RESPA-TILA Update; HMDA Changes in the Wind; FinCen SAR Stats; New IM System for Banks?
is it that this is the last week of July already? Lots of lenders seem
to have seen decent Julys - but perhaps not as strong as some of their
Junes - and certainly for many the upward sloping trend of lending
activity and profits seen from March through June has tended to level
off - it is a tough job for most to keep that kind of increase going. HR folks' jobs are sometimes pretty tough - and can be the opposite of boring - and in a note that will make HR folks take notes, are laws & restrictions on running criminal background checks in the near future? "The law prevents criminal background checks in the private sector until after employers and hiring managers pursue the interview process with potential applicants."
take a quick look at the overall market. Who says that the housing
market is not doing well? We can't pick up a newspaper or see the news
without seeing some study about prices, foreclosures dropping, or recovering markets, or some combination thereof. It seems to have become a national hobby...
Compass Point Research and Trading LLC reports on the banks' mortgage origination and servicing numbers for the second quarter.
"Origination volumes are up roughly 25%, in-line with prevailing
estimates from Fannie Mae and MBA. Gain on sale margins were up 7% on
average, while correspondent lenders saw slightly more pressure than
retail-heavy originators. Mortgage servicing rights (MSR) marked down 2%
on average. This would indicate the non-bank mortgage originators
likely will see slight pressure on margin due to the material amount of
originations from the correspondent channel, while fair value marks will
hit GAAP earnings. On a positive note, we have seen gain on sale margins move meaningful higher through the first few weeks of the third quarter
as stable mortgage rates combined with lower agency MBS have caused
spreads to widen. If this continues, the third quarter could be setting
up to be a decent quarter.
Point's excellent piece went into more detail. "The spike in margins
through the first weeks of the quarter...is due to a quick move down in
agency MBS yields while mortgage rates have not fallen as the same pace.
Typically, this is a temporary phenomenon until we see some
stabilization in MBS yields. Mortgage origination volumes are up 25%,
while margins are up 7% on average. Mortgage servicing income was a
mixed bag. MSR amortization was more elevated than expected and we
generally saw 2-5% markdowns for most servicers. We did see some hedging
gains support servicing margins, but this likely won't translate for
the non-banks that are reporting in the next couple of weeks."
is an opinion on affordability. "Over the past several quarters, we
have made the argument that the mortgage and housing markets have the
capacity to handle higher rates given affordability index has been well
above the long-term average. However, with the most recent move higher
in prices during the spring selling season, the affordability index is
approaching its long-term average. Meanwhile, the price-to-income ratio
has pushed above the long-term average, indicating it will be difficult
for the housing market to handle a significant move higher in rates
without income levels going along with it. We continue to believe
housing remains affordable for well-qualified borrowers, but are
increasingly concerned the market can handle an increase in rates."
Compliance is about a year away, but a mention of RESPA-TILA reform
bears repeating, since it impacts every loan application. "RESPA-TILA
is a huge rule and will impact your business from the time a borrower
walks through the door to closing, and your business is going to need to
make deep operational changes to comply. To help the mortgage industry
get ready, MBA is on the road this summer with top-level legal,
compliance and technology experts - including a CFPB representative. So
far they have brought together hundreds of industry professionals in two
states. There are just two workshops remaining
- Atlanta on July 31st and Washington, D.C. on August 7th. The cost for
this one-day intensive workshop is low, but space is limited."
Yup, accurate HMDA reporting is an executive level oversight these days; the downside is too great for it not to be a concern. "With heightened regulatory and media focus on HMDA data, more lenders will find themselves the subject of fair lending exams," according to Mortgage TrueView,
a provider of data-driven business intelligence services. With their
new independent study, the company concluded that many lenders are
leaving themselves vulnerable to fair lending exams and significant
penalties by not properly monitoring and managing HMDA reporting.
"Mortgage companies and banks are not taking full advantage of the
insights offered in HMDA data," said Mortgage TrueView President and CEO
David Moffat. Additionally, Moffat said their 2013 HMDA survey showed
that many lenders are submitting their data with formatting errors,
which could lead to non-compliance issues with regulators. Among the findings, include: 2013
regulatory risk indicators show a 13% year-over-year increase in loan
denial rates, denial rates for white applicants increased from 17% to
21%, while denial rates for non-white applicants increased from 23% to
28%, denial rates for Hispanics increased from 25% to 30%, denial rates
for non-Hispanics increased from 18% to 21%, and denial rates for female
applicants increased from 21% to 26%, as opposed to males where it
increased from 17% to 21%.
Clifton Larson Allen's Anna DeSimone reports on the CFPB's latest
thoughts on simplifying the HMDA reporting for financial institutions. (Under
the proposal, financial institutions that make 25 or more closed-end
loans or reverse mortgages in a year would be required to report HMDA
data.) Even in this
era of computers we still don't have the 2013 numbers yet, but "in 2012,
7,400 financial institutions reported information about approximately
18.7 million mortgage applications and loans. While the HMDA dataset is
the leading source of information about the mortgage market, it has not
kept pace with the market's evolution. For example, the HMDA data do not
provide adequate information about certain loan features that helped
contribute to the mortgage crisis, such as adjustable-rate mortgages and
July 24 announcement... is proposing to improve the quality and type of
HMDA data as required by the Dodd-Frank Act. The Bureau is also looking
at ways to make submission of data easier for lenders and to improve the
user experience in accessing the public data. The proposed changes
include improving market information.
In the Dodd-Frank Act, Congress directed the Bureau to update HMDA
regulations by having lenders report specific new information that could
help identify potential discriminatory lending practices and other
issues in the marketplace. This new information includes, for example:
the property value; term of the loan; total points and fees; the
duration of any teaser or introductory interest rates; and the
applicant's or borrower's age and credit score. The CFPB is proposing
that financial institutions provide more information about underwriting
and pricing, such as an applicant's debt-to-income ratio, the interest
rate of the loan, and the total discount points charged for the loan,
which all fall under monitoring access to credit.
This information would help regulators determine how the
Ability-to-Repay rule is impacting the market, and would also help the
Bureau monitor developments in specific markets such as multi-family
housing, affordable housing, and manufactured housing. The proposed rule
would also require that covered lenders report, with some exceptions,
all loans related to dwellings, including reverse mortgages and open-end
lines of credit.
It is quite an undertaking, and to see all the information and form your own opinion in order to comment by October 22, see the CFPB's press release on HMDA.
In a related, yet unrelated, vein, the Financial Crimes Enforcement Network (FINCEN) has released a 27-page document entitled SAR Stats, July 2014. To view the Technical Bulletin in its entirety, please click on SAR Report July 2014.
A full range of "stat tables" in Excel format may be accessed by
clicking on any of the reporting entity sections noted on the Table of
Freedom Mortgage Corporation,
a privately held, full-service mortgage lender licensed in all 50
states, let everyone know that it funded over $2 billion in residential
mortgages in the month of June 2014...Two years ago, in July 2012, the
company achieved monthly volume of $1 billion in funded loans for the
first time. This dramatic increase in volume over the past two years is
the result of leadership's vision and strategic growth plans. Roughly
half of the $2 billion volume was funded by its Structured Products
Group, the company's correspondent lending division."
a national provider of multifamily and healthcare mortgage loans, has
been busy. It recently launched a seniors housing real estate sales and
investment advisory group through the acquisition of the ARA National
Seniors Housing Group from ARA National Seniors Housing Group, Ltd. The
acquisition is specific to the ARA National Seniors Housing Group - none
of the other ARA offices or groups were included in the transaction. It
provided a $5.9 million bridge loan for a 168-unit multifamily property
in Colorado Springs, CO. (The non-recourse, interest-only bridge loan
included $4.4 million in financing at close with the remaining $1.5
million to be future funded for property improvements. The fully funded
loan amount is 78% of total costs, which carries a two-year term with
two six-month extensions.) Greystone
provides mortgage finance solutions across multiple platforms,
including FHA, Fannie Mae, Freddie Mac, USDA, CMBS, bridge, mezzanine
and other proprietary loan programs.
In Northern California comes news that Mechanics Bank and RPM Mortgage, Inc. have announced an agreement for RPM to originate mortgage loans for Mechanics Bank customers.
Within the last month Mountain West Financial Wholesale announced that, per the California Housing Finance Agency changes to the term of the CHDAP reservation, MWF
will lock the CHDAP reservation for only 30 days. It is recommended
that you not request a CHDAP reservation until the loan is ready for
underwriting submission. As a reminder, CalHFA' s Bulletin 2014-08
stated that for all new CHDAP reservations subordinate to any first
mortgage made on or after June 2, 2014, the first mortgage maximum
allowable fees charged by a lender may not exceed the greater of 2% of
the first mortgage loan amount, or $3,000.
"The FT's Tracy Alloway is reporting that Goldman Sachs is leading an effort amongst big banks to create their own instant messaging system for traders and bankers. The project is called "Babble" and it's a big deal because it could be a threat to the Bloomberg Terminal."
we have a lot of scheduled economic news this week here in the U.S.!
Today is Pending Home Sales, tomorrow is the S&P/Case-Shiller house
price numbers with their two-month lag, along with Consumer Confidence.
Wednesday we have the MBA application numbers, along with the ADP
employment change numbers, GDP, and an FOMC rate decision. On Thursday
we'll have the Employment Cost Index, Initial Jobless Claims, and the
Chicago Purchasing Manager's Survey. And then on Friday, drum roll
please, we can look forward to all the unemployment data, along with
Personal Income and Consumption, the University of Michigan Consumer
Confidence survey and Construction Spending.
at the traditional benchmark 10-yr T-note yield, it has been in the
2.44%-2.80% range since January. We're at the lower end of that now due
to unrest overseas and the fact that the U.S. economy is not expanding
very rapidly. Friday it closed at 2.47%, and this morning we're sitting at roughly the same level, and agency MBS prices are also unchanged.
While we're on HR, First
Financial Bank, a highly profitable $5.5 billion, 5-Star rated
community bank headquartered in Abilene, TX, is seeking to employ a
proven leader to become EVP of Mortgage Lending. This
person should be a senior level mortgage banker with proven success
building and leading a profitable mortgage banking operation. The ideal
candidate would have mortgage experience with the framework of a
financial institution and have a clear understanding of production,
operations, secondary, and servicing. Interested candidates should
contact Mike Jackman, President of Jackman Financial Group.
And Atlanta's First Century Bank, N.A. continues to grow. Its Mortgage Operations office is located in Sacramento and is expanding its national Wholesale Account Executive team.
FCB offers a full suite of products including FNMA, FHLMC, FHA, VA and
Jumbo loan options. Every
member of the senior management team has over 20 years' experience in
the mortgage industry and are dedicated to providing a superior customer
experience for all our business partners and their clients. If you are
a seasoned account executive and looking for an opportunity to grow
your business please send your resume to Terry Alessi, Western Divisional Manager or Richard Dybel, Eastern Divisional Manager.