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News From NAMB: August 6, 2015

John Councilman
Aug 06, 2015

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



United Wholesale (Advertisement)
United Wholesale’s CEO Mat Ishbia says the 30-day lock isn’t going to be a problem under TRID for their brokers. United has the technology and staff to get your loans closed on time.

UWM is paying for their brokers to attend NAMB National. That’s right, United will pick up the $395 admission charge. Just give your account rep a call and get this free gift. Hold on! United is so certain you’ll love NAMB National they will also pay for up to 10 people in your company to attend for free as well! If you’re not a UWM customer, isn’t it time you started working with company that treats you like a partner?


New legislation could allow brokers to make small mortgages
As any broker knows, on a $120,000 loan, the most you can make is 2.75 percent or $3,300. If your originator’s minimum is set at $1,500, you have about $1,000 in lender fees and $1,000 in fixed overhead. That means you would lose $200 on the loan. If your comp plan is two percent or $2,400, you would lose $1,100. HR 3393 would remove lender comp from the QM points and fees cap which would allow brokers to set a realistic minimum compensation amount. The CFPB had said in its LO Comp Rule that this was warranted but needed legislation to make the change. Please visit your representative ask them to sign on as a co-sponsor to help lower-income borrowers.


e-Closings are the future say CFPB and Watt
Mel Watt, the man in charge of Fannie and Freddie, said e-closings are the future whether anyone likes it or not. Speaking at the CFPB’s e-closing seminar, Watt said you can stick with the old way and get left behind or adopt e-closings.  The seminar featured consumer research by the CFPB that showed consumers like e-closing and tests show they understood the process better. It did feel a bit like a sales job since much of the gains were based in getting the closing documents several days before settlement. One really good idea was to have a chat feature where the borrower could discuss the documents with the closer or even the LO. The CFPB panel said many borrowers have expressed dissatisfaction with notary closings where the notary says they know nothing about the documents. Zillow is trying to go one step further by taking the entire real estate transaction to paperless by buying Dotloop. Zillow must be doing something right because their second quarter income was up 20 percent over the previous year.


Wells Fargo cuts marketing agreements
Wells Fargo Bank has announced that it will withdraw from mortgage marketing services and desk rental agreements with real estate firms, builders and certain other referral sources. The news comes as a “result of increasing uncertainty surrounding regulatory oversight of these types of arrangements.” That probably means we don’t want any multi-billion dollar fines. Wells says, “We believe the best way to earn the relationship with real estate firms and builders is through timely, dependable service delivered by the best team in the business.” One must question why they paid for marketing services instead of doing that in the first place. Prospect Mortgage has also pulled the plug on MSAs and more are rumored to be following. Just in case you are considering filling that void, check this article on the subject.


HUD says many local downpayment assistance programs are illegal
In what could be described as a master stroke of technicality, the HUD Inspector General has decided that most current local downpayment assistance program are illegal to be used for FHA loans. When the local housing authorities issued the housing bonds themselves, HUD was OK using them for down payments. But, when local issuers had no market, a novel way to get DPA money was devised. The local housing authority would advance the downpayment. Then, the lender would reimburse them after closing from premium pricing. The HUD IG says that is illegal which may kill off many local downpayment assistance programs. The funny part is that FHA seems to disagree with the HUD Inspector General as to the legality of this. If it is legal, why can’t brokers and bankers all fund the downpayment through premium pricing?


Fannie, Freddie profits jump
Freddie Mac reported a $4.2 billion profit in the second quarter, up from $1.4 billion during the same period last year, according to a financial filing. Fannie Mae’s profits were also up but not quite as high percentage wise. Fannie turned a nifty profit of $4.6 billion. This was without income from bank settlements this quarter. As interest rates go up, both had higher gains from derivatives. Rather than returning money into the economy, Freddie will pay the Treasury $3.9 billion. This makes $96.3 billion on Treasury’s $71.3 billion investment for Freddie and $142.5 billion on $116.1 billion for Fannie.


Home sales numbers don’t add up
In June, existing home sales were up a blazing 9.6 percent, according to the National Association of Realtors (NAR). New home sales were slightly less than May but 18.1 percent above the June 2014 estimate of 408,000. So, if existing sales are soaring and new home sales are up year over year, how can homeownership rates be plummeting? Supposedly, homeownership is at its lowest rate in 50 years. Are we saying that the sales are strictly a factor of population growth rather than economic recovery?


NAMB member releases book
Sylvia Gutiérrez, NAMB Diversity Committee co-chair, has released an amazing new book. Demystifying the Loan Approval Maze is likely the most comprehensive book available about the mortgage process. This book could easily be used as a textbook or an instruction manual for new originators. Even seasoned LOs will learn a few things. I couldn’t find a single inaccurate statement in the book that you normally find in most mortgage books. It is well worth adding to your library. Kudos Sylvia.


Are county recorders a thing of the past?
One state, Pennsylvania, seemed to outlaw MERS. Its law states documents that “grant, bargain, sell, and convey any lands, tenements, or hereditaments” must be recorded or they are void. A Federal court had ruled that MERS had evaded that law and owed Pennsylvania county recorders a lot of money. The appeals court seems to rule that recording mortgages is voluntary. Apparently, according to the appeals court, mortgages and assignments aren’t something that has to be recorded in Pennsylvania. This could be MERS biggest victory yet and may end public notice as to who owns a mortgage.


CFPB complaint database not secure
The Office of Inspector General issued a report on the CFPB’s consumer complaint portal that showed security weaknesses. Why anyone would want to break into it is a good question but the CFPB says it has patched it. If that was not fully secure, one must wonder about the security of other CFPB computer systems that hold tons of sensitive material.


Fiorina blames mortgage crisis on porn-watching regulators
Carly Fiorina has brought to the public’s attention that federal regulators at times spent the entire day just watching porn. The Washington Examiner broke the story a while back, but it never seemed to get much traction. Some blogs report bank examiners were bought off by prostitutes. Fiorina wants the government out of the lending business. This is going to be an interesting election season.


BankRate says closing costs are declining
In a survey conducted by BankRate, closing costs around the nation are declining. The survey is not particularly scientific since it is only based on asking for 10 Good Faith Estimates in each state. The chart looked suspiciously low. A further examination shows it only includes lender fees, appraisals and credit reports. It does not include title fees, title insurance and government charges.


Chase lowers standards of jumbos
Chase has announced it is simplifying its jumbo loan product and lowering FICO and downpayment requirements for those loans. A buyer with a FICO of 680 or higher looking to purchase a single-family property can now put as little as 15 percent down. Previously, single-family homebuyers were required to have a minimum FICO of 740 with 20 percent downpayment.


FHFA says rents are too high
FHFA is dumping money into multi-family housing. The agency had put a cap on how much they would lend so private money would enter the market. When private money didn’t materialize, FHFA played with the caps and has opened the spigots on multi-family. The question for both multi and single family is why private money doesn’t want in. Is the government taking on risk that they shouldn’t?


Win a free trip to Las Vegas!
NAMB is offering you chance to win a free to trip to NAMB National in Las Vegas this October. The prize goes to the person who comes up with the best reason they are a mortgage pro. You may submit text (no more than two sentences), a picture with text, or a video. Entering the contest is a simple. You must start your post with “I am a #mortgagepro because …” to be a valid entry. Enter today by posting your reason to Facebook, Twitter or Instagram.


Political Front
Things are heating up in the world of politics. Forbes is now giving a 60 percent chance of a government shutdown. The big flap is over funding for Planned Parenthood, who is accused of selling fetuses for harvesting of body parts.  Shutdowns in the past affected FHA, VA, and Rural Housing. Would they shut down the CFPB?

Joe Biden is said to be seriously looking at running for president. He likely would continue Obama mortgage policies. On the Republican side, Donald Trump continues to confound by leading the pack. This is going to be an entertaining year.

A new Wall Street Journal/NBC News poll finds that 65 percent of Americans think the country is on the wrong track. That isn’t as dramatic as you might think but it is not good. It appears Americans regularly think the country is on the wrong track. In 1992, 71 percent said the country was on the wrong track and it upset a sitting president. In 2007, when frustration with President George W. Bush was peaking, wrong-track sentiment was just 63 percent. The poll also found 24 percent said they thought the economy would get worse over the next year, up from 17 percent in December. Two-thirds of Americans want the next president to take a different tack from President Barack Obama, but only 39 percent want a Republican in the White House while 37 percent want a Democrat.

The strangest statement of the week goes to, no, not Donald Trump, but Republican Sean Duffy.  He spoke highly of Martin O’Malley. “…then you have Martin O’Malley, who I think is a terrific guy. He was a good governor of Maryland. I thought he did a great job.”  Is this the same Martin O’Malley who even taxed the rain and caused Maryland’s population growth rate too slow because so many people moved out? Must be a ploy to give Hillary some competition.


Rate outlook
Bloomberg says, “Traders have never been more convinced of a September rate hike by the Federal Reserve. The chances of an interest-rate increase next month reached 52 percent Wednesday, up from just 38 percent just two days earlier.”

Yesterday’s strong report on U.S. service-sector growth was one. That, paired with comments from Fed Bank of Atlanta President Dennis Lockhart on Tuesday have nearly everyone convinced there will be a September rate hike.

Tomorrow is the release of the most important economic data of the month, the Bureau of Labor Statistics jobs report. Anything other than a disaster is likely to push rates up and ensure the Fed raises rates at its September meeting.

ADP gave a very dismal job growth report early in the week but they are often not a good predictor of the BLS jobs report. Unless you like to gamble, today is good day to lock.



 

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

 

Published
Aug 06, 2015