CFPB Thoughts; Credit Suisse Settles; F&F Changes; Company Fined For a Boat Cruise?
(Yes, a paragraph of pure fluff to start the year.) Does anyone handwrite checks anymore? Always a struggle to remember “2017” instead of “2016.” And here’s a story about twins being born in separate
years. With the change in year it
is good to know that Saudi Arabia is adopting the Gregorian calendar - the one
we, and most of the world, uses and which was introduced in 1582. The state
previously used the Islamic calendar, where
it is 1438, not 2016.
regulatory and compliance quagmire that residential lending finds itself in has
some extreme examples. One was the
Minnesota Department of Commerce settling, for $45,000, against title company TitleSmart for hosting a boat cruise supplying realtors and mortgage
loan officers with dinner and drinks. Jeremy Potter wrote, "My previous
experience with real estate brokers, title companies and mortgage brokers leads
me to believe this is commonplace with local companies (i.e. smaller
markets). If this is going to be a RESPA violation for state regulators,
they will have many, many $45,000 fines to dole out.
"Second, the article published
by the state slightly misquotes RESPA's prohibition of providing a 'thing of
value' in exchange for direct referrals of settlement services; the article
states 'anything of value.' Nit-picky I know, but words matter. Third, the
state provides valuable advice for any consumer of settlement services. It is
unclear that consumers ever see or understand this type of advice, but it is of
course good advice for customers to consider before signing up with a
provider. The bottom line is there are common misconceptions about how
RESPA treats normal business development or sales tactics versus direct payment
for referrals and as a result, RESPA remains a hot topic on the federal and
state level." Thank you Jeremy!
Soon after Trump won the
election there was some talk of the CFPB being closed. It is generally thought,
however, that the CFPB will receive a makeover, not a shutdown. Its ruling by
enforcement action could sure use some work, and even if the CFPB is reigned in
somehow we can expect state mortgage regulators and attorneys general to step
up enforcement of lending rules. Since the elections there has been much
discussion of how expected changes under a Trump administration are likely to
reduce the Consumer Finance Protection Bureau's impact, particularly in the
At the Congressional level,
Dodd Frank will not be eliminated. It will be refined - which is a good thing.
The industry and Administration should look at what works, and correct what
doesn't. Trump has indicated that his administration may focus on less Federal
enforcement, but the states will remain aggressive, especially in California,
Illinois, and New York - primarily Democratic states.
And the CFPB is doing a fine
public relations job. Its most recent complaint snapshot highlighted debt
collection complaints. The
CFPB tells us that the
most common complaint was in regards to attempts to collect on a debt that the
consumer says was not owed. Additionally, the report showed that consumers
continue to report being harassed about debts they have already paid.
And is the Consumer Finance
Protection Bureau a tragic failure? If you have some time, check out this
article from an insider about the CFPB, and thank you very much to Ken S.
for passing this along.
Of course the Department of
Justice doesn't want to be known as a slacker. Credit
Suisse had agreed in principle to pay U.S. authorities $2.48 billion to
settle claims it misled investors in residential mortgage-backed securities it
sold in the run-up to the 2008 financial crisis. Credit Suisse will also
provide $2.8 billion in consumer relief over five years from the settlement,
assuming the negotiations of final documentation and approval by its board of
directors work out.
The final deal is in line with
the $5 billion-$7 billion the U.S. Department of Justice (DOJ) had asked Credit
Suisse to pay earlier in negotiations. Don't forget that Deutsche
Bank agreed to a $7.2 billion settlement with the DOJ over its sale and
pooling of toxic mortgage securities.
"The deals highlight the
Justice Department's efforts to hold European banks accountable for shoddy
securities that contributed to the U.S. housing market collapse."
Effective for loans originated
on or after January 1, 2017, CFPB's Final Rule updates the dollar amounts
for provisions implementing amendments to Truth-in-Lending Act (TILA) under the
Home Ownership and Equity Protection Act (HOEPA) and the Dodd-Frank Act.
West will be updating sections of its guidelines.
in the last week or so regarding conventional conforming (Freddie Fannie) loans
from the Agencies or investors? Yes there are - they never
seem to stop.
Could you use a 2016 year-end
recap of Fannie Mae announcements and notifications? In
Case You Missed It 2016 summarizes Selling
Guide and related policy
updates, clarifications, and other communications in an easy-to-follow table
format. It includes a brief description of each communication as well as links
to related resources for a convenient reference to Fannie Mae updates.
continues to promote its low down payment/high LTV loans.
Fannie said it will immediately begin accepting applications for fixed-rate 97%
LTV financing of borrowers with FICO scores as low as 620. Freddie, meanwhile,
has taken a more cautious approach, delaying the start of the program,
requiring credit counseling, and in some cases only allowing FICO scores as low
M&T announced a substantial
revision to its Fannie Mae HomeStyle product. It has removed the "Structural"
vs. "Non-Structural overlay from the program. Several sections of its
corresponding product page have been updated to reflect the overlay removal. These
changes began 12/28.
AmeriHome will be implementing the new 2017
loan limits. Pricing will be available at the new limits with commitments
issued beginning today.
Union Financials' Conventional DU Cash-out
Refi requires at least one borrower on the new mortgage transaction must have
been on title to the subject property for at least six months prior to the
disbursement date of the new loan. Guidelines were updated to clarify that
a waiting period is not required if documentation supports that the borrower
acquired the property through an inheritance or was legally awarded the
property (divorce, separation, or dissolution of a domestic partnership).
Moving from the primary
markets into the secondary markets...
Mac recently priced its second offering ($43 million) of a Multifamily
Structured Credit Risk (SCR) Debt Note, which gives private investors a
portion of the credit risk on certain multifamily mortgage loans backing
targeted affordable rental housing tax-exempt bonds guaranteed by Freddie Mac.
(Remember that SCR Notes are unsecured and unguaranteed corporate bonds that
build on the company's successful multifamily securities offerings and
single-family Structured Agency Credit Risk debt notes, and reduce taxpayers'
exposure to mortgage default risk. With SCR Notes, the first-loss credit risk
of a specified pool of mortgages is transferred to private capital markets
credit investors. Freddie Mac retains the senior loss credit risk.)
We ended 2015 with the 10-year
yield at 2.27% - it began 2015 at 2.17% so not a lot of net movement. It did,
however, hit a low yield of 1.36% in the early summer. (It's high was 2.60%
last month.) Friday it closed yielding 2.43%, so yes, rates are higher. But not
by a huge amount. The difference, of course, is all the millions of borrowers
who now have 30-year fixed-rate mortgages in the 3's.
What are the prospects for
2017? The increase in rates for fixed-rate mortgages has pushed roughly 75% of
the universe out of the refi window. ThomsonReuters expects gross issuance to
ease to $1.1 trillion in 2017 with net issuance at about $196 billion.
Mortgages will still prepay, whether it is refinancing, or someone selling
their home and paying off the mortgage. And so reinvestment purchases from the
NY Fed are expected to continue through 2017 to the tune of $1-2 billion a day.
Congress returns to session
today. Nothing specific is scheduled, but investors and bond traders will be
watching very closely to see how the tax reform language evolves as the legislation
works its way through various committees in the House and Senate. Is the
mortgage interest deduction (MID) in danger, especially for "the rich"? Stay
Looking at economic news, it
is another shortened week but with plenty coming at us, unlike last week which
was a snoozer. This morning we'll have some Institute of Supply Management
(ISM) numbers, along with Construction Spending. Tomorrow things speed up with
two weeks' worth of application data from the MBA and the FOMC minutes from the
December 13/14 meeting. On Thursday the 5th we'll have the Challenger Job Cuts
data, ADP Employment Change, and Initial Jobless Claims. We finish off the week
with Friday's employment data (look for +175k with the unemployment rate at
4.7%), and a set of Factory Orders.
Remember that the bond market
improved most of last week. But this morning we're giving a piece of that back: the 10-year's yield is back up to 2.51% with agency
MBS prices worse about .250 versus Friday's close due to some estimated
strength in the Chinese economy.
Jobs and Announcements
In the here and now, Quicken Loans is searching for Account Executives for Georgia (remote/in the area), Texas (remote, in the area), and Inside Account Executives for North Carolina. "We're the #1 online lender in America, closing loans in all 50 states, and we've grown to be one of the largest full-service residential mortgage lenders in the country. Quicken Loans was named a J.D. Power and Associates 2010 - 2015 Customer Service Champion, one of only 40 companies named in the U.S. We were also ranked highest in the nation for customer satisfaction among mortgage servicers the last three years, the first years we were eligible. There's a simple reason we've been so successful: We care about the people we work with. AEs are expected to increase and grow the Company's wholesale lending business by developing and maintaining mortgage loan broker relationships and agreements with qualified banks, community banks, credit unions and other qualified financial institutions (QFIs) within the Account Executive's authorized territory."
If you're interested in a job with a warehouse bank, "Is your resolution for 2017 to start a great job in warehouse lending? Looking to make a switch? If so, NattyMac just may have the right opportunity for you. NattyMac, a wholly owned subsidiary of Stonegate Mortgage Corporation (NYSE: SGM), is dedicated to providing effective, reliable warehouse lending. As Warehouse Lending Client Manager, you will be responsible for building relationships and meeting the needs of a regional portfolio of NattyMac warehouse customers. Work with top performing sales and operations teams to deliver a high level of service to customers." Interested applicants should send confidential resumes to firstname.lastname@example.org.
Fairway Independent Mortgage rolled out its FairwayNOW program for its loan officers. "The platform allows our LOs, borrowers, and Realtors to connect via one platform for their loan needs. Borrowers can search for homes, run loan scenarios, apply in under 10 minutes, easily scan and upload documents direct to the LOS, and receive push notification of status. LOs are able to view their pipeline on the go and click to call or message their borrowers/Realtors, send pre-qualification letters on the go, that are tracked and approved by Fairway's compliance department, and provide co-branding opportunities with Realtors. 'The goal is to make communication between all parties more efficient, for borrowers and LOs to do everything they need to via their smartphone, and really enable LOs to be free from the office to do what there are best at.'" (Questions can be addressed to Sarah Middleton, EVP - National Production & Marketing.)
The residential lending environment is always changing, and I received this well-thought out note from Joe Panebianco, CFA CMB and President & CEO of AnnieMac. "A widely unanticipated election result puts our industry in a very different operating environment in terms of economic growth and higher interest rates. In preparation for this new operating environment AnnieMac took the proactive step of properly aligning its resources toward its already purchase-heavy retail branch network.
"It's our strong belief for an originator to maintain the same levels of production they were accustom to in 2016 they will need more purchase referral sources in 2017. Towards that end we've spent the last 4 years investing in and preparing for this environment. We've expanded our technology platform, referral partner offerings, marketing and coaching divisions all geared towards the purchase originator. AnnieMac continues to believe that the future belongs to those firms that are prepared for a world of higher rates and fewer refinances despite an overall strong housing market. AnnieMac plans to significantly expand its retail footprint in 2017 by adding well-managed, purchase oriented teams that want to grow in a contracting market." Thank you Joe!