Texas Bank Sues the CFPB; Hawaii's New Originator Laws; Chicago Now Looking at Eminent Domain
"Rob, with the Wells news earlier this month, and FAMC's comp change
last week, I am hearing rumors of all kinds of price and investor changes.
On the pricing side, what will happen if rates continue to drop?" I have
seen nothing definite, but "the jungle drums" are saying that soon
the agencies will be making a g-fee increase, and investor pricing
(investors being Wells, Chase, U.S. Bank, etc.) pricing should get worse by 5
to 15 basis points. Some of this may have already hit their best efforts
pricing. It seems that this may be an industry-wide change, impacting all
lenders, and in turn borrowers. On the plus side, some investors are opening up
the 2.50% coupon for originators to sell into, meaning that 2.75-3.125% home
loan rates. (And why not - Fannie 2.5%'s are at a one point premium.) Back on
the negative side, for the wholesale channel, following FAMC's move it is
rumored that a half a dozen investors are considering dropping "Borrower Paid"
compensation plans. I don't have any details yet. Monitoring counterparty risk
is the trendy buzz-phase, but any
wholesaler could have trouble adhering to Dodd-Frank/CFPB regulations by
monitoring what each broker client is doing, and possibly running the risk of a
large fine from the DOJ by failing to do so - and who wants that?
For good news, Fremont Bank is growing and seeking wholesale underwriters,
loan processors, relationship LO's, and other talented mortgage
professionals. Founded in 1964 and one of the oldest independently
owned and managed bank in the Bay Area, Fremont is expanding its Southern
California Operations Division. Fremont funded nearly $4 billion in 2011, and
was voted one of the Top Workplaces in the Bay Area 2011 and 2012. It will be
hosting a Career Fair on Friday, August 3, from 11AM-7PM at 30 Enterprise,
Suite 110, in Aliso Viejo. Interested individuals should submit their resume in
confidence to jobs@fremontbank .com,
or write for more information.
And for another job-related event, the Mortgage Lending Division of
Carrington Mortgage Services, LLC is having an open house next week, Tuesday,
August 7th from 5:30 to 7:30 PM at 1610 E. St Andrew Place, STE B-150 in Santa
Ana. Carrington has openings for operations, sales, underwriters, funders,
doc drawers, wholesale account managers, area sales managers, retail branch
managers, loan officers, and wholesale AE's. This open house is invitation
only, so be sure to RSVP.
"God bless The Great State of Texas, and the small banks
there." No, I did not hear that from the CFPB. I heard it from a mortgage
banker regarding a small bank in Texas that is suing the CFPB saying Dodd-Frank
is unconstitutional. Here you go - many mortgage banking folks are probably
wondering where to send the money.
About a month ago we had the industry concerned (rightly so) with the
California Bill of Rights. Now Hawaii has turned heads by passing three new
bills related to mortgage servicing and mortgage origination. Starting July
1 the first requires the Office of Consumer Protection to educate consumers
regarding fraud schemes aimed at homeowners facing foreclosure. The bill also
establishes that violators of Hawaii's Mortgage Rescue Fraud Prevention Act
will be charged with a Class C felony and fined $10,000 in addition to other
possible penalties. The Hawaii Secure and Fair Enforcement for Mortgage
Licensing Act requires adjustments to loan originator registration fees and
amends Hawaii's Secure and Fair Enforcement for Mortgage Licensing Act (SAFE
Act) to comply with recent changes to federal laws. Those who originate loans
on behalf of a mortgage servicer are not required to register or obtain
licensing so long as "[t]he employee's actions are part of the employee's
duties as an employee of the mortgage servicer company" and the employee only
originates residential mortgage loan modifications.
Similar exemptions are made for those who originate loans for nonprofit organizations
if the nonprofit registers with the Nationwide Mortgage Licensing System and
Registry. Registered mortgage loan originators acting as subsidiaries of
federally-regulated insured depository institutions are now subject to
provisions of the SAFE Act. Hawaii also passed a law affecting mortgage
servicers. According to the new law, the Commissioner of Financial Institutions
may require servicers to register with the Nationwide Mortgage Licensing
System. Additionally, the bill states servicers must comply with all licensing
requirements of the SAFE Act before offering loan modifications. Link
this eminent domain thing is indeed spreading - now Chicago is looking at using
When I started in this business in the 1980's, we called it LIBOR.
Shouldn't an abbreviation be all capitals? But it seems to have become Libor -
maybe it is easier to type. Regardless, they're talking arrests for the folks
that manipulated it.
It is the most widely used interest rate in the world. Libor is the
London interbank offer rate, an interest-rate benchmark for many other rates,
from commercial loans to mortgages. Estimates of how much is tied to Libor
vary from $350 trillion to $800 trillion. (To put that in perspective, $350
trillion would pay for all U.S. government spending for 96 years.) Libor is
calculated daily when London banks (through the British Bankers' Association) tell
Thomson Reuters the interest rate they would expect to pay on a loan from
another bank. Thomson Reuters drops those rates in the highest and lowest 25%
and averages the 50% in the middle. Interestingly enough, there are actually
150 Libor rates, with maturities from overnight to one year, and in different
currencies. Libor is a way of insuring floating-rate loans from a surge in
interest rates, as rather than the rate actually paid, it is the interest
rate the London Banks would expect to pay. This honor system becomes skewed
when some banks artificially inflate or deflate their rates, depending on what
would benefit them most. Some may have deflated their rates to give the
impression that they were more creditworthy than they actually were. If Libor
was artificially high when a borrower took out a loan, then the borrower paid
more on the loan than they should have. Conversely, if Libor was artificially
low, the borrower may have paid less than they should have.
Berkshire Bank, a New York lender with 11 branches, sued 21 banks including
Bank of America Corp, Barclays, and Citigroup for damages over the
alleged manipulation of the London Interbank Offered Rate. Berkshire sought
undisclosed compensation and punitive damages and the right to represent other
lenders in a group lawsuit, or a class action, in a July 25 filing in federal court
in Manhattan. The lender claims in the suit that Libor fraud lowered interest
payments it received.
And now a House panel is involved.
And some believe that Libor/LIBOR is on its way out anyway.
Here, as is nearly becoming standard, are some relatively recent updates
from vendors and investors, and some training. As I warn folks, these will
give you a flavor for current trends but for exact details read the bulletin.
The Georgia Department of Banking and Finance, and the FDIC, shut down Jasper
Banking Company in Jasper, and turned things over to Stearns Bank National
Association out of St. Cloud, Minnesota. And also on Friday the Federal
Reserve Board announced its approval of the applications by Five Star Bank,
Warsaw, New York, (1) to acquire four branches of HSBC Bank USA, National
Association ("HSBC"), McLean, Virginia, that First Niagara Bank,
National Association, Buffalo, New York, contracted to purchase from HSBC; and
(2) to establish branches at those locations.
Members of Ballard Spahr's Consumer Financial Services and Mortgage
Banking Groups will present a humorous (but instructive) look at "what
not to do"-things that can trigger the unwanted attention of the CFPB.
"How to increase your risk through inadequate compliance management and
complaint handling systems; How to allow key service providers to create risks
by operating without oversight; How to violate substantive laws such as ECOA
and UDAAP; How to attract CFPB attention by taking the position that if a
practice is not expressly prohibited, it is permitted; How to stonewall the
CFPB when it issues a civil investigative demand to your company; The
unimportance of preparing for your company's first CFPB examination; and Why
SCRA compliance, which involves so few of your customers, is irrelevant." By
focusing on these and other examples, we will share our views on how your
institution should interact with the CFPB so that it does not end up in the
CFPB's crosshairs. More
Flagstar has resumed
funding loans in several zip codes affected by the wildfires in Colorado.
Any such properties are required to be re-inspected; re-inspections should have
taken place on or after July 9, 2012.
In the wake of the wildfire activity in Colorado and the flooding in Florida, Kinecta
reminds clients to follow the updated disaster policy, which requires
properties in designated counties to be re-inspected by a licensed
appraiser. Should the property be deemed uninhabitable, unsound, or
otherwise affected by the disaster, a new full appraisal must be ordered, while
the original may be used if the property is deemed to be in the same condition
as before the disaster. An Appraisal Update (Fannie Form 1004D),
Completion Report (Freddie Form 442), or DU Property Inspection Report (Fannie
Form 2075) are the inspection forms that Kinecta will accept. Properties
whose appraisals weren't completed before the disaster require a full appraisal
to be carried out.
Mountain West Financial has clarified its policy on Non-Arm's Length
Transactions to provide additional details on scenarios where an exception may
be made. The loan file will be subject to a Pre-Funding Audit in cases
where the estate agent and loan officer are employed by the same business
entity in order to re-verify all the information submitted as well as any
individual licenses for companies, real estate agents and mortgage loan
officers. Loan officers are not permitted to participate in family
members' transactions, and a loan officer's spouse may not notarize the
documents for the transaction.
This morning the markets seem much more concerned about what may happen this
week rather than what happened Friday or over the weekend. But Friday saw a
huge uptick in selling by originators. Wells Fargo's economics team suggests
that "Growth Remains Slow but steady." That pretty much sums things up, given
the GDP news, New Home Sales, and Durable Good numbers.
This week, addition to all European gyrations, we have a lot of scheduled
news here in the U.S. There is nothing for today, but tomorrow is Personal
Income & Consumption, along with the Employment Cost Index, a PCE Price
number, the Case-Shiller 20-city index, Chicago PMI, and Consumer Confidence!
Wednesday is the private jobs ADP number, always of questionable validity in
predicting the government's total number on Friday. We'll also have an ISM
Index and Construction Spending. More importantly we'll have the Fed
announcement will be the primary focus. Investors will be looking for further
easing or indications that it will take place in the near future. And there
will be an ECB meeting on Thursday, along with Jobless Claims and Factory
Orders. Finally on Friday we'll have the usual first-Friday-of-the-month
In the early going, rates are a shade better than Friday afternoon - one would
expect a bounce back after the price "worsenings" Friday. The 10-yr's yield
has gone from 1.56% to 1.53%, and rate-sheet MBS prices are better by about
RETIRE WHERE? Here are some of your choices - I keep
receiving them from readers, part 6 of 7;
You can retire to Florida where.
1. You eat dinner at 3:15 in the afternoon.
2. All purchases include a coupon of some kind -- even houses and cars.
3. Everyone can recommend an excellent dermatologist.
4. Road construction never ends anywhere in the state.
5. Cars in front of you often appear to be driven by headless people.