Organizations React to CFPB Compensation Proposals; MBA's Revised 2012 Estimates; QM Update; 10-yr Hits 1.68%
every prediction about the future is right, right? In my visits around the
nation to different companies and mortgage banking groups, I continue to hear very positive things about volume and
profits. And sure enough, the MBA has come out with a "new and
improved" volume scenario for 2012, including raising refi volume
predictions to $870 billion up from the $400 billion estimate last summer. (Now,
if only companies could focus on margins instead of volumes.) (Read: MBA Hikes 2012 Origination Forecast by $200 Billion)
several firms are looking to capture their share of the market by adding staff:
been retained by an established,
independent retail mortgage banker based in Northern California is looking to
fill a senior finance position. The candidate would be well versed in all
aspects of mortgage banking accounting including servicing, financial analysis,
and cash modeling. Several years of experience in the industry, a B.S. in
accounting, along with strong team player skills are highly recommended. The
company is originating $2 billion per year with a footprint west of the
Rockies. If you know someone who might be interested in this opportunity with a
good company, please have them contact me at rchrisman@robchrisman .com.
Informative Research is looking to fill
two sales positions. One of the opportunities will be in Southern
California and the other will concentrate on national strategic accounts,
and the ideal candidates will have extensive contacts in the industry and who
can make an immediate impact. "The genuine team culture and underlying family
company values make Informative Research a great place to work." The company
has been in business for 66 years,
providing settlement services and risk solutions to brokers, bankers, and
servicers nationwide: informativeresearch .com.
Resumes should be sent to John LaBriola, EVP of Sales, at johnl@informativeresearch .com.
And on the
other side of the nation, PRMG has
immediate openings for operations, underwriting and sales people to serve the
New England territory after announcing the expansion of its wholesale
operations into the Northeastern United States region. PRMG's new Regional
Manager, Brian Burke will be responsible for recruiting and developing a strong
presence in the New England territory, while overseeing a full service
fulfillment operations center that will be underwriting and funding locally,
including generating business in the states of Maine, Connecticut, Vermont,
Massachusetts, Delaware, New Hampshire, and Rhode Island. Since 2001, "Built by
originators for originators", PRMG (www.prmg.net) has been ranked as the #1 independently
owned FHA lender by the Santa Ana, CA HOC center. Please send resumes to Brian
Burke at bburke@PRMG .NET.
when S&P downgraded the United States - did our stock market plunge, or
borrowing costs skyrocket? The traditional question is, "Do rating agencies move the market, or reflect news that the markets
already know?" Bloomberg notes the diminishing impact that rating agencies
have with investors, and as we know in the mortgage business, Moody's,
S&P's, and Fitch's miss-rating of residential MBS's helped contribute to
said, newer rating agencies have emerged with "new and improved" business
models. For example, the "corporate investigation agency" Kroll Bond Rating is expanding its reach through affiliations,
investments, and acquisitions. The agency's priority at present is to
develop its overseas operations, with plans to rate European banks and
asset-backed deals by the end of 2013. And a few years back Kroll acquired
Lace Financial, one of very few credit-rating firms registered with the SEC,
which makes it easier for issuers and investors to use a firm's ratings. Kroll
now holds more than 8.7% of the market share for US commercial-mortgaged backed
What is new with QM rules (not to be
confused with QRM!)? Law
firm Ballard Spahr points out that a
few politicians are circulating a draft of a letter on the Hill which urges the
CFPB to "craft a safe harbor [in the Ability to Repay/QM rule] that strikes the
right balance between protecting consumers from poorly underwritten mortgages
while ensuring they have access to safe and affordable mortgage products." The
letter expresses the concern that, without the safe harbor and the legal certainty
that the safe harbor arguably would provide, there is little incentive for
lenders to make "qualified mortgages" which may restrict the availability of
credit for some borrowers. Under Dodd-Frank Section 1412, a loan that meets the
definition of a "qualified mortgage" (QM) is presumed to meet the ability to
repay requirements of the rule. In May, 2011, the Fed proposed two possible
standards for a QM. The critical difference between the two standards is that,
under one alternative, the origination of a QM would create a safe harbor that
the lender has complied with the ability to repay requirements and, under the
other alternative, it would create a rebuttable presumption of compliance. "The
Ability to Repay/QM regulation is among the most anxiously awaited final rules
to be issued by the CFPB and is expected to be issued this summer." Read the
congressional draft letter.
proposed procedures for asserting its supervisory authority over nonbanks
engaged in conduct that could potential pose risk to consumers. Under the Dodd-Frank Act, the CFPB has
authority to supervise a nonbank, regardless of its size, that the CFPB has
reasonable cause to determine "is engaging, or has engaged, in conduct that
poses risks to consumers with regard to the offering or provision of consumer
financial products or services." This includes related services like payday
loans, credit cards, or private education loans.
are doing what they can to educate their members. For example, in New Jersey,
the NJPMO is having a conference to
discuss the "CFPB Flat Fee Proposals on Mortgage Originator Compensation" on
June 5th in Iselin, New Jersey. (For information contact Brian@NJPMO .org.)
At NAMB, its Board and Government Affairs
Committee convened a task force to read and analyze the CFPB's release on
"Rules to Simplify Mortgage Points and Fees". "The intent of the new rules that
will be proposed this summer and implemented in January 2013, are intended to
make it easier for consumers to understand mortgage costs and compare loans so
they can choose the best deal." The CFPB is considering proposals that would
require an interest-rate reduction when consumers elect to pay discount points,
require lenders to offer consumers a no-discount point loan option, ban origination charges that vary with the
size of a loan (i.e., flat origination fees), set qualification and screening
standards for every person who originates loans, prohibit paying steering
incentives to mortgage loan originators, and so on. A full plate!
Columbia, Maryland, on June 5th, the MMBA is hosting, "Are you Prepared
for Upcoming Regulation that will Change the Face of Mortgage Lending?" "This
event will review several key topics, including but not limited to: components
of Dodd-Frank and regulation updates, why the changes are happening, regulatory
compliance, expectations, risk of non-compliance, and how the changes affect
everyone's day-to-day duties, and several other topics. Go to www.mdmba.org to register, and questions should
be directed to firstname.lastname@example.org.
Turning to recent Fannie news, Fannie Mae has enhanced and
clarified HARP guidelines based on questions received by lenders over the past
few months. The clarifications and enhancements, all of which can be
found in the revised Selling Guide, address Responsible Lending Practices,
subordinate financing for co-ops, eligibility for modified mortgages, multiple
financed properties for the same borrower, significant derogatory credit
events, general eligibility requirements and underwriting considerations for DU
Refi Plus and Refi Plus, valuations and project standards, escrow account
requirements, and resubordination.
The income and employment guidelines in the Selling Guide have been updated as
well and now include additional guidelines on the evaluation of variable
income, continuity of income, income verification, and income sources with a
defined expiration date. Sections on employment documentation and
verification; bonus, commission, overtime, secondary, rental, and seasonal
income; income reporting on IRS forms; and assessing and verifying income for
Desktop Underwriter® purposes have also been updated.
The July 2012 Release Notes on DU for government loans are now available;
as well as FAQs.
As of July 21st, DU users can expect updates to VA bankruptcy and foreclosure
messaging, a variety of HUD underwriting issues, FHA reserves calculation on
3-4 unit properties, and the FHA TOTAL Mortgage Scorecard.
Desktop Originator and DU users are reminded that the practice cases and
documentation have been updated in support of the changes made to the method of
assigning Social Security numbers. The SSNs associated with the test
cases have been updated accordingly, and the test credit reports that use the
old SSN information will no longer be in use as of June 16th.
through this, some lenders are continuing to deal with "unsalable" loans while
other companies have carved out a niche for themselves dealing with these
loans. For example, Right House Capital
is a mortgage consulting firm who specializes in assisting banks and mortgage
companies liquidate their unsalable loans. RHC has access to all three
GSE's and "because these are purchased strictly based on the AUS (and thus no
overlays), your agency-eligible loan can price very close to, if not above,
par." Of course, not every loan is going to be sold near par, but if you have
some loans that you can't sell, it might be worth contacting Craig Beard at craigbeard@righthousecapital .com.
(And no, this is not a paid announcement.)
think that this index has ever risen in its history, but yesterday we learned
that the Standard & Poor's Case-Shiller National Composite home-price
indexes fell 2% in the 1st quarter and 1.9% year-to-year, and prices
are down roughly 35% from their peak in the second quarter of 2006. The
Case-Shiller index of 10 major metropolitan areas was down 2.8% in March from a
year earlier and the 20-city index was off 2.6%. We also found out that the
Conference Board's Consumer Confidence index decreased to 64.9 in May from a
revised 68.7 in April. But neither really has the strength to move rates like
the events in Asia and Europe tend to do.
to see a significant pick up in the amount of Fannie 30-yr 3.0's that
originators have been selling (containing 3.25-3.625% loans). Fannie and
Freddie 3.0's represented <1% of the total flows in the market 3 weeks ago,
2 week ago they represented about 6%, and last
week 3.0's represented as much as 15.5% of all hedging activity.
uh, I mean Tuesday, was pretty quiet rate-wise. Our 10-yr closed around 1.73%
and agency MBS prices were a shade worse on below-average volumes. Locks seem
to be slowing down, and in fact the MBA's mortgage application index dropped 1.3%
last week (purchases were -.6%, refi's were -1.5% but still account for about
77% of all apps). About the only news is at 7AM PST with NAR's Pending Home
Sales Index for April - hardly a rate mover. In the early going the 10-yr is down to 1.68% - look for a
market improvement in rate sheet pricing!
Puns (Part 2 of 4):
I wondered why the baseball was getting bigger. Then it hit me!
Broken pencils are pointless.
I tried to catch some fog, but I mist.
What do you call a dinosaur with an extensive vocabulary? A thesaurus.
England has no kidney bank, but it does have a Liverpool.
I used to be a banker, but then I lost interest.
I dropped out of communism class because of lousy Marx.
All the toilets in New York's police stations have been stolen. The police have
nothing to go on.