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News From NAMB: March 3, 2016

John Councilman
Mar 03, 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

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Free Registration Extended to NAMB East!
We want every east coast originator and broker to come to NAMB East so we have decided to let everyone who has a personal or company NMLS number in for free!  Simply use the code NAMBSTATE on the online registration form. A large percentage of attendees will walk away with a big prize at NAMB East. There are so many prizes that hundreds of people will get prizes like Surface 3s, I-Pads, GoPro cameras, TVs, Drones, to name 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.  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 in March of 65 to 70 degrees.

Bankers Still Having Big Problems With TRID
According to a survey of 548 financial services professionals conducted by the American Bankers Association (ABA), more than 75% of respondents acknowledged that TRID has resulted in delayed loan closings ranging from 8 to 20 days. More than 90% of respondents said that their front-boarding and loan processing times have increased. And 25% percent stated that their banks no longer offer certain mortgage products because the TRID mandate “does not provide enough clarity.”   94% hoped that the CFPB would extend its "good faith" grace period on TRID enforcement—something the CFPB has repeatedly refused to do, despite pleas from the industry and legislators.  Another major problem is bankers have yet to receive system updates from their vendors.

Don’t Misrepresent Your Company’s Security
The CFPB just announced that they are fining Dwolla, an online payment processor, for not telling the truth about how secure it is.  “Dwolla claimed its data security practices exceeded industry standards and were Payment Card Industry Data Security Standard compliant. They claimed also that they encrypted all sensitive personal information and that its mobile applications were safe and secure.”  It won’t be long before regulators will test the data security of mortgage companies.  It is easy to do.  You are supposed to be testing already.  Fines for failure are quite likely.

Fannie Mae Having Major Technology Problems
As long as most of us can remember, Desktop Underwriter has had very little down time.  Not only has DU been down, so have EarlyCheck, Loan Delivery, and others.  Fannie Mae says they have been resolved this morning.

Bill Would Remove Loan Limits on VA Loans
The Flexible VA Loan Guarantee Act would eliminate the loan limit or the “maximum guarantee amount” of a loan that the VA can guarantee for a veteran, providing the VA with the flexibility to determine the appropriate limit for all veterans' loans.  According to its sponsor, Congressman Lee Zeldin (R, NY), the change would be extremely helpful for veterans who live in areas with a high cost of real estate.  Two Democrats have also signed on as cosponsors.

Edging Out the Selling Realtor
A new technology offering would allow buyers to make offers online directly to the listing agent.  Skupit would eliminate the need for a selling or buyer’s agent.  They believe their system would make buyers more attractive for two reasons.  First, the listing agent could get a double commission making it more likely their contract would be accepted.  Second, a seller using a discount listing service would receive the calls directly and not have to pay a selling agent fee making it more likely the contract would be accepted.  The question is, “What will be do with all of those unemployed real estate agents?” Don’t worry.  When I looked on the site it had 0 listings anywhere I do business.

PHH Finds Retail Origination is Harder Than It Looks
Last year, PHH unveiled ambitious plans to open 6 new retail operations centers in major U.S. Cities. They expected to use these to expand their customer base. Just a year later, PHH says it is abandoning retail because “Progress is too slow and the effort too costly."  Yes, building a client base takes time and lots of effort. PHH says it will be relying on acquisitions and relying on their Realogy channel. Realogy owns PHH as well as Coldwell Banker, Zip Realty and others.  It is easier to get loans by getting them from your realty company but it is a 2-edged sword. Realogy and PHH are currently being sued for RESPA kickback violations in Central California. The suit claims “PHH Home Loans is the exclusively recommended mortgage lender for Realogy's vast real estate brokerage network.” PHH lost $145 million last year.

Watchdog Calls For Investigation of MBA’s Stevens
According to the New York Times, The National Legal Policy Center is calling for an investigation of David Stevens, CEO of the Mortgage Bankers Association (MBA).  The group is calling for the United States Attorney and HUD Inspector General to investigate whether Stevens violated federal rules barring former government officials from “communicating or appearing on behalf of persons or entities with respect to matters in which the former officials ‘personally and substantially participated’ during their government service.”  In mid-December, the nonprofit Campaign for Accountability asked the Justice Department to investigate Mr. Stevens for possible violations of so-called revolving door laws.  MBA responded that it is part of a concerted campaign to discredit Mr. Stevens.

Radian is Adjusting Borrower-Paid PMI Premiums
The PMI world is constantly adjusting to better reflect the risks of higher/lower credit scores and LTVs.  UGIC took the top spot among mortgage insurers by using risk-based pricing half a decade ago.  Now, other PMIs are aggressively following suit.  The latest news comes from Radian who will be adjusting borrower-paid to give lower rates for borrowers with a score over 740 and raising them for scores below 740.  They will also be charging the same rates for jumbos as they do for conforming.

Are Democrats Beginning to Abandon the CFPB?
Everyone knows that Republicans don’t like the CFPB or Dodd/Frank. Now, it looks like some powerful Democrats are trying to shoot down a proposed CFPB rule on payday lending. Debbie Wasserman Shultz, Democratic party chair, has signed on as a cosponsor of H.R. 4018, a bill that would prohibit the CFPB from regulating payday check cashing if a state has a law regulating it.

Realtors Unhappy About Not Getting Closing Disclosure
Realtors are continuing the drumbeat about not getting a copy of the Closing Disclosure. What is this all about? Prior to TRID, title companies were responsible for the settlement statement and willingly issued a copy to the real estate agents involved. The new TRID rule does not govern, or even address the issue of sharing CDs or settlement information. But, since lenders are now responsible for the settlement statement, they have privacy worries. Any information that is not publicly available could be construed as a Graham-Leach-Bliley or other federal or state law violation. The end result is real estate agents aren’t able to catch errors.

Why the Biggest Companies Want Out of the Mortgage Business
Remember WMC Mortgage? They were the subprime company owned by GE Capital. Even though GE sold WMC in 2007 they are currently being sued in 14 different suits amounting to billions of dollars. Now, the Department of Justice has decided to investigate WMC regarding the origination and sale of mortgage loans from 2005 to 2007 for FIRREA violations. The state of limitations is 10 years for FIRREA so one must wonder why 2005 loans are being investigated.

Pending Home Sales, Mortgages Show Sharp Decline
Things looked very good for existing home sales so far this year but NAR says pending home sales, a measure of what will happen next, actually declined. That often happens due to weather this time of year.  We will have to wait and see.  Home prices continue to rise, along with lack of inventory, which could also be factors in slowing sales.  Mortgage applications dropped 4.8% last week because of the uptick interest rates.

CFPB Complaint Database Shows Mortgages Still at Top
The CFPB released its March Complaint Database which shows mortgages still have the largest number of complaints since inception.  That is a bit misleading though because debt collectors and credit reporting did not enter the database until much later.  Both of those categories had more complaints than mortgages in the past 3 months.  The bad news is that mortgages still had more complaints than credit cards and other consumer loans.  But, most of them were in loan servicing which is not far removed from debt collection.  Wells Fargo had the most financial company complaints but the 3 credit bureaus had the most complaints overall.  Non-banks registered very few mortgage complaints and complaints against mortgage brokers were non-existent.

Urban Institute Says QM Hasn’t Affected Mortgages
The  joins CFPB Director Cordray in claiming QM hasn’t affected mortgages. They offer 4 reasons. The problem with all of this reasoning is it overlooks the fact that nearly all of the loans out there are government and exempt from QM. This is the same group that recently decried 5.2 million loans weren’t made due to overly restrictive underwriting that relates to QM. They admit those loans would have helped low-to-moderate income borrowers build their net worth. You can’t have it both ways. They ignore their own data that shows the few portfolio non-QM loans being done have been cut 60% since 2013 alone.

Flood Bill Would Encourage Private Flood Insurance
NAMB is endorsing a bill that would make it easier for private flood insurers to get a foothold in the market.  The concern is that FEMA insurance is said to be $23 billion in debt and unsustainable.

Ginnie Mae Ends Virtual Moratorium on New Issuers
According to former FHA Commissioner Brian Montgomery, Ginnie Mae became overwhelmed and put new applications on the back burner at the end of last year.  Ginnie now has caught up and is processing new applications for issuers.  Ginnie continually complains it has inadequate resources and lacks funds to manage the billions of dollars it guarantees.

Could Being a “Rural” Lender Allow Alternative Products?
So more areas could be designated “rural,” Congress passed the Helping Expand Lending Practices in Rural Communities Act in late 2015. Now, the CFPB has created a preliminary list of counties designated “rural” and invites people and businesses to apply for more areas to be included.  It appears the only thing that cannot be classified as rural one designated as Urban by the Census Tract.  Small lenders having a rural designation get additional safe-harbor protections.

Former Fannie Chief to Face Jury Trial
When mortgages began to melt down in 2007, then head of Fannie Mae Daniel Mudd is alleged to have misled investors about Fannie’s involvement in subprime. While this trial would not put Mudd in jail, it could put a serious dent in his pocketbook unless the taxpayers pick up the tab, which they are doing with his legal fees. It seems everyone was misleading the public about how serious the meltdown was. Remember Barney Frank saying on July 14, 2008, "I think this is a case where Freddie Mac and Fannie Mae are fundamentally sound. They're not in danger of going under… I think they are in good shape going forward.''  Fannie Mae went into conservatorship less than 60 days after that statement.

NAMB Leg Conference Sold Out!
NAMB’s Legislative and Regulatory Conference is totally sold out. This is a great opportunity to talk members of Congress and regulators about our issues. Hopefully, you were able to register. It is going to be Great! Make certain you register early for next year’s conference.

Rate Outlook
It’s more lackluster economic news.  We got a bunch of semi-good economic news at the end of last week.  Revised Gross Domestic Product (GDP) was up 1% in the 4th quarter, higher than the original figure of .7%.  Everyone expected GDP to be revised downward.  Still, compared to the 2nd quarter where GDP rose 3.9% and the 3rd quarter’s 2% rise, it was a sign of a slowing economy.  Personal Income rose .5% and Personal Outlays rose .5% as well.  Both show an increasing trend that is causing businesses some concern.  Wage pressures with a slowing economy are not what business wants to see.  The only good news for rates was the Personal Consumption Expenditures Index (PCE) measure of inflation came in at only .1% but it was higher than the .1 drop in December. 

People are reading the data differently.  Everything to do with inflation increased over December/January which may embolden the Fed.  On the other hand, slowing GDP may mean the malaise worldwide is coming to the U.S.

When the Fed raised rates in December, Ben Bernanke was not exactly bullish.  He said he “never expected interest rates to stay at zero for so long.”  He even seemed to intimate that we could slip back into recession and need negative interest rates.  Some believe we are sliding in that direction.

Rates continue to be pressured by rising stocks and higher oil prices.  Overall, the economy could be best described as flat to slight improvement.  The ISM Index showed more companies are cutting back instead of expanding their businesses.  The Fed Beige book showed some areas doing OK while others are languishing.  Productivity was down.  Last week, jobless claims looked like fewer people were getting laid off but things went in the other direction this week.  Factory orders were up slightly but less than expected.

Tomorrow brings the most watched economic news of the month, the Bureau of Labor Statistics Jobs Report.  Experts are expecting the downward trend in job creation to continue.  If more jobs are created, rates may spike up.  If job creation is weak, rates will get better.

Unless we get a strong jobs report tomorrow, the bet is the Fed will not raise rates in two weeks when they meet.


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].


Mar 03, 2016