The
Agencies are "happy" to deal with credit risk. After all, that is
what guarantee fees are for, right? But when someone like Fannie is dealing
with approximately 1,400 lenders, operational risk is not something they want
to assume. The Agencies, and other investors, are carefully watching the
migration away from the pristine risk profile that the industry has developed
over the last several years. They want viable counterparties with plenty of net
worth, and lenders exiting or merging cause some instability. And any investor
walks a fine line between offering more and more to their clients versus
protecting themselves. Given the recent announcement from the FHFA about the
Agencies needing to focus on non-regulated servicers, the premise that the
Agencies aren't interested in operational risk oversight may be shifting.
The
interesting thing is that everyone I have asked has told me that not every loan
should be done - so logically not every borrower will qualify for a loan. Fred Jackson
wrote to me saying, "Regarding the comments on mini-correspondents, after
all this time, does it not amaze you that many (still) believe that Fannie and
Freddie underwrite the loans they buy. No matter how many times it's explained
that it's the responsibility of the seller to qualify and underwrite the loans,
with DU or LP or manually, and how obvious it is that, to underwrite every loan
bought , F&F would need to have as many underwriters as all their sellers
put together, why don't people get it? The same applies to large correspondents
who are seller/servicers. Do the math, folks."
Risk
management in mortgage lending is a burgeoning field. How does one measure,
track, and reduce loan defects? What will the upcoming RESPA/TILA changes mean
to risk? Are you preventing all fraud in your originations? And if not, why
not? How are you handling your underwriting, repurchase, indemnification, and
rescission risks? The CFPB appears to be focused on counterparty risk - how are
you monitoring your vendors? What about cybersecurity, or the risk of the
janitor throwing a bunch of loan files in the dumpster (I saw that one happen
several years ago)? Is the company monitoring appraisal and review appraisal
risks? Collateral valuation is critical to investors. How about for third party
originators - how are they watching their broker clients?
But
wait - there's more! Are you hedging your secondary marketing risk correctly?
Will your warehouse lender be around next month? Conversely, will the warehouse
bank's clients be around next month? Are you adequately training your staff on
risk metrics and avoidance? Are you at risk of your LOs running amok in social
media, saying they have the best rates in town? And the CFPB wants to make sure
that a lender's LOs are not being compensated to steer borrowers in one
direction - the risk of a lender not doing that are pretty darned steep.
And
when a lender has their eyes on all of that, is there any time or resources to
actually originate a loan profitably? Is it easier doing all of that when
you're a big bank than when you're a lender doing $30 million a month? Not only
are lenders measuring, tracking, and reducing loan defect rates, but they are
also mitigating repurchase, re-default, and rescission risk. And all of this is
for QM and non-QM loans, vanilla product or expanded - that should have little
bearing on a company monitoring and minimizing risk. Indeed, managing risk
is critical, and expensive, for lenders.
Not
coincidentally, the MBA's Risk Management and Quality Assurance Forum is
scheduled on September 7th-9th in Miami Florida.
"Hear from a distinguished panel of key industry leaders and GSE staff as
they discuss updates and challenges to current business processes in two
general sessions. Register before August 4th, member price $840 and
non-member price $1040. For complete details and registration information: MBA.
While
we're talking about training and happenings, let's play some catch-up with
other upcoming events. In no particular order...
I
know that this is late notice, but the MBA/MW if offering a Fundamentals of
Mortgage Banking course starting today in Herndon, VA. "A
comprehensive two-day course
that every Loan Officer Assistant, Loan Officer or new
Processor should attend. Taught by industry renowned instructor Mary Kay
Scully of Genworth Mortgage Insurance.
The
CMLA and AMLG are hosting a complimentary comprehensive 90 Minute
Repurchase/Make-Whole Defense Webinar: "The
Latest Patterns, Trends and Solutions to Resolving Repurchase/Make Whole
Claims in 2014 and Beyond" on Tuesday, July 29, from 11-2:30PM PST.
Topics include various trends with the major secondary market investors
both in and out of court, insights into the latest case law from around the
country and how such may affect forward-moving repurchase/make-whole defense
and resolution strategies, updates to legal defenses that lenders can use to
push back a repurchase demand; common allegations asserted in support of
repurchase/make-whole demands and a number of the strategies that should be
considered to rebut such demands, etc.
NAMB
National
will have its 40th Annual Conference in Vegas baby! The Nation's Largest
Conference & Tradeshow for Mortgage Professionals is scheduled for
September 13-15 at the Luxor Hotel. Attendee registration price is $295
increasing to $345 after Thursday July 31st. For complete conference details,
visit the website: NAMB. As an added bonus,
you can fulfill your complete 8 hour continuing education requirements for your
NMLS license renewal. "This is a separately-ticketed bonus offering. Make
the most of your time in Vegas by getting your federally-required CE in
addition to a conference full of networking, education, opportunities and
prizes. Continuing Education course is provided by Mortgage Educators &
Compliance. Important Note: You must take the entire 8 hour class to qualify
for credit.
The
Community Home Lenders Association (CHLA) has announced plans for
its second annual fall conference to be
held September 8-9 at in Washington DC at the Liaison Hotel on Capitol
Hill. The conference will once again feature attendance by key
federal policy makers that affect the future of the mortgage banking industry
and housing finance reform. The Conference also includes a Lobby Day with key
members of Congress. "CHLA has taken the lead on important issues
affecting independent non-bank mortgage bankers, including being the first
national trade association to call on FHA to reduce annual premiums and calling
for bank mortgage originators to have testing and training requirements
commensurate with those that apply to non-bank mortgage lenders."
If
you find yourself in the Northwest in early September, you may want to check
out the Pacific Northwest Mortgage Lenders Conference, September 7-9.
This year's event will be held at The Benson Hotel, a historic landmark in the
heart of downtown Portland, Oregon. The Oregon Mortgage Bankers
Association (OMBA) is pleased to host this year's tri-state event for Oregon,
Washington and Idaho. "The guest speakers will cover topics that include
regional and national economic forecasts, GSE reform, CFPB updates, Private MI
changes, and QM updates. The MBA will provide critical and timely updates on
legislative issues that affect our business."
The
TMBA's 13th Annual Reverse Mortgage Day
will be held at the Westin Galleria Dallas in Dallas, Texas on Thursday,
September 11 with a Welcome Reception on Wednesday September 10. This event
will bring industry professionals from all over the country to the Lone Star
State seeking strategic options and information about the business of reverse
mortgage lending. Attendees include upper management from the nation's leading
reverse mortgage lenders, loan officers, real estate attorneys and title
companies. Individual registration fee, before August 8th, $159.00, after
August 8th, fee is $209.
What
happens in Vegas shouldn't stay in Vegas... The CMBA's 19th Annual Western States Loan Servicing
Conference is taking place August 3rd - 5th at the Encore in Las
Vegas. This year includes an added a golf tournament to kick off our conference
which will happen on Sunday, August 3rd at Spanish Trail Golf Course, just a
few minutes from the conference hotel.
The
markets: Ukraine, Gaza Strip, and Malaysian Airline disaster, take your pick.
Overall prices and rates ended Monday about where they ended Friday, despite
turmoil and lack of U.S. news. Today we'll have the Consumer Price Index
numbers for June, seen just below the prior read of +0.4%, the FHFA house price
index for May (expected slightly higher) and the June's Existing Home Sales
(also expected higher). In the early going the 10-yr is still at 2.48% and
agency MBS prices roughly unchanged from Monday's close.
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