Unlike Japan,
which is now officially in another recession, there are plenty of companies who
have confidence that their balance sheet is better than everyone else's, but
plenty of smart people are out there wondering what those balance sheets are
going to look like after the 4th and 1st quarters coming up - especially if
those companies have not been adding production units or making existing units
more efficient. Fortunately initial reads on October and November are looking
pretty good!
This could be worse than eminent domain, particularly if it's
buried in others state laws. Apparently a New Jersey man beat out a foreclosure
because it didn't happen within 6 years. Just what the lending industry
needs... And as servicers know, there are plenty of borrowers dragging things
out. Let's hope this doesn't give them a goal to shoot for.
In the nearby state of New York, Ocwen has signed a mutual
termination agreement on the purchase of $39 billion UPB of servicing rights
from Wells Fargo. The company will receive its $25 million deposit back.
The industry, and especially non-bank servicers, has been waiting for some kind
of resolution on this most of the year. The deal had initially been announced
in early January and was put on hold in February at the request of the New York
Department of Financial Services (DFS). Interestingly, Nationstar's stock price benefited
from the news.
Speaking of servicing, here's something "interesting"
for Washington and Oregon production since these states have legalized
marijuana. When you look at MSR models, prepay speeds are actually slightly
slower in those states (4.06 servicing multiple in WA and OR versus 3.88
multiple in CA). That means borrowers those states are a little slower to
refinance. Feel free to correlate as you please.
Also out west, the Nevada
Division of Insurance often receives questions regarding marketing practices in
the title industry that may violate Nevada's rebate and inducement laws.
Real estate and mortgage professionals may unknowingly be asking title
professionals for items or favors that they are not allowed to provide under
Nevada law. Check out the "Unlawful Inducements in the
Title Industry"
In CFPB news, a federal judge forced it to obey the same rules
of discovery in civil litigation that apply to everybody else even if
government officials are annoyed by them. Judge John E. McDermott rejected a
motion by CFPB. As a result, the bureau's officials were required to
submit to depositions - cross-examinations of witnesses conducted under oath
but outside the courtroom - in a case filed by the bureau.
A
"prominent mortgage industry attorney" wrote to me regarding the
ruling. "Judge McDermott's decision is an encouraging sign that the
judicial branch of our government is beginning to recognize that the CFPB, like
other federal regulators, is not free to act without accountability to anyone.
This is similar to the recent decision by Judge Leon in Maryland which struck
down the regulators' disparate impact theory under the Fair Housing Act. The
powers of an administrative agency, such as the CFPB, to make and interpret
rules, as well as investigate, prosecute and impose penalties for alleged
violations, poses important Constitutional questions for those of us who
remember our Civics lessons about 'checks and balances'. These powers, if
abused and unchecked by other branches of government can result in
fundamentally unfair results that threaten the legitimacy of the agency's
actions. The CFPB, in its early years, has been much more aggressive in
its approach to these issues than other agencies in the past, such as the SEC.
The CFPB's record in the few instances where its interpretations have been
reviewed by the judicial branch reflects that they should reassess their
tactics."
The attorney's note continued. "Likewise, the practice of
the CFPB to push for numerous Consent Orders in areas where it has extended
interpretations of law or regulation is another troubling development.
CFPB defendants generally lack the resources or intestinal fortitude to
challenge the CFPB in these matters, instead settling and entering into Consent
Orders to avoid potentially crippling fines and the legal expense and burdens
of a court challenge. We never hear about investigations that result in no
action by the agency to compare against. Yet, once issued, the CFPB seeks
to claim Consent Order interpretations are now valid against everyone even
though the facts are not fully disclosed. Decisions such as Judge
McDermott's or Judge Leon's reflect the judicial branch's responsibility to
reign in an agency that ultimately needs to be held accountable to the
Constitution and the governed."
NAR's Profile of Home Buyers and Sellers annual survey further
solidifies the notion that there has been a decline in first time home buyers. In this year's survey,
the share of first time home buyers dropped to 33%, representing the lowest
stake since 1987. Reasons for the decline include increased rent, student loan
debt, limited job prospects and flat wage growth. Nearly half of first time
home buyers in the survey indicated that the mortgage application and approval
process was more difficult than they had anticipated. More than half (53%) of
first- time buyers purchased because of their desire to own a home and 79% of
recent buyers said their home was a good investment, with 40% of them
believing their home is a better investment than stocks. Younger buyers
were more likely to finance their purchase (97%) than buyers aged 65 years and
older (64%). For the young buyers who were able to save up for a down payment,
23% said saving for a down payment was difficult and 57% said student loans
hindered saving. Most home buyers searched for a home using the internet (92%)
and 87% used a real estate agent. A link to the article can be found here.
The
National Reverse Mortgage Lenders Association (NRMLA) is announcing its support
for the Federal Housing Administration's new financial assessment rule for home
equity conversion mortgages (HECMs). As part of industry-supported changes to the program, the U.S.
Department of Housing and Urban Development (HUD) now requires potential
borrowers to first go through a financial assessment that ensures they will be
able to continue paying property tax and insurance premiums. Peter Bell,
President and CEO of NRMLA, applauded HUD's move to require financial
assessments. "At NRMLA, we are always concerned about protecting those
aging Americans who cannot afford to meet the responsibilities of reverse
mortgage loans," says Bell. "Financial Assessment will help
determine if the product is right for the potential borrower. By
implementing this process, HUD is responsibly making the HECM a safer
product."
Let's
take a look at some upcoming events!
Recent
enforcement activity surrounding MSAs has the world of RESPA on edge.
Are you prepared? Join RESPA News on Tuesday, November 18th for an exclusive 90-minute webinar
featuring top compliance attorneys Phil Schulman of K&L Gates, Marx
Sterbcow of The Sterbcow Law Group and Chuck Cain of WFG National Title
Insurance Company as they guide you in the assessment of your current and
prospective Marketing Services Agreements (MSAs) to help you remain
compliant and avoid the bite of the CFPB. "Together they will provide
expert insights into RESPA provisions impacting MSAs compliance, the CFPB's
enforcement and policy posture, and what companies should be looking for as
they review their MSAs and work to ensure compliant conduct."
AllRegs is conducting a Webinar
on December 4th addressing The CFPB Targeting of Mini Correspondent
Lending practices discussing implementation of operational changes to reduce
risks in originating and purchasing mini correspondent loans. To register, click here.
Fannie
Mae's
new HFI InDepth Page offers a full calendar of classes available. To view, click here.
Mortgage
Bankers Association of Greater Kansas City (MBAKC) is hosting its
Membership Luncheon on November 20th. The topic of discussion is
What the Industry can expect in the First Half of 2015 Without Making Forecasts
with Guest Speaker Rob Chrisman. For more information, click here.
Plaza
Home Mortgage is providing Webinars on various aspects of Reverse Mortgage.
November 18th topic is on Reverse Mortgage Basics, for information,
click here. How to Use the
Reverse Mortgage to Purchase a Home is available in November 19th.
To register, click here. November 20th
webinar will discuss How to Present a Reverse Mortgage, to sign up, click here.
Before
I forget, the Intercontinental Exchange (ICE) said it would discount license
fees for financial institutions that use LIBOR as a pricing benchmark on
loans or other contracts. ICE said banks with assets less than $1.5B can use
LIBOR at no charge, while those between $1.5B and $10B would have to pay
$2,000 per year and those above $10B would have to pay $16,000 annually.
Impacted banks should note that the fee is retroactive to July 2014, when ICE took over managing LIBOR
Turning
to the markets, unlike last week when we hardly had any interest rate-moving
news, this week we have quite a bit here in the United States. Let's jump in.
Today we'll have the Empire Manufacturing number and Industrial Production
& Capacity Utilization duo. Tomorrow is the NAHB house price index and
Producer Price Index (a measure of the change in the average price of goods
received by domestic producers of goods and services), Wednesday is Housing
Starts (the number of starts for new buildings intended as a residential
building) & Building Permits, and the FOMC Minutes (insights into how Fed
officials came to their decisions). On Thursday 11/20 we have Jobless Claims,
the Consumer Price Index, Philly Fed, and Existing Home Sales will tally the
number of previously constructed homes that sold in the previous month. People
need to be confident in the economy to drop some serious cash on homes,
existing home sales provides insights into how the economy is faring.
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