As most of you know, in 2013
the Oxford Dictionary proclaimed the new word of the year was
"selfie." I think Anthony Weiner may have helped awareness of
that word. And the mortgage banking word of the year was certainly
"compliance." What will the word of the year be in 2014?
My STRATMOR colleague Garth Graham thinks the word of the year will be
"Conversion." He has a good write up about why, in a
series of articles on "Why Conversion Matters Most."
LO compensation continues to be
a concern; "We have seen some chatter about originator comp
and some wholesalers allowing varying compensation. I am not sure how they
deem this within the rules - specifically the 'Borrower paid' and 'Lender Paid'
transactions. Below is a piece from the Preamble of the rule. I am by no
means an attorney, but even I can't imagine this excerpt can be interpreted any
way but 'DON'T VARY COMP'. 'Consumer Payments Based On Transaction Terms.
TILA section 129B(c)(1), which was added by section 1403 of the Dodd-Frank Act,
provides that mortgage originators may not receive (and no person may pay to
mortgage originators), directly or indirectly, compensation that varies based
on the terms of the loan (other than the amount of principal). 12 U.S.C.
1639b(c)(1). Thus, TILA section 129B(c)(1) imposes a ban on compensation that
varies based on loan terms even in transactions where the mortgage originator
receives compensation directly from the consumer. For example, under the
amendment, even if the only compensation that a loan originator receives
comes directly from the consumer, that compensation may not vary based on the
loan terms. As discussed above, § 1026.36(d)(1) currently provides that
no loan originator may receive, and no person may pay to a loan originator,
compensation based on any of the transaction's terms or conditions, except in
transactions in which a loan originator receives compensation directly from the
consumer and no other person provides compensation to a loan originator in
connection with that transaction. Thus, even though, in accordance with §
1026.36(d)(2), a loan originator organization that receives compensation from a
consumer may not split that compensation with its individual loan originator,
existing § 1026.36(d)(1) does not prohibit a consumer's payment of compensation
to the loan originator organization from being based on the transaction's terms
or conditions.'"
They say that fact is stranger
than fiction, just ask any whoever underwrote a SISA loan....on second thought
that might be fiction is stranger than fact. Anyway, the CFPB is hoping that
the facts stand up against fiction, at least when it comes to QM and Ability to
Repay. The agency recently issued a "fact versus fiction guide" on
its ability-to-repay/qualified mortgage rule. The guide is intended "to
help dispel some of the most common misconceptions about what this new rule
actually means for consumers." Mainly, the misconception (according to the
CFPB) is that the rule's requirements, which the guide describes as "basic
guidelines that lenders can follow," will make it more difficult for
consumers to obtain credit. In the guide, the CFPB counters various
"fictions" with "facts" designed to show why lenders should
not find the rule's requirements discouraging to lending practices.
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