Lawyers
should never ask a Georgia grandma a question if they aren't prepared for the
answer.
In a
trial, a Southern small-town prosecuting attorney called his first witness, a
grandmotherly, elderly woman to the stand.
He
approached her and asked, "Mrs. Jones, do you know me?"
She
responded, "Why, yes, I do know you, Mr. Williams. I've known you since
you were a boy, and frankly, you've been a big disappointment to me. You lie,
you cheat on your wife, and you manipulate people and talk about them behind
their backs. You think you're a big shot when you haven't the brains to realize
you'll never amount to anything more than a two-bit paper pusher. Yes, I know
you."
The
lawyer was stunned.
Not
knowing what else to do, he pointed across the room and asked, "Mrs.
Jones, do you know the defense attorney?"
She
again replied, "Why yes, I do. I've known Mr. Bradley since he was a
youngster, too. He's lazy, bigoted, and he has a drinking problem. He can't
build a normal relationship with anyone, and his law practice is one of the
worst in the entire state. Not to mention he cheated on his wife with three
different women. One of them was your wife. Yes, I know him."
The
defense attorney nearly died.
The
judge asked both counselors to approach the bench and, in a very quiet voice,
said, "If either of you idiots asks her if she knows me, I'll send you
both to the electric chair."
The legal morass that residential lending finds itself in
continues. The latest comes from the ghost of Lehman Brothers continuing
to haunt small institutions around the United States - like this small bank in
Wisconsin - thanks to Scott F.
for passing this along. In other news, Credit Suisse has agreed to pay more
than $29 million to settle a lawsuit with the National Credit Union
Administration. Supposedly CS sold toxic mortgage-backed securities to credit
unions that later failed. NCUA has recovered more than $2.5 billion from banks
through lawsuits it began filing in 2011. And out in California jury has
awarded Mount Olympus Mortgage Co $23 million in damages from Guaranteed Rate and a former loan officer for
conspiring to steal hundreds of loan files and confidential customer
information.
Like
mortgage companies, banks continue to merge, acquire other companies, and
change branch structure. In the last week we've learned that First Savings
Bank of Hegewisch ($610mm, IL) will acquire Lake Federal Bank, FSB ($66mm, IN).
In Massachusetts Rockland Trust Co ($7.2B) will acquire Bank of Cape Cod
($261mm) for about $30.7mm in stock. Umpqua Bank ($23B, OR) will consolidate 26
branches/stores as the bank adjusts to changing customer behavior around
increased usage of online and mobile banking services. Reliance Bank ($168mm,
AL) will acquire 4 AL branches and 1 NC loan production office from SouthBank
($65mm, AL).
Adjustable
rate mortgages aren't against the law - yet - but volumes certainly haven't
done much, percentage-wise or volume-wise, in recent years.
A while
back Andrew Kalotay proposed a "ratchet mortgage," which is essentially an ARM with a
rate that can only reset downward. Ed Pinto outlined a "wealth building home loan" that
features shorter amortization-fifteen or twenty years-than most U.S. mortgages.
Howell Jackson discussed embedding call options in mortgage contracts
that would allow an interested party (such as the government) to buy a mortgage
from the holder under specific circumstances (for instance, during a financial
crisis) at a predetermined price. Andrew Caplin focused on shared-equity finance, in which a third
party (such as a private equity firm) provides some of the equity for a home
purchase, and in turn shares the risk (or gain) when house prices change.
Franklin American Mortgage Company announced the release of its Non-Conforming Jumbo ARM
program. The product offers 5/1 and 7/1 LIBOR ARMs.
TRID-specific news and changes continues to come
through - nearly six months after it was instituted.
On Tuesday, March 1 at 2 p.m. EDT, the
Federal Reserve hosted a webinar on the Know Before You Owe mortgage disclosure
rule. A link to this webinar is now available on the Bureau's
website. The session, presented by the Bureau, addressed specific questions
from industry pertaining to construction lending.
Flagstar's recentTRID system enhancements
include users' ability to choose a closing date two days earlier
provided that all borrowers required to receive the CD have electronically
consented. This is available for all new requests and is not available on
loans where the request has previously been submitted. Once all applicable borrowers
have electronically consented the Earliest Closing Date available in the
Disclosure Management module will reflect the new Earliest Closing
Date. In addition, The Disclosure Management module has now been
updated for originators to input the non-obligated borrower(s) information
including their email address. This will allow for the non-obligated
borrower(s) to electronically consent earlier in the process. Please note
a social security number is required for any non-obligated borrower requesting
to receive documents electronically.
DocMagic
announced the development of an extensive
set of new reps and warrants for its calculations, documents and data, which
provides peace of mind to lenders when it comes to compliance with the TRID
rule. With DocMagic's TRID-ready systems and now the Premium Compliance
Guarantee, it has implemented a solution that mitigates lender risk of
non-compliance. With the Premium Compliance Guarantee, the Loan Estimate
and Closing Disclosure are guaranteed to be accurate and complete. The offering
is backed by a $5 million dollar guarantee (up to $50,000 per loan) with a
36-month claim filing period. Beginning February 15, 2016, all new
customers will automatically receive the new premium rep and warrant offering. Existing
customers will be given the opportunity to protect their future loan files for
an additional nominal fee.
Powered by NYCB's proprietary eSign
technology, the Signing Room vision now expands beyond our industry-leading
eSign Closings to the convenient electronic acknowledgement of the LE and CD
with more e-documents to come. For Clients: Signing Room Client Roadmap [WSL: 1266]A
great summary of key Signing Room details you need to know. For Borrowers/Other Signers: Welcome to the Signing Room [WSL:
1265]Provide this flyer to Borrowers/Other Signers to prepare them for
the Signing Room experience. Online Consumer Tutorial - Easily demonstrate the Signing
Room procedures to your Borrowers/Signers. This tutorial is also available from
esignmortgage.com.
I
remember the days following 9/11 when originators had loans in their pipelines
which were technically on hold for funding due to certain characteristics
contained in the credit package. This made for interesting conversations around
secondary marketing desks on how to hedge and commit such files. But what
about when foreign money wants to purchase real estate with cash? Or, foreign
originated money aside, what about individuals who wish to purchase through
LLC's? In a recent Bloomberg article they discuss such an area of concern for
the current administration, they write, "President Barack Obama's
administration, citing concern about the origin of funds used for all-cash
purchases of luxury real estate, said it is stepping up scrutiny of transactions in New
York City and Miami. The Financial Crimes Enforcement Network said on Wednesday
that it will temporarily require title insurance companies to identify individuals
behind companies that pay cash for high-end residential real estate in
Manhattan and Miami-Dade County." FinCen, a unit of the U.S.
Treasury Department, is concerned that real estate purchases without bank
financing "may be conducted by individuals attempting to hide their
assets and identity by purchasing residential properties through limited
liability companies or other opaque structures." Maybe someone should
tell these people intentionally hiding taxable assets from the United States is
frowned upon.
I
recently wrote about European negative interest rates, and received an email
asking why anyone would pay a bank to hold their money in deposit? The quick
answer: you probably wouldn't....but institutions might under the right
circumstances. If the average American has $4,400 in their checking account they would probably
withdraw it and store it under their mattress, or burry it in their backyard
ala Tony Soprano; however, large banks and money managers who control billions
of dollars don't have that option. Why? For one there would be a cost
associated with storing that much money (maybe even more than the implied 20bps
in negative interest banks would charge you), and secondly, banks and money
managers aren't necessarily in the business of holding cash, but rather are in
the business of moving cash.That's a good thing too, if you believe the classic
economic concept of the circular flow of money. Economies are normally
unproductive when cash sits on the side lines (see: current U.S. economy as
example). Negative interest rates are an attempt to spur investments.
Central
bankers are stress testing mortgages again and not liking what they find. Before
you start trying to find your resume on your computer, I should mention the
central banker in question is the PBOC (the People's Bank of China) which
called officials from the nation's biggest commercial lenders to a meeting in
the southern city of Shenzhen to stress a close adherence to rules on mortgage
lending. Bloomberg writes, "The People's Bank of China told
lenders not to compete excessively on mortgages, said the people, who asked not
to be identified as they aren't authorized to speak publicly. Banks were also
requested to step up their scrutiny on the source of borrowers' down payments,
the people said." This sounds uniquely familiar, but I can't place
it's context...."Chinese authorities are mulling plans to impose rules ending the practice of
home buyers taking out loans to cover down-payments, people familiar with the
matter said last week." Where did I hear that before? "Central
bank Deputy Governor Pan Gongsheng said on Saturday loans from developers, real
estate agents and peer-to-peer lenders have raised home buyers' leverage,
undermined the effectiveness of macro policies and increased risks to the
financial system and property markets." Again, that seems oddly
familiar.
Down
Tuesday, up Wednesday, down Thursday... the bond market and rates have seen
some minor fluctuations right up to the early close yesterday. Declining global
equities and oil prices were not enough to keep U.S. Treasuries in positive
territory yesterday. The economic data for the U.S. was bad too as the durable
goods orders data for February caused downward revisions to Q1 GDP growth
estimates. Durable goods orders fell 2.8% in February, slightly less than
estimates, but January's change was revised down to +4.2% from the initial
reading of +4.9% and excluding transportation orders were down 1.0% in February
and were said to have increased 1.2% in January versus 1.8% before. New orders
for nondefense capital goods excluding aircraft -- a proxy for business investment
-- declined 1.8%.
The
bond markets are closed today for the Good Friday holiday, so any rate sheets
produced will have the usual conservative approach.
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