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News From NAMB: April 13, 2017

John Councilman
Apr 13, 2017

You may have noticed that News From NAMB is not just links to other media stories but also goes to primary sources. News From NAMB is different because we find important information that may not be reported elsewhere and we comment on why it is relevant to you, often in a fun way. Best of all, it is free to NAMB members. News From NAMB is sponsored exclusively by United Wholesale Mortgage
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Trump Says May Just Repeal Dodd/Frank
Speaking to a group of CEOs, President Trump said of Dodd/Frank, “We're really doing a major streamlining and, perhaps, elimination, and replacing it with something else. But that will be the minimum. But we're doing a major elimination of the horrendous Dodd-Frank regulations, keeping some obviously, but getting rid of many.” One area we could recommend would be repeal of the Loan Originator Compensation Rule. Other than anecdotes, no one ever showed the relationship between foreclosure and what the originator was paid.

Carson Has More in Mind Than Housing
When one thinks about it, the department’s name is more than Housing. It is also about Human Development. We haven’t heard much about that previously but Secretary Carson sees HUD also as way to develop people into productive citizens. We should remind the Secretary that owning a home helps to stabilize families so he should not forget about FHA’s role. He threw out the first pitch at a youth baseball game. Just getting the ball over home plate is harder than it looks. Is there a parallel here?

DOJ Says PHH Case Is Bigger Than PHH and CFPB
The Department of Justice wants to be able to present oral argument in the PHH case. In the request, DOJ says the case is now about limitations on the President’s power, not just about RESPA. DOJ says their position is not that of wither PHH or the CFPB. The CFPB says they should completely independent of the President. PHH says the CFPB’s director and the CFPB itself are unconstitutional. DOJ’s position is simply that the CFPB must operate at the will of the President.

Did Fannie Mae Set Conforming Limit Too Low?
When one looks at the Mortgage Bankers Association’s Mortgage Credit Availability Index, that may be the case. The Index measures which loans are available for certain borrowers. When you look at the chart on MBA’s site, you can see that the Index was up around 900 when anyone who could fog a mirror could get a loan. Now, it’s around 200. Currently, a fair number of borrowers can’t use Fannie/Freddie financing primarily because the loan amount is too low. Jumbo offerings are gaining ground as well as government loans that continue to specialize in certain borrowers.

Is Jeb Hensarling Setting Up the CFPB?
The House Financial Services Committee, chaired by Jeb Hensarling, sent the CFPB a second subpoena requesting information. Hensarling wants “all records relating to any instance whatsoever, from January 4, 2012–present, in which any CFPB employee directed another federal government employee not to transmit to any Member, Committee, or Subcommittee of Congress records requested or subpoenaed by any Member, Committee, or Subcommittee of Congress.” Even if the CFPB produces such information they may be setup for removal of the Director for malfeasance.

LA Times and Hensarling at War
As media outlets become more and more partisan, the Los Angeles Times decided to defend the CFPB and its Director. They called Director Cordray’s appearance before the House Financial Services Committee “bordering on abuse.” The Times writer went on to give a list of big bank contributors to Committee Chair Jeb Hensarling. Hensarling fired back on Twitter, attacking the CFPB and claiming the Times is pushing a liberal agenda.

Hensarling Acknowledges Importance of CFPB Mission
Jeb Hensarling calls the CFPB “the most powerful and least accountable Washington bureaucracy in history.” But, even Hensarling believes the agency has an “important mission.” His vitriol is primarily focused on Richard Cordray whom Hensarling says, “recklessly ignores the due process protections that have been deeply rooted in our American legal system for centuries.”

California Fines United Shore
United Shore, parent of United Wholesale, was ordered to pay $293,127 in refunds to California borrowers over perdiem interest. In addition, United was fined $1.1 million dollars by the California Department of Business Oversight under a settlement agreement. The Department’s findings concerned loans originated between 2011 and 2014 but United is being required to provide self-audits all the way into 2018. United’s CEO, Mat Ishbia, says the problem has been long solved and claims, “We didn't benefit one penny and not one borrower was harmed. The escrow agents who are selected by realtors or brokers didn't have the documentation proving they disbursed our funds within one day of closing.”

Equifax Jumps Fees on Work Number
Equifax will now be charging a $25/month “Monthly Account Servicing Fee” to maintain credentialing in addition to fees charged for employment verifications on the Work Number. They will also be charging a “Consumer and Inquiry and Data Charge” since they have begun returning additional consumer data and insights from sources outside of The Work Number database, when available, anytime you request a verification of employment (VOE) and/or verification of income (VOI). This information is retrieved from other proprietary data sources owned or maintained by Equifax. It is not clear if or how these fees will apply to other vendors who use Equifax’s data.

Freddie Mac Says Renters Staying Put
In its latest renter survey, Freddie Mac found this quarter saw an increase in the number of renters saying they want to stay in place because they like where they live, even though their rent has increased. The majority of renters are expecting their rent will stay the same in the next 12 months. Many are uncertain about all of the things it takes to own. 41% say they have no interest in owning. That is the highest percentage that has ever been.

Customer Service is #1
Have you ever wondered how LOs working with companies who have much worse rates than yours get all of the business? No, it isn’t with kickbacks … usually. A recent study by Ally Bank shows that 93% of mortgage applicants rate customer service as very important, more than any other category. But they aren’t getting it. Only slightly more than a third (37%) were very satisfied with the mortgage application process.

Dodd/Frank Repeal Would Add $340 Billion to Federal Coffers
The Heritage Foundation released a paper today by two noted economists that claims repeal of Dodd/Frank would create an economic explosion. They believe the deregulation would create a $340 billion boost over a decade, and as much as $817 billion over 20 years. Under the most conservative scenario, revenues to the Federal government would increase by $64 billion in a decade and $202 billion over two decades.

Premium Homes Dominate Inventory
Starter homes are in short supply according to the Trulia. Starter homes are considered homes with a median price of $165,015. There are only 253,735 or 25.9% of inventory. Trade-up homes are those with a median price of $289,455. There are 229,585 listings or 23.0% of the total. Premium homes are those with a median price of $624,143. They have the lion’s share of inventory with 497,231 or 51%, more than all of the lower priced-homes combined. Now may be a good time to buy a premium home.

Register Now for NAMB’s Leg Conference
We can actually lobby this year and have a possibility something we are lobbying for could be passed or changed. They are rewriting Dodd/Frank and we need to make our voices heard. The banks are in there getting what they want. That makes this Legislative Conference, April 22-25, particularly important. You will hear from members of Congress, the CFPB, and other groups that make things happen in DC. This is your chance to shape what laws will determine how you do business. It’s a beautiful time of year in DC so plan a tour while you are here. Hotel rooms are filling fast so register now.

Rate Outlook
The Bureau of Labor Statistics Jobs Report last Friday was quite mixed. The headline number of unemployment at 4.5% would indicate a decent improvement. But that number is only a survey of those looking for a job. The real number, how many jobs were created, was shockingly low, at only 98,000. That is the worst performance in quite a few months. If that continues, it may well give the Federal Reserve reason to pause.
This week, rates have continued to do a little better. The reason? When bomb drop, investors look for a safe haven in bonds. If we really get into it, bonds and mortgage rates could see lower levels. In addition, on Wednesday, President Trump said that the U.S. dollar is "getting too strong" and that he favors "a low-interest rate policy." His quasi endorsement of Janet Yellen leads some to believe the two have an understanding to keep rates low.
Economic news this week was mostly positive. The University of Michigan said consumer confidence is at 98, better than expected. The Producer Price Index was down .1% but the core was up .4%, somewhat better than expected. Jobless claims were well below the 250,000 mark at 234,000.
With the drums beating for military action, I would bet on rates to drop a tiny bit or stay about the same this week.



John Councilman, CMC, CRMS of AMC Mortgage Corporation in Ft. Myers, Fla. is past president of NAMB—The Association of Mortgage Professionals. He may be reached by phone at (239) 267-2400 or e-mail [email protected].



Apr 13, 2017