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News From NAMB: January 28, 2016

John Councilman
Jan 28, 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 (UWM)

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Free Passes to NAMB East End January 31st!
Free passes to NAMB East bought by wholesalers stop January 31st.  If you don’t have your free passes by January 31st, you will have to pay $495. No exceptions. Nearly every major wholesaler has them.  Ask your A/E for yours today.  Hundreds of people will walk away with big prizes, 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. Meet industry leaders, motivational speakers, and top producers who will show you how to increase production. World-class golf, top entertainers, at Hilton Head’s finest resort. It’s right on the ocean with average temperatures of 65 to 70 degrees. 

Tech Compliance Expert Gives Strong TRID Warning
For those of us who are frequently audited by state regulators, we know Compliance Ease because most state auditors use the software to find violations. In a Tech Talk article, the president of Compliance Ease gives a dire warning, “TRID requires lenders to monitor all fees on all LEs and not just compare the final LE to the final CD. This means that if a lender is only comparing one LE and not monitoring revisions to individual fees and changed circumstances across all LEs throughout the origination process, then there is high potential for significant violations under TRID.” One fee change can create “significant violations?”  Scary stuff.

Calyx Releases Yet Another TRID Update
Calyx Software just released another update this week to help untangle TRID issues. Calyx is not alone. Other software developers are finding a need to make changes. It is little wonder. Just one example is using the alternate Loan Estimate. Closing Costs Financed means something entirely different depending on which form you are using. The forms aren’t that bad. It is the complex, and even silly, implementation rules.

Flagstar Says Wholesale Hit Harder By TRID
In his explanation of why Flagstar had a big drop in 4th quarter mortgage earnings, Flagstar CEO Alessandro P. DiNello blamed TRID. DiNello said the whopping 32% drop in mortgage earnings was because wholesale mortgage lending has a lot more difficulty complying with TRID than retail. His next statement is a cause for concern, “We are taking steps to address this issue while building market share in our distributed and direct-to-consumer retail channels." That seems to mean that Flagstar doesn’t like all of the issues TRID causes for third party origination and they want more correspondent and retail.

Mortgage Applications Jump 8.8%
Mortgage applications increased for the 3rd straight week, rising 8.8% from the previous week in the latest MBA survey. Refinances remain strong at 59% of volume. ARMs are also continuing to gain ground, now at 6.9%. We can thank low rates although some poor sheik has probably had to hock his Mercedes.

Existing Home Sales Make New Record
Existing home sales jumped 14.7% in December after a week November, setting a new record for a month-to month gain. The obvious answer is that all of the loans that tried to close in November got pushed back into December. But, 2015 was a great year with a 7.7% over gain in home sales, the highest number since 2006.

HUD Cutting Premiums on Multifamily
HUD announced it is cutting the mortgage insurance premiums on it FHA multifamily loans.  It is a targeted cut “designed to encourage capital financing of affordable and energy-efficient apartments.”  More affordable and efficient properties will get bigger reductions.  The rate reductions announced today will take effect on April 1, 2016.  People are now beginning to bet on a single-family premium cut as well.

CHLA Beats the Drum for Bank LO Licensing
It is certainly true that banks have some significant regulatory advantages compared to non-banks.  They can escape licensing to originate mortgages, Don’t have to license originators, and hire people that would fail an NMLS background check.  The Community Home Lenders Association which represents non-bank mortgage lenders isn’t about to let the subject die.  Kudos to them.  NAMB has the same stand.  Bank LOs should be licensed like everyone else that originates mortgages.

HUD Wants to Review Quality of HECM Counselors
HUD has published a notice in the Federal Register that would allow it to sample 300 HECM borrowers who received housing counseling. The quality of HECM counselors has been a sore spot with consumer advocates who say too many seniors don’t understand what they are getting into.

CBO Says Fannie/Freddie Will be Money-Makers for Taxpayers
Although big chunks of free settlement cash are expected to slow, the CBO says Fannie and Freddie are kind of like the lottery for taxpayers. They expect the GSEs to feed $20 billion into the government with only $11 billion in “possible” risk. Nothing like appropriating shareholder money so the government can have a profit-making business.

House Report Charges White Borrowers Getting CFPB Minority Settlement
Ally Bank was required to pay $80 million to minority borrowers in a disparate impact case. According to the House Financial Services Chair Jeb Hensarling, the CFPB and DOJ don’t know who was harmed and are sending a lot of the checks to white borrowers rather than to African-Americans and Hispanics. Hensarling charges that the entire basis for disparate impact is thrown into question if the government didn’t know who was a minority.

CBO Says Home Prices increasing Twice as Fast as Wages
The Congressional Budget Office just issued a report that shows home prices are far outpacing wages. The takeaway is that home price escalation must slow or home will not be affordable for an ever-increasing number of people. As lenders push ratios, that may account for continued home sale increases. There also appears still be pent up demand from several years ago when home sales floundered.

Zillow Forecasts Lower Rental Appreciation
Zillow National Rent Forecast reports rental rates will slow in 2016 in most areas of the country. That could have a much more far-reaching effect than just on landlords. If investors stop buying real estate for rental, it could easily curb home price increases due simply to the law of supply and demand.

VA Lender Conference 2016 Announced
If VA loans are an important part of your business, you certainly want to attend the VA Lender Conference. This is where the heads of VA and people from industry get together to discuss all things relating to VA home loans. This year’s conference is being held in San Diego, April 18-21. Even better ... it’s free.

Bad Financial Reporting Strikes Again
In an article that is certainly slanted against PHH, Time Magazine presents some embarrassingly poor journalism.  PHH did not send business to “mortgage issuers;” they sent business to a mortgage insurance issuer.  There was no claim that PHH had developed “a system that took advantage of the average borrower by raising their mortgages… a scheme that benefited PHH to the tune of “hundreds of millions of dollars.”  The gist of the CFPB claim is not that consumers paid more.  It was that PHH benefitted by illegal kickbacks.  I think PHH would certainly disagree that “the case’s particulars involving the lender and the CFPB are all but agreed upon.”  Time should probably check with PHH and the CFPB before they take a story to print.

Rate Outlook
Stocks revived a bit this week, mainly on a speech by European Central Bank President Mario Draghi. Draghi promised there are “no restrictions” on what the bank would do to stimulate the European economy. He is obsessed with getting to the 2% inflation mark. So, the answer is to push more and more printed money into the system. History tells us that after a while you may need a wheel barrow to buy a loaf of bread if that is your only answer to economic prosperity. Of course, people making outrageous statements like that are not good for bonds and mortgage rates even with poor economic conditions. It is possible to have a bad economy and high interest rates.

Worldwide, stock and commodity prices continue to drop.  Economic news is not good.  Industrial production declined for the past four months.  China and Europe are in bear market territory and it looks the US may be there as well.  GDP growth in 4th quarter was very weak and weakness will likely continue at least a little while based on indicators. Things are so bad in China that there seems to be no end to the freefall.

Lest we worry about the economy, Ben Bernanke says we are not facing a recession.  Isn’t that same guy who found he couldn’t get a mortgage when he left office?  You would have thought he would have applied while he still had a job.

The good news is that the originators in the refi market are going to make money.  As always, the refi guys do well when there is a rough economy.

This week, the Federal Reserve released dovish comments that indicate they are in no mood to raise rates again soon.  That is understandable since jobless claims were still in the upper 2000s at 278,000 this week.  A little better than last week but not great economic news.

The big shocker this week was durable goods, the big ticket items, dropping 5.1% when the expectation was -.5%.

Tomorrow is a big day for economic news with GDP, Employment Cost Index, and Consumer Sentiment.  Be careful.


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 28, 2016