As thousands of folks prepare to head to Boston for the MBA’s conference, they may be asking, “What’s in my wallet?” Maybe a little less. The average cost of an out-of-network ATM fee in the U.S. is $4.57, making this the tenth consecutive year of increases. (The surcharge from the ATMs themselves accounts for $2.90 of that total, while the charge from the customer's own bank for using an out-of-network ATM accounts for $1.67.) Heck, it's more expensive than a no-cost home loan!
Before going on, I wanted to clear up some name confusion. Yesterday I wrote about a settlement that First American Mortgage Trust, which does business as NXTLoan.com, had with the DOJ over FHA loans.This is not the "First American" that is First American Financial Corporation (parent company of First American Title, First American Trust, First American Mortgage Solutions and a variety of other companies). So it is First American Mortgage Trust, which does business as NXTLoan.com, and CEO Barry Polack, who will pay $1.025 million to settle charges brought by the Department of Justice, not First American Financial Corp!
As Will Rogers said, "Well, what shall I talk about? I ain't got anything funny to say. All I know is what I read in the papers." The National Credit Union Administration (NCUA - the top U.S. credit union regulator) said it had paid more than $1 billion in legal fees to two law firms to pursue lawsuits against various banks over their sales of toxic mortgage-backed securities before the 2008 financial crisis. NCUA said the contingency fees represented 23% of the $4.3 billion the agency recovered in settlements with banks over their sale of faulty securities to five credit unions that later failed.
NCUA Board Chairman Rick Metsger said, "Without this fee arrangement, which shifted most of the risk of these legal actions to outside counsel, there would have been no legal investigation of potential claims, no litigation, and no legal recoveries."
So who ponied up? In no particular order, Morgan Stanley, Bank of America, JPMorgan Chase, Barclays, and last month the NCUA announced a $1.1 billion deal with Royal Bank of Scotland Group. The payouts went to two law firms, Korein Tillery LLC and Kellogg, Huber, Hansen, Todd, Evans & Figel PLLC, which pursued lawsuits against the banks.
The Federal Housing Finance Agency, which has acted as conservator for mortgage funders Fannie Mae and Freddie Mac since their government takeover in 2008, in September 2015 disclosed paying two other law firms $406.7 million. Reuters reports that, "The sum, which reflected around 2 percent of the $18.7 billion it obtained through settlements and judgments against 16 banks, has likely grown since then amid ongoing litigation by FHFA against RBS."
Training and Events
Avoid an application blow up, register for Plaza's webinar on October 25th.
Alight, Inc. is hosting its second annual warm-up to the MBA's Accounting and Financial Management Conference. Taking place on November 14th in San Diego, this year's event, Alight Mortgage Innovators 2016, will welcome over 100 firm owners, CEOs and senior finance executives for an afternoon of innovation-themed sessions to help supercharge the independent mortgage banking business. Alight will cap the event with a yacht cruise around San Diego Bay, including food, cocktails and a great chance for networking. Mortgage industry pundit Dave Lykken, host of Lykken on Lending, will broadcast the event live. If you're a firm owner, CEO, or senior finance executive, register now at alightinc.com/forum or contact Sandee McCready.
And if you're planning out 2017, next September in Chicago MORT is an "unprecedented and transformational mortgage industry event that will evolve attendees' perspective on how they lead their companies. MORT is specifically designed for executives at smaller and mid-tier mortgage companies. Best-of-class speakers from many different disciplines, and customized coaching following MORT will ensure that participants are implementing the vision, systems and tools they experienced there. MORT is assembling an accomplished and distinguished group of 12-15 speakers who will convey new ways of thinking to drive a shift in the attendees' paradigm on how they navigate through industry turmoil and change, while installing long-term sustainable thinking into their business that will optimize their success and enable them to attain maximum capacity. Participants will learn to embrace and leverage change as a competitive advantage, while guiding their companies to prosperity in the new mortgage era." For more information on attending MORT or on corporate sponsorship opportunities, please contact Gary Baraff.
Turning to capital markets, one of the big issues that lenders have been faced with in the last eight years are buybacks. Even though they've dropped off since 2012, they're expensive, and often lead to problems leading back to the LO who did the loan. Fannie Mae, according to American Banker, is preparing to offer immediate representation and warranty relief to lenders that use its suite of automated quality-assurance technology. Watch for it in a marketing campaign dubbed "Day 1 Certainty." That name will serve as an umbrella brand for a variety of Fannie Mae tools, including Desktop Underwriter, Collateral Underwriter and EarlyCheck, according to sources familiar with the initiative.
What lender doesn't want a waiver or an end to a representation or warranty obligation in an electronic mortgage loan system? Lenders want to know, of course, what the price for this will be. And the circumstances under which representation and warranty waivers will be granted are not completely clear. AB reports that the Federal Housing Finance Agency (FHFA, which oversees both Fannie & Freddie) is said to have approved the plan only this week, and an official announcement is expected next week.
As background, the GSEs created a "representation and warranty framework" that took effect in 2013 and lets lenders off the hook for repurchases three years after eligible loans are acquired. That framework was amended in 2014 to clarify certain guidelines and again in 2016 to include an independent dispute resolution process. The first group of loans eligible for the rep and warrant sunset period just recently matured to the point where lenders can take advantage of it.
From an LO's perspective, if any government agency can create more certainty in the lending environment, it is a good thing, and could lead to better borrower pricing. Theoretically lenders have to put aside less money for unseen liabilities in the future. "Just give us the rules and a level playing field, and we'll take it from there" is something that CEOs generally say.
Over at GNMA (aka Ginnie Mae), heads turned with the announcement from GNMA in limiting "outlier refinancings" - impacting lenders that churn their production. It addresses, in part, originators' (and the industry knows who they are) practices that needed to be reined in. Remember that when an investor buys a pool of loans they want them on their books for a long time - not three months - especially if they're paying a premium. It is not a money-making venture to pay 104 for a loan that pays off at 100 five months later. The purpose of the Ginnie Mae Mortgage-Backed Securities (MBS) Program is to attract funding from capital market investors in support of government-insured and guaranteed housing programs, and to provide lower-cost financing for the homeowners those programs are designed to serve. Investor participation in the MBS program depends, in part, on a level of confidence that investment returns can be expected to be reasonably aligned with market conditions.
Put another way, the APM 1605 memorandum that Ginnie Mae issued is in response to ongoing concerns of elevated prepayment speeds. Effective February 1, 2017, streamline refinance loans will only be eligible for inclusion in Ginnie Mae I single-issuer pools and Ginnie Mae II multi-issuer pools if, at the time of refinance, at least six consecutive monthly payments have been made on the existing loan. Streamline refinances that do not meet this seasoning requirement may only be delivered into Ginnie Mae II custom MBS pools. This requirement will apply to all government-insured or guaranteed streamline refinance programs. This change was made in response to concerns from investors about unusually fast speeds on newer-production GNMA pools, particularly VA.
Keeping on with capital markets, not much happened price-wise in the bond markets Thursday despite a decent chunk of news. The usual folks were buying MBS (the Fed and banks) and the usual folks were selling MBS and hedging pipelines (lenders); the 10-year ended Thursday yielding 1.75% and agency MBS prices unchanged versus late Wednesday. The same entities will be doing the same thing today, i.e., selling and buying MBS.
For scheduled news today we have...none. And if you liked the mortgage rates for most of this week, you'll like today's. We find the 10-year wallowing around 1.75% with agency MBS prices unchanged versus yesterday.
Jobs and Announcements
Citadel Servicing Corporation ("CSC") is excited to announce expansion plans for its Correspondent sales team and is hiring Account Executives for the East and West region. CSC provides correspondent sellers "aggressive industry leading Non-QM products and exceptional customer service. CSC will purchase loans on a flow or bulk basis for Alt-A and Non-Prime origination with industry leading rates, loan to value and loan amounts up to $3,000,000. Interested candidates should have a background of successful mortgage sales skills, correspondent experience and existing contacts within their market. Special consideration is given to those candidates who desire to work at our regional offices in Irvine, CA and Alpharetta, GA. If you desire to be involved in an industry leading company whose culture is committed to funding and servicing the very best in Non-QM loan products, please contact Will Fisher, SVP National Sales."
On the retail side of things, "With over 170 years in business and near 100 branches in NY, Peoples United Bank is continuing to expand! Denise Sinclair, Regional Mortgage Sales Manager for NY is hiring talented Mortgage Account Officers/ Loan Officers in New York. Positions are currently available for New York City, Westchester, and Nassau counties. As an Assistant Vice President- Mortgage Account Officer/Loan Officer, you will originate residential mortgages through our retail branch network as well as self-generated referral sources. We offer Portfolio Jumbo with Interest-Only, Home Equity products, Conventional, SONYMA, FHA including Limited 203K, VA, Land Loans and Construction Lending with a One-Time Close!" Please apply online here. Peoples United Bank, N.A is headquartered in Bridgeport, CT.
And in management, New American Funding, a national mortgage banker, is seeking an experienced Sales Manager for its Tempe, AZ call center location in addition to licensed loan officers and operations staff. New American Funding is known for its direct marketing lead generation feeding its call centers with live inbound calls from direct mail, television, radio, billboards and more. Rated as one of America's Top 100 Mortgage Companies by Mortgage Executive Magazine the company is committed to its steady expansion reaching out to consumers nationwide. Please submit resumes to Al Ortega (480.582.0468).
Assurance Financial is selectively seeking seasoned mortgage loan originators and producing branch managers to help expand its footprint. The company, again voted one of the Best Places to Work, is looking for great people in good markets in Arizona, Colorado, New Mexico, Texas, Oklahoma, Arkansas, Louisiana, Mississippi, Tennessee, Alabama, Ohio, Virginia, West Virginia, North Carolina, South Carolina, Georgia, and Florida. Assurance has the right processes, commitment and technology to consistently close loans on time. For more information, contact Paul Peters, CMB at 225-239-7948 or visit lendtheway. com/careers.
And for lenders looking for a new marketing product, Equifax (EFX) continues to develop its offering of SmartZip solutions in the mortgage lending marketing space. Recently, EFX started selling the SmartTargeting Platform Powered by SmartZip. SmartTargeting allows a lender to leverage Pre-Mover Scores along with its automated online and offline marketing capabilities to acquire new purchase loans and retain existing customers. Pre-Mover Scores use predictive analytics to enable a lender to score their database or to source a list of homeowners likely to move within the next six months. Lenders can segment their top prospects based on Pre-Mover Scores and allocate their marketing and sales efforts for maximum impact. SmartTargeting is a fully integrated marketing platform which includes Pre-Mover Scores, Targeted Online and Facebook Ads, and Personalized Direct Mail. Contact your EFX sales representative for further information or EMSSalesSupport@Equifax.com.
Quick congratulations to Ben April. VidVerify, a mortgage industry video communications provider, announced that Mr. April is its new Chief Executive Officer.