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News From NAMB: November 25, 2015

John Councilman
Nov 25, 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

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National Columnist Pans New FHA Rules for Condos
The most widely distributed real estate columnist, Ken Harney, says, “There’s more sizzle than red meat.”  Harney says the reforms don't address the key reasons why so many condo associations are no longer certified. The reforms outlined in Mortgagee Letter 2015-27 will keep a few more condos certified but little more than that. In prior years, as many as 90,000 condo loans were made. That number has shrunk to 22,800 last year making up only 2.8 percent of total FHA loan volume. The pressure is mounting to bring back spot condo loans and remove some of the rules that don’t affect loan performance.

FHFA Fails to Raise Conforming Loan Limit
Fannie Mae and Freddie Mac are stuck at $417,000 for 2016 despite soaring home prices. Despite a 5.7% annual gain, the Federal Housing Finance Agency decided to raise a few selected areas rather than increase the conforming limit.  Several counties around Nashville, TN were one of the few increases. Must be a country music fan at FHFA.

New York Revokes New Day Financial License
New York took the action because “Its C-Suite and other senior managers engaged in a widespread scheme to cheat on state-required continuing education courses and exams. New Day’s Chief Executive Officer had continuing education requirements completed on his behalf by other employees on at least eighteen occasions.” Incredibly, New Day’s parent corporation rehired two of the former senior managers who had been dismissed to resolve the problems. NYDFS warned this, “will not be tolerated in New York.” New Day will pay a $1 million penalty to New York State NYDFS and surrender its mortgage banker’s license.

Senate Still Toying With Using Fannie to Fund Highways
Congress is searching everywhere to find some money to fund highway construction and repair. Even though the House overwhelmingly defeated using G-fees to fund highways, the Senate has not decided to do so. You should contact your senator and tell them we don’t want Fannie Mae fees used to fund the transportation bill. Our thanks to Senator Mike Crapo of Idaho for leading that fight. If you live in Idaho, call his office and thank him.

Is Google Going to Replace Mortgage Originators?
Google has just launched Google Compare, a site that lets you shop for your mortgage online.  So far, it is only available in California where Google has obtained a mortgage broker license. Some say it will be the death of mortgage brokers and individual originators. In reality, it is nothing more than a merge of Zillow and Lending Tree. As you can see from the graph taken from its home page, the rates cited bear little semblance to typical reality. The graph also points out the huge weaknesses in TILA’s advertising rules that the CFPB has not corrected. This site is no more likely to eliminate human mortgage originators than WebMD eliminated doctors.

CNBC Says TRID Scare Was Like Year 2K
While people had predicted a near-shutdown of mortgages when TRID went into effect; it didn’t happen. According to Campbell Surveys, home sales that closed on time as well as total average closing times for all loan types showed, "no clear trend" across loan types. The total average closing time including delays for most loan types stayed relatively level or showed only a slight increase between September and October, according to the survey. MBA president Dave Stevens thinks "Closings are faster because they [borrowers] have read all the forms."

Quicken Introduces the 8-Minute Mortgage Approval
Dubbed the “Rocket Mortgage,” Quicken loans announced a new online mortgage process that it claims will give a borrower a full approval in eight minutes. According to Quicken, the site has options to compare and customize interest rates, mortgage terms, monthly payments and fees based on individualized financial information and goals.

Little Fees Net Big Fine
Prospect Mortgage was fined and required to refund fees to the tune of $10.1 million dollars for collecting $202.50 in settlement service fees from each borrower, which exceeded the actual cost of the services by an average of $37.50. The fees were charged by an appraisal affiliate named C2C Appraisal Services or were performed by Prospect employees. An audit showed Prospect failed to disclose properly and failed to maintain adequately documented loan files, according to the agreement. Just in case you would like to see CSBS’ multi-state exam manual here is the link.

CHLA: End Conservatorship of GSEs
The Community Home Lenders Association, a group of non-bank lenders, is always very vocal about its positions.  The CHLA’s latest position urges FHFA to end the GSE’s conservatorship.  They argue that taking all of the proceeds of Fannie and Freddie, leaving them with no reserves, will most assuredly cause them to need a bailout.  An elementary school child knows that if you get your allowance cutoff, you will soon not be able to buy candy.  Of course, that appears to be what the current administration wants to spur action on the GSEs.

Shocking Figures on Mortgages
If someone asked you, “Are people borrowing more mortgage money than during the mortgage crisis?” you would intuitively answer, “Yes.”  The truth is there is less mortgage money outstanding on homes than in 2011.  People may be buying a lot of homes and they are refinancing but there is actually $300 billion dollars less mortgage debt outstanding on homes than there was in 2011. The Wall Street Journal claims people are not borrowing on their homes, despite the rise in equity, which is partly slowing the economy.

Senator Warns Don’t Put Dodd/Frank Reform in Budget
The ranking Democrat on the Senate Financial Services Appropriations Subcommittee warned that he will fight any attempts to roll back Dodd/Frank in the budget process. Many times legislation that can’t get the 60 votes needed to pass in the Senate are attached to must-pass appropriations bills. There will be a lot of social agendas and well as business-supported items that will be attached to the budget. We shall see how many make it.  Jacob Lew, the secretary of the Treasury, sends the same warning. “I have publicly made clear that my recommendation to the president would be that if there are legislative measures that will roll back the clock that would take us back toward where we were before the financial crisis, I would recommend a veto.”

Are You Saving Money With NAMB-Plus?
NAMB members can find great service providers and save money too at You’ll find everything from lead generation companies to coaches to compliance providers. These are all quality companies and most offer discounts to NAMB members. Using just one provider could easily pay for your annual NAMB membership.

FHFA Says Lenders Don’t Understand Guidelines
The Federal Housing Finance Agency's Acting Deputy Director of Conservatorship Bob Ryan said Fannie and Freddie’s ‘credit box” is just fine to give full access to credit. Ryan says the underwriting guidelines are not the issue. He claims the problem is that lenders don’t understand the guidelines well enough to use the full box for fear of buybacks. So, FHFA is working on a process that would allow for independent reviews of disputes between lenders and Fannie Mae and Freddie Mac over loan defects. FHA believes these reviews would resolve the "back and forth" when Fannie and Freddie try to get a lender to buy back faulty mortgages.

Financial Protection Bureau
CFPB examiners will start looking at the racial impact of "underwriting criteria" for business loans, not just loans to consumers. The White House and the Congressional Black Caucus have pushed the CFPB to make certain minorities and woman are getting the same terms as other borrowers. The auditors will be collecting data for disparate impact claims. Business lenders claim this could destabilize their business since business loans are inherently more risky than consumer loans.

CFPB Sizes Up Its Target’s Will to Fight
When the CFPB went after Ally Bank for discrimination, internal documents show it took the action based on Ally’s desire to fight. "Some of the claims being made in this case present issues ... that would pose litigation risks,” CFPB staff members wrote in a 2013 memo addressed to Richard Cordray. CFPB officials noted in the same 23-page document that Ally would settle rather than litigate. “Ally may have a powerful incentive to settle the entire matter quickly without engaging in protracted litigation,” the agency's lawyers wrote, stating that Ally wanted approval to become a holding company to keep its insurance subsidiaries.

Banks Holding Mortgages in Portfolio at Risk
Couched in the news that banks are doing very well financially since legal fees have died down, was a warning from the FDIC. "While the banking industry had another positive quarter, there are signs of growing interest-rate risk and credit risk that warrant attention." A four percent mortgage looks great when you are paying one percent on deposits.  It is not so great if you are paying 3%.

Rate Outlook
Federal Reserve Vice Chairman Stanley Fischer says, "While we continue to scrutinize incoming data, and no final decisions have been made, we have done everything we can to avoid surprising the markets and governments when we move, to the extent that several emerging market central bankers have, for some time, been telling the Fed to "just do it."

The minutes last month revealed most Fed officials said they expected economic conditions "could well be met" to raise rates in December. That seems to be sufficient warning to expect the hike.  The only questions remaining are how much and how often.

Mortgage rates have taken a yawn approach to the Fed lately. There has been lots of economic news this week, all has been pretty much as expected; slow, steady growth. Gross domestic product was up 2.1%, in line with expectations, up a total of 2.8% from a year ago.  Spending was up .1%, less than the expected .3%.  PCE, one the key indexes watched by the Fed, was unchanged.  Jobless claims were 260K, staying in the 250 to 300K range.  Michigan U consumer sentiment was down a little at 91.3 vs. the expected 93.  New home sales were 495K.  Analysts were expecting 500K.

So far, the read is that consumers are still a bit skittish.  They aren’t spending a lot of money, they aren’t borrowing a lot on their homes, and their sentiment is guarded.



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].


Nov 25, 2015