I see a fair amount of state-level news, and it seems to be the season for lenders to meet with legislators. What items are on the agendas? As an indication, Banner Bank's Ken Larsen sent along the Seattle Mortgage Bankers Association and Washington Mortgage Lenders Association (soon to be merged into Washington Mortgage Bankers Association)'s talking points with their State legislative representatives: DFI's retention of auditors, first mortgage interest deduction, and B&O tax parity. (Ken notes that 50 appointments have been set with the Senators and Representatives of our state with over 35 mortgage lenders participating.) For example, the first talking point focuses on auditor retention.

"The CFPB has been ramping up their operations for quite some time now. Part of that ramp up entails hiring a plethora of auditors from all over the country. Their natural selection process leads them to individuals who come with existing audit experience and this talent pool is being found within state auditor agencies (such as WA DFI). As a consequence, the Washington State DFI has had a very large percentage of their auditors resign in order to take jobs with the CFPB, who offers significantly higher wages. This adversely impacts DFI by vastly reducing their audit staff thus lengthening their audit calendar. Additionally DFI is being forced to hire inexperienced auditors to replace the experienced ones.

These auditors end up learning on the job, which results in much longer audit completion times for our industry, and significant increase in costs to both DFI as well as the institution(s) they are auditing. To help combat the pressure of the CFPB on our state's talent pool, it would be of great benefit to DFI if their funds were not swept (the Governor proposed sweeping $5 million in his budget proposal). This would enable DFI to attract more qualified audit talent and who are able to perform their jobs more efficiently. At the same time, this would facilitate the audited institutions to help work through the process in an efficient and timely manner, enabling businesses to get back to their day‐to‐day operations. Consumer protection is a vital effort on both the state and federal level, and this protection is better achieved by a well‐funded auditing entity."

There is a lot of chatter about the FHA MIP changes. Yesterday the commentary noted what many lenders are doing with regard to the changes prompting Alice Alvey with Indecomm to write with some advice for lenders: "Our clients have seen their FHA volume increase dramatically. It seems every borrower who purchased a home in the last 1-3 years using FHA financing is a potential candidate to save money, if they plan to stay in the house long enough.  It is important to consider all of the financial calculations to ensure the borrower doesn't end up spending more money in the long run. The details to consider include the following. The borrower will be paying a new UFMIP and will receive a credit that will range from a high of .80% (1 month seasoning) to 58% after 1 year, 34% after 2 years and 1% in month 36. If there is little or no credit toward the UFMIP, the borrower will have a large sum to overcome when calculating the number of months to recoup their investment. A borrower with a closed loan case number that was issued prior to JUNE 3, 2013 has an annual MIP that will drop when the LTV hits 78%. It may be a disadvantage for these borrowers to be put into the new cancellation provision where an LTV over 90% will never have the annual MIP drop.  Be sure to factor in the MIP drop point and the long term cost to a borrower who plans to stay put in their house for 10 years or more. This is a UDAAP issue! Don't put the borrower into financing that assumes they are getting out of the financing before any specific tipping point."

Alice's note went on. "Closing costs may push the total amount of upfront costs to recoup beyond a reasonable time frame. What is reasonable? Is it 3 years or 5 years? Be sure you do the math based on the shortest time frame for the borrower's scenario. The FHA annual MIP is based on the average unpaid principal balance throughout the year. Therefore, if the originator uses the loan amount to calculate the MIP savings amounts, the amount will be over disclosed and may not reflect the correct savings, if any, to the borrower. Many lenders have credit overlays for streamline refinances and don't want to end up with another lender's servicing problem. The borrower will still need to qualify and pass a credit check and in some cases, the lender may want an appraisal." (In a bit of a pitch, Alice ended with, "We are the authors of the FHA Practical Guide, FHA Fundamentals, FHA Advanced and FHA Case study training and review services. We have helped many companies achieve FHA success and get from zero to servicing, and if any of your readers need more information contact Linda Bomar.")

And Molly Dowdy with Mercury Network sent, "January 26 was the first day of Fannie Mae's Collateral Underwriter tool running on all appraisals. As you know, this program has been really controversial over the past several weeks, with several scary reports of closing delays and frustration.  We have a very different perspective than many in the industry, and plenty of actual firsthand experience with CU.  Since several of our customers participated in the pre-launch pilot and we powered almost 20,000 appraisal deliveries today, we've already seen tens of thousands of appraisals submitted to CU.  To combat some of the industry hysteria and help lenders and AMCs streamline the transition, we've compiled this collection of interviews and best practices as a free download for your readers.  It includes interviews with compliance experts, chief appraisers, and more.

Plenty of correspondent lenders will be downloading that CU piece, and probably plenty are interested in learning how their compensation plan compares to peer lenders and competitors in today's emerging Correspondent production channel. "Given that sales compensation is typically the single largest expense line item in this channel and as the Correspondent market continues to add new players, it is becoming increasingly critical to understand how your sales compensation compares. Would you like more than anecdotal information on what the market is paying Correspondent AEs? The STRATMOR Group invites you to participate in a Correspondent Compensation survey that is being conducted via 30 minute phone calls and is free for lenders to participate. Participants will receive a summary analysis from responses gathered for all participants. As is our custom, the study will be blind survey (no participant will know the identity of the respondents) and no individual company data will not be displayed in the results. To schedule your call, contact Nicole Yung.

Bill Scammell from PMAC writes, "On February 2^nd 2015 USDA will implement the eligible area maps in accordance with the Agricultural Act of 2014 (Farm Bill - Pub. L. 113-79). This reclassification, set in motion in December with H.R. 83, will largely involve areas that are going from rural to non-rural; however any areas that should have previously been made rural will now become eligible. In order to receive a conditional commitment on any properties that are in a current eligible area that will be made ineligible with this legislation, a full and complete package must be submitted to USDA prior to February 2^nd 2015. This link is for both the current and future eligibility maps that the borrower and or lender can search on USDA's website."

(Bill also provided some additional information. "The USDA will continue to re-examine its policy of 'rural in character' for the purposes of determining eligible areas until further notice. However, any areas that should have been made eligible during Phase 1 in May of 2014 will now receive the proper classification. In order to receive a conditional commitment on any properties that are in a current eligible area that will be made ineligible with this legislation, a full and complete package must be submitted to USDA prior to February 2nd." Thank you Bill & PMAC!)

The U.S. fixed income markets, tired of being influenced by Europe and oil, and not having any locusts or the plague to fall back on, opted for weather. Things became pretty quiet Monday afternoon as many headed home, and prices weakened slightly. (They could have just as easily moved the other way depending on the demand of those still at their desks. It certainly didn't stop the Fed from buying its share of agency MBS operations: $2.666 billion 30yr FNMAs, FGLMCs, and GNMA IIs.)

I decided to wait out the storm in Scottsdale, Arizona, but we do have some economic news coming our way. At 6:30AM MST we have December's Durable Goods, and then at 7AM we'll have November's Case/Shiller set of numbers and Consumer Confidence for January (92.6) and December New Home Sales, which is expected higher from 438k past reading. For numbers the 10-yr closed Monday at 1.83%.

Jobs and Announcements

Freedom Mortgage is growing, looking for seasoned Wholesale Account Executives in Northern California and the Los Angeles markets. Freedom mortgage is a direct seller servicer for FNMA and Issuer/servicer for GNMA, VA, FHA, and USDA, was recently ranked #2 in wholesale in total volume gain from 2011 to 2012, and the #3 GNMA issuer Nationwide in Q1 2013. Please contact James Hooper for more information. "If you are looking for a partner to help you make the conversion from broker to banker, Freedom Mortgage has a proven history for providing extremely low risk options for you. Over the last few years we have helped hundreds of clients all across the country make the change, providing them improved execution and putting flexibility back into their hands. For more information on the company visit FreedomMortgage."

Following the lead of President Obama, ResMac has made significant improvements to the FHA Streamline program to help qualified FHA borrowers reduce their monthly mortgage payments for ResMac's brokers and emerging bankers. In addition to more competitive pricing and the option to buy out their $995 admin fee, ResMac will provide pricing up to 106 on FHA Streamlines to pay for most if not all borrower closing costs. These changes went into effect January 19th. "We are confident these enhancements will make the loan program more affordable for the borrower, and in terms of closing the loans quickly, our new drag and drop technology allows originators to upload directly into our underwriting queue via the 'Drop Zone'."

On the Ops side, TruHome Solutions, LLC is seeking a highly motivated, driven and experienced Controller to manage, oversee and direct the overall Accounting Operations of TruHome Solutions. TruHome Solutions is a national full service mortgage provider serving close to 100 credit unions. The position is an integral part of the financial committees and teams designated by executive management. This person must possess a proven track record of effectively managing an organization's day to day accounting activities and deadlines while also carrying out objectives put forth by the TruHome Executive team and Board. Strong communication skills and consistency in accounting practices while effectively managing in an ever changing environment are required. TruHome Solutions, LLC is an organization that "offers first in class benefits, great work life balance, proven stability and competitive compensation!" If you or someone you know may be interested, please email for a complete job description or forward resume to Karen Steen.