Here in Texas, how can anyone go through Waco without visiting the Dr. Pepper Museum? For you sales folks, 10AM and 2PM and two are low points in the day for the body's energy levels, or so we are told by Dr. Pepper. U.S. Bancorp and Regions Financial Corp., as well as other residential lenders, could use a little pick-me-up. Both expect waning mortgage-refinancing activity to continue to create headwinds in the fourth quarter. U.S. Bancorp estimates mortgage-banking revenue will decline about 30% from the previous quarter, Chief Financial Officer Andrew Cecere said Friday at an analyst conference in Boston.

40 business days until what? For those of you working for companies that have ignored QM, or that perhaps cannot afford someone to constantly monitor what is happening, my sympathies. The Dodd-Frank Wall Street Reform and Consumer Protection Act was signed into law by the President in July 2010.  Many of its provisions regarding mortgage lending go into effect on January 10, 2014. The changes relate to HOEPA, or High-Cost Loans, HPML Escrow and Appraisal Requirements, Ability-To-Repay/Qualified Mortgage, mortgage servicing, Reg B Appraisal Requirements, and Loan Originator Compensation. Costs of complying have skyrocketed, and the cost to produce a loan has gone up by some estimates by 50%. (Heck, discussions no longer revolve around how to bring in business - most revolve around QM uncertainty and relying upon vendors.) Mortgage banks and depository banks across the nation have developed implementation teams to study these new regulations, provide training and ultimately implement the appropriate changes. The clock is ticking, and the calendar includes Thanksgiving, Christmas, and New Year's.

The CFPB has continued to resist widespread calls for it to delay the rules, one of which included a letter to Richard Cordray from over 100 Congressman. Director Cordray is trying to offer an olive branch by suggesting that the CFPB intends to take an approach of being reasonable in enforcement with lenders that have made a good faith effort to comply.  While the CFPB may not be looking for compliance perfection, the industry should not expect the same from plaintiffs' attorneys in the future.

My guess is that everyone is waiting for the vendors & investors to figure out how QM compliance will play out. Lenders can't ignore the need to develop compliant compensation structures for the new LO Comp Rule. Attorney Brian Levy ( points out that, "The new LO Comp Rule has some key difference with the Fed's Rule that went into effect in April of 2011.  The new Rule goes into effect for applications taken on or after January 1.  Unlike QM, investors aren't likely to tell correspondents how to set their commission structures (although many will want the right to audit compensation for compliance). If lenders don't have their new LO Comp plans ready for January 1, they had better get moving right away. With Thanksgiving, Christmas (and Christmas parties) looming, it may be hard to find people such as consultants, lawyers and analysts to help understand the financial and compliance implications to be able to confidently put a compliant program into place in time and to give LO's a reasonable head's up of any changes. For those who say, 'I would rather beg forgiveness than seek permission', I don't see how you'll be able to cure a violation after the fact, so this needs to be addressed up front."

The CFPB has announced that on November 20 it will hold a field hearing in Boston on "Know Before You Owe: Mortgages." The event will feature remarks by Director Cordray and testimony from consumer groups, industry representatives, and members of the public. Field hearings are typically used by the CFPB to announce new initiatives and developments. It is possible this hearing will be used by the CFPB to announce the issuance of the TILA-RESPA integrated disclosures final rule.  The CFPB has previously indicated that we could expect the rule before year end.

And lenders and vendors are beginning to give QM its due. For example, BofI Federal Bank notified its clients that, "As many of you are aware, our industry is bracing for another set of regulatory changes, slated to go into effect in January, 2014. The newly created definition of a Qualified Mortgage will place new restrictions on lending guidelines and the products that are available in the secondary market. The unfortunate side effect of this new legislation is that many well qualified consumers will have more difficulty in obtaining mortgage financing. It is our position that we will be an active participant in the non-qualified mortgage lending space. While there will be a few minor changes to the programs we offer today, we anticipate minimal impact and we are looking forward to continuing to offer our portfolio products through the wholesale and correspondent lending channels nationwide. In the coming weeks, we will be sending out an additional product update that outlines the minor changes we will be making to our products and additional disclosure requirements for the origination of non-qualified mortgages. Your partnership has been a key component of our success and we look forward to continuing our growth together."

Let's see what is new with guidelines out there, and check the hodgepodge of relatively recent agency, investor, vendor, and training updates.

First, a student loan guideline note from Freddie Mac. Freddie's student loan provisions have not changed since 2010, and any "new" information out there about deferred student loans not being excluded from DTI ratio calculations is incorrect. Freddie notes, "If student loans are deferred, they must be included - if the credit report does not show a payment, the lender must document a monthly payment (either direct verification or other documentation)." Be sure to check with current Freddie guidelines for full details, but know that there has been no change regarding student debt.

For Reverse Mortgage folks, here's an upcoming webinar of interest: "Changes to the FHA HECM Reverse Mortgage Product Webinar". "Join us November 12 from 12-1PM EST for a webinar sponsored by the Florida Association of Mortgage Professionals. During the webinar, you'll learn about different MIP premiums, how the pricing changes can help you with more affluent clients, leveraging the new product features to gain more referral partners, how the HECM is impacted by coming CFPB regulations, most importantly, how to increase your sales in 2014!" The presenter, Dennis Loxton, CFP, is a 20-year veteran of the financial services industry with the last 9 years in the reverse mortgage world." Cost for this webinar is FREE for members and $25 for Non-members.

AllRegs and the American Mortgage Law Group invite folks to attend this FREE webinar that will help get them ready for the January 2014 deadline: The Final "Final Rules" - Keeping Track of Regulatory Updates. Tuesday, November 19th, 2013, from 2-3:30 EST (11-12:30 PST). Register here.

Last week MSI clients received this: "As a result of the downturn in volume levels this year, MSI has been forced to adjust our operational capacity and resulting overhead costs, nationally.  To fiscally manage this, we have decided to close our correspondent funding office in Urbandale, IA on Friday, November 8.  The decision was a difficult one, as we value each and every employee affected.  They have represented MSI with incredible integrity, accountability, and class for over 4 years...Your AE will not change.  Your business will be underwritten and funded in one of our 3 operational centers, in either Oakbrook, IL, Bloomington, IL, or Kansas City, MO."

Redwood Trust reported net income for the third quarter of 2013 of $22 million, obviously down from the net income of $66 million for the second quarter of 2013 and net income of $40 million for the third quarter of 2012.

Real estate service provider Timios National Corporation has released its new "Timios Closing Costs" GFE calculator app, which is compatible with the iPhone, iPad, and Droid.  The app allows the user to instantly receive a GFE that includes non-lending closing costs, title insurance, escrow fees, and any applicable government fees using Timios's proprietary systems.  Quotes can also be emailed directly.  For more information, visit

LendingTree also released its 3rd quarter results, "setting new records, increasing revenue and gaining market share." The revenue of $37 million was 60% above the 3rd quarter of 2012. "Diverging from overall market trends, revenue from mortgage products was up 73% in the third quarter from the same period last year, while total mortgage market originations fell by 27% during this time, signaling a gain in market share. The company's purchase mortgage strategy continued to produce impressive results in the third quarter, with revenue from purchase mortgage products up 250% from the same period in 2012. With four consecutive quarters of growth, the number of mortgage lenders on the LendingTree network has increased by 96% over the third quarter 2012."

Analytics company LoanLogics has upgraded its LoanDecisions pricing platform with a CFPB-compliant Fair Lending feature.  Through individually issued loan-level reports, users can now provide an audit trail proving that the borrower was given the best program, price, and lock period available, negating any implications of disparate impact or treatment.  To find out more, visit

In Maryland, the 2014 NMLS Mortgage Lender Renewal Process kicked off on November 1st, from which point lenders will have until the end of the year to review and confirm all of their records as being up to date.  This includes taking care of outstanding annual financial statements and Mortgage Call Reports, confirming that all Continuing Education requirements have been met, and preparing any necessary documentation to be uploaded to NMLS.

The industry learned of a change to forced-place insurance. "The regulator and conservator of Freddie Mac and Fannie Mae (the GSEs) said today it has directed the GSEs to prohibit servicers of their loans from being reimbursed by insurers for expenses associated with captive reinsurance arrangements."

The bond markets are closed today - no hedging of locks, so don't look for aggressive rate sheet pricing - but lenders are still dealing with the aftermath of Friday morning's shockingly strong employment report. In spite of all the questionable statistics, more jobs mean a pick-up in the economy, right? But we can't ignore the statistics. Total nonfarm employment increased by 204,000 jobs in October, and September & August payrolls were revised up. But the unemployment rate slid back up to 7.3% after reaching an almost five year low of 7.2% in September as a result of a massive 735,000 job decline in the household series of employment. The government shutdown may be showing up more in that series than in the payroll series.

It appears that the federal government shutdown had little to no effect on the nonfarm payrolls numbers. The establishment survey counts workers as employed if they either worked or were paid for the pay period that included the twelfth of the month. Although most federal workers did not work during this period, they were paid, and thus counted as employed in this survey. The same cannot be said for the household survey, which should have classified federal workers on furlough as "unemployed on temporary layoff." Slice and dice it however you want, agency MBS prices worsened about 1 point on Friday.

(Read More: MBS RECAP: NFP Has Markets Second Guessing Taper Timeline (Again))