Yesterday I posted some USDA rural housing updates,
and received a couple notes from astute readers on a couple errors. The
upfront guarantee fee is not 2%, as was reported in a mortgage
publication. The fee is currently 2.75%. And the same article reported
that, regarding the maximum legal note rate, one can round the USDA fee
up to the highest quarter. Currently, the USDA fee is allowed to be rounded up to the nearest quarter of one percent. If
a lender locks the loan above the maximum legal note rate the loan is
not eligible to be insured. Here is guidance from the USDA 3555
Handbook: "The lender and the borrower are free to negotiate any
mutually acceptable fixed interest rate, as long as it does not exceed
the interest rate cap established by the Agency. This cap is 100 basis
points (1.00 percentage points) over the following: Current Fannie Mae
yield for 90-day delivery (actual/actual) for 30-year fixed rate
conventional loans, rounded up to the nearest one-quarter of 1 percent.
The Fannie Mae website can be used to confirm acceptable interest rates."
My cat Myrtle observed that if we aren't there already, ever
so slowly the residential lending industry approaches the point where
more people regulate it, audit it, survey it, and provide vendor
services than actually do the lending.
There are some that hope the CFPB will make an announcement in the next
few days regarding TRID and loans, perhaps specifically non-agency
loans to help alleviate the issues the industry is having - it
would be nice to think that the last thing that the CFPB is wants is to
be universally thought of as the cause of bringing residential lending
to its knees.
share of mortgage-related home sales that took longer than expected to
close increased slightly in November compared with the previous month,
according to results from the latest Campbell/Inside Mortgage Finance
HousingPulse Tracking Survey. The uptick in the share of delayed
closings and the total time mortgage-related transactions took to close
suggests that new disclosure requirements from the Consumer Financial
Protection Bureau that took effect in early October had an impact on
the housing market.
However, the impact appears to be limited as the majority of
mortgage-related home sales continued to close on time under the CFPB's
Truth in Lending Act/Real Estate Settlement Procedures Act Integrated
Disclosure (TRID) rule."
of how violations can be cured are being hotly debated. Theoretically
TRID mistakes are TIL violations and as we all know violating TIL is no
joke with fines of thousands per day. Seeing what is happening in
residential lending Dan Goldstein penned a story about how the "New Rules to Protect Home Buyers are Starting to Add Delays and Costs."
Industry vet Joe Garrett
asks, "TRID gives borrowers three days to think about whether they want
to proceed with the mortgage or not. I guess the idea is that they'll
have plenty of time to ask questions and read everything. Do borrowers
actually do this? On refinances, how often does this actually happen? Or
is this a solution to a non-existent problem?"
this commentary noted that a sizeable and growing percentage of loans,
especially jumbo loans, were being rejected by investors. The question
among lenders is naturally, "Why?" The themes as to what the
problems/violations are include calculation issues. From seemingly small
stuff like how to round the results of various fields to more complex
closing and financing calculations - there are many new calculations
that have been created - all of which create an opportunity for error.
forms are a big one. Many of the fields needed to be dynamic to be able
to hold the proper number of fields and/or amount of information.
Because the permutations of possible rate, fee, product, etc. outcomes
go into the thousands, I am hearing stories of form failures (not enough
columns, data going into the wrong fields, etc.).
Chase posted a TRID FAQ
to help answer policy and procedure questions. Clients of Digital Risk
Clayton could contact them as they are right in the middle of this since
many non-agency loans that aren't going into a bank portfolio go
And Wells Fargo
informed its correspondent clients on common defect trends it has
observed for loans regulated by the TILA-RESPA Integrated Disclosure
(TRID) rule. (This is meant as a summary; for specific details see Wells' actual announcement.)
Wells developed a TRID best practices sheet for addressing common
suspense issues - talk to your Wells rep about obtaining a copy.
Common Closing Disclosure (CD) errors
include the CD missing (all copies of the CD disclosed to borrowers
must be included in the closed loan package), and CDs being used as a
communication tool between settlement agents and lenders and not
necessarily disclosed to the consumer(s). The final CD signed and dated
at Closing is missing - Wells considers the "final CD" the CD signed by
the borrower(s) at consummation.
incomplete or inaccurate CDs are being disclosed to consumers: a CD
that is disclosed to a consumer and is materially incomplete or
inaccurate will likely result in non-purchase. (As a reminder,
regardless of who prepares the CD, the creditor is responsible for the accuracy of all disclosures provided to the borrower.)
credits listed as negative fees in the Borrower-Paid column of the CD.
Lender credits used toward specific fees in the transaction must be
itemized under the "Paid by Others" column and identified with an "L."
Lump sum lender credits should be shown in the Lender Credits field in
section J. TOTAL CLOSING COSTS (Borrower-Paid). HOA dues must be
included in the Estimated Taxes, Insurance and Assessments section of
the final CD, when the information is known to the lender prior to
associated with the transaction (including those paid for by the
seller), must be reflected on the borrower's CD, even if a separate
seller's CD is provided. And Wells is seeing that a Borrower's total
Closing costs do not match - The J. TOTAL CLOSING COSTS (Borrower-Paid)
on page 2 and the Total Closing Costs (J) on page 3 of the CD signed at
closing must be consistent.
Common Loan Estimate (LE) errors are similar.
All copies of the LE disclosed to borrowers must be included in the
Closed. Wells will not accept a Loan where the LE was provided to the
consumer on or after the date the CD was issued. Any seller credits,
either lump sum or for specific fees, known at the time of delivery of
the LE, must be disclosed on the LE as a total amount. The LE DATE
ISSUED field must be completed in order to validate accuracy of the
is seeing examples where the initial LE was not disclosed within three
business days of the REG Z application date. Or the appraisal disclosure
verbiage is missing from the Other Considerations section. It must be
included in the Other Considerations section on page 3 of the LE. And
the LOAN ID # field must be completed on page 1 of the LE. Another
problem is that lender and/or mortgage broker (as applicable) contact
information is not complete. Email address(es) and phone number(s) must
be provided with other data required under "Additional Information About
This Loan" on page 3.
reports that there are other common errors. For example, the
Application Date field is blank on the Wells Fargo Funding Loan
Submission. Regarding the Summary (LSS) - The Reg. Z application date
must be provided on the LSS (in addition to completing the DATE ISSUED
field on the LE) in order to validate accuracy of the timing
to borrowers must be included in the Closed Loan Package to evidence
the proper refund was made within the required timeframe. The
correspondent group is seeing tolerance violations not supported by
changed circumstance documentation, or changed circumstance documents
missing - they must be included in the Closed Loan Package.
our attention to the bond markets & rates, Monday, market-wise, was
a great example of holiday trading: up some, down some, ending
unchanged. Fed-watchers heard Atlanta Fed President Lockhart say that he
more likely sees a rate hike at every other meeting than at every
meeting. The market expects even fewer rate hikes than that, looking for
less than the four indicated by the FOMC's "dot plots" Frankly I'm a
little weary of the press talking about the Fed. Give it a break!
Today we've had the third look at the 3rd
quarter's GDP (headline GDP was expected +1.9%, it came in at +2.0%).
Coming up is the FHFA Housing Price Index and November's Existing Home
Sales. We saw a 2.20% close Monday on the 10-year T-note, where it's
been pretty much all year and equaling Friday's close. This morning it is waffling around 2.21% with agency MBS prices worse a smidge.
(Thanks to several readers who sent this note from Santa along.)
was going to deliver presents on the 25th of December as usual, but due
to hidden messages within TRID, I now have to follow proper guidelines.
That being said below is my revised holiday schedule.
make sure you submit your initial list at least 14 days prior to the
25th. This list will be called your IPD (Initial Present Disclosure.)
You will then have 3 days before the expiration to modify or change that
you change your IPD wish list, my EDT (Elf Disclosure Team) will send
you a COCPL (Change of Circumstance Present List) which must have a
valid reason such as, "I no longer want a waffle maker, but would like a
healthy shake maker instead."
that point, once everything is confirmed, we will issue you a final SPD
(Santa Present Disclosure) which will go out to everyone immediately,
including closers and funders. Yours will go out 24-48 hours after
others. At that point, you have 3 days to decide if you want your
presents or decline.
I will mount my sleigh and deliver the presents. You will have to wait 3
more days to open your presents, but if you're not in a NEW home, you
will have 3 more days to return the presents and forget the entire
HO HO HO Happy Holidays,
Jobs and Announcements
Recruiters and heads of Human Resources may find this supposed list of JPMorgan Chase interviewing questions of interest.
Houston-based Mortgage Banker Envoy Mortgage is expanding in N. California and has several "fantastic opportunities in the San Francisco Bay Area and the Wine Country
for professional originators who wish to focus on the purchase market.
Envoy is a purchase-centric (76% YTD) lender currently lending in 48
states. It has a strategic relationship with a Bay Area focused Real
Estate company and needs to place originators inside of several
offices." For a more information about the opportunity please contact Bob Schwab (925.482.0301).
And a couple thousand miles away Freedom Mortgage is expanding its retail presence in the Central United States under the leadership of Marty Garrity.
"Garrity has been a staple of leadership in large mortgage depositories
across the Midwest and Central states over the past 25 years and his
team is seeking both state Regional Managers and Branch Managers in OH,
IL, MI, IN, WI, IA, MN, WV, NE, ND and SD. Founded in 1990, Freedom
Mortgage is a privately held, full service residential mortgage lender.
It is one of the largest and fastest-growing privately held mortgage
companies in the country. This is a great time to join Freedom!" Contact
Marty Garrity regarding this opportunity (216.396.3214).
Pacific Union Financial, LLC
announced the promotions to Senior Executive Vice President for Andy
Peach (who heads up Correspondent and now Consumer Direct) and Jim Wyble
(the head of Wholesale and now the Distributed Retail channel with 40
branches). John Hummel has also joined the company in the capacity of
Executive Vice President, Distributed Retail National Sales.
The Consumer Financial Protection Bureau
appointed senior State Department lawyer Mary McLeod to be its general
counsel. Ms. McLeod, who has advised the secretary of state and other
top officials as the head of the State Department's Office of Legal
Advisers, succeeds Meredith Fuchs and will start at the CFPB early next
BofI Federal Bank, the nationwide bank subsidiary of BofI Holding, Inc.,
spread the word that it is expanding its wholesale lending channel and
will now offer single-family agency mortgage products through its
wholesale lending channel. In other words, compete with scores of other
wholesalers pursuing broker business in spite of broker business being
plus/minus about 15% of the overall industry's volume.
But in the yin-yang of this business, Dutch bank Rabobank Group said it will cut 9,000 jobs (about 19% of its workforce) in the next few years, as it adjusts the business model to stricter regulation.
These cuts will be on top of the 3,000 already announced. The bank said
its ROE goal after the cuts that it is seeking to achieve is 8%.