Construction Product; Tax Guideline Changes From Lenders

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Here’s some trivia for Happy Hour tonight. Who is Irene Triplett? Triplett is the sole surviving person sole surviving person to be receiving a Civil War pension from the VA. She is 87, the daughter of a “War of Northern Aggression” soldier, lives in North Carolina, and every month cashes a check for $73.13 from the VA. At the other end of the dollar spectrum, at more than $5.4 trillion, “tappable” borrower equity reached an all-time high in the fourth quarter of 2017, according to the latest “Mortgage Monitor” report released by Black Knight Financial Services’ data and analytics division. Black Knight defines “tappable equity” as the total amount of available equity a homeowner with a mortgage can borrow against before reaching a maximum loan-to-value ratio of 80 percent. Of course, this gives lenders thoughts of volume, but also to the, “People shouldn’t use their homes as piggy banks,” argument.

 

Lender Products

LendingQB will showcase its new OriginatorQB module at the upcoming MBA Technology Conference in Detroit. OriginatorQB is a tool designed specifically for loan originators that focuses the mortgage process on their unique needs. It also represents a revolutionary way for lenders to use the LendingQB LOS platform by offering role-specific modules that enhance productivity and improve ease-of-use of their software. You can learn more about LendingQB and their OriginatorQB module by visiting them at booth #433 at the MBA Technology Conference or online at www.lendingqb.com.

Built Technologies is a leading provider of secure, cloud-based construction lending software, was recently named to the HW Tech100 for the second consecutive year. The Nashville-based FinTech firm has also been named a 2018 best of FinXTech finalist, recognizing the transformative impact the Built software has had with Pinnacle Financial Partners. With demand for construction loans on the rise, a growing number of lenders have transitioned to managing their construction portfolios online, reducing risk and simplifying the construction loan administration process.

Tax News

Here’s something interesting: The top 20% of American earners will pay 87% of the income tax. Households earning more than $150,000 will pay a larger share of income tax than last year.

When new tax legislation was passed late last year, many in residential lending opposed it, fearing it would hamper homeownership. In a new analysis, Moody’s Investors Service is doing a deep-dive into whether these fears were founded. Moody’s tells us that the Tax Cuts and Jobs Act of 2017 decreased the tax incentive of homeownership by 1.61 percent from 1.67 percent to 0.06 percent for a family earning $150,000 annually in a high-tax state. But although Moody’s found that the legislation greatly reduces the tax benefits of homeownership, the impact on residential mortgage credit performance in the near-term will be neutral.

Every loan officer knows that families make decisions to buy or rent based on more than just financial considerations, considering factors such as where they want to live and whether rentals are available in their desired location. “Financial considerations can become even less important in environments, such as the current one, where there is a relatively limited supply of homes for sale. In fact, the tax law’s grandfathering of interest deduction limits for existing mortgages of up to $1 million (which falls to $750,000 under the new law) may further reduce supply in certain markets by dis-incentivizing sales by existing owners with outstanding mortgages greater than $750,000,” Moody’s reported.

“According to Moody’s, the higher after-tax incomes that many Americans will now experience will also offset the direct impact of losing homeownership incentives. With this greater access to disposable income, Moody’s predicts the tax changes will drive a modest positive for the performance of non-mortgage consumer credits—such as in the auto and credit card markets. Overall, however, these markets will continue to weaken largely due to weakening underwriting standards which have seen delinquencies and charge-offs start to rise.” Moody’s subscribers can access the full report by clicking here.

Wells Fargo Funding posted that Tax-advantaged college savings plans (529 college saving plans) may now be used to meet the retirement portion of the reserve requirement for Non-Conforming Loans. The borrower must be the custodian on the account. The balance must be reduced by 10% to account for tax consequences for drawing the funds for noneducational purposes.

FTMC now requires 75% of the estimated tax amount to be used for escrows instead of the current assessment based on the lot value only. This requirement is applicable for new construction loans.

Pacific Union Financial strives to make tax documentation easy. If a borrower wishes to use his or her 2017 tax returns for qualification and has recently filed (thus transcripts are currently unavailable), Pacific Union will accept: 2017 tax returns signed by the borrower(s) Proof the tax returns were filed by one of the following: Electronic receipt from e-Filing, Stamped IRS Receipt, Letter from CPA/Accountant AND Proof of either taxes paid (cancelled check) or refund received (bank statement).

Pacific Union Financials’ Mortgage Credit Certificates (MCCs) are now allowed as follows: Delegated: MCCs may be used as a direct income tax credit when filing a Federal Income Tax Return or monthly income amount to be used for qualifying purposes. Non-Delegated: MCCs may only be used as a direct income tax credit when filing a Federal Income Tax Return. MCCs may not be used as monthly income at this time.

Ditech Financial LLC “ditech” Approved Correspondent Clients: should note that its Tax Return Job Aid has been updated to reflect the new year.

Flagstar Bank posted the following 4506-T overlay revision: Effective immediately for USDA loans, the 4506-T results will no longer be required for all adult household members and will only be required for borrower(s) with the following income types: Self-employed, Commission greater than 25%, Rental income documented on Schedule E, Employed by family and Fixed income types such as disability, social security, retirement, child support, alimony, etc., when the 1040s are obtained in lieu of alternative documentation such as award letters, 1099s, bank statements, etc.

Effective March 1, 2018, the IRS has stopped accepting the September 2015 version of Form 4506-T. Sun West will now require the use of July 2017 version of Form 4506-T for all loans that require ordering IRS transcripts.

Capital Markets

Everyone’s looking to pick up a few basis points. Sometimes it is tough to be a capital markets person, trying to eke out a few, when your company is paying out 1.50 points to LOs. Watch an in-depth interview with Benjamin Coll, Director of the Product & Pricing Division at Mortgage Capital Trading (MCT), as he explains how lenders target and maximize their margins with white-label rate sheets, mark-to-market reporting, and best execution analysis. A white-label rate sheet allows secondary managers to optimize their margins and develop a consistent, positive experience with an in-house product for their loan officers. MCT works with lenders to analyze all possible executions and generate this rate sheet daily or whenever the market dictates an update. Learn why having accurate pricing data is so crucial and how daily and monthly mark-to-market reporting engenders the transparency and control that mortgage companies need to be fully prepared for any market event.

Looking at rates, U.S. Treasuries ended Tuesday on a mixed note after headlines focused on a speech made by China’s President Xi Jinping, in which he offered to allow more foreign investment in China’s auto sector. While President Xi’s speech was enough to boost global capital markets, he has twice made similar speeches previously without follow through. The Producer Price Index (PPI) was the market release of note yesterday, and higher figures will feed concerns about a pass through to consumers and keep the Federal Reserve steadfast in its belief that inflation rates are set to pick up, leaving it with a tightening bias. It should also be noted crude skipped higher on increased tensions over Syria (Weekly crude inventories are due out this morning at 10:30 ET; prior -$4.6 million), and volatility could also pick up with the FBI raid on President Trump’s personal lawyer.

Looking to the other releases slated for today, the MBA mortgage applications for the week ending April 6. Overall down 2%, the headlines were grabbed by refis which hit a 10-year low and make up 38% of all apps. We’ve also had March CPI and core CPI (-.1%, a surprise, core +.2%, as expected). Later in the day we have the minutes of the March 20/21 FOMC meeting along with the March budget deficit which the CBO estimates at $207bn which, if realized, would be a record for March. Wednesday starts with rates a shade lower versus last night’s close: the 10-year is yielding 2.76% and agency MBS prices are better .125.

Employment

David Godwin will serve as Senior Vice President of Business Development at BankSouth Mortgage. In this role, David will continue to lead BankSouth Mortgage’s business development efforts with an emphasis on recruiting, as the company grows its roster of best-in-class mortgage bankers. David, who joined BankSouth Mortgage in 2012, previously focused on supporting the organization’s Alliance Division by fostering relationships with new builders and real estate companies, and his efforts helped the BankSouth Mortgage earn recognition as the top new construction lender in Georgia in 2016. Contact David to learn more about BankSouth Mortgage.

Focused on residential real estate entrepreneurs and obsessed with customer service, Center Street Lending has built a reputation as a premier private money portfolio lender. Center Street provides business-purpose loans through wholesale and retail channels for investments in: fix and flip, fix and rent, buy and rent; buy, tear down and build; new construction, and bridge loans. Contact management at 800-208-2976 or info@centerstreetlending.com for more information.

“We are a Southern California-based mortgage lender seeking highly talented and experienced Wholesale Regional Sales manager for the southwest region to join our growing team. Our company has successfully been originating and servicing loans for over 20 years and is currently expanding throughout the country. We are Fannie, Freddie and GNMA approved coupled with a unique non-QM product line. Our professional underwriting and operations team is second to none within the mortgage industry. We continue to be leaders in pricing products & services. If you want a stable corporation with an entrepreneur growth mindset, then we are a great fit for you.” Please send confidential resumes to me and specify the opportunity.

Continuing their record growth in March, Angel Oak Mortgage Solutions, a leader in non-Agency lending, announced the addition of 4 more AEs to help brokers grow their business. Adding additional coverage across the country, Alonzo Johnson came on-board in Los Angeles, Tom Self in Seattle, Jared Warlick in Fort Myers, FL and Oscar Ungo joined the inside sales team. And Angel Oak Mortgage Solutions is not done, as it continues to hire additional Wholesale Account Executives across the country as well as underwriters and other operations positions in Atlanta and Dallas. As more companies realize the benefits of offering responsible non-Agency products, it only makes sense to work with the market leader. If you are interested in learning more, please visit JoinAngelOak.com.

Towne Mortgage Company is looking for a Senior Account Executive in nation-wide geographical markets. In this position you will have access to multiple operation centers and all product offerings including FHA, 203K, Fannie Mae HomeStyle, HomeReady, DU Refi Plus, VA, USDA, and Manufactured Programs. Towne is looking for a seasoned, high-energy, sales leader who can partner with Towne to expand their book of business. This AE will have the ability to add an array of account types including Brokers, Banks, and Credit Unions with Wholesale and Mini-Correspondent offerings. Towne offers competitive compensation packages including Medical and 401K. Sound Interesting? Email Cassi Sluka for more information.

Congratulations to Carl Tyree who has been promoted to EVP of Sales at Arch MI. “Carl joined Arch MI at its inception in 2014 as VP and National Accounts Manager…His promotion to lead Arch MI’s sales team follows the recently announced and upcoming retirement of Chris Clement, who currently serves in this role. Carl will oversee Arch MI’s sales teams and customer relationship strategies, reporting to President and CEO David Gansberg.”

 



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