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News From NAMB: July 30, 2015

John Councilman
Jul 30, 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 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 United customer, isn’t it time you started working with company that treats you like a partner?

NAMB says “no” to G-fees paying for highways
It appears the Senate has backed off trying to tax homeowners with G-fees to support highway construction. Senate Majority Leader Mitch McConnell filed an amendment over the weekend that would have struck the proposal, according to a Senate aide. Now, the House says it will not take up the Senate bill at all. Good news for housing and a victory for NAMB, NAR, MBA, and homeowners. NAMB is calling for the CFPB to require the disclosure of G-fees on the new TRID disclosures since they are perhaps the largest single expense item on some loans.

Appeals Court allows CFPB unconstitutional suit to proceed
State National Bank of Big Spring, Texas brought a suit against the CFPB saying it is unconstitutional because it is not subject to Congressional oversight. The suit also claims regulations promulgated before Richard Cordray was confirmed are not enforceable. Last year, the district court ruled the bank doesn’t have standing. The appeals court said State National doesn’t have to wait for the CFPB to bring an action against them to sue so it does have standing. The bank is joined by 11 state attorney generals who also believe CFPB power is too great. This doesn’t mean the appeals court thinks the CFPB may be unconstitutional, just the bank has the right to sue. Don’t get your hopes up because a California court ruled earlier the CFPB is constitutional.

Warren says we intend to expand Dodd/Frank
On the fifth anniversary of the CFPB, Elizabeth Warren put out a video that could almost make you feel sorry for the CFPB. She portrays the CFPB as a “little agency” that stands up to the giant banks. Warren declares it is David vs. Goliath and David can win. The scary part is, later in the video, she says we need to expand Dodd/Frank. On the other side of the coin, Sen. Ted Cruz and fellow Texan Rep. John Ratcliffe are introducing legislation in the Senate and House to abolish the CFPB.

Are lenders pushing borrowers to FHA?
The Seattle Times says, Yes. The newspaper decries the fact that lower-score borrowers are not getting Fannie Mae and Freddie Mac loans. “Borrowers with minor credit dings, or downpayments of less than 20 percent, still can’t get access to federally backed loans once considered mainstream. Lenders are instead routing them into higher-cost Federal Housing Administration (FHA) mortgages, designed for low-income or bad-credit borrowers,” according to the paper. I guess this is a call to the good old days when Fannie and Freddie were giving loans to low-score borrowers with no equity. This highlights the political danger of keeping the GSEs as wards of the government. This is very evident in Freddie Mac’s Market Insight Report.

House Committee passes bills including creating TRID hold harmless
The House Financial Services Committee passed four bills that affect how the CFPB operates, including the hold harmless bill backed by NAMB. We applaud this much-needed bill that would avoid being fined for an error implementing TRID.

Biweekly payment scheme gets $38 million fine
Paymap and LoanCare were fined by the CFPB for devising a bi-weekly payment plan that deceived consumers. The companies advertised a mortgage payment program that promised tens of thousands of dollars in interest savings from more frequent mortgage payments. The two areas where they fell into trouble was overstating the expected savings and how the payments would be applied.

Fannie and Freddie examiners lack competence
An FHFA OIG report says the examiners FHFA sends to make certain Fannie and Freddie are following sound practices are not competent. Two-thirds of the examiners were not commissioned which means they had not completed their classroom and on the job training that would provide them with technical competencies and practical examination experience. Is FHFA still needed to guide the GSEs in conservatorship?

House says no raise for Fannie/Freddie execs
The House Financial Services Committee voted 57 to 1 not to give raises to top Fannie and Freddie execs. FHFA had said they were going to boost the top salaries from $600,000 to $4 million. That is particularly odd since FHFA is supposedly calling the shots in the conservatorship and no one there makes more than $265,000.

Quicken tops J.D. Power list again
Following last year’s sweep, Quicken Loans easily outpaced every other servicer in the latest J.D. Power survey.  Amazingly, Ocwen was only the 2nd worst servicer this year, being beat out by Greentree.  This follows Quicken’s top finish last year in the mortgage origination experience.

Banks benefit from outdated laws
There are some really outdated laws that give preference to banks vs. non-banks when both are doing exactly the same thing. One case that sets this forth eminently is Madden vs. Midland Funding. A bank originated loans that were sold to a non-bank.  The bank was able to charge a higher rate of interest then the non-bank who simply bought the loans originated by a bank. The only distinction is that one was a bank and received special privileges. No one knows this better than non-bank mortgage companies who have to have 50 state licenses and whose loan originators have to meet more stringent requirements. It is consumers that lose when there are extra costs and fewer choices.

You need to hear about the “Reigns Act”
If you haven’t heard about the Reigns Act, check it out. It’s one of the few new laws that you would actually like. It is designed to “reign in” regulations that would have a harmful effect on business and the economy unless they were absolutely necessary. Formally titled, the Executive in Need of Scrutiny Act, its goal is slow down the huge number of regulations that are put in place every week. If a regulation had an impact of $100 million or more, Congress would have to approve it. There have been 82 such regulations this year alone. Needless to say, the Executive in the White House is not fond of the bill and has vowed to veto it.

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.

Rate outlook
Fed staff accidentally posted the Open Market Committee’s economic projections that could be influential in determining the possible changes to the federal funds rate. The data contained the Fed’s forecasts for the unemployment rate and inflation. An expert at Barclays says the data points to a rate increase in September and another in October or November with a pause in December.

“To support continued progress toward maximum employment and price stability, the Committee today reaffirmed its view that the current 0 to 1/4 percent target range for the federal funds rate remains appropriate,” the Fed said at its meeting this week. “The Committee anticipates that it will be appropriate to raise the target range for the federal funds rate when it has seen some further improvement in the labor market and is reasonably confident that inflation will move back to its two percent objective over the medium term,” they continued. In plain language, they didn’t raise rates but are likely to do so before the end of the year.

Rates ignored all of the other data and are pretty much flat. GDP is still looking OK and unemployment numbers are good. Even real estate is selling well and near all- time high median prices. There isn’t inflation pressure on the Fed to raise rates but economic news is generally good enough to expect a rate increase around September.

Tomorrow we get the Employment Cost Index and University of Michigan Consumer Confidence. They would have to be pretty shocking to have a major impact on rates but the Fed does was employment costs.


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].


Jul 30, 2015