Are you sure that you want to keep originating FHA loans? There’s a lot of profit per loan, but it is easy to see why some companies like Chase have really pulled back from originating them. Branch Banking & Trust Company, a unit of BB&T Corp, is the latest in a growing list of companies smacked by fines, and will pay $83 million to settle charges that it originated and underwrote federally insured mortgages that did not meet federal requirements. The U.S. Justice Department said that BB&T, as a "direct endorsement lender" in the FHA's mortgage insurance program, failed to comply with FHA origination, underwriting and quality control requirements.
Yes, the 2015 raw origination data from the Home Mortgage Disclosure Act (HMDA) was just released yesterday, and Richey May has already organized it into a dynamic, interactive dashboard that is available free of charge on their website for the next year. As Q3 comes to a close and you look towards strategically planning for Q4 and 2017, lenders will find this dashboard valuable for identifying new markets for expansion, seeking out M&A opportunities, measuring the success of sales efforts and more. With a few clicks, you can focus in on the data most relevant to you, including specific markets, lenders and product types. And did I mention it's free? Visit this dashboard and others here.
In a notice published in the Federal Register, the CFPB announced that it has given its "official approval" to the collection of expanded Home Mortgage Disclosure Act information on ethnicity and race in 2017. The amendments to Regulation C (which implements HMDA) finalized in 2015 will require financial institutions covered by HMDA to permit applicants to self-identify using disaggregated ethnic and racial categories beginning January 1, 2018. In the notice, the CFPB stated that before such date, such inquiries would not be allowed under Regulation B Section 1002.5(a)(2) which limits inquiries by creditors about race or other protected characteristics.
Believing there will be significant benefits to permitting creditors to ask consumers to self-identify before January 1, 2018, the CFPB gave approval for a creditor "at any time from January 1, 2017, through December 31, 2017...at its option, [to] permit applicants to self-identify using disaggregated ethnic and racial categories as instructed in appendix B to Regulation C, as amended by the 2015 HMDA final rule." A creditor adopting that practice "shall not be deemed to violate" Section 1002.5(a)(2) and "shall also be deemed to be in compliance with Regulation B § 1002.5(a)(2) even though applicants are asked to self-identify using categories other than those explicitly provided in that section."
The notice also includes instructions for creditors to use to submit information concerning ethnicity and race collected under the approval in connection with applications received from January 1, 2017 through December 31, 2017. The instructions distinguish between applications on which final action is taken during the 2017 calendar year and those on which final action is taken on or after January 1, 2018.
For applications on which final action is taken during the 2017 calendar year, a financial institution is directed to submit the information on ethnicity and race using only the aggregate categories and codes provided in the filing instructions guide for HMDA data collected in 2017, even if the financial institution has permitted applicants to self-identify using disaggregated categories pursuant to the approval. For applications on which final action is taken on or after January 1, 2018, a financial institution is given the option to submit the information on ethnicity and race using disaggregated categories if the applicant provided such information instead of using the transition rule adopted by the 2015 HMDA final rule or to submit the information using the transition rule.
In the notice published in the Federal Register, the CFPB also announced that it has given its "official approval" to a revised and redesigned Uniform Residential Loan Application (2016 URLA). The 2016 URLA approved by the CFPB was issued by Freddie and Fannie, and is included as an attachment to the CFPB's notice. The notice indicates that the CFPB's staff has determined that the relevant language in the 2016 URLA complies with the provisions in Regulation B (which implements the ECOA) that limit requests by creditors for certain information in applications, such as information about race and other protected characteristics, a spouse, marital status, or income from alimony and certain other sources. The CFPB stated that while a creditor's use of the 2016 URLA is not required under Regulation B, a creditor that uses the 2016 URLA without any modification that would violate these Regulation B provisions would be in compliance with such provisions.
The CFPB noted that a version of the URLA dated January 2004 is included in appendix B to Regulation B as a model form and describes the safe harbor provided in appendix B for creditors that use the model form. The CFPB also noted that the Official Staff Commentary to Regulation B provides that creditors can use a previous version of the URLA dated October 1992 without violating Regulation B. The CFPB stated that its official approval "is being issued separately from, and without amending" the Official Staff Commentary and that it will consider whether to address the treatment of outdated versions of the URLA in the Commentary at a later date.
Franklin American Mortgage Company's (FAMC) TILA policy requires delivery of two copies of the rescission notice (a/k/the right to cancel) to each individual who has an ownership interest in a subject property at the time of closing. In the scenario where an individual with ownership interest in a subject property is being voluntarily removed from the title, FAMC is updating its policy to accept the following documentation in lieu of the right to cancel disclosure: Executed Quit Claim Deed or other instrument removing ownership interest signed and recorded prior to the security instrument. If the document is executed at closing, the lender must ensure that the instrument removing ownership is signed and recorded prior to the security instrument.
Over 40 percent of American homebuyers feel taken advantage of or are confused by the calculation of title insurance fees on the Consumer Financial Protection Bureau's (CFPB) new mortgage disclosures, according to a new study by the American Land Title Association (ALTA). The survey, which polled 2,000 current and prospective homeowners (planning to buy within the next year), revealed that that over 30 percent of homebuyers find the new Closing Disclosure confusing. More troubling, another 10 percent of homebuyers feel taken advantage of when reviewing the current calculation of an owner's title insurance policy on the Closing Disclosure. According to ALTA's survey, the most important factor homeowners want on their Closing Disclosure is a detailed breakdown of all the costs for a service. Secondly, consumers want the ability to easily compare cost estimates to final fees on the disclosure. Third, homeowners want to compare the disclosures to the actual costs they will pay and confirm that the seller is paying the accurate amount.
Yes, I have reviewed more than a few Procedures and Protocols over the past few years. To be honest, I believe most Secondary Marketing departments get it wrong; I'll explain. While P&P's are usually written by individuals who come at it from a "what do auditors want to see" position, this is really only half the reason this departmental document is an important part of risk and compliance mitigation. P&Ps should be used to eliminate confusion, create structure and to enforce standards established by executives or regulatory bodies. It's the departments chance to put down in writing, the how's and why's, and to address the inherent risks associated with pricing, hedging and selling loans.
Good departmental P&P's have many things in common: they illustrate daily tasks in an easy to follow manner (an excellent resource for new hires), note why a particular task is important to the department, and use a standardized format. Also, I know someone who reviews these manuals for mortgage bankers, and agree a third party review of P&Ps can be a good use of time and money, especially for small originators attempting to write them from scratch. For bigger companies, establishing an inter-department review process (example: Post Close reviews Secondary's, and vice versa) is a great use of time as well.
Interest rates aren't doing much, nor is there any impetus for them to move much. Fixed-income prices spent most of Thursday in negative territory until more bad news for Deutsche Bank caused a flight to quality to U.S. government bonds. The particular bad news today was that 10 hedge funds had reduced their collateral for clearing derivatives trades, thus reducing their exposure to Deutsche Bank, sparking renewed fears of a modern-day bank run and sending the American depository receipts down. Throw that in with continued Wells Fargo news, and, well...
So Thursday the good ol' 10-year improved about .125 to end the day at 1.56%; agency MBS prices finished about unchanged.
Today we have a fair amount of scheduled news. China released its Manufacturing PMI for September - if you care to trust those numbers. We've had Personal Income and Spending/Consumption for August (+.2%, unchanged, respectively). The Core PCE deflator was tame. Coming up are September's Chicago Purchasing Manager's Survey and the University of Michigan Sentiment Index. The 10-year yield is currently 1.55% with agency MBS prices a shade better.
CalyxSoftware will host its first national user conference, ASCEND16, next week, October 5 - 8, 2016 at the Hyatt Regency New Orleans. ASCEND16 will feature more than 20 specialized breakout sessions for Point, PointCentral, PathSoftware, and LoanScoreCard customers and prospects. Scheduled speakers include representatives from the CFPB, Fannie Mae, Freddie Mac and Mortgage Bankers Association (MBA), as well as Shark Tank's Barbara Corcoran and Yahoo! Tech columnist David Pogue.
On October 13th, AMLG and TMC are hosting a Complimentary Webinar on "Fair Lending: What You Need to Know in 2016." Click here to register.
California MBA is offering a free webinar on Mobil Marketing. This October 19th training has limited availability; register now.
ACI's 22nd National Residential Mortgage Forum San Diego Installment: The industry's leading litigators and in-house counsel are meeting in San Diego on January 11-12, 2017. Attend to benchmark your current strategies, learn the latest government enforcement and regulatory priorities, and get judicial insights from top State judges and Federal judges. Click here to view the Agenda for Jan. 11th-12th.
Jobs and Announcements
In correspondent news, the Northeast's Admirals Bank has hired Sue Anderson as a Correspondent Account Executive covering all states. Admirals has rolled out the only FHA Title I Home Improvement Correspondent program in the nation. Lenders can add a new product, earn revenue, and obtain CRA Credits with this program. Qualified homeowners can borrow up to $25,000 for home improvements. Moreover, no equity, no appraisal is required for the Title I program which allows you the lender to reach more customers who may not quality for a traditional Equity Loan. To learn more about this call or email Sue Anderson to become a lender partner (860.402.8337).
In capital markets job news, Mortgage Capital Trading, Inc. (MCT), a market-leading provider of hedge advisory services and secondary marketing technology, has immediate openings in its new San Francisco Bay Area office for experienced Mortgage Pipeline Analysts and MBS Traders. Additionally, the company is looking to fill positions in its Outsourced Lock Desk, MSR Valuation, and Consulting divisions located in San Diego, Dallas, and Philadelphia. "Headquartered in San Diego, MCT has been experiencing significant growth, appearing on the Inc. 500/5000 list six years in a row, expanding offices, adding new employees, and being named Best Places to Work five years in a row. Come and see why we are recognized by our clients as their most valuable partner!" To learn more, email MCThere.
And for something a little different, "a buy-side industry executive with 20 years of direct experience in capital markets, securitization, portfolio management, lending / operations, and REITs, and seeking to join an institutional investor that's interested in whole loan returns, has put together a presentation about today's opportunities. Here's a link to the presentation: http://tiny.cc/g968ey.
In personnel news Radian Group Inc. announced Peter Danna has rejoined the company as SVP, Structured Products, and will seek to foster new business while leading and managing a cross-functional group supporting the development of structured residential mortgage credit products and related services outside of traditional mortgage insurance. "Danna will also collaborate with the SVP of Product Development, Curtis Over, who will lead the expansion of Radian's Mortgage Risk Navigator technology suite to cover structured residential, mortgage credit products."