Memorial Day 2020 Holiday Lock Desk Hours

May 6, 2020rashtonBulletin, News

Overview

The Lock Desk will be closed on Monday, May 25, 2020 for Memorial Day, which is a Federal Holiday. Normal lock hours will resume on Tuesday, May 26, 2020.

Additionally, the Lock Desk will close early on Friday, May 22, 2020 at 11:00 A.M. PST due to the early close of the financial markets.

Rate locks that expire on the holiday will automatically roll to the next business day. In addition there are some important disclosure considerations associated with the holiday:

  • Monday, May 25, 2020 cannot be included in the rescission period for refinance transactions.
  • Monday, May 25, 2020 cannot be included in the seven (7) business day waiting period between the date the initial Loan Estimate (LE) was provided to the borrower and the consummation of the loan
  • When re-disclosure of the LE is required, Monday, May 25, 2020 cannot be included in the three (3) business day waiting period between the date the revised LE was provided to the borrower and the consummation of the loan.
  • When re-disclosure of the Closing Disclosure (CD) is required, Monday, May 25, 2020 cannot be included in the three (3) business day waiting period between the date the revised CD was provided to the borrower and the consummation of the loan.

Issues related to locks should be sent via email to lockdesk@carringtonms.com.

Big Rate Drop & LLPAs Cut

May 5, 2020rashtonNews

Big Rate Reduction + Drastic Reduction in LLPAs

Effective immediately, Carrington Mortgage has improved pricing and reduced LLPAs on FHA, VA & USDA products. In these ever-changing times, you can count on Carrington to consistently help drive your success.

Carrington. Your one “constant” for…

  • Options for FICOs as low as 500
  • Manual underwriting expertise
  • Financing manufactured homes
  • Non-traditional credit programs

VIEW RATES

Is This the Bottom?

May 4, 2020jordanreedNews

Last Week in Review: Is This the Bottom?

Home loan rates continue to hover near all-time lows, but there are three reasons why they should have improved but didn’t.

Let’s take a look at some of the “Bond-friendly” news from this week that was unable to push mortgage-backed security (MBS) prices higher and home loan rates lower.

  1. Unemployment: The unemployment line is growing. This past week another 3.85 million people filed for unemployment insurance, bringing the total to a staggering 30,000,000 since mid-March. Bonds embrace bad news, and this was bad news.
  2. Core PCE: The Federal Reserve’s favorite gauge on consumer inflation, the Core Personal Expenditure Index (PCE), was reported at -0.1%, well beneath expectations. Inflation is like the tide that rises all boats — when it declines, like we are seeing, rates typically decline as well. That did not happen this week.
  3. Monetary Policy Statement: This past week, the Federal Reserve issued their Monetary Policy Statement and shared that they will continue purchasing MBS “to support smooth market functioning.” Bonds and home loan rates were unable to improve further despite the Fed’s continued buying commitment.

What does this tell us? Have we reached the “bottom” in rates? Quite possibly.

Stocks ended April up 12%, the best month since the ’80s. At the same time, the 10-year Note yield, a benchmark for longer-term rates, has been unable to move convincingly beneath .60%. Both Stocks and the 10-year Note yield are forward-looking and appear, at the moment, to be ignoring the awful economic numbers that continue to roll in.

Bottom line: For those who have an opportunity to lock in a home loan rate, now is an incredible time. It’s not yet clear that once our economy starts re-opening that rates will stay near current levels. If this week was any gauge, it is suggesting they won’t.

 

Stabilization in the MBS Market

April 27, 2020jordanreedNews

Last Week in Review: Stabilization in the MBS Market


One of the major effects of the coronavirus was the enormous destabilization of the mortgage-backed securities (MBS) market back in mid-March.

MBS pricing and trading activity determine home loan rates, so a big and fast solution was necessary.

Thankfully, the Federal Reserve quickly came to the rescue by purchasing MBS to help stabilize the MBS market — and it worked! Their massive MBS Bond buying program stabilized the market, helped the lending industry in numerous ways, and kept home loan rates in a sideways range throughout April.

Now the Fed, who was buying as much as $50 billion per day in MBS, purchased less than that amount this entire past week.

What does it all mean for homeowners or would-be homeowners today?

With the Fed buying significantly less MBS, there is a limit to how low home loan rates can go in the near-term, making today an incredible opportunity to capture historically low home loan rates.

Besides a sharply smaller Fed MBS buying commitment limiting the improvement to home loan rates, here are three additional reasons why home loan rates might not improve much further in the near-term, making today a great time to secure a home loan:

  1. Capacity at the lender level will limit how low home loan rates can go. Lenders are experiencing record mortgage volume. Whether a company is selling widgets or loans, when they are “flying off the shelf” the last thing a company does is lower price.
  2. MBS are now carrying an increased risk of default due to the current elevated unemployment rate. Investors in MBS will demand a premium for this risk, again putting a limit to lower rates.
  3. MBS hate good news. This week, stabilization in the oil market, and the idea that pockets of the U.S. economy will reopen, lend an air of optimism which limits interest rate improvement.

The Unemployment Line is Growing

April 20, 2020jordanreedNews

Last Week in Review: The Unemployment Line is Growing

The leading indicator on the health of the job market is the Initial Jobless Claims report, which essentially tells us the length of the unemployment line. And that line just grew.

Over the past four weeks, approximately 22 million people have filed for unemployment benefits, erasing nearly a decade worth of job creation.

Although the unemployment rate is likely 13% or higher, this is temporary in nature due to the coronavirus. We expect many people will be headed back to work relatively soon as the virus passes.

We won’t see the “pre-virus” 3.5% unemployment numbers for some time. However, the economy is expected to bounce back sharply as pockets of the country begin to reopen, putting people back to work.

There remains incredible opportunity during these uncertain times. Home loan rates are at all-time lows, affording many people the opportunity to refinance and restructure their personal debt.

With the Fed continuing to buy mortgage-backed securities, rates should hover near current levels for the foreseeable future.

The CARES Act – Mortgage Forbearance Relief Breakdown

April 6, 2020jordanreedNews

Last Week in Review: Coronavirus Fallout to Hit Homeowners

The Coronavirus has impacted millions of Americans across the country due to job loss and furloughs making it difficult, and sometimes impossible, for homeowners to make their mortgage payments.

The U.S. government has stepped in to offer homeowners financial relief during this unprecedented time with the Coronavirus Aid, Relief, and Economic Security (CARES) Act. With this new Act, government-sponsored agencies such as Fannie Mae and Freddie Mac will offer forbearance agreements with protections for those homeowners in need.

What is a forbearance? A forbearance is an agreement between a homeowner and their mortgage servicer (to whom they send their mortgage payments) to suspend payments for a period of time. The homeowner does not incur late fees or other penalties during the forbearance.

Additionally, mortgage terms are unchanged, and the homeowner agrees to make up the accrued interest and payments in the future. Typically, a forbearance will affect a homeowner’s credit rating, however, there are a few differences in forbearances during COVID-19 which can be found on the Fannie Mae and Freddie Mac websites.

Loan servicers have been instructed to provide mortgage relief options which include:

  • Ensuring payment relief by providing forbearance for up to 12 months.
  • Waiving assessments of penalties or late fees.
  • Halting of foreclosures and evictions of borrowers living in homes owned by the mortgage servicer until at least May 17, 2020 (Freddie Mac).
  • Suspending the reporting to credit bureaus of past due payments of those in forbearance due to the COVID-19 emergency.
  • Offering loan modifications for payment relief to keep mortgage payments the same after the forbearance period.
  • Borrowers are eligible regardless of whether their property is an investment, second home, or owner-occupied.

Bottom line: homeowners who have the ability to pay their mortgage should do so. Homeowners who are unable to, should contact their mortgage servicer immediately and request assistance on forbearance under the new CARES Act.

The Fed to the Rescue

March 30, 2020jordanreedNews

Last Week in Review: Liquidity Defined

This past week, thanks to the Federal Reserve, home loan rates declined. The high uncertainty around the coronavirus and its impact on homeowners and mortgage payments created a dire need for liquidity in the mortgage-backed security (MBS) market.

This is where the Fed came to the rescue by providing liquidity.

What is liquidity?

Liquidity describes the degree to which an asset or security can be quickly bought or sold in the market at a price reflecting its intrinsic value. In other words, it’s the ease of converting it to cash.

Last Sunday, the Fed announced that it would purchase an unlimited amount of MBS in order to provide the much-needed liquidity to get the MBS market to perform correctly.

As a result, MBS prices showed more normal trading activity which resulted in lower rates and more stable pricing this week.

We expect more stabilization in the days and weeks to come as the Fed is committed to getting the MBS market to function as normal.

Bottom line: the Fed’s unlimited MBS buying doesn’t mean home loan rates are going to improve much further, but it will rather stabilize the market and keep rates near current levels, affording homeowners the ability to refinance and secure a low home loan rate.

Agency Appraisal Requirements

March 24, 2020rashtonBulletin, News

Overview

Carrington Mortgage Services, LLC (CMS) is actively monitoring the spread of COVID-19 (coronavirus) throughout the United States and its potential impact to our borrowers and loan originations. Our ability to continue to serve our customers is a top priority. As the Agencies provide additional Appraisal guidance, this bulletin will be updated and republished.

FNMA Temporary Appraisal Requirement Flexibilities

These temporary flexibilities are effective immediately for all Mortgages in process and remain in place for Mortgages with Application Received Dates on or before May 17, 2020.

Effective immediately, Fannie Mae is allowing temporary flexibilities to their appraisal inspection and reporting requirements. As described below, FNMA will accept an alternative to the traditional appraisal required under Selling Guide Chapter B4-1, Appraisal Requirements, when an interior inspection is not feasible because of COVID-19 concerns. FNMA will allow either a desktop appraisal or an exterior-only inspection appraisal in lieu of the interior and exterior inspection appraisal (i.e., traditional appraisal).

If a traditional appraisal is not obtained and there is insufficient information about the property for an appraiser to be able to complete an appraisal assignment with a desktop or exterior-only inspection appraisal, the loan will not be eligible for delivery to FNMA.

Loan purpose LTV ratio Occupancy Ownership of loan being refinanced Permissible appraisals
(in order of preference)
Purchase* Per Eligibility Matrix Principal residence N/A Traditional appraisal

Desktop appraisal

Exterior-only appraisal

≤ 85% Second home Investment Traditional appraisal

Desktop appraisal

Exterior-only appraisal

> 85% Second home Traditional appraisal
Limited cash-out refinance Per Eligibility Matrix All Fannie Mae-owned Traditional appraisal

Exterior-only appraisal

Not Fannie Mae-owned Traditional appraisal
Cash-out refinance Fannie Mae or not Fannie Mae-owned Traditional appraisal

*Excludes new construction and construction-to-permanent loans.

NOTE: For all loans with LTV ratios greater than 80%, FNMA require mortgage insurance in accordance with their standard Selling Guide policy. Lenders must consult with their mortgage insurance companies to confirm coverage for mortgages using one of the temporary appraisal flexibilities.

Desktop appraisals

For purchase money transactions when an interior and exterior appraisal is not available, lenders are encouraged to obtain a desktop appraisal rather than an exterior-only appraisal.

The minimum scope of work for a desktop appraisal does not include an inspection of the subject property or comparable sales. The appraiser relies on public records, multiple listing service (MLS) information, and other third-party data sources to identify the property characteristics.

When a desktop appraisal is performed, reported on Form 1004 or Form 1073, and submitted to FNMA through the Uniform Collateral Data Portal® (UCDP®), the appraisal will be scored by Collateral Underwriter® (CU®). All loans with a CU risk score of 2.5 or less will receive value representation and warranty relief under Day 1 Certainty. With desktop appraisals, lenders will have the added risk management and efficiency benefit of being able to use CU to aid in the appraisal review process.

The table below provides the appraisal report form that must be used to complete the desktop appraisal for each property type.

Property Type Acceptable Appraisal Form
One-unit property, including a unit in a planned unit development (PUD) or a detached condominium unit Uniform Residential Appraisal Report (Form 1004)
Condominium unit Individual Condominium Unit Appraisal Report (Form 1073)
2-4 Unit Property Small Residential Income Property Appraisal Report (Form 1025)
Manufactured Home Manufactured Home Appraisal Report (Form 1004C)

Exhibits for Desktop Appraisals

Each desktop appraisal report must include the following exhibits:

  • a location map indicating the location of the subject and comparables, and
  • photographs of the subject property. FNMA recognizes that it may be challenging in some instances to obtain photographs; however, it is expected that the appraiser utilize available means to obtain relevant pictures of the subject property.

Exterior-only Inspection Appraisals

An exterior-only inspection appraisal may be obtained in lieu of an interior and exterior inspection appraisal for the following transactions:

  • Purchase money loans
  • Limited cash-out refinances where the loan being refinanced is owned by Fannie Mae

Lenders will not receive value representation and warranty relief under Day 1 Certainty® for loans with exterior-only appraisals.

The table below shows the appraisal report form that must be used to complete an exterior-only inspection appraisal for each property type. Because there are not appropriate exterior-only appraisal report forms available for two-four unit properties and manufactured homes, FNMA will accept an exterior appraisal scope of work completed using the applicable forms listed below.

Property Type Acceptable Appraisal Form
One-unit property, including a unit in a planned unit development (PUD) or a detached condominium unit Exterior-Only Inspection Residential Appraisal Report (Form 2055)
Condominium unit Exterior-Only Inspection Individual Condominium Unit Appraisal Report (Form 1075)
2-4 Unit Property Small Residential Income Property Appraisal Report (Form 1025)
Manufactured Home Manufactured Home Appraisal Report (Form 1004C)

Exhibits for Exterior-only Inspection Appraisals

Lenders are reminded that the following exhibits to the appraisal report are required for an exterior-only inspection appraisal:

  • a street map that shows the location of the subject property and of all comparable sales that the appraiser used;
  • clear, descriptive photographs (either in black and white or color) that show the front of the subject property, and that are appropriately identified (photographs must be originals that are produced either by photography or electronic imaging); and
  • any other data−as an attachment or addendum to the appraisal report form−that are necessary to provide an adequately supported opinion of market value.

FHLMC Temporary Appraisal Requirement Flexibilities

These temporary flexibilities are effective immediately for all Mortgages in process and remain in place for Mortgages with Application Received Dates on or before May 17, 2020.

Freddie Mac understands that due to the COVID-19 pandemic there may be instances where a Lender is unable to obtain an interior inspection of the subject property. As a result, Freddie Mac is allowing temporary exceptions to their property eligibility and appraisal requirements.

Freddie Mac is revising its appraisal inspection and reporting requirements. As described in detail below, for certain Mortgages, when a Lender cannot obtain an appraisal with an interior inspection as a result of the COVID-19 pandemic, Freddie Mac will accept either an appraisal with an exterior-only inspection or a desktop appraisal (as described below) in lieu of the interior and exterior inspection appraisal required under Section 5601.5(a).

There may be instances where there is insufficient information about the property for an appraiser to complete an appraisal assignment with a desktop appraisal or an appraisal with an exterior-only inspection. In these instances, the Mortgage will not be eligible for sale to Freddie Mac until the appraiser has sufficient information to complete the desktop appraisal or an appraisal with an exterior-only inspection, or an appraisal with an interior and exterior inspection is obtained.

The following table provides appraisal requirements based on Mortgage purpose, loan-to-value (LTV) ratio, occupancy type and Mortgage ownership.

Permissible appraisal requirements
Mortgage purpose LTV ratio Occupancy type Ownership of Mortgage being refinanced Permissible appraisals
Purchase transaction* Up to 97% Primary Residence N/A Interior and exterior inspection appraisal, desktop appraisal or exterior-only appraisal
≤85% Second homes and Investment Properties N/A Interior and exterior inspection appraisal, desktop appraisal or exterior-only appraisal
˃85% Second homes N/A Interior and exterior inspection appraisal
No cash-out refinance As permitted in the Guide All Mortgage being refinanced owned by Freddie Mac Interior and exterior inspection appraisal or exterior-only inspection
Mortgage being refinanced not owned by Freddie Mac Interior and exterior inspection appraisal
Cash-out refinance As permitted in the Guide All Mortgage being refinanced owned or not owned by Freddie Mac Interior and exterior inspection appraisal

*These flexibilities are not permitted for Construction Conversion, Renovation or new construction properties.

Note: For all Mortgages with LTV ratios greater than 80%, FHLMC will require mortgage insurance in accordance with Guide requirements. Lenders must consult with their mortgage insurance companies to confirm coverage for Mortgages using one of the temporary appraisal flexibilities.

Appraisals with Exterior-only Inspections

The table below provides the appraisal report form that must be used to complete an appraisal with an exterior-only inspection for each property type. Because there are not appropriate exterior-only appraisal report forms available for 2- to 4-unit properties and Manufactured Homes, FHLMC will accept an exterior-only appraisal scope of work completed using the applicable forms listed below.

Property type Acceptable appraisal form
1-unit property, including a unit in a Planned Unit Development (PUD) or a Detached Condominium Unit Guide Form 2055, Exterior-Only Inspection Residential Appraisal Report
Attached Condominium Unit Form 466, Exterior-Only Inspection Individual Condominium Unit Appraisal Report
2- to 4-unit property Form 72, Small Residential Income Property Appraisal Report
Manufactured Home Form 70B, Manufactured Home Appraisal Report

Mortgages with appraisals with exterior-only inspections will not receive the appraised value representation and warranty relief described in Section 5601.9(b).

Exhibits for Exterior-only Inspection Appraisals

Lenders are reminded that the following are required in connection with an appraisal with an exterior-only inspection:

  • A street map that shows the location of the subject property and of all comparables that the appraiser used
  • Clear, descriptive photographs (either in black and white or color) that show the front of the subject property, and that are appropriately identified. (Photographs must be originals that are produced either by photography or electronic imaging); and
  • Any other data (as an attachment or addendum to the appraisal report form) that are necessary to provide an adequately supported opinion of market value

For Purchase Transaction Desktop Appraisals

Lenders are encouraged to obtain a desktop appraisal in lieu of an appraisal with an exterior-only inspection when an interior and exterior inspection is not available.

The minimum scope of work for a desktop appraisal does not include an inspection of the subject property or comparable sales. The appraiser relies on public records, multiple listing service (MLS) information or other third party data sources to identify the property characteristics.

When a desktop appraisal is obtained using Form 70, Uniform Residential Appraisal Report, or Form 465, Individual Condominium Unit Appraisal Report, and submitted to the Uniform Collateral Data Portal® (UCDP®), the appraisal will be assessed for valuation representation and warranty relief in Loan Collateral Advisor®. All appraisals with a risk score of 2.5 or less that meet the requirements in Section 5601.9(b) will receive valuation representation and warranty relief and Lenders will have the added risk management and efficiency benefit of being able to use Loan Collateral Advisor to aid in the appraisal review process

The table below provides the appraisal report form that must be used to complete the desktop appraisal for each property type.

Property type Acceptable appraisal form
1-unit property, including a unit in a Planned Unit Development (PUD) or a Detached Condominium Unit Form 70, Uniform Residential Appraisal Report
Condominium Unit Form 465, Individual Condominium Unit Appraisal Report
2- to 4-unit property Form 72, Small Residential Income Property Appraisal Report
Manufactured Home Form 70B, Manufactured Home Appraisal Report

Exhibits for Desktop Appraisals

Each desktop appraisal must include the following exhibits:

  • Photographs of the subject property. Freddie Mac recognizes it may be challenging in some instances to obtain photographs; however, it is expected that the appraiser utilize available means to obtain relevant pictures of the subject
  • A location map indicating the location of the subject and comparables.

VA Guidance for Property inspections

Appraisers should continue to conduct business as outlined in Chapter 10 of the Lender’s Handbook.

Appraisers should contact the RLC of jurisdiction if they have been impacted by COVID-19 and are unable to complete an appraisal assignment. The email addresses for each of the RLCs are available at: https://www.benefits.va.gov/HOMELOANS/contact_rlc_info.asp.

FHA Guidance for Property inspections

The FHA is continuing to require Appraisals with Property inspections for Single Family Programs. The FHA Roster Appraiser must complete all required appraisals in accordance with acceptable Appraisal Reporting Forms and Protocols.  Appraisers should stay informed of CDC Coronavirus updates, and incorporate prudent measures in their business practice regarding personal contact with the borrower and/or occupants. FHA is closely monitoring the situation and will provide updated guidance, as needed.

USDA Guidance for Property inspections

USDA has not announced any temporary guidance as of 3/24/20.

Contacts

Please contact your Account Executive or Account Manager with any questions.

Carrington thanks you for your business.

Verbal Verification of Employment Requirements

March 24, 2020rashtonBulletin, News

Overview

Carrington Mortgage Services, LLC (CMS) is actively monitoring the spread of COVID-19 (coronavirus) throughout the United States and we understand there may be concerns about its potential impact to our borrowers and loan originations. Our ability to continue to serve our customers is a top priority. As the Agencies provide additional guidance, this bulletin will be updated and republished.

Effective: These temporary employment and income verification flexibilities are effective immediately for all Conventional product only loans in process and remain in place for loans with application dates on or before May 17, 2020. Please note that the Guidelines/ Matrices and AUS messages will not be updated to reflect these temporary policies.

Verbal Verification of Employment

In cases where there is difficulty in obtaining the verbal verification of employment (VVOE) due to disruption to operations of the borrower’s employer, the following temporary process applies:

  • Written VOE: Obtain an email directly from the employer’s work email address that identifies the name and title of the verifier and the borrower’s name and current employment date within 10 calendar days of the note date.
  • The Work Number: We will continue to accept automated verifications such as those from The Work Number, although the last date of employment verified must be within 10 calendar days of the note date. In situations where the automatic database upload has not been refreshed within the last 10 calendar days, we will have to wait for the next refresh period.
  • Paystub: Provide a year-to-date paystub dated within 10 calendar days of the note date.
  • Bank statements: Provide a bank statement evidencing the automatic payroll deposit reflecting the employer’s name within 10 calendar days of the note date. (The 10 calendar days is calculated from the date of the payroll deposit, not the bank statement date.)
  • Self-Employment: Verification of self-employment will follow existing guidance, but must be dated within 10 calendar days of the note date.

Continuity of Income:

It is important to remind our Associates of ensuring sustainable homeownership for our borrowers in light of recent events.

Given the current economic climate associated with the COVID-19 pandemic and its impact on employment and income, our Underwriting team will practice additional due diligence to verify the most recent information is obtained. This will ensure any disruption to borrowers’ employment (or self-employment) and/or income due to the COVID-19 pandemic is not expected to negatively impact their ability to repay the loan.

Contacts

Please contact your Account Executive or Account Manager with any questions.

Carrington thanks you for your business.

Carrington Temporarily Suspending Non-QM Lending

March 22, 2020rashtonBulletin, News

Non-QM Update

Carrington Mortgage Services remains committed to the Non-QM market as one of the key leaders in the industry. Unfortunately, we have to temporarily discontinue offering Non-QM loans due to current secondary market conditions. We’re happy to say that any approved loans that are locked will be honored through the remaining locked term. Unfortunately, we will not be accepting any new Non-QM submissions for our Carrington Flexible Advantage, Flexible Advantage Plus, Investor Advantage, and Prime Advantage products.

Non-QM Loans that have been submitted or approved without rate lock cannot proceed under this program. For locked loans, we are not offering lock extensions at this time.

As the market stabilizes, Carrington will be at the forefront and will re-introduce our Non-QM product line.

We sincerely apologize for the temporary inconvenience this may cause and look forward to serving your Non-QM borrowers in the near future.

On the Brighter Side

Carrington continues to offer its full suite of government loans including FHA, VA & USDA loans full doc and streamlines. And don’t forget about our conventional Fannie/Freddie loan products.

  • FICOs down to 500
  • Manual underwriting (for those out of the box borrowers)
  • Expanded DTI on FHA loans available
  • So much more…

See Our Loan Products