12 years of commercial construction and architectural experience and previously served as a project manager for a national construction manager. A LEED BD+C Accredited Professional and licensed Real Estate Sales Associate, Walczak served as an adjunct professor at Florida SouthWestern State College teaching courses in construction management, estimating and scheduling for three years. As project manager, Walczak will have overall responsibility for the management and execution of commercial projects during all phases of design and construction, ensuring projects maintain budget and schedule.

Fannie Mae to loosen mortgage requirements – Visalia Times






Consumers with credit card debt, adjustable-rate mortgages and home equity lines of credit will be most affected by a Fed rate hike.

The government-sponsored mortgage giant Fannie Mae is planning to reduce its requirements next month, raising its debt-to-income ceiling from 45 to 50 percent in July according to the National Association of Realtors. The move could pave the way for a larger number of new buyers to qualify for a home mortgage, especially millennials who may be saddled with student loan debt.

The debt-to-income ratio compares a person’s gross monthly income with his or her monthly payment on all debt accounts, including auto loans, credit cards, and student loans. It also factors in the projected payments on the new home mortgage. Lenders see applicants with lower debt-to-income ratios as less of a risk of defaulting on their home loans.

More: Millennials are powering the housing market

Drop in mortgage rates motivate refinances

Survey: Home ownership rates may rise

Local Realtors fight for California property rights

Fannie Mae, Freddie Mac and the Federal Housing Administration (FHA) have exemptions that allow them to buy or insure loans with higher ratios than the federal rules, which are set at a maximum of 43 percent. The FHA allows debt-to-income ratios of more than 50 percent in some cases. This will be extremely helpful to families here in the San Joaquin Valley as they plan for a new home.

In a recent study, Fannie Mae researchers looked at more than a decade and a half of data from borrowers with debt-to-income ratios in the 45 percent to 50 percent range. They found that a significant number of these borrowers had good credit and were not prone to default on their loans.

“We feel very comfortable” with the increased debt-to-income ratio ceiling, said Steve Holden, Fannie Mae’s vice president of single-family analytics. “What we are seeing is that a lot of borrowers have other factors” in their credit profiles that reduce the risks associated with slightly higher debt-to-income ratios. For example, these borrowers may make higher down payments or have cash reserves of 12 months or more.

In Visalia, Tulare and Porterville many lenders say they are happy to see Fannie Mae loosen up their debt-to-income guidelines a bit. This will help potential buyers who are currently being rejected for mortgages and allow more potential homebuyers to enter the marketplace.

But that does not mean that anyone with a debt-to-income ratio below 50 percent will be approved. Borrowers will still be closely vetted by Fannie’s underwriting system to examine their complete application including income, down payment, credit scores, and more. The best move a potential homebuyer can make is to contact a local Realtor with experience in the Visalia, Tulare or Porterville marketplace and start getting prequalified for your home loan. Realtor’s work hand in hand with mortgage lenders and will be an invaluable resource to help you arrange for the right home loan for your family.

Mike Allen is the new President/Broker-Owner of Century 21 Jordan-Link Company, a full-service real estate firm celebrating their 41st year in business in 2017, with offices in Visalia, Tulare, and Porterville. Allen and hs business partner Michael Gutierrez, new Vice President of the firm and Manager of the Porterville office of Century 21 Jordan-Link, purchased the company recently from founder Bill Jordan. Mike can be reached at 733-9696 or