Subservicing, Non-QM Products; Agencies Active in Capital Markets

Aug 13 2018, 8:37AM

Don’t think that correct mortgage documentation is important? Think again, or ask Citigroup. The Federal Reserve said Friday it had fined Citigroup $8.6 million over poor quality mortgage documentation practices at its CitiFinancial subsidiary in 2015. The Fed Citi mishandled customer files as it was preparing to wind down its mortgage servicing business, doing so in 2017. But there is good news! The Fed said that the problem was corrected, and the Fed is terminating a separate 2011 enforcement action against Citigroup on a separate residential mortgage loan servicing matter, citing sustainable improvements by the bank. Dot those i’s and cross those t’s!

 

Capital Markets

The various high-ranking officials within the Federal Reserve know just as much about the direction of the economy, short-term rates, and financing than anyone else, right? Fed Governor Quarles said the Secured Overnight Financing Rate (SOFR) is more liquid than Libor and should be used by banks when lending to one another going forward. Fed Kansas City President George said she believes “gradual further increases in our policy rate will be necessary to return policy to a neutral stance.” Fed Chair Powell said in Congressional testimony that the global growth outlook “remains solid” and the US economy is in a “really good place” and the “best way forward is to keep gradually raising the federal funds rate.”

The markets continue to expect the Fed to increase rates twice more this year baring any surprises in economic data or world events. The expected timing for those rate increases remains at the September and December meetings. Any questions?

As mentioned in this commentary, Fannie Mae issued the market’s first-ever Secured Overnight Financing Rate (SOFR) securities, a three-tranche $6 billion SOFR debt transaction scheduled to settle on July 30, 2018. This transaction should accelerate the development of the SOFR market and encourage other issuers in the debt markets to follow suit. The floating rate notes, offered in three maturities, 6, 12, and 18 months, were met with strong investor demand.

What else have those crafty Agencies been up to? Here’s a primer on the single security efforts. Loan originators should care because anything that contributes toward an active and liquid market for mortgages helps rates for borrowers.

Lender Products and Services

“Interest only payment options for your Jumbo Borrowers? We can do that! Stearns Wholesale introduces our Non QM Jumbo Product. With no private mortgage insurance required and eligibility based on FICO scores from 720 and up, the Non QM Jumbo provides flexible guidelines to help your clients qualify for more financing options. Income flexibility that allows for asset depletion, DTI > 43% and projected income. First time homebuyers with FICO scores less than 720 may access loan amounts up to $1M; experienced homebuyers can access loan amounts up to $1.5M. Big Win? We’d call this a Jumbo Win. Contact us for more details on the Non QM Jumbo and all the ways Stearns Wholesale can help you qualify more borrowers!”

CMC Funding, part of the Computershare Group, is aggressively buying servicing through its co-issue platform. With the co-issue process, the asset is sold directly to Fannie or Freddie while CMC Funding is simultaneously designated as the servicer. Why should you consider adding this delivery to your arsenal? Historically, with co-issue delivery your back-office expenses are lower – by some estimates up to 12bps. Additionally, you get all the benefits of selling agency direct without retaining servicing, you have readily available cash flow plus there is no servicing asset to maintain or value monthly – worth exploring!

  • CONVENTIONAL LOANS – Giving you a low down payment, a great rate and a head start on your equity
  • FHA LOANS – Taking FHA borrowers to a new level with industry-leading government rates and pricing
  • VA LOANS – A hero for our veteran borrowers. Whether you are purchasing a new home or refinancing
  • REFINANCE LOANS – Multiple options allowing you to refinance with aggressive pricing that help you lower your payment or cash-out
  • JUMBO LOAN – Look no further. Superior gives you the pricing and turn times you deserve with competitive pricing 
  • FIRST TIME HOME BUYERS – We have great alternatives for borrowers looking to purchase with a low down payment
  • MORTGAGES FOR CANADIAN CITIZENS – Canadian citizens who are interested in purchasing a second home in the US. We can help!
  • COMMERCIAL LOANS – With over 30 years of business, commercial and multifamily purchase, refinance and construction financing experience
  • ELITE – The obvious choice for top-tier borrowers! Comprised of some of the best rates and pricing in the industry. You’ve build outstanding credit, you deserve an outstanding rate

CONTACT US TODAY 702-507-4170

One of the Best Mortgage Brokers in Las Vegas. Helping You Finance Your Dreams!

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About Superior Mortgage Lending LLC

Superior Mortgage Lending LLC is a full service mortgage broker located in Las Vegas, Nevada. Our goal is to provide excellent service to you throughout the process. NMLS # 372130 Nevada License # 3582 California License # 603K964 Arizona License # 0119906 8867 W Flamingo Road STE 200 Las Vegas, NV 89147 (702)507-4170 / www.superiorml.com
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