News From NAMB: April 21, 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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House Financial Services Chairman Jeb Hensarling released a discussion draft of the Financial Choice Act that rewrites Dodd/Frank. There is a lot in there about mortgages, but we will have to wade through it to see exactly what the changes are since they strike this and add words here and there. Hensarling has been working with the President who said he will do a "major elimination of the horrendous" Dodd-Frank regulations. There seems little doubt this will see changes in the Senate. This is why every originator needs to attend our Leg conference.  It is not too late to hop a plane to lobby on Tuesday. Hearings on this bill will start next Wednesday.

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While FICO may not be using trended data in its score calculations, Vantage Score apparently sees this as a big opportunity. Vantage says it will reveal the potential for some borrowers to over-spend, then paydown. Although the mortgage market is still heavily dependent on FICO, one should not underestimate the power of the big three bureaus. Creditors are already pulling over 8 billion Vantage scores each year. This may help them push out FICO so they have more control of the market.

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Barney Frank, one of the authors of Dodd/Frank that created the CFPB issued a warning to those who would eliminate or weaken the CFPB. Frank told a New York radio station that the CFPB has “can save consumers a lot of money.” He believes people would hold politicians accountable if those savings were cut off. There is no question the CFPB has collected a lot of fines and returned money to consumers. But Frank failed to explain how the CFPB saved consumers a lot of money.

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Independent mortgage bankers took in a record $8,555 per loan in 2016. That’s the good news. Now the bad news; costs to originate those loans was $7,209 per loan, also a record high.  Escalating home prices had something to do with the larger revenues. Regulation had a lot to do with the record expenses.

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Gary Cohn, President Donald Trump’s top economic adviser, gave Richard Cordray, the head of the Consumer Financial Protection Bureau, an ultimatum over dinner a few weeks ago: Go the easy way, or go the hard way. He believes Cordray wants to run for governor so they have decided to hold off firing Cordray that could boost his candidacy and juice his fundraising. 2018 is approaching quickly so Cordray must decide soon if he wants to be Ohio governor.

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It seems lenders have gotten the hang of TRID. Ellie Mae’s most recent survey shows turn times down to 43 days, the shortest time period since TRID began. That is for both purchase and refinance loans. The survey also shows purchases up to 63% of closed loans as the refi boom seems to be waning. 

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Real estate agents are all complaining about the lack of homes for sale. The answer is to sell new homes. But builders are feeling antsy about building too many homes. Bad weather slowed sales but they were still 9.2% better than this time last year. Permits are up so it looks like there will be some inventory available this summer.

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In a lengthy blog, Trulia lists all of the reasons why the CFPB is important. They believe consumers would lose and important tool to voice their complaints against mortgage lenders. Trulia points out, “the CFPB offers the much-needed guidance and consumer protection that was sorely lacking a decade ago.” It is true that hundreds of thousands of consumers have complained to the CFPB and lenders have acquiesced, whether or not the complaint was legitimate. Like everything I have found in legislation, if tip the balance too far in any direction, you will get a strong rebound, which is what the CFPB is experiencing.

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There are signs of pullbacks in the economy that is beginning to worry Wall Street. Consumer borrowing is down as is commercial borrowing from banks. Since spending in the United States is done via borrowing, especially for large items, there is some concern. It is a bit early to worry but some experts are watching closely. Slowing could hold rates down.

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The latest version of the Mortgage Bankers Association GSE reform plan seems to be leaning more toward the Republican view of things. It calls for less government guarantees and more private capital. MBA also wants to ensure that smaller entities have equal access to capital in the plan.

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American Financial Network entered into a settlement agreement with HUD over an alleged Fair Housing Act violation. A borrower claimed an AFR branch refused to prequalify him because he was Hispanic. AFR denies the claim but apparently paying $5,000 was cheaper than fighting HUD in court. Seems hard to imagine that an originator would turn away a large paycheck based on ethnicity.

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While other banks like Goldman Sachs and Wells Fargo earnings were flat, Bank of America turned in a 40% profit increase for the first quarter. The biggest driver was consumer banking, i.e. credit cards, auto loans, and bank account charges. The biggest loser was residential mortgages, where production dropped from $87 billion a year ago to just $69 billion in Q1 2017.

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The American Society of Appraisers (ASA) and the National Association of Independent Fee Appraisers (NAIFA) are merging. As the appraisal world shrinks, it only seems logical for appraisers to try to gain more clout or become irrelevant. The Appraisal Institute will still be the largest trade organization in the field, even after the merger.

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If you really don’t like things in the United States, it looks as though Russia has a burgeoning mortgage market. Mortgages were up 26% in March thanks to a Fannie Mae clone that Putin has started. I wonder if they have an equivalent of the CFPB?

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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.

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