There is an old joke in
advertising that says, "Half of all advertising money is wasted. The trick
is knowing which half." Companies continue to take a hard look at
overhead, looking for wasted money. But what is "wasted"? I
continue to hear numerous stories about reputable companies competing for LOs
against companies that are offering "aggressive" comp structures
& great street pricing. A mortgage company's bottom line improves through
increasing revenue or decreasing expenses, and any company cutting expenses
by cutting compliance measures has a short-sighted view of the world. And
as a reminder, there's always the CFPB's anonymous "whistle blower" site for, among other
things, reporting non-compliant comp plans.
Scott Everett, founder and current
CEO of Supreme Lending, a Dallas-based nationwide mortgage banker,
addresses the 2014 QM Regs. and how Supreme is confident they are ready.
"In speaking with others in the industry, it appears many are relying on
vendors, etc., to ensure that compliance is met. Although we believe we
partner with some of the industry's best partners, we also wanted to control
our own fate with regards to ensuring 100% compliance and that is why we took
the matter so seriously." Supreme has invested in a top of the line loan
origination technology system that allows for a seamless experience during the
life of the loan origination process. The new technology allows Supreme to
customize programs in order to stay compliant with the changes in industry
without impacting the way they provide their service. Leveraging
technology has allowed Supreme to maximize quality, along with quantity while
minimizing costs. To learn more about becoming a branch with Supreme
Lending visit Supreme or email at
recruiting@supremelending.com
or call toll free 877-350-5225.
And the Home Lending Group,
a nationwide retail mortgage operation, is expanding its retail production
throughout Austin, Dallas, Houston, and Knoxville, TN. "Sure the
current market has its challenges," states Home Lending Group founder and
CEO Charley Myers, "but I have been an advocate of taking care of loan
originators and our customers with exceptional service and attention to detail
my entire career and nothing has changed there. Whether a mortgage is a
QM or a non-QM, we will continue to originate and underwrite good loans and
treat people fairly. I know it's not flashy, but that's what we believe
is the basis for success in this very competitive environment". The Home Lending Group
is looking for production oriented originators with a passion for the mortgage
process. If you are searching for an opportunity to take the next step
in your career please contact Mr. Myers at cmyers@thehomelendinggroup.com.
Hey, just because we're in the
mortgage business doesn't mean we don't have feelings. Fortunately, plenty of
folks spared my feelings yesterday by gently telling me that I made a mistake
yesterday: the new forms for RESPA/TILA will be effective August 1, 2015,
not August 15, 2014 as I noted. But what the heck... QM in 32 business
days, but for changing some forms, a year and a half? The form with
clarified tolerances and existing automated data points is given a 20 month
phase in...the form that is executed around a table as borrowers mindlessly
sign everything placed in front of them while a closing attorney or escrow
officer drones on like an adult in a Charlie Brown cartoon...as if that will
change... Seriously, it is believed that the CFPB knew this was also a huge
implementation, and wanted to let all the QM dust settle over the next year.
(And there are certainly folks who believe that there will be plenty of changes
to QM next year.)
But the new simpler forms
involve over 2,000 pages of documents (this one alone is 1,888). Let
me repeat that: the CFPB's supporting documentation for the new,
easier-to-understand forms is nearly two thousand pages. Our Declaration of
Independence is 1,137 words. The Declaration of War against Japan on December
8, 1941 was 165 words. At a bedtime reading pace of 20 pages per night, it
would take 100 nights to polish it off. What is wrong with this picture?
What's "right" about
this picture is that the 12 months' implementation was statutory for Title
XIV rules. Also, although settlement service industry can get a jump on
things, lenders are busy with QM and other current rules which they've actually
known about for months. Looking at the calendar shows that August 1, 2015, is
18 months from the Feb. 1, 2014 post-January Title XIV mortgage rules effective
date. Here's another tidbit: effective August 2015 a home BUYER will now
have a MANDATORY 3 day waiting period before the loan can fund (like a
refinance now).
Now, more than perhaps ever,
lenders are dealing with the future or our business and at the same time
dealing with the past. Buybacks are an issue within our industry with a lot
of momentum and no sign of slowing down anytime soon. It's been reported
that as of June 2013 there is $265.6 million in pending and disputed buyback
requests for loans securitized in 2012 and 2013, versus $134.3 securitized in
2010 and 2011. So there is more risk on the horizon for most lenders. Every
lender out there knows that there it has to dedicate staff, or have staff take
time away from other activities, to deal with researching and defending against
buybacks.
But an innovative approach
being taken by a national title/settlement company is actually reducing risks
for lenders. Rhode Island based Equity
National has been providing their Comprehensive Settlement
Protection (CSP) to their customers as part of their title & settlement
services since the second quarter. Created with The Prieston Group and
underwritten by Lloyds of London, it is a $5 million insurance policy, designed
to protect lenders where closing protection letters (CPLs) leave them
vulnerable. Equity National's President Jim O'Donnell, who is also an attorney,
identified numerous gaps in coverage in a year-long study, and collaborated
with TPG in creating a policy that closes those gaps and even helps their
lenders avoid buybacks. Inspired by losses he saw his customers experiencing,
O'Donnell, a 22 year title industry executive found himself surprised at the
limitations in CPL's and other protections relied upon by lenders. There is a
compelling story behind the creation of CSP and fascinating examples of the
gaps it is designed to close, which he loves to share when explaining its
benefits. (Contact Jim O'Donnell at jodonnell@equitynational.com
for more information. And no, this is not a paid ad.)
Turning briefly to a little
state news, Texas recently amended its rules regarding application
procedures, and has adopted rules regarding alternate charges for consumer
loans. The Finance Commission of Texas adopted new amendments concerning
residential mortgage loan originators applying for licensure with the Office of
Consumer Credit Commissioner (OCCC) under the Secure and Fair Enforcement for
Mortgage Licensing Act. Also, the commission has adopted an amendment regarding
Maximum Term and Maximum Installment Account Handling Charges for regulated lenders.
The new provisions go into effect as of November 7, 2013.
And north in Oklahoma,
legislators have recently updated certain provisions in their Secure and Fair
Enforcement for Mortgage Licensing Act (that would be "SAFE Act" for
anyone good with word scrambles). The changes arrive via Enrolled House Bill
No. 1828. The Bill has several additions as well as numbering and formatting
changes, along with the unique identifier of a mortgage lender must be clearly
shown on all residential mortgage loan application forms or advertisements. A
mortgage lender as defined in the Bill must also adhere to the mortgage
licensing requirements.
For a smidgeon of good news, Zillow
recently released its Q3 Real Estate Market Report;
nothing too earth shattering in the way of findings, however, there are a few
important indicators to take note. Home values increased 1.2 percent from the
second quarter of 2013 to the third quarter of 2013. The quarterly pace of
appreciation was roughly half that experienced in the second quarter. Zillow's
own Home Value Index (ZHVI) rose 6.4 percent from September 2012 levels.
According to the Zillow Home Value Forecast (ZHVF), analysts expect national
home values to increase 3.8 percent in the coming year. The rate of homes
foreclosed continued to decline towards the end of Q3, with 5.12 out of every
10,000 homes in the country being liquidated through foreclosure. As for
foreclosure resales, they continue to decline, making up 8.32 percent of all
sales in September, down 2.7 percentage points from the third quarter of 2012.
Let's take a look at some
recent personnel, lender, and vendor changes. (I can't of course, publish every
new branch, branch manager or regional manager - these are a little higher up.)
Jim Macleod, President and COO
of CoastalStates Bank announced that Thomas Neary, a 28 year veteran of
the mortgage industry, is assuming the position of President and CEO of Homeowners
Mortgage Enterprises, Inc. Neary will also serve as an EVP of CoastalStates
Bank. Neary's background includes senior executive positions at Wells Fargo,
NationsBank/ Bank of America, GMAC/ Rescap and BankBoston Mortgage. (Homeowners
Mortgage Enterprises is a wholly owned subsidiary of CoastalStates Bank on
Hilton Head Island, SC.)
And at Citi, congrats to
Tony Tenore who has assumed the role of Head of Correspondent Sales.
"Correspondent lending continues to be a vital part of our business and is
a major contributor to our CRA strategy and goals. We are committed to this
business, and combined with retail, brings balance to our mortgage franchise in
a complex industry with dynamic cycles.
Tony comes to this position
from his previous role as National Sales Director for the Citibank Direct to
Consumer business channel. In this role, he successfully led our sales teams in
St. Louis, Ann Arbor and Dallas. Tony has 25 years of business experience and
more than 13 years in the mortgage industry."
Recently Total Mortgage
Services, LLC, launched "Total Mortgage Processing," an
end-to-end mortgage processing platform for mortgage lenders, community banks,
credit unions and third party originators, to originate more mortgage loans,
scale capacity to market demands, increase profitability, enhance service
levels, remain fully compliant and maintain the customer relationship.
"Total Mortgage Processing can efficiently support retail or wholesale
channel originators through either an existing network of preferred service
providers or a network recommended by Total Mortgage. The on-demand
processing platform is 100% customizable and includes multiple features and
benefits."
Wholesale is certainly not dead.
In the West, Commerce Mortgage announced it has entered the wholesale
lending market. The Company has operated a successful retail lending division
during the last twenty years. "Commerce Mortgage will
initially market wholesale jumbo loans in California and Colorado. Its primary
niche will be the jumbo loan amounts from $417,001 up to $2,500,000 for both
owner-occupied and second homes featuring a 25 day close, 30 year fixed, 5/1
ARMS and refinancing after an all-cash purchase. Sometimes also referred to as
'delayed purchase' refinancing, this program provides a borrower with the
ability to write an all cash purchase offer in today's competitive real estate
market, and then recoup cash after close of escrow.
For banking M&A,
Rockville Bank ($2.2B, CT) will merge with United Bank ($2.5B, MA) in a merger
of equals deal. United shareholders will own 51% of the company which will be
named United Bank. The banks expect to save about 15% of combined expenses with
the deal. And Essa Bank & Trust ($1.4B, PA) will acquire Franklin Security
Bank ($213mm, PA) for $15.7mm in cash.
MGIC is
reducing "our borrower-paid monthly premiums by 5 basis points for all
LTVs, credit scores and coverage segments. We are reducing most rates for
non-refundable borrower-paid and lender-paid single premiums as well!" New
rates are available on line at www.mgic.com.
Rates aren't doing much,
although we did have some news yesterday that caused some volatility. The
Producer Price Index fell 0.2% in October following a 0.1% decline in Sept.,
Core prices, excluding food and energy, increased 0.2% as the cost of cars
jumped by the most in four years. Producer prices were up only 0.3% from a
year ago - much less than the FOMC's target rate of 2% inflation. (Taper?)
But Jobless Claims dropped by 21,000 to 323,000, the fewest in almost two
months, from a revised 344,000 the previous week. So initially the fixed-income
markets took their cue from this Jobless Claims number, and Treasury 10-year
note yields rose to 2.83%, the highest level in two months.
But then headlines crossed
around midday that the Senate passed a rule change that effectively prevents
Republicans from being able to block confirmation on President Obama's
nominees. As Thomson Reuters reported, "This hit higher coupons,
especially 4.5s and 5s, on worries that Democrats again would try to get Rep.
Mel Watt confirmed for FHFA Director. Investors (certainly not LOs) are worried
that Watt would move back the HARP eligibility date to pre-May 2010 from
2009 and initiate other programs such as principal forgiveness to help
underwater borrowers refinance." We also saw that the Senate Banking
Committee voted favorably on Janet Yellen's nomination for Fed
Chairperson - it now proceeds to the full Senate with a vote expected after the
Thanksgiving break.
Rate-wise today, we're a little
better than Thursday's closing levels. In the early going the 10-yr. which closed
at 2.78%, is at 2.77%, and agency MBS prices are better by .125.
A man walks into a
bar with a slab of asphalt under his arm.
He says, "A beer please. And one for the road."
He says, "A beer please. And one for the road."
Rob
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