Debi B. writes, "Thought for
the day... We are always hearing about how Social Security is going to run out
of money. How come we never hear about Welfare running out of
money?" And there is plenty of money in the agency MBS markets, and
F&F, and the FHFA, are indeed working on a platform for common securitization.
Due to its continued expansion, Affiliated
is looking for successful operational staff and account executives to join its
team. Please contact www.affiliatedtpo.com if you wish to learn more.
Affiliated recently added Mylena Evans-Alred as Executive Vice President of its
Wholesale/Mini-correspondent division. Mylena joins Jerry Alred in expanding
the TPO division in over 25 states and growing their current group of Third
Party Originators. (Affiliated is a wholly owned subsidiary of Benchmark Bank,
which has been a banking leader since 1964. Affiliated is a direct
Seller/Servicer for FNMA and Issuer/Servicer for GNMA and offer a wide spectrum
of programs, including Conventional, Texas Cash- Out, FHA, VA, USDA
and Texas Veterans Land Board, and also offers warehouse lines.)
"All of the talk about
lenders 'loosening' their requirements for IRS transcripts. Lenders should
remember that just because an investor or aggregator does not require a
customer to provide an IRS transcript for a borrower doesn't mean they are 'in
the clear.' As you are aware, the agencies and many aggregators or national
lenders include in their sale agreements with customers a clause saying the originating
institution would have to repurchase any loan that contains fraud. For lenders
that underwrite, certainly they could be in a repurchase situation for not
correctly calculating a borrower's income. Let's say a lender, aggregator, or
GSE executes the 4506-T as part of its post-funding Quality Control and sees
unreimbursed business expenses, side jobs, or other discrepancies in the
approved borrower's income. This would mean that it was not run through DU or
LP correctly and potentially that there is borrower fraud since they signed a
1003 at closing not disclosing certain income or losses thereto. The
question is not 'Will my lender let me close a loan without tax transcripts?'
The correct question is, 'Without the transcripts from the IRS, what is the
repurchase or indemnification exposure I have on this loan, if eventually the
4506-T is executed and my income figures are not correct.'" So wrote
Fowler Williams, president of Crescent Mortgage Company - thank you!
(Speaking of the 4506-T question,
here is what the public sees regarding Fannie & Freddie's stance on the requirement.)
Not only is the lending industry
grappling with potential future liabilities regarding 4506-T issues, but
lenders will still somewhat confused about the QM/non-QM question, and even
what kind of loans they can originate. As a reminder, the CFPB came out with a
quick reference chart. "Our newest chart maps out the types of
qualified mortgages that small creditors can originate. View the quick
reference charts here. These charts offer
an easy way to visualize how the new mortgage rules are likely to apply to
certain products or transactions in a variety of circumstances. These charts
are not substitutes for the regulation text and official interpretations, but
they can give you an idea of where to start."
And for fans of maps, as a
reminder the CFPB also provides heat maps and illustrative graphs that
detail local mortgage market trends. The tool relies on data gathered
through the Home Mortgage Disclosure Act (HDMA) to offer consumers information
on mortgage loan applications and originations, mortgage loan volume, and the
volume of loans insured by the Federal Housing Administration (FHA) and the
Veterans Administration (VA). Here you go: HMDA. OK, so maybe the
guys and gals at the CFPB have a ways to go before they rise to the level of
analytics of say, a Wells Fargo, or even a well-staffed originator, but at
least they've made something relatively mundane (spending any amount of time on
a .gov website) somewhat interesting. The CFPB is planning additional features
for the site, including "easy-to-use tools" that allow users to
filter HMDA records and create summary tables and an application programming
interface that will allow researchers and software developers to incorporate
the CFPB-provided HMDA data into other applications and visualizations.
When I learned that CFPB
examiners have found mortgage servicing problems at banks and non-banks, I
immediately thought about sitting in my dentist's waiting room thinking, "What
are the odds he doesn't find anything and there will be no drilling?" Not
good on both accounts as the older I, and Dodd-Frank, become. The agency
released its recent report detailing mortgage servicing problems, which also
found that many non-banks lack robust systems for ensuring they are following
federal laws. Some of the mortgage servicing problems contained in the report
are disorganized account transfers, poor payment processing, and loss
mitigation mistakes. Some issued noted in compliance include: missing consumer
compliance programs, the lack of formal policies and procedures, and the lack
of independent consumer compliance audits. This is yet again, another
indication of the role compliance, and compliance accountability, will play in
mortgage banking moving forward. The official report can be found here, and is a useful
guide for companies thinking about starting to build their own servicing
portfolio.
Soon we will all be partnering
with the CFPB! In late September the CFPB announced a partnership with
the City of Jackson, Mississippi, to accept and respond to questions and
complaints about financial products and services posed directly to the Bureau
by local residents. The agreement
will allow Jackson consumers to dial a local hotline and be connected with the
CFPB's Consumer Response team, which will screen complaints for completeness,
jurisdiction, and non-duplication. This agreement is one of several the
CFPB has entered with localities around the country and is at least the second
time that the CFPB has partnered with a locality on a consumer complaint hotline. We all know that
the CFPB is currently accepting complaints regarding credit cards,
mortgages, deposit products and services, consumer loans, private student
loans, credit reporting, debt collection, and money transfers.
Yes, companies are going to
merge, and the landscape is going to change - plenty or originators would
rather focus on originating and not compliance. There is no doubt about it.
Servicing is being transferred, personnel shifted or eliminated, originators
are being courted, and companies are looking at getting bigger, smaller, or
merging. For example, last week we learned that PHH was laying off hundreds
of workers, and now the industry is digesting news/rumors that PHH is for sale,
or at least parts of it are (http://www.chicagotribune.com/business/sns-rt-us-phh-sale-20131007,0,33289.story). So PHH
is thinking about selling the company for up to $1.5 billion, which is roughly
in line with the current capitalization of the company. KBW reports that the
current tangible book equity of the company is $1.6 billion. The article also
stated that PHH had approached both Ocwen and Nationstar about buying the
mortgage company in recent months.
KBW goes on to say that, "...we
believe that there are operational challenges for any buyer of the mortgage
business. PHH is not a traditional mortgage company. The bulk of its mortgage
volume comes through mortgage originations it makes on behalf of its partners.
As part of the company's contract with its partners, PHH has to provide certain
levels of service. We believe that this gives PHH somewhat less flexibility in
cutting its costs, and management noted on the 2Q earnings call that it would
seek to amend certain private label contracts to reflect fundamental changes in
the industry. We agree that the company's $229 billion servicing portfolio
($133 billion of owned servicing) would be very attractive to both Ocwen and
Nationstar. But neither company has paid meaningful premiums to book value to
purchase MSRs. If we assume that the mortgage company is worth book value, the
market is now valuing the fleet management business at around $140 million over
book value. We believe that further upside to the current share price in a sale
would largely depend on any potential buyer valuing the fleet management
business at a level higher than this."
Keeping on with lender and vendor
news, let's take a look at some recent announcements to see the trends out
there in residential lending along with some upcoming events.
Radian's management reiterated
that they expect the GSEs to introduce new risk-to-capital standards as early
as year-end, likely in the range of 16-18 to 1 with potential haircuts for
subsidiary capital. There is expected to be a phase-in period for the new
rules. Given its holding company liquidity, the company expects to be able to
comply with any new requirements. "While conditions in the mortgage
insurance sector remain competitive, management believes that the overall growth
in private mortgage insurance relative to the FHA should help limit competitive
pressure. Further, the company noted that there are meaningful barriers to
entry given the long timeline to profitability so it is unlikely there will be
new entrants into the industry in the near term."
Effective October 1, the new
name for Secondary Interactive is now Optimal Blue Secondary Services.
"We are changing our name to better integrate our secondary marketing
products and services with the Optimal Blue family and brand, a recognized
leader and innovator in mortgage technology." To learn more about Optimal
Blue Secondary Services, visit www.optimalblue.com.
Paramount Residential Mortgage
Group announced the recent expansion of its Retail Division in the
South Eastern U.S. "The Southeast territory will be headed up by the
recent hiring of PRMG's new Retail Regional Manager, Steve Levine. Levine
brings over 13 years of independent retail mortgage banking experience to an
already robust PRMG retail platform."
MBA is holding a one-day Retained
Servicing Workshop on Wednesday, November 13 at the Westin - DFW Airport,
Dallas, TX. "We have a strong line-up of expert speakers, including
executives from mortgage companies that have ramped up their servicing in the
past few years. They will discuss their major operational decisions, such as
servicing loans in-house versus using an outside subservicer. All
companies that are starting to retain servicing must understand the CFPB
servicing requirements that go into effect in January and what exemptions may
apply to them as smaller servicers. Financially, they need to understand
how to properly value servicing rights and explain their valuations process to
regulators and auditors. Strategically, they need to decide if it makes sense
to grow their servicing portfolios going forward. Click here to find out more: http://www.mortgagebankers.org/RSW13.htm.
In Georgia, its MBA October
events will be held at the City Club of Buckhead (Financial Center) in Atlanta
on October 23. FNMA will speak to the new changes (effective Nov.16th)
as it relates to QM, DU 9.1 guidelines, Rep & Warrant framework, QC
Overview and ULDD Phase 2 updates: http://events.r20.constantcontact.com/register/event?oeidk=a07e8963x903d420d7b&llr=wc756jcab. There
is a Free Networking event hosted by the MBAG and anyone can attend: http://events.r20.constantcontact.com/register/event?oeidk=a07e8a4orh0c8e51f7f&llr=wc756jcab. And
lastly on the 23rd is a session on understanding the impact of the
CFPB's Final Rule on ATR/QM on the Broker Model. "This is a
Broker-Only Luncheon sponsored by the Mortgage Bankers Association of Georgia's
Membership Committee and presented by Loretta Salzano" - here you go: http://events.r20.constantcontact.com/register/event?oeidk=a07e898cnh197d75196&llr=wc756jcab
The Texas Mortgage Bankers
Association is now accepting registrations for its annual Educational
Seminar and Marketplace, which is scheduled for November 12th and 13th
in Dallas, TX. The event will focus on best practices, with breakouts in
operations and sales and general sessions on technology and compliance, and
culminate with a CEO roundtable. To register, go here.
The Mortgage Bankers
Association of Florida has announced the dates for the Eastern Secondary
Market Conference, scheduled for February 5-7th in Orlando, and its
61st Annual Convention, scheduled for June 18th and 19th
in Delray Beach. Watch http://www.mbaf.org/ for upcoming details.
As I head to San Francisco today
to give a speech, there just is not much going on out there for the markets to
latch onto. Partial government shutdown...blah blah blah...light MBS
flows...market nervousness...delayed government economic announcements....
There just is not much going on with interest rates, and certainly lenders have
much more on their minds. The economic calendar today contained more postponed
data than released ones as the government shut down continues and August Trade
Balances are the latest casualty - it is not coming out. The Treasury, however,
will auction off $30 billion of 3-yr notes today. The "benchmark"
10-yr yield saw a 2.63% close on Monday, and this morning it is at 2.64%, with
very little change in agency MBS prices.
Here are some facts for football
fans, part 2 of 2:
It takes 600 cows to make enough
footballs for one NFL season. Moo!
The Dallas Cowboys haven't played
in Dallas since 1971. Cowboys Stadium is located in Arlington, TX.
The St. Louis Rams were the first
NFL team to use their logo on their helmets.
The Green Bay Packers are a
publicly owned corporation, the only team in the NFL to have this status.
President Theodore Roosevelt
radically changed American Football rules when he introduced the forward pass
in 1906.
Dr. James Naismith introduced
helmets to football, but he is better known as the inventor of basketball.
Former Minnesota Vikings kicker
Fred Cox invented the Nerf football in 1972...he still receives royalties for
every unit sold.
The NFL is considered a
non-profit and is thus tax-exempt.
The NFL requires that all
stadiums be built facing north/south so the sun never interferes with a play.
The average life expectancy of an
NFL player is 55 years.
The league minimum for an NFL
rookie in 2013 is $405,000. In 2014 it will be $420,000. Somewhere, Ricky
Williams smiles.
The NFL averages 290 million
television viewers a week. That is four times the population of the United
Kingdom.
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