LOS survey; RESPA-TILA toolkit; LO comp violations still out there

http://globalhomefinance.com

You don't think things are changing? Apple announced it has signed up 500 more banks in addition to the 6 largest US banks it announced during the launch of its Apple Pay service, which is now available today. In the UK, Lloyds Bank is cutting 9,000 jobs. "Lloyds...wants a new type of branch, complete with iPads and facilitated internet discussion screens, enabling chats with staff who may not be physically in the same branch as the customer." And Walmart has recently announced a new banking initiative called GoBank through which it will offer mobile checking accounts with debit cards in its 4,300 US locations by the end of October. Bank analysts will counter with the line of thought that the most profitable bank customers may not shop at Walmart, but still...

USDA step aside: The CFPB has posted its 2015 final lists of Rural and Rural or Underserved Counties on its website. The CFPB has previously posted lists of such counties for calendar years 2011-2014. The lists are relevant to exemptions in several CFPB mortgage rules, including the CFPB's rule requiring creditors to establish escrow accounts for certain first-lien higher-priced mortgage loans.  The CFPB's blog post announcing the posting of the 2015 lists includes links to the various CFPB rules that refer to the lists. 

While we're on the CFPB, "Rob, here is a link to a TILA/RESPA toolkit that Wolters Kluwer put together for its clients. The materials and it seems to be pretty thorough and a great resource for those that don't have a large staff to help guide implementing the rule. There is a Resource center and tool kits - click on tool kits." Hey, compliance is going to cost you money anyway, and this might be a cost effective way to do so. 

Turning to vendors, what is the true market share of Loan Origination System (LOS) providers? "Have you recently replaced this crucial technology for your company? Was the implementation successful? How does your LOS functional experience compare to that of your peers, from a functional suitability and vendor service perspective? Take our 15 minute LOS Technology Insight survey to learn the answers. STRATMOR Group is actively conducting a repeatable, statistically reliable survey to provide lenders with up-to-date, industry-wide objective data for future trend analysis and much needed decision support for internal LOS self-evaluation and/or LOS replacement. Participation is FREE and respondents will receive a high-level summary of overall market share by product/vendor and of implementation success metrics. Note that you must participate in this survey to receive these summary results. Detailed survey results and STRATMOR's proprietary analysis of our findings will also be made available for purchase that will break out the full range of survey questions by respondent organization (independent, bank owned, etc.), origination channels, and by company size (origination volumes). As is STRATMOR's practice, to assure confidentiality, we will conduct this as a "blind" survey. All survey results will be aggregated; individual company results will not be disclosed, nor will we publish the results in a way that would enable individual respondent identities to be derived. To participate in the 2014 LOS Technology Insight, register at STRATMOR LOS Technology Survey Website.

“I haven't read much about LO COMP lately. Is the issue all taken care of, and the CFPB has moved on?" No, unfortunately it is still a source of confusion. And there are still reports of lenders offering programs that are not compliant with the CFPB's regulations, or the intent of the regulations. Examples are too numerous to list, but reports certainly include the following: one independent mortgage bank offers its LOs a deal where the first 100 basis points goes to the house on conventional loans and then the LO keeps everything above that. (Oh, and for FHA loans the house keeps 200 basis points and the LO keeps the rest.) There is chatter of paying LOs different amounts based on conventional and government loans. (Certainly an issue when a borrower is looking at a 95% LTV deal!) I've heard of single originators being offered a branch manager position paid out of profitability on the loans he or she closes personally. And I hear about independent mortgage banks, and even banks, having convicted felons employed in mortgage operations. And no, I don't know what these companies are thinking - but the question is whether or not the consumer could be negatively impacted by policies.

Let's play some catch up with lender, agency, and vendor news. As always it is best to read the full bulletin for complete details!

Hilco Real Estate LLC announced that it has sold its private real estate mortgage lending company - Hilco Real Estate Finance LLC (CEO Mark Filler) - to the Garrison Investment Group. "Neil Aaronson, CEO of Hilco Real Estate LLC, a unit of Hilco Global, indicated that the growth of Hilco's private real estate mortgage lending business had exceeded all expectations and financial projections.  Aaronson said that "following such a successful first year and a half of lending, originating loans in approximately 20 states and rapid expansion of the operations, we decided that the time was right to carefully transition the company to a new capital partner that wanted to aggressively scale the business."

Hey, don't forget that last week Ginnie Mae changed its net worth requirements.

On Q announced that it has opened a new branch office in Gig Harbor, WA which underscores the rapid expansion of the company into the home financing market in the Pacific Northwest. In 2014, On Q opened four branch offices in the Pacific Northwest (Bellevue, Lynnwood - Seattle, Vancouver and now Gig Harbor. The On Q Gig Harbor branch is managed by local residents, and husband and wife team, Peter and Dawn James.  The branch supports the entire Puget Sound area and plans to open a satellite office in the Olympia/Thurston County area as well.

Flagstar Wholesale streamlined the approval process for both the Construction and Renovation loan programs. By attending the full duration of one session, attendees will satisfy both construction and renovation requirements. To register for the Construction & Renovation Programs class, go to wholesale.flagstar.com under the Help & Training link and then select Wholesale Live WebEx Training. Click the Upcoming Sessions tab to view and register for the date and time that works best.

Arch MI updated its rates for the Non-Refundable Single Premium Lender Paid Mortgage Insurance (LPMI) program. The changes include a new credit score tier for borrowers with credit scores 760 and greater, lower pricing for higher-quality borrowers with credit scores 720 and greater, and further rate refinement for credit score tiers below 680. The new rates also reflect some increases in the rates for credit scores below 660.

Video use is on the rise. Here is "Mortgage News Network Videos" presentation of "Master the Markets" for this week: "The Real Story on Housing and a Fed Preview".

Looking briefly at the markets, we did have some news yesterday. Durable Goods Orders decreased 1.3% in September after declining 18.3% in August. The S&P Case Shiller Home Price Indices told us that the deceleration in home prices continued in August. But despite the weaker year-over-year numbers, home prices are still showing an overall increase, as the National Index increased for its eighth consecutive month.  The large extent of slower increases is seen in the annual figures with all 20 cities; the two composites and the national index all revealing lower numbers than last month. Lastly, the Conference Board's consumer confidence index rose to 94.5 in October from 89 the prior month. By the time the dust settled the 10-year was at 2.28% and 30-yr agency MBS prices were worse about .125.

For today the Treasury sells $15 billion 2yr floating rates at 11:30am and $35 billion 5yr notes at 1PM Eastern time, and then an hour later all eyes turn to the FOMC meeting at its conclusion with the statement out around this time. Most foresee a cessation to MBS agency purchases and a continuation of prepay reinvestments (approximately $20B/month). The agency MBS market is roughly unchanged from Tuesday's close with the 10-year at 2.28%.

Market Report:

The bond and mortgage markets opened slightly better this morning but not much difference from yesterday’s selling that dropped MBS prices 20 bps and GNMA price down 27 bps. Equity markets still driving rates, yesterday the three key indexes had another strong day with earnings continuing to impress investors and a very strong consumer confidence index, the best since Oct 2007.

Today at 2:00 the FOMC policy statement; between now and then the media and analysts will spend all day making projections about what the FOMC will do. Our view; the Fed will end the QE at the end of the month, and the Fed will state it will keep interest rates low for a considerable period. Fedspeak interpreters will focus on each verb and adjective in the statements---what does each word mean and what is the message the Fed is projecting. We go through this process every six weeks. It usually takes a day or so for everyone to get on the same page about what the statement really means going forward.

At the beginning of the year the overwhelming consensus was the Fed would begin increasing the FF rate no later than next April; since then the consensus has been extended more than a few times. The current forecasts complied by Bloomberg is that there is only a 50% chance the Fed will increase the FF rate to 0.5% by next October. Janet Yellen hasn’t retracted any of her comments that she is concerned about the quality of new jobs being created; as long as that is her concern she isn’t likely to move anytime soon to begin increasing short term interest rates. This afternoon will be all about how the FOMC frames the statement; the way markets interpret the phrasing. The Fed has made a huge point in the last few years to be more transparent without being specific, letting markets define the meanings.

Prior to the FOMC this afternoon, Treasury will auction $35B of 5 yr notes at 1:00. Yesterday’s $29B 2 yr auction was in line with previous 2 yr auctions. Conducting an auction one hour before the FOMC is kind of dicey.

At 9:30 the DJIA opened +28, NASDAQ -14, S&P unchanged, the 10 at 2.30% testing its 20 day moving average. MBS prices at 9:30 +2 bps from yesterday’s decline of 20 bps points and down 15 bps from 9:30 yesterday.

The weekly MBA mortgage applications declined last week. The composite index -6.6%, the purchase index -5.0% while the re-finance index dropped 7.0%. The week before was strong, +11.6% composite while the refinance index was up 23.0%. Purchases the prior week were down 5.5%. Based on this, purchases are still slow.

Expect the bond and mortgage markets to stay still until this afternoon’s FOMC statement at 2:00 pm. The bellwether 10 yr note yield at 2.30% is the yield the 10 printed the day before the huge decline in rates; two weeks and back to where rates were before the capitulation of most bond market bears. Not really necessary to point out the volatility. Technicals now are neutral, not bullish or bearish, however that won’t last long. The fixed income markets are at a crucial pivot point now.

PRICES @ 10:00 AM

10 yr note: -4/32 (12 bp) 2.31% +2 bp

5 yr note: -2/32 (6 bp) 1.53% +2 bp

2 Yr note: 0.44% +2 bp from yesterday’s auction

30 yr bond: -11/32 (34 bp) 3.08% +2 bp

Libor Rates: 1 mo 0.152%; 3 mo 0.232%; 6 mo 0.322%; 1 yr .541%

30 yr FNMA 3.5 Nov: @9:30 103.42 +2 bp (-15 bp from 9:30 yesterday)

15 yr FNMA 3.0 Nov: @9:30 103.85 -4 bp (-10 bp from 9:30 yesterday)

30 yr GNMA 3.5 Nov: @9:30 104.42 +3 bp (-21 bp from 9:30 yesterday)

Dollar/Yen: 108.15 -0.01 yen

Dollar/Euro: $1.2741 +$0.0007

Gold: $1,222.20 -$7.20

Crude Oil: $82.24 +$0.82

DJIA: 17,058.66 +52.91

NASDAQ: 4561.17 -3.12

S&P 500: 1990.43 +5.38

http://globalhomefinance.blogspot.com