Angelo Mozilo Interview; NMLS & UST News; Lots of Agency News Including 203(k) Proposals
If you don't open up one other link in this e-mail, at least open this link to a photo of a sign that surely has applications to residential lending. (Although this is pretty cool too. Somehow, somewhere, in this short video there is an analogy to lenders dealing with the current, and expected, compliance environment).
What is Angelo Mozilo up to? Well, aside from living his life, he is granting interviews to Bloomberg.
The industry, and especially CEOs, is watching any civil lawsuits that
may arise as a bellwether for future litigation at a personal level.
mortgage insurance probably wasn't a BBQ discussion topic over the
weekend, but plenty of high IQ folks are thinking about it. The latest piece
is written by one of the directors of MGIC (Mark Zandi), and Jim
Parrott (with the Urban Institute). If you don't want to actually click
on the link, the gist of it is, "The Private Mortgage Insurance Eligibility Requirements,
recently put forth by Fannie Mae, Freddie Mac, and the Federal Housing
Finance Agency, are... a thoughtful effort, these standards should succeed
in ensuring that private mortgage insurers are strong counterparties to
the government-sponsored enterprises and a much improved bulwark
against excessive risk in the system. Several features of the rules as
currently written, however, would likely unnecessarily increase costs
and cyclicality in the mortgage and housing markets."
Today New York became the latest state to adopt the Uniform State Test (UST).
Ohio, Connecticut, and Oklahoma will then follow soon after. NMLS
approved course providers are encouraged to keep abreast of which states
are adopting the UST and to update any course material accordingly.
Adoption information is posted on the testing page of
NMLS Resource Center. "Additionally, we have received several course
submissions with incorrect test retake information. As a reminder, an
individual who attempts to take the test and fails to achieve a passing
score of at least 75% must wait 30 days before they are allowed to
retake the test. An individual may take the test a total of three (3)
times before the SAFE Act requires the individual to wait 180 days
before attempting it again. Detailed information about the MLO SAFE Test
is available in the MLO Testing Handbook."
On August 20, the District of Columbia Department of Insurance, Securities and Banking (DISB) spread the word that as of September 3 it will begin using the NMLS
to manage money transmitter, check casher, money lender, retail seller,
sales finance company and non-bank ATM licenses and
registrations. Beginning on that date, new applicants for such licenses
and registrations must apply via the NMLS. Entities currently holding
such licenses and registrations must create a complete record in NMLS
and submit it to DISB for approval by December 31.
Last week HUD issued its final rule prohibiting mortgagees from charging post-payment interest under FHA's single family mortgage insurance program.
The final rule is responsive to the CFPB's ATR/QM rule, under which
post-payment interest charges will be considered a prepayment penalty in
connection with FHA loans closed on or after January 21, 2015. Because
prepayment penalties are prohibited on higher-priced FHA loans, the new
definition of "prepayment penalty" under the ATR/QM rule would have
effectively prohibited the making of higher-priced FHA mortgage loans.
Also effective January 21, 2015, HUD's final rule ensures consistency
among FHA single-family mortgage products and provides the same
protections for all borrowers. Under the final rule, monthly interest on
the debt must be calculated on the actual unpaid principal balance as
of the date prepayment is received.
We also had HUD issuing its final rule to amend FHA's single family adjustable rate mortgage (ARM) program regulations
to align with the interest rate adjustment and notification periods
required for ARMs under the CFPB's new TILA mortgage servicing rules.
The final rule is effective January 10, 2015 and adopted the proposed rule
issued on May 8 without change. Under the final rule, interest rate
adjustments resulting in a corresponding change to the mortgagor's
monthly payment for an ARM must be based on the most recent index value
available 45 days before the date of the rate adjustment. FHA's previous
regulations provided for a 30-day look-back period. Further, the final
rule mandates that mortgagees of FHA-insured ARMs comply with the
disclosure and notification requirements of the CFPB's TILA servicing
rules, which require at least 60-days, but no more than 120-days advance
notice of an adjustment to a mortgagor's monthly payment. Previously,
the regulations provided for only 25 days advance notice.
And Fannie Mae issued Lender Letter LL-201404,
which reminds lenders that when a mortgage loan is selected by Fannie
Mae for an anti-predatory and HOEPA compliance review, the lender must
provide requested loan information to Fannie Mae. Further, the letter
reminds sellers that mortgage loans with either an annual percentage
rate or total points and fees payable by the borrower that exceed the
applicable HOEPA thresholds are not eligible for delivery to Fannie Mae.
Additionally, Fannie Mae released an optional worksheet, available on
the Fannie Mae website, designed to assist lenders in responding to any
information requests from Fannie Mae. This letter highlights the
continued focus of Fannie Mae regarding its anti-predatory lending
quality control process.
And I received this note from a concerned mortgage professional. "Rob, the commentary about FNMA
and FHLMC allowing lenders to only provide W2, paystub, with the
supporting 4506T illustrates that they are willing to continue to put
good lenders in jeopardy. The
main reason many originators go that route is to not disclose 2106
expense or schedule C that would prohibit the borrower from qualifying. We
asked our QC team at FNMA what they thought. Their response was, 'If
you know (or believe) the borrower occupation typically has 2106 expense
you should ask for full returns'. My
thoughts are that they continue to put us in harm's way. Some lenders
use this lack of proper documentation as a competitive recruiting
advantage while the rest of us look long range at the implications. By not fully documenting we run the risk of violating the ability to repay as well as creating a repurchase risk later when FNMA or aggregator gets the taxes from the borrower during proposed workouts and looks for borrower fraud."
Freddie Mac's Reps and Warrants Updates
remind lenders that have mortgages that obtained selling representation
and warranty relief between February and July 2014, your organization
will receive a Selling Representation and Warranty Relief Date Report by
mid-September. Also, Freddie Mac has terminated its relationships with
the following law firms providing default-related legal services (DRLS)
for Freddie Mac Default Legal Matters. Connolly, Geaney, Ablitt &
Willard, P.C., in the following states: Massachusetts, New Hampshire,
Rhode Island, Florida and Puerto Rico. The Castle Law Group, LLC, in the
following states: Utah, New Mexico, Nevada, Arizona and Wyoming. Visit default legal services for detailed information for Servicers, law firms, and Legacy Matters. Bulletin 2014-15
covers a great deal of information including: Mortgages insured by Arch
Mortgage Insurance Company, Suspicious Activity and anti-money
laundering (AML) noncompliance reporting, Updates to counterparty
eligibility, Updates to flood insurance requirements, Updates related to
ULDD, Certificate of incumbency forms, and Requirement updates for
Freddie Mac news and reminders
covers Loan-to-value edits, elimination of ULDD data point for certain
construction conversion mortgages and for seller-owned modified
mortgages; both effective August 18th, upcoming ZIP code edit, and changes to allow the 'Field Review' option to be selected for conforming loans.
On Friday HUD came out with several proposed changes to its FHA 203(k) program.
The possible changes prompted one veteran broker from New Jersey to
write me saying, "There are some interesting proposals, including two
appraisals (which we like) - 'as is' value and 'after improved' value. I
am not sure I like the capping of the loan amount to 110% of after
improved value now to include the EEM money, so hopefully I am
FHA posted revised
hudclips form HUD/VA Addendum to Uniform Residential Loan Application
to implement changes for VA-guaranteed mortgages. The VA update
clarifies what constitutes a valid marriage for the purpose of obtaining
Risk versus reward: "Rob, when will your readers learn that all investors want more yield?
Prime or subprime, QM or non-QM, residential or commercial, most want
that extra .5 or 1%. Yes, there are varying degrees of risk, reps and
warrants, and potential pitfalls down the road - and investors
understand that. But if presented with two pools of loans, one made up
of loans with a 42% DTI and yield 3% and the other made up of loans with
a DTI of 45% and a yield of 3.5%, all else being equal, which pool will
they buy?" I like to think that most folks understand that. In fact,
there was a story late last week about pools of subprime loans with
small credit enhancements having a resurgence of interest among investors.
ended last week with the 10-yr at a yield of 2.34%. At the current time
the U.S. economy is not doing well enough to warrant higher rates, and
trouble overseas has increased foreign investment in our bond (and
stock) market. We did find out, however, that U.S. second-quarter gross
domestic product was higher than initially estimated - but it wasn't
enough to reverse a rally in Treasury securities as the 30-year yield
reached a 15-month low. Concern about Russian intervention in Ukraine
and an expectation that the European Central Bank will soon launch a
bond-buying program drove demand for U.S. government debt as a
safe-haven investment in spite of second quarter GDP being revised
higher to a 4.2 percent annualized rate. Headlines for housing data were mixed last week,
but reports generally suggest the sector continues to gradually improve
as home prices are increasing at more reasonable rates, supply is
coming back and future recorded sales look to improve.
Tuesday already, and we have a lot of scheduled news staring us in the
face. Today the ISM Manufacturing Index will report on the general
direction of production, new orders, backlogs, inventories, employment
and overall demand from 300 manufacturing firms nationwide. We'll also
see Construction Spending for July. Tomorrow is Factory Orders and the
release of the Beige Book (the status of the Federal Reserve Districts).
Thursday the 4th
will have International Trade numbers, Challenger Job Cuts, ADP
Employment Change numbers, Nonfarm Productivity, and Unit Labor Costs. On Friday, September 5th, the Employment Report tells us the change in Nonfarm Payrolls, Unemployment Rate, and Hourly Earnings.
are higher this morning: as a benchmark, Friday we had a 2.34% close on
the 10-yr T-note, and this morning we're at 2.38% (the 10-yr is worse
by .375 whereas the 30-yr T-bond is worse a full point!). Agency MBS prices are worse between .125-.250. There is no late-breaking news, aside from stock markets around the globe rallying on Ukrainian tension subsiding somewhat.
Turning to some job news, I have lost track of the number of $600k a year jobs I have left. But Chelsea
Clinton just left her first one - her NBC correspondent job with its
$600k salary. "The 34-year-old mom-to-be revealed Friday she's giving up
her gig 'to continue focusing on my work at the Clinton Foundation.'
Though she had zero journalism experience and only filed a trickle of
stories since 2011, Alex Wallace, a senior vice president of NBC News,
said, 'Chelsea's storytelling inspired people across the country.'" I'm
Moving to job news that is relevant, United
Fidelity Funding Corporation, a 20 year old national wholesale lender,
has recently entered the California market by opening an operations
center in Orange County. It is currently looking for a select number of
AEs to work the entire state of California
and is offering the right candidates an opportunity to work for this
well-established lender that has not saturated the state with other AEs.
"Take advantage of its wide-open state-wide opportunity with minimal
broker account conflict. United's Irvine operations center is staffed
and prepared to maintain industry leading turn times. UFF West is a
direct seller to FNMA and FHLMC, an approved GNMA issuer, VA and USDA
you are interested in joining an experienced lender who has not
oversaturated California and has industry leading products and pricing,
turn times/service levels, please email Division Manager Mike McCarthy and/or visit UFF."
On the other side of the country, PHH
Mortgage is seeking a Director of Fair Lending and UDAAP with a
competitive compensation package, sign on bonus and relocation
assistance offered. This
role is located in PHH's Mt. Laurel, NJ office and is responsible for
managing the company's existing fair lending and UDAAP programs
throughout its sales, originations and servicing units. This is not a
new position. This is an opportunity to join a team of dedicated
compliance professionals and excel in an established and effective
compliance program. Interested candidates can email Jessica Winslow for more information or apply directly at www.phhjobs.com.
And a quick note - if there are any processors or junior LOs who'd like to work in Marin County (just north of San Francisco) for a top agent at Terra Mortgage (a division of Opes Advisors), or if you know of anyone, contact Marney Solle.