State Lending News From Coast to Coast

By rchrisman@robchrisman.com

 

A blonde comes to driving practice test. She gets into the car and immediately the instructor says, "You have failed."

Blonde: "But why, I have just got into the car."

Instructor: "Yes, but you sat on the back seat."

 

The nation's thoughts and prayers go out to the families of the five Dallas police officers who were killed and six others wounded after snipers fired into a demonstration Thursday night.

Blackstone is beginning to monetize some of its investment in single family homes by selling them. Not in a tidal wave of liquidations, feared by real estate agents in many markets given the number of properties it owns, but instead in selling houses to its tenants. And of course who is standing by to help but Blackstone's own residential lender Finance of America.

 In a slight business model shift, Southern California's New American Funding is transitioning its wholesale channel - but as painlessly as possible. CEO Rick Arvielo explained, "The fact is that our retail is growing so fast that our wholesale, which is less than 10% of our business, wasn't receiving proper attention. Our wholesale management felt our team would be better served moving to another lender that is 100% focused on wholesale and we agreed. The wind down will be focused on making sure our broker families loans in our pipeline get closed out with proper attention and we are working with the group to help them transition to their new home."

 Since practically every lender has an online presence it is hard to know what the popular press defines as "online." But online lender Avant has seen better days. It is deliberately cutting its loan underwriting volume by 2/3 due to concerns over capital availability. And it has offered buyouts to all its 760 employees amid a slowdown in online lending. LendingClub and Prosper Marketplace are doing similar things.

 Speaking of underwriting, Reuters reported that Canada's banking regulator has written to lenders to tighten expectations that they engage in prudent underwriting of residential mortgage loans. "The Office of the Superintendent of Financial Institutions said that, with Canadian household debt levels at all-time highs, persistently low interest rates and rapid house price increases in some areas, the prudential risks and vulnerabilities for financial institutions have increased."

 State-specific news rolls on - often leading to confusion when laws fly in the face of federal regulations. Or rules made up by unaware regulators. Hey, not saying that is happening here, but let's see what's new.

 The state of Colorado has modified various provisions related to foreclosure sales under Article 38.C.R.S. 38-38-101 states that a holder of evidence of debt may elect to foreclose and declare a violation of a covenant of a deed of trust and to do so that holder must file certain documents with the public trustee of the county where the property is located.  By repealing part (1)(h) the holder is no longer required to provide the public trustee with a separate document that demonstrates the property requires posting under section 38-38-802.  The repeal of part (5)(d) from the law removes requirements for the officer responsible for publishing and mailing notice.

 The Connecticut state legislature recently passed House Bill 5571: "An Act Concerning Banking and ConsumerProtections." The Act includes 93 Sections with varied effect dates amending and revising statutory provisions relating to financial institutions. Adjustments include: the definition of small loans, foreclosure and mediation, mortgage servicing, Consumer Collection Agencies, installment contracts, security freeze procedures and requirements, student loan servicing requirements and education savings plan development, deed tax provisions. Also included is the implementation of a pilot program for eligible local housing authorities to implement a credit building program that uses rental payments as a mechanism for credit building. Read the full House Bill here.

 The General Assembly of South Carolina has recently enacted the Uniform Fiduciary Access to Digital Assets Act. The purpose of this Act is to provide clarification regarding the accessing of digital assets in the event of death or incapacitation. This regulation applies to fiduciaries (i.e. under a will or power of attorney), personal representatives, conservatorship proceedings, and trustees. If an individual chooses, the Act allows for him or her to direct a custodian as to digital asset communications to a designated recipient. In addition, the Act provides that the fiduciary or recipient's access to digital assets may be restricted by either federal law or terms of a service agreement. Click here to read an article regarding this Act.

 Entities applying for a mortgage broker or mortgage lender license for the first time in Montana, with no prior business history or a business history of less than one year at the time of application, are now required to purchase a surety bond in the amount of $25,000.  An entity licensed as a mortgage broker, mortgage lender, and mortgage servicer is required to maintain one surety bond for each entity license. The amount of the required surety bond must be calculated by combining the annual loan production amounts for all persons originating residential mortgage loans and for all business locations of the mortgage broker or mortgage lender.

 On August 20, 2016, provisions regarding mortgage servicers is changing in New Hampshire. The Licensing chapter provides the definition of Nondepository Mortgage Bankers, Brokers, and Servicers including the licensing requirements as such. The Application chapter provides the department's regulation of persons that engage in the business as defined above.  The Examinations chapter outlines the banking department rights to examine the business affairs as it deems necessary. Reporting requirements including but not limited to mortgage call reports and financial statements is addresses. Lenders' and Brokers' rights are outlined as specific to entities licensed under the provisions of this chapter as entitled to compensation for services rendered.

 South Carolina enacted incorporations and amendments to its South Carolina Uniform Power of Attorney Act (Act) effective on January 1, 2017. The Act essentially covers two areas of interest: powers of attorney (other than health care powers) and health care powers of attorney. Due to the complexities of the powers of attorney, South Carolina has decided to exclude certain actions from the Act. In addition, changes and additions have been addressed regarding access, termination, and other requirements. To view the complete Act, click here.

 The state of South Carolina General Assembly 121st Session, 2015-2016, enacted provisions regarding its Consumer Protection Code. These provisions cover a wide array of changes and are effective immediately. Section 1 provision amends the definition of a Consumer Credit Transaction that is made within the state. In section 3, provisions for Title I of the Federal Consumer Credit Protection Act will be referred to as the Federal Truth-in-Lending Act. Section 5 changes focus on what a creditor can charge and what he or she must file with the Department of Consumer Affairs concerning their fee schedule.

 The Georgia Department of Banking and Finance adopted various provisions with respect to the Residential Mortgage Act including licensing fees, examinations and renewals, advertising requirements, maintenance of records, and administrative fines.  Provisions include requirements such as all applications for new licenses or registrations must be made through NMLSR. Required content for all loan files and the ramifications for omitting or absence of required documentation. These provisions are effective on July 10, 2016. To view the complete text version of Georgia's adopted provisions, click here.

 New York has amended and enacted several statutory provisions that relate to foreclosures. Provisions include changes that effect mandatory settlement conferences for foreclosure actions on real property of which the defendant is a resident.  Changes regarding expedition of application for judgment of foreclosure of vacant property and sale of such property. The establishment of a statewide vacant and abandoned property electronic registry maintained by the department of financial services. And a revision to the statutory format for notice that servicers provide to the borrower. These provisions take effect on December 20, 2016.

 The State of Hawaii has enacted Senate Bill 2850 which amends its mortgage loan originators law and mortgage servicers law. The purpose of the bill is to bring consistency to the terminology of the chapters, to bring clarity to the scope of each chapter and to update references to federal law in the chapters. A new section regarding confidentiality has been added. Sections 454F-1 and 454M-1 have been amended to add and to make consistent the definitions used in each chapter. Minor variances between the definitions are identified in brackets.

 Don't forget that the Uniform State Test (UST) was adopted by Missouri and became effective January 1^st, 2016. The adoption of the UST was a result of the coordination of industry advocates by the MBA of Missouri and local MBAs in St. Louis and Kansas City. Along with Missouri, California implemented the UST on January 1 as well.

 Moving on to the bond market, Thursday was a push-pull between the bearish effect of strong job market data versus sharp declines in oil and equities. Although there was a slight revision downward in May ADP showed the U.S. adding 172K jobs in June, well ahead of the estimates. But oil is back in the headlines with West Texas Intermediate oil prices dropping almost 5% yesterday to a two-month low.

 Focusing on securities backed by mortgages, prepay and supply concerns continue to weigh on lower coupons. When the prepayment speeds were actually announced aggregate 30-yr speeds were +8%, roughly what many had forecast. Most cohorts are in line, although 3%, seasoned 4% and 4.5% securities were a touch faster than expected. But why should any investor pay a premium for a pool of loans that may pay off in less than a year?

 But today we can focus on the June jobs data. Recall that May's figures were piddling (nonfarm payrolls +38k). The people who spend their time estimating the numbers thought that nonfarm payroll this time around would be +180k with the unemployment rate steady at 4.7% and a slight bump in hourly earnings. The three key metrics came out at +287k, 4.9%, and +.1%. Given the volatility analysts are focused on employment moving averages - which show the US jobs picture is still doing pretty well.

 What will rate sheets do today? We closed out the 10-year Thursday at a yield of 1.39% and after the employment numbers it is 1.41% with agency MBS prices worse about .125.