A little boy returned from the grocery
store with his mom. While his mom put away the groceries, the little boy opened
his box of animal crackers and spread them all over the kitchen table.
"What are you doing?" asked his
mom.
"The box says you shouldn't eat them
if the seal is broken," said the little boy. "I'm looking for the
seal."
In Friday's commentary I included a piece on the direction of
rates. ("Are you positive that rates are going higher? Me neither, and there are reasons why rates may stay here or actually slide
back down a bit. No one has a crystal ball...") The write-up prompted
Tom C. to contribute, "Rob, the reasons that interest rates may not go
up as expected are complicated and are evolving. Your report discusses near
term aspects to the markets and interest rates but does not get into the longer
term economic issues like retiring/aging Baby boomers here, and an aging
population in Japan and Europe, negative interest rates here and all over the
developed world, Keynesian economics influence here, and in most of the major
economies that increases the size of government and regulations that interferes
with the growth of private enterprise."
His note went on. "In the short run the 10-year range
will be in the 2.00-2.75% range through mid-2018. That is, IF Trump achieves
real tax reform, both corporate and individual, dramatically cuts superfluous
business killing regulations, cuts down the size of government through his
different cabinet appointees cutting their departments down, and killing bad
regulations, if we get a good immigration plan that allows in needed
immigrants, and keeps out the poorly skilled, and he does not start a trade war
with China. Then we could see real GDP hit 3 plus percent by 2019 and interest
rates on the 10-year could hit 4-5% by 2020. The real long term question is do
we end up looking more like Japan/Europe or can we regain the entrepreneurial,
free enterprise energy that propelled the US economy after WWII? Too many
people want the world to be fair - but we cannot depend on government to save
the day!" Thank you, Tom.
What about the overall job market in residential
lending? I asked Jim
Boghos, President of The Boghos Group. "With volume off as much as 40%, underwriters
who moved for higher end comp plans are now at risk for layoff as most
originators have operational capacity. The current mortgage job market
is squarely focused on adding originations people. Competition for
established producers is about to become as fierce as we have seen in recent
years. In 2017, look for acquisition of small to medium size originators,
recruitment of top performing branches and mortgage brokers continuing to
convert to the lender side. Top shelf retail branches and regions
originating north of $8 to $10 million per month are the main targets right
now. Smaller branches have equal opportunity but the larger branches will
be targeted as priority for its impact. Companies that offer excellent support,
operational execution and financial transparency will control the
deck. Also, make sure you have a compelling story to tell. If you don't
have one, you need to develop one because there are a ton of "me too"
companies out there saying the same things hoping to recruit the same
people." Thanks Jim!
Recently the commentary mentioned a $45,000
settlement in Minnesota between a title company, which had a boat/dinner cruise
for clients, and the Minnesota authority. Is taking clients on a cruise
illegal? It prompted Louisiana attorney Marx Sterbcow to write,
"The RESPA enforcement does seem to be getting extreme as I'm seeing state
attorney generals in conjunction with provincial regulators issuing subpoenas
or opening up actions involving really innocuous things such as.... a tin
foil container full of ribs or hot dogs. This is starting to have a
chilling effect as I'm seeing companies withdraw from all legally permissible
marketing & Advertising because they are seeing their friends who provided
20 ribs or 50 hot dogs cost wind up having to pay $40k-100k in ESI document
production and attorney's fees. It's a different environment and I don't see
this slowing down regardless of who heads up the CFPB.
"Here are two different cases involving different
lead regulators however the same supporting regulator is the back-seat driver:
one involves a bank/mortgage company and the other involves a real estate
brokerage. Readers should pay close attention since if you bought someone
a hot dog or threw down the 'buy one get second hot dog free coupon' you just
violated the law under these and need to produce a receipt to the government so
you can self-incriminate yourself in your own document production. And in
both cases this is exactly what the government is seeking one simple pricing
differential.
"Your readers should always remember that social
media is the regulators best friend so those fun pictures you posted on
Facebook or Instagram just cost you $50k in ESI production because you posted a
picture of you and another settlement service provider eating a hot dog at the
same event and the other settlement service provider posted, 'Thanks for the
hot dog!'" Thanks Marx!
Sleuthing around a little shows some state-level
differences. For example, "Documents sufficient to show the value and
frequency of any rebate, discount, abatement, credit, reduction of premium,
special favor, advantage, valuable consideration or inducement, fee, kickback,
or thing of value, including but not limited to free or discounted meals,
provided to XYZ Mortgage in XXXXXX, Alabama. In lieu of providing the actual
documents, you may provide a sortable Excel spreadsheet containing the date,
value and description of the specified benefits provided."
And in Florida, "Documents sufficient to show the
value and frequency of any rebate, discount, abatement, credit, reduction of
premium, special favor, advantage, valuable consideration or inducement, fee,
kickback, or thing of value, including but not limited to free or discounted
meals, provided to REALTOR Suzy Q or XYZ real estate company in XXXXXX,
Florida. In lieu of providing the actual documents, you may provide a sortable
Excel spreadsheet containing the date, value and description of the specified
benefits provided."
The topic prompted attorney Brian Levy to contribute,
"While 'anti-inducement' laws that directly impact title and insurance
companies in many states can be like RESPA on steroids, under RESPA itself, an
enforcement authority needs to not only prove that the hot dog was a 'thing of
value,' but also that it was 'in return for referrals.' As a native
Chicagoan, I have deeply held opinions on what would constitute a hot dog that
could be a thing of value (none of which would involve ketchup). I also
believe, given the right narrative, that even if a hot dog is a thing of value,
that it could be provided as a legitimate marketing expense (or even in
response to a social convention) and not simply as a kickback for referrals.
Frankly, (pardon the pun) the 'hot dog as RESPA violation' is a ridiculous case
to bring and a hard one to win for the regulator. Still that doesn't mean
that a regulator with an axe to grind can't make life tough on regulated entity
by imposing huge discovery and legal defense costs to prevail." Thank you,
Brian!
Real estate agents are home buyers' most important source
of information about new homes after the Internet. Last year, 33% of buyers
learned about their new homes via a real estate agent. Agents' influence is not
declining despite consumers' use of the Web, and for most new home
transactions, Americans still prefer a real estate agent. Last year, 87% of
buyers purchased their home through a real estate agent or broker-a share that
has steadily increased from 69% in 2001, per the National Association of
Realtors.
And bankers and lenders have thoughts on this.
"Together, realtors and MLOs can ease buyer concerns around confusing
paperwork and unexpected costs, making the home buying process as seamless as
possible," said Ryan Bailey, Head of Mortgage, TD Bank. "We're
invested in making a positive impact, and this is part of what makes our bank
different."
As it turned out, TD Bank released the results of its
Triple Play Conference Survey, which uncovered that despite realtors' strong
home buying outlook for 2017, they are losing sleep over the home buyer
experience. As a value add for their buyers, realtors should partner with
mortgage loan officers (MLOs) to offer a more seamless home purchase process,
especially for first time homebuyers, who are expected to be driving the market in 2017.
Key findings of the survey include that Realtors expect
sales to increase in 2017. Most (55%) realtors expect home sales to increase in
2017, and 70 percent of the realtors surveyed are expecting single-family homes
to be the highest type of home in demand this year (versus condos/townhomes,
multi-family homes and apartments). Technology is imperative to the home
search. 44% of real estate agents said online home shopping via Zillow, Trulia
and/or Realtor.com will be the biggest technology influence on the home buying
process in 2017.
Realtors brought up buyers' top concerns. The survey
showed that the top two concerns for realtors in 2017 are home inventory and
mortgage qualification. Realtors said that buyers' top concerns are confusion
around paperwork, followed by unexpected costs and concerns over financing
What do agents value most in a mortgage loan officer? Most
realtors (79%) look for efficient communication and responsiveness when working
with an MLO, followed by guidance with navigating the finance process,
competitive rates and expertise on managing the regulatory landscape.
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