It is the holidays, and I receive my fair
share of automatic e-mail responses. Some are actually apologetic about taking
a day off, or even leaving work for the day. And every once in a while someone
breaks out of the mold. (Part 2 of 5 where I took the time to find some of the
more interesting ones.)
Happy Thursday: Why is Prancer always wet?
Rein-deer? I'm out in the field today visiting clients and will respond between
customer visits...
I will be out of the office Thursday
at noon and returning Monday morning. I am tired. I will have very limited
access to email and voicemails but will return a reply as soon as I am able...
Thank you for your email. I am
currently out of the office Today, Thursday, December 3rd & returning
tomorrow after attending a meeting that my company makes me go to...
Sorry I am not available at this
time. I will check my emails periodically, and reply when I can. For
emergencies contact someone else.
What is this? Fear of a bubble in commercial real estate?
Apparently the Fed is increasingly concerned about asset pricing and lending
practices in commercial real estate markets but lacks the tools to appropriately
address the excesses. But in other countries those crafty multi-family architects
not only don't care, but have some interesting
ideas
about combining skiing and apartment living.
NMP is offering up another webinar: "Does Your 2016
Business Plan Contain Fatal Flaws That Will All But Ensure Failure?"
It will be held this Thursday, December 17, at 2PM EST. "We're changing the
way we absorb information but more importantly we're better at filtering
information. Real estate agents and consumers now have a different process by
which they let people into their personal decision making space. In this clinic
you'll learn how agents and buyers will absorb information in 2016, why
overcoming objections no longer builds trust, and no & low cost ways to
connect with Real Estate Agents and Buyers in a meaningful way. Register here for this free webinar
provided by National Mortgage Professional Magazine.
There is a Lenders Compliance Group webinar today
on "TRID Challenges:
Guidance for Real Estate Professionals". "Major changes under the TRID Rule, New
Disclosures, TILA/RESPA - Boot Camp Basics, Timeframes: No Changed
Circumstance, Timeframes: Changed Circumstance, and Actions to improve timely
closings."
And the MBA is hosting a
webinar
on Wednesday with Mike Fratantoni and Steve O'Connor. The session is geared
toward the global/institutional investor community, but the discussion and
content would certainly be applicable to anyone looking for an update on the
state of housing finance.
Today Fannie Mae's trading desk is offering up an
upcoming "Best Efforts Execution" webinar to help lenders manage
their pipeline and interest rate risk and eliminate fall out risk in a best
efforts whole loan commitment. "Join us for a webinar at 2PM EST on
Tuesday, December 15. To register contact the Capital Markets Sales Desk at
1-800-752-0257 for more information.
Are the "Know Before You Owe",
TILA-RESPA reform changes impacting consumers? It certainly appears so. One broker wrote to me
saying, "TRID just cost my client $345. My lender used to give me a 30 day
rate lock and that didn't have to include the recession. Now it's a 30 day lock
but I need 6 days for the CD to be sent and acknowledged. In reality I went
from a 34 day rate lock to a 24 day rate lock. To put it in raw numbers based
off of this loan, every 5 days costs the consumer .125. So if I'm
burning 10 days that's .25 - does the consumer really win?"
And from Oregon Pete wrote, "The delays from TRID are
evident. I am now into my third TRID closing, and as a broker close loans with
different creditors. There are myriad of unforeseen reasons that are causing delays.
And there are more restraints in place, limiting our flexibility for the
consumer."
Let's go back a month or two and see how things got to
where they are today, which is that most lenders are "dealing" with
it but the Realtors and title companies seem befuddled, and the industries are
searching for guidance.
Remember when Existing Home Sales fell to 5.36 million in
October, according to the NAR? The median home price increased to $219,600.
"It doesn't appear that TRID had much of an effect on home sales, at
least so far" said the NAR.
Genworth Mortgage Insurance published results from
a survey of mortgage professionals conducted at the MBA's annual conference.
Findings show that 38 percent of survey respondents are concerned about
complying with the new TRID rules, which has been the biggest hurdle in
implementing the regulation. Additionally, 35 percent said that having the
right technology was their biggest TRID challenge and then 22 percent believed
that communication with borrowers discussing the new rules was another
challenge. These findings do not come as a surprise, as most of the industry
has been struggling with implementing the new regulation and has resulted in a
large learning curve for most.
Zelman and Associates published its Mortgage
Originator Survey implying that the industry has been focused on TRID, trying
to implement the new disclosures. Back then respondents reported that YoY
purchase application growth has accelerated to 18 percent in September from 15
percent in August, which is partly due to the push for applications prior to
TRID's effective date of October 3rd. Lenders marked the impact of
TRID as moderately disruptive and expressed that most of the disruptions will
be on the back end, at the time of loan closing, due to the strict timing
requirements. For more information, contact Ivy at ivy@zelmanassociates.com.
Zelman & Associates returned with its November Mortgage
Survey and a report on TRID. The feedback from contacts has been that TRID is
creating more disruptions than anticipated and expected last month,
particularly in the broker channel, which we expect to be a drag on existing
home sales in November.
Zelman noted, "November marked the second month that
the TILA-RESPA Integrated Disclosure (TRID) rule was effective for mortgage
applications. Despite challenges associated with the implementation of the new
disclosure forms, purchase mortgage applications increased 17% year over year
in November, accelerating roughly 400 basis points from October's growth rate
as applications rebounded from the initial slowdown, which we attributed to
cautiousness around TRID last month. However, the impact of the rule is
expected to be more evident in closings in November and December given that
closing timelines for the first round of TRID applications were extended by
five to seven days, on average. According to contacts, implementation has
varied significantly between origination channels, with retail (~55% of
originations) performing strongest given in-house control of the application
process and wholesale broker (~10%) faring the worst. For our financials
coverage, we are cautious in the near-term given the potential for volume
shortfalls caused by TRID delays, and reduced 4Q15 EPS estimates for the title
insurers and NIW estimates for the mortgage insurers, as discussed in greater
detail in our TRID report."
"In recent weeks, mortgage lenders have begun the
process of attempting to close an increasingly large percentage of their
originations on newly-mandated TRID forms, required for mortgage applications
submitted on or after October 3rd. Overall, TRID appears to be causing
worse-than-expected delays in closings, particularly in the wholesale channel,
as well as increases in expenses, resulting in lower 4Q15 earnings estimates
for certain volume-driven companies. In addition, we believe that existing home
closings in November are set to severely disappoint consensus expectations.
However, we expect the industry to better-manage the disruption as December progresses,
resulting in little spillover to 2016."
Lenders and investors continue to react, and paying
attention to the calendar is critical. For example Freedom Mortgage has
presented some helpful tips on loan closings in the month of December.
"For all Non-TRID loans, the last day to close is 12/23/15. Final
conditions submitted to underwriting 12/16/15 and final approval no later than
12/18/15. For all TRID loans, the last day to close is 12/23/15. CD sent
electronically or by mail and acknowledged by applicant: Final conditions
submitted to underwriting by 12/11/15; Final approval no later than 12/15/15.
CD acknowledged by applicant no later than 12/19/15*. *All applicants who
have the right to rescind must acknowledge the CD. CD sent electronically or by
mail and NOT acknowledged by applicant: Final conditions submitted to
underwriting by 12/09/15; Final approval no later than 12/11/15, CD out to
applicant no later than 12/16/15."
But Dodd-Frank's impact doesn't stop with the primary
markets. It has severely curtailed market-making operations at investment
banks, and right now there are very few buyers of distressed credit as hedge
funds face redemptions and investment banks cannot step in because of capital
requirements. In fact, the
regulators are considering additional steps to ensure a bank failure doesn't
bring down the entire financial system, which means that investment banks will
probably de-risk further, making them even less likely to act as market-makers.
This will be an interesting first test of a financial crisis in the new
Dodd-Frank world.
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