Readers Weigh in on Compensation Based on Channel and Source; QM & ATR

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Posted To: Pipeline Press

In Saturday's edition of the commentary, the question was raised by CG from Wisconsin regarding paying loan officers different rates based on different origination sources. ("I will pay the loan originator, 'X' number of basis points on files that THEY bring in the door but I will pay them 'Y' basis points on loans that are provided 'by the house'. I don't see this being a violation of LO comp as the final terms to the client will not be any different, and the difference in originators pay will not be related to ANYTHING related to the terms of the loan. Can I do this?") Is it "legal"? Terry F. wrote, "Rob, per our counsel, and the MBA meetings I attended back in 2010, lenders cannot differ the commissions based on the source if you are working with the same loan officer. For this to work,...(read more)

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Source: http://www.mortgagenewsdaily.com/channels/pipelinepress/05282013-ability-to-repay-qm-lo-comp.aspx

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Can't Count on Low Rates Forever, Right? Why QE3 Could be Expensive; HUD disaster relief

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Posted To: Pipeline Press

The Fed giveth, and the Fed taketh away. Both stocks and bonds fell on Wednesday after a Q&A session with Ben Bernanke , and minutes from the latest U.S. Federal Reserve meeting, shed some uncertainty on the schedule of QE3. We also had U.S. existing home sales move higher in April, +.6%, and so once again we have numbers showing a continued improvement in the housing market. Even though sales have likely been restrained by limited available inventory in recent months, the pace of sales reported for April was the strongest of the expansion to date (excluding the home buyer tax credit periods). The sales mix has also become healthier lately with distressed sales accounting for only 18% of the market in April, down from an average of 23% in 1Q and 28% in April 2012. The median price of an...(read more)

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Source: http://www.mortgagenewsdaily.com/channels/pipelinepress/05232013-bernanke-qe3-low-rates-hud.aspx

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Primer on Current Broker Compensation Plans - BPC & LPC; Reader Input on Different Topics

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Posted To: Pipeline Press

The mortgage industry is filled with smart business people who just want to know "the rules of the game" rather than the uncertainty that seems to exist in many areas. For example, CG from Wisconsin writes, "I own a small mortgage brokerage that, for a plethora of obvious reasons, is attempting to make the conversion over to become a mortgage banker. I'm doing my best to follow the ever changing LO comp rules as they seem to change on a daily basis; and I know that I will need to somewhat revamp my compensation plan for this new origination structure. It is pretty apparent that I will be forced to compensate my loan officers on a 'vanilla' basis point compensation plan (ensuring that their compensation is not commensurate to the terms of the loan in any shape of fashion). So here is an idea...(read more)

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Source: http://www.mortgagenewsdaily.com/channels/pipelinepress/05252013-broker-compensation-deduction.aspx

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Delinquency Rate Hits Post Housing Crisis Low for Freddie Mac

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Posted To: MND NewsWire

Freddie Mac said today that its total mortgage portfolio i ncreased by $951 million in April to $1.949 trillion , an increase of 0.6 percent. This was the second straight month the portfolio has increased. Purchases totaled $47.3 billion compared to $52.0 billion in March, liquidations were ($45.7) compared to ($44.85) billion and sales were ($627) million, up from ($617) million. The year to date growth in that portfolio is (1.1) percent and the annualized liquidation rate is 29.2 percent. The Mortgage-Related Investments Portfolio declined from an unpaid principal balance of $534.2 billion in March to 528.3 billion in April, a change of 13.2 percent . Purchases totaled $15.0 billion compared to $13.57 billion in March. Liquidations increased from ($10.10) billion the month before to ($10...(read more)

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Source: http://www.mortgagenewsdaily.com/05242013_freddie_mac_volume_summary.asp

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Mortgage Rates Hold Steady Ahead of 3-Day Weekend

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Posted To: Mortgage Rate Watch

Mortgage rates finally paused their relentless push higher today, holding at unchanged levels compared to yesterday's latest rate sheets on average. Some lenders were slightly better or worse, but none of them by a wide margin. Data and events were limited and markets were in holiday mode. The most relevant market to mortgage rates, MBS, had a volatile day, but the volatility didn't transfer to rate sheets as much as it normally does, likely due to the shortened trading day and 3-day weekend ahead prompting lenders to price more conservatively yesterday. This would go a long way toward accounting for our observation yesterday that rate sheets were worse in the morning despite trading levels not being appreciably weaker. (If you missed this week's big news for rates, or want a refresher: Why...(read more)

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Source: http://www.mortgagenewsdaily.com/consumer_rates/310172.aspx

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Mortgage Rates Carried Higher Still By Yesterday's Momentum

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Posted To: Mortgage Rate Watch

Mortgage rates weren't quite finished with what they began on Wednesday, which was the worst we've seen in a long time . Despite bond markets managing to hold their ground for the most part today, rates were carried higher by yesterday's momentum--that is to say, lenders' rate sheets were worse this morning than yesterday afternoon despite the fact that trading levels in Mortgage-Backed-Securities weren't appreciably worse. (catch up with yesterday's big move: Why Did Mortgage Rates Skyrocket Past 2013 Highs on Wednesday? ) Considering that yesterday's rates were the highest in exactly one year, today's claim the "over a year" title and best-execution is pushing well into 3.75% for most lenders with some closer to 3.875% already. This isn't universally the case and a few lenders were closer...(read more)

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Source: http://www.mortgagenewsdaily.com/consumer_rates/310022.aspx

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MBS RECAP: Attempting To Consolidate After Wednesday's Sell-Off

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Posted To: MBS Commentary

MBS Live : MBS Afternoon Market Summary Treasuries had a bit of an easier time today than MBS, the latter feeling the effects of a shift in duration preference that has been historically unkind to Fannie 3.0 30yr Fixed MBS. So far in 2013, when 10yr yields have approached 2.0%, The lower end of the production MBS coupon range feels the biggest pinch. This has to do with the negative convexity inherent to MBS markets. In short, if the broad swath of interest rates in the financial world are at a certain level and moving higher, there is a certain point on the spectrum of liquid MBS coupons where liquidity begins to dry up and prices tend to fall much faster than higher coupons because investors don't want to be stuck earning interest at a lower rate in a rising rate environment. That's a bit...(read more)

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Source: http://www.mortgagenewsdaily.com/mortgage_rates/blog/310013.aspx

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