(The NFL season commences in early
September. With that in mind I'll put forth a week of football quotes &
jokes guaranteed to insult practically every team. Please, no complaints - you
can change the team to whoever you like.)
"Gentlemen, it is better
to have died a small boy than to fumble the football" - John Heisman
"I make my practices real
hard because if a player is a quitter, I want him to quit in practice, not in a
game." Bear Bryant / Texas A&M - Alabama
"It isn't necessary to see
a good tackle. You can hear it!? - Knute Rockne / Notre Dame
"At Georgia Southern, we
don't cheat. That costs money, and we don't have any." Erik Russell
/ Georgia Southern
"The man who complains
about the way the ball bounces is likely to be the one who dropped
it." - Lou Holtz / Arkansas - Notre Dame
"When you win, nothing
hurts." - Joe Namath / Alabama
"Rob, are we heading back
to loans with LTVs greater than 100%?" I doubt it, but certainly there are
some high LTV programs out there, over and above down payment assistance
programs. For example, and this is not an ad, but United Wholesale Mortgage gives borrowers 2%: "Borrower
puts 1% down, UWM contributes 2% toward the down payment, giving them 3%
equity at closing." And Quicken began offering a 1% program earlier this year. More
down payment news below with FirstREX.
Vendors appealing to
residential lenders are on the rise.
IRS tax transcripts are a hot
topic these days. NCS, founded in 1978 and a leader in risk mitigation
solutions, had the distinction of being the first organization in 1994 to offer
IRS tax transcript solutions (4506-T) nationwide. On July 15th
the IRS implemented a "Re-verification" program for all participants
using the Income Verification Express Service, (IVES), and 100% of NCS'
direct clients were compliant and accessing TRV® Services throughout the
implementation period. NCS offers advanced verification products and
services to the financial industry with the customer service mantra of,
"beyond the expected." (NCS will be attending The Mortgage
Collaborative conference in Denver coming up 8/21-8/22. Reach out to Kimberlee Foster or Casey Hughes to secure a
meeting or learn more about NCS and its full suite of product offerings.)
But vendors offer plenty
of services throughout the loan process. The OCC issued vendor management guidelines, followed by the FFIEC in 2015. As a result, the time has come for lenders
& community banks to put their vendor management efforts to the test in
regulatory audits. Not all vendors are created equal. While you have to perform
due diligence on all vendors, and many experts say it's a sound practice to
divvy them up into a few buckets to break them into groups based on the level
of analysis required.
The first bucket should
consist of critical vendors. These are vendors that could cause significant
risk to the lender or bank by failing to meet expectations. Critical vendors
also could have substantial effects on customers or have a major impact on
lender operations. This group requires the greatest level of analysis because
the impact can be so large. Many lenders create a basic evaluation checklist
that consists of items including a business impact analysis, insurance
verification, clear service level agreements and a signed contract. You'll
also need to designate an employee to serve as the vendor relationship manager.
Next, once you separate
critical vendors from the pack, identify those vendors who work with sensitive
or confidential data. This group needs to have enough capital to remain a going
concern, and have strong enough risk management practices and controls to make
you comfortable. The level of regulatory scrutiny has increased here so if you
don't know or haven't done this yet it is a good thing to do quickly and
thoroughly to identify weak players. For your general bucket of vendors,
following the evaluation checklist will probably also be enough to satisfy
regulators. For vendors who work with sensitive or confidential data and those
that are critical, you will need to analyze whether they are maintaining proper
E&O and cybersecurity insurance, proof of regular third-party audits,
review of financial statements, inquiring into compliance history and
establishing ongoing relationship monitoring.
The third bucket of
vendors to group together are those that are more general in nature and don't
fall into the other categories. These should have a lower risk profile overall,
so analysis on this group can be much higher level and faster in most cases.
Far too often lenders and banks don't have an up-to-date complete inventory of
current contracts, meaning many don't have a good handle on contract terms and
conditions. Getting these records in order is a must so you can be confident
contracts meet current regulatory, accounting and business requirements.
Tim Cox, Chief Strategy Officer
with MQMR, writes, "Vendor management and CMS assessments
are important topics for discussion at both the State and the Federal Level,
and with Fannie, Freddie, and Ginnie. In a series of Supervisory
Highlights, spanning over the last several years, the CFPB has reiterated the importance of robust compliance management systems. Rumor
has it that several states have made vendor management a focus of their exams,
including testing of the vendor management program to understand a lender's
risk methodology, proof that ongoing reviews are being performed, and that
vendor management isn't just a checkbox and background check, but rather a true
risk assessment of the vendor.
"Lenders need to
ensure they've put a program in place, starting with tiering their vendors to
understand the criticality and impact a vendor may have on the
organization. In our dealings with lenders, it's evident that most
struggle on where to start, how to implement a comprehensive program, and
perform ongoing monitoring. With each vendor tier having multiple data
points and documents to be collected, validated, and tracked, efficiency is
absolutely critical. This need for efficiency is moving lenders away from
spreadsheets and to technology which provides a single system of record to
manage risk tiering, due diligence, and all annual activities."
So what are vendors doing that
lenders are interested in?
How about DTC customer
satisfaction? Josh Friend, President of Insellerate, writes, "We
have all seen 'Rocket Mortgage' and we now know where our industry is heading:
to the 'Digital Mortgage Experience'. Who will sell these? More than likely
someone hundreds, if not thousands, of miles away in a consumer direct call
center. We see the continued growth in this channel as it now accounts for
over half of all refinances, and 20% of the purchase market, and continues to
grow. Our borrowers are asking for it so we will have to deliver it. How are we
doing so far as an industry? How is your company doing? Find out by
participating in InSellerate's 3rd annual 'Speed to Contact'
survey (click here). Or, you can view the past survey results here.
During the loan
processing "Lendsnap automatically collects authoritative
borrower qualifying documents for brokers and lenders. By linking to financial and
payroll institutions, we securely deliver original W2s, pay stubs, bank
statements, and full tax returns in minutes instead of days. Lendsnap is the
only account linking solution to deliver actual bank statements instead of VODs
based on third-party transactional data. Our lightweight solution works with
your current process and keeps your portfolio completely liquid on the
secondary market. Lendsnap, a Y Combinator funded company and a 'security-first
company," have completed rigorous SOC I (formerly SSAE 16, SAS 70)
auditing and hired hackers to test our defenses." (For more information,
please contact VP of Business Development, Mike Romano.)
Secure Insight has been in discussions with several
large mortgage lenders and warehouse banks about adopting the SSI agent
registration number as an industry standard identifier for settlement agents.
The company's database, which is expected to include nearly all active title
and settlement professionals including attorneys throughout the country by
year-end, was the first live repository to include unique identification
numbers covering all the different groups who manage this function nationwide.
SSI president Andrew Liput said that he hopes to begin to feed all agent data
warehoused in their system, including these Identifiers, to lenders through LOs
platforms on a transaction basis beginning 1st Quarter 2017.
LendingQB, a
provider of mortgage loan origination technology solutions, announced the
successful implementation of its web-based loan origination system for Inlanta
Mortgage, Inc. "The Brookfield, Wisconsin-based mortgage lender
attributed its smooth and rapid implementation experience to LendingQB's
comprehensive deployment process and a focused effort by both Inlanta's and
LendingQB's staff." (Inlanta Mortgage employs over 250 mortgage
professionals and has gained recognition as the top FHA and USDA lender in the
state of Wisconsin.)
Guild Mortgage, announced
an agreement with FirstREX for introducing the REX HomeBuyer program to
Guild's California, Washington and Oregon borrowers. Under the program,
FirstREX contributes up to half of a 20 percent down payment in combination
with a Guild Mortgage loan to empower more people to buy the home they really
want.
First
Cal and FirstREX also inked a deal. The REX Homebuyer program, which
FirstREX is now rolling out for the first time in combination with conventional
conforming and super-conforming loans, is initially available in California and
Washington, with more states to follow. The REX HomeBuyer program contributes
up to half of the down payment on a home purchase. The combination of REX
HomeBuyer investment with a First Cal mortgage loan means a buyer can borrow
less, make a smaller monthly payment and avoid paying the mortgage insurance
required if they had put down less than 20 percent.
MISMO announced
the release of its new HMDA Implementation Toolkit. Designed to help companies
implement the new CFPB HMDA rules, the Toolkit offers a comprehensive collection
of guidance, mapping documents and other information about the rule and the use
of MISMO in meeting rule requirements.
Aspire Financialsigned with Alight to provide real-time reporting, analysis and
continuous reforecasting. Alight gives management teams the ability to see
the impact of every decision, before they make it. "We see Alight as the
answer to our financial reporting needs as it integrates all our existing
systems to give us a real-time forecasting solution," said Jason Spooner,
COO of Aspire Financial.
Turning to the markets, we had
a bit of a rally/price improvement Friday as retail sales and producer price
index data for July came out well below expectations. If one looks at the news
from the last few weeks, the job market is healthy but production, spending,
and business fixed investment are weak. Still, jobs and housing drive the
economy... Fed rate hike odds continue to drop: the odds of a September hike
are now 6% and only 40% in December.
We have a new helping of
economic releases this week. We've already had August Empire Manufacturing
(sinking below 0 to -4.21), coming up is some housing news - August's NAHB
Housing Market Index. Tomorrow we'll have the July Housing Starts and Building
Permits numbers, July CPI and Core CPI, and July Industrial Production and
Capacity Utilization. On Hump Day we have the MBA's application figures for last
week but also the release of the Federal Open Market Committee minutes from its
last meeting. Thursday we have Initial Jobless Claims, August Philly Fed, and
July Leading Indicators. There is zip on Friday.
For numbers, on Friday
the 10-year note price rallied by .5 (the yield ended the week at 1.51%) the
5-year note improved .250, but current coupon MBS prices were only up about
.125. This morning the 10-year is at 1.53% with agency MBS prices roughly
unchanged.
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