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News From NAMB-May 21, 2015

John Councilman
May 21, 2015

You may have noticed that News From NAMB is not just links to other media stories but also goes to primary sources. Because NAMB is deeply involved in so many facets of our industry, we find important information that may not be reported elsewhere. Best of all, it is free to NAMB members. News From NAMB is sponsored exclusively by United Wholesale Mortgage. 

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NAMB Submits Testimony to House
The House Financial Services Committee held a hearing titled, “TILA-RESPA Integrated Disclosure: Examining the Costs and Benefits of Changes to the Real Estate Settlement Process." NAMB submitted testimony concentrating on the adverse effects the three percent cap on lower income borrowers. There was also some good verbal testimony before the committee also.


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.


Professor Rips Dodd-Frank
In testimony before the House Financial Services Committee, Paul Mahoney, professor at the University of Virginia, said Dodd-Frank blamed all of the wrong parties. He says it should have blamed the crisis on government attempts to avoid a recession, expand credit to low-income households, and failure to avoid systemic risks. Mahoney went on to say all Dodd-Frank has really done is enshrine too-big-to-fail banks. He said the mistake is to think Dodd-Frank will prevent future similar failures when history shows it is rare to see failures repeated in the same fashion so, essentially, Mahoney says, Dodd-Frank is nothing more than over-regulation at the expense of the public. 


Another Professor Rips Dodd-Frank
The testimony last week was so good, you need to hear more. Hester Peirce of George Mason University pointed out that Dodd-Frank assumes regulators are better able to make business decisions than those who run businesses. Peirce believes Dodd-Frank made it impossible to lower the profile of Fannie Mae and Freddie Mac. Instead, it ensured that they would be the sole sources of conventional lending since the regulations passed shift all risk to the federal government.


GAO Says Merge Rural Housing Into FHA
In testimony before the House Financial Services Committee, the Government Accountability Office (GAO) continued to recommend merger or consolidation of USDA’s Rural Housing into FHA. The GAO released a report back in 2012 where they believed it may be possible to merge FHA, VA and Rural Housing but they said any action should wait until the housing market stabilized. USDA also testified. It is somewhat ironic that GAO thinks it is in the government’s best economic interests to merge a program with a very low delinquency rate into one with a high delinquency rate.


Congressman Publicly Thanks NAMB
Congressman Andy Barr posted on Facebook his thanks for NAMB’s strong support of the Medical Debt Relief Act. The bill provides a way to have medical collections removed when they were supposed to have been paid by insurance. NAMB believes strongly that spoiling a consumer’s good credit for a bill they honestly believed was going to be paid by insurance is simply wrong and we are glad Congress is doing something about it. Congratulations Congressman Barr and Congressman Carney!


New Shelby Senate Bill Alienates Dems
Senate Banking Committee chair Richard Shelby of Alabama is on version two of his banking bill. The tiny changes he made aren’t sitting well with Democrats who say no rollbacks of anything in Dodd-Frank is acceptable. Shelby’s bill currently gives portfolio lenders automatic QM status, creates s study to see what side effects Dodd-Frank has created, eliminates the three-day wait at closing if rates go down, creates a temporary license for bank originators who want to become licensed, and lots more that doesn’t directly affect originators. It looks as though prepaid insurance (including credit life) would no longer be put in points and fees.


Democrats Offer Alternative to Shelby Bill
The Democrat bill will be far slimmer than Shelby’s bill. It only offers relief to small banks similar to that proposed by Senator Shelby.


Bill Introduced in Senate to Make CFPB Budget Subject to Congress
Sen. David Perdue has followed the lead of a House bill that would subject the CFPB to the Congressional budget process. It is a companion to Rep Duffy’s bill that has already passed the House. Perdue said, “The CFPB is a rogue agency that dishes out malicious financial policy and creates new rules and regulations at whim without real congressional oversight.” He has found at least one ally in a taxpayer watchdog that is concerned about CFPB spending.


CFPB Starts Financial Coaching Program
The CFPB announced it will place 60 financial coaches in various organizations around the country. The coaches will deal with all financial areas, particularly where they believe people are financially underserved or vulnerable. You will likely encounter someone coached by these people which should be interesting. It took some searching, to figure out who will be directing these coaches. The coaches will be working under the direction of the CFPB but will be employees of a CFPB contractor with salary and benefits. 


New Companies Dominate Ginnie Mae
Ted Tozer, Ginnie Mae president, speaking the MBA’s Secondary Market Conference said that in 2010, new entrants to Ginnie Mae made up just 15 percent of issuers. In 2015, new entrants jumped to nearly 75 percent. Wells Fargo represented 34 percent of Ginnie Mae securities in 2011. In 2015, Wells had fallen to just 16 percent. With over 400 Ginnie issuers in place, Tozer says that reduces Ginnie’s systemic risk.


Something Every Member of Congress Should Approve
Sen. Mike Rounds (R-SD) is introducing a resolution to establish a permanent Joint Select Committee to develop a congressional review process for every economically significant agency rule before it is enacted. The resolution would also give recommendations to eliminate rules that are overly burdensome. While they are at it, they should be considering amending the Administrative Practices Act.


Banks Send Letter to Senate Banking Saying It’s Time to Work Together
The four major bank trade association sent a letter to Senators Shelby and Brown pleading for both sides to come together.  They believe banking regulation is “suffocating” and immediate relief is essential for community banks.  While this letter is just for banks, it is likely everyone in the lending business could sign on for some relief.


New FHA Handbook Online, Training Available Anytime
You can now view and search the new FHA handbook online. Also, FHA announced the availability of a new series of pre-recorded training modules that address the bulk of the Single Family Housing policies that mortgagees will use for origination through obtaining an FHA insurance endorsement for Title II forward mortgages. Even if you are a seasoned originator, you may want to review the upcoming changes to the FHA Handbook.


Moody's Says Investors Leary of Buying Mortgage Securities
Moody's says investors in mortgage securities can be held liable for origination errors under the new TRID rule. It is still unclear how extensive that liability will be. Moody's says it will have to be determined by courts.  This is yet another blow to the private mortgage securities market and anyone buying mortgages. You can be certain origination will be even more closely monitored under TRID.


Dodd Says Dodd-Frank Won’t Stop Next Crisis
In an interview with ThinkAdvisor, Chris Dodd admitted that his namesake law will not prevent the next financial crisis. Dodd said, “This bill does not stop the next crisis. It will happen. The question is can you minimize the impact?” Dodd also admitted the bill has flaws, “I didn’t write the Ten Commandments here. I wrote a bill, and I never met a perfect one in the 36 years that I sat in Congress. I don’t care if a bill is a page long; I promise you there are things that you didn’t get exactly right.” Regarding Congressional oversight Dodd said, “The role of oversight in Congress is [to assess if laws are] working the way that you intended them to. Are there unintended consequences? There’s nothing startling about that.”


The Dumb Department: Was there a full moon this week?

Zillow Says Small Loans Cost More
Zillow released the results of a study that showed small loans paid a higher percentage of closing costs per dollar than large loans. No doubt someone was paid a lot of money to find out what every loan originator has learned within months of being in the business.  It takes as much work and fixed overhead to originate and service a $100,000 loan as it does a $400,000 loan. When you buy the giant size at the supermarket it costs less per ounce. Perhaps if we paid clerks the same wages as doctors this problem would go away. Then everyone could have a $400,000 loan.


Appraisals in Illinois Come to Dead Stop
The state of Illinois revoked the licenses of 70 of the 165 Appraisal Management Companies (AMCs) in that state last week. The result was many appraisals could not be accepted by licensed appraisers. It appears the AMCs didn’t send in a bond required by the state. It created such a firestorm that the state decided to reinstate all AMCs while it gets sorted out.


Bid Now, Find Out if You Can Afford it Later
Hubzu, an online real estate marketplace owned by Altisource, is encouraging buyers to bid on homes and worry about financing later. That used to be the way real estate agents did things until too many deals fell through. The first stop for any home buyer should be the mortgage originator, even before they start looking for a house. Of course this could be a crafty way to try to get the loan by making certain people don’t see an originator first. After all, it’s not their house they are selling.


Mortgage Bankers Believe Bilked by Phony Warehouse Scheme
Rob Chrisman reports a company is offering warehouse deals that seem too good to be true from unsuspecting mortgage companies. A person heard from a warehouse provider that one of their customers has sent $60,000 to Monarch Financial and now can't get anyone on the phone. Monarch Financial Corp. is offering very unrealistic rates of L+1.75% lines with a floor of 2% and $25 per file. Their Web site is www.monarchfinco.com.


FHFA Proposes Way to Set Loan Limits
The Federal Housing Finance Agency is taking input on how it measures changes in home prices when setting crucial limits on the size of home loans Fannie Mae and Freddie Mac can finance, according to a proposal published today.


Rate Outlook
Fannie Mae, Freddie Mac and MBA are all predicting a September Fed rate hike. The prediction is that rates will continue to rise this quarter to slightly over four percent. They believe the 30-year fixed will go to the mid fours by year end and above five percent in 2016. Interestingly, they don’t think this will hamper the housing recovery. That is about 40 percent higher interest cost than earlier this year plus rising home prices. Interesting economics.

The minutes of April’s Fed meeting, released after the standard three-week delay, revealed most Fed officials “thought it unlikely that the data available by June would provide sufficient confirmation” that there has been stronger growth. That means a hike in June is unlikely. But, the Fed also said they could change their opinion with a moment’s notice.


Lots of Economic News Today …
Jobless claims came in at 274K and continuing claims, at 2,211K. Economists’ expectations were for claims to print at 270K and continuing claims at 2,250K so that data was near expectations.

The Philly Fed survey was weak, printing at 6.7 vs. the expected 8.0.

But, leading economic indicators rose 0.7 percent vs. the expected increase of 0.3 percent which was not bond friendly.

Finally, existing home sales were lower than expected at 5.04M vs. the expected 5.24M units.

Rates started the morning with about a 3/8 point gain but seem to be giving some of that back at this time. Overall, the trend is upward for mortgage rates.

Published
May 21, 2015