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News From NAMB: January 21, 2016

John Councilman
Jan 21, 2016

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)
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Brokers Can Now Get GUS Findings on USDA Loans
USDA’s Rural Housing program is finally doing what Fannie, Freddie and FHA have done for years.  You simply have to set a personal account with USDA and then get your wholesale lender to acknowledge you. Simply go to  Now, if we could just get GUS to import a 3.2 file and get rid of some of those quirky guidelines, things would work very well.

Mortgage Originators Feeling the Squeeze
For several decades, mortgage originators enjoyed considerable freedom. You could easily start your own broker shop, more or less price what you wanted to make on each loan, and move freely to another company. Today, being a broker takes a lot more expertise and infrastructure. The compliance burden is huge, especially for very small shops. Even if you join a larger lender, you no longer can price loans individually. Moving to another company means you must make an NMLS transfer and learn all of that company’s systems. Going from a bank to a non-bank requires education and testing. The best wholesale lenders are making compliance easy for brokers. Some even treat their brokers as though they are the broker’s back office. That seems to be the ones that are thriving.

Can Builders Offer Incentives to Use Their Mortgage Company?
Rob Chrisman had an interesting discussion on the matter with some top industry lawyers. There are some restrictions on these incentives. Another interesting takeaway is that under QM rules, the three percent affiliate cap does not apply to builder mortgage companies. I think you will find the newsletter interesting.

Software Designer Says We Can Approve Loans in Minutes
Blend Software says it shouldn’t take so long to approve a loan. Blend’s idea is to digitize pay stubs, tax returns, bank statements, etc. so they can be analyzed by a computer in seconds. This is typical of software developers who don’t understand that we don’t lose that much time on these items. We lose it in regulations that mandate delays and regulatory reviews that suck up time. We lose it when borrowers and others don’t respond timely. Not to mention most paystubs and other documents we get aren’t of the quality that lends itself to digitized data extraction. We still need people.

Thousands of $$ in Prizes Being Given Away at NAMB East!
Surface 3s, I-Pads, GoPro cameras, TVs, Drones, are just a few of the prizes being given away at NAMB East!  Mark your calendars for Wednesday, March 9, 2016 to Friday, March 11, 2016, for the biggest mortgage conference east of the Mississippi. All of the major wholesale lenders are exhibiting in the sold-out exhibit hall. Talk to industry leaders, motivational speakers, and top producers who will show you how to increase production. Plus, there will be world-class golf and top entertainers at one of Hilton Head’s finest resorts. It’s right on the ocean with average temperatures of 65 to 70 degrees. For a limited time most wholesalers have bought tickets and are giving them to their accounts, a $495 value. Ask your A/E for yours.

New Loan Programs Abound
We now have lenders offering construction and one-time close construction loans. We have renovation loans. There are lenders offering 12-month bank statement programs. Some lenders are taking loans that have a 55% DTI. Several lenders are offering loans with interest only. Others have loans with no income verification. There are dozens of lenders that offer various exceptions to Fannie, Freddie, FHA, and VA.  We even have lenders that offer more than three percent lender compensation to brokers. The list goes on and on. The best place to learn about all of these new programs is NAMB East. You simply won’t be competitive if you don’t keep up with the changes.

Secondary Market Develops for Loans With TRID Errors
Fannie, Freddie and FHA’s grace period for TRID errors will end soon but a secondary market has already begun to form for other loans not getting purchased. According to Rincon Mortgage Trading, they are seeing a lot of flow on TRID-impaired loans. The bad news is that investors are only paying 90 cents on the dollar. Makes one wonder if the original investor might want the loan at that price. It would pay to find trivial errors.

People Must Love Getting a New Mortgage
This week, mortgage applications were up again, jumping nine percent from the previous week. Lower rates spiked refinance applications 19 percent from the previous week, constituting 59.1 percent of total applications, up from 55.8 percent. Makes one wonder if the gloom and doom folks for refi originators have a clue. Purchase applications fell two percent from the previous week, but they are still 17 percent higher than the same week a year ago. People are willing to endure the rigor of underwriting and regulation to save a few bucks or get some cash.

Social Media Can Be One of Your Biggest Legal Headaches
So many mortgage companies and originators have rushed into social media without considering the legal consequences. It has been very costly for some. Others are finding that state regulators are looking at your social media and issuing fines. K & L Gates gives an excellent overview of what legal perils accompany social media.

Perhaps Chase Should Reconsider Mortgages
Overall, Chase had a very good quarter with net profit up 10.2 percent, a new record for Chase. Investment banking was the big winner with an increase of 80 percent. Credit cards and other interest income jumped 10 percent. The big loser was mortgages with a drop of 21 percent. Chase doesn’t like FHA so they aren’t even in the top 100 FHA originators and they don’t seem to be able to make a profit on Fannie and Freddie product. Non-banks are taking the business back from the banks in general.

Ocwen Pays Fine, Executives Skate
Ocwen Financial was just fined $2 million by the SEC for misstating financials. So who does that hurt? It hurts the shareholders, not the executives who perpetrated the violations. Then we wonder why executives allow such things.

Rate Outlook
The big economic news this week was the huge sell-off in stocks. Since bonds compete with stocks for investment money, mortgage rates have done well. The big question is, “Was the sell-off panic selling or the beginning of a bear market. Experts disagree. Some say it simply happened too fast which signals panic selling more than reasoned investment decisions based on fundamentals like corporate earnings.  Others are saying we were due for a major correction. We do have “full employment” (supposedly) so everyone has a job that wants one and has to spend. Oil is cheap so that will help a lot of industries and should improve consumer spending.

Some people are buying stocks so the market is currently a few hundred points better than the low of 15,370 reached this week. My personal feeling is that a lot of people would rather collect interest than play the stock market. They were forced into stocks to get any return at all. Fed tightening generally has a negative effect on the stock market and this is no exception. Usually, mortgage rates dip after a Fed raise but eventually go up. Bernanke said a few years ago, “a premature tightening of monetary policy ... an abrupt change in policy could lead to a large correction in the stock market."  Does that mean the Fed tightening was premature?  It certainly wasn’t based on inflation.

This week bonds played off stocks with little economic news to drive rates down or up.  The Consumer Price Index showed inflation is still quite dead.  The index for all items less food and energy increased only 0.1 percent in December.  Counting those items, the CPI fell -.1%.  Jobless claims have to be weighing on economists’ minds.  Weekly claims edged up significantly to 293,000 which is getting near the 300,000 break mark.  New jobless claims are now equaling the best job gains, not a good economic sign.
Stocks had a nice rally this morning which is pushing rates up.  This is no major economic news that comes out tomorrow.  Watch stocks to see where we head.



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


Jan 21, 2016