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News From NAMB: October 1, 2015

John Councilman
Oct 01, 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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UWM has the lowest BPMI rates in the country!
Think all MI is created equal? Think again. UWM has the lowest BPMI (Borrower Paid Mortgage Insurance) rates in the country. They’ve also decreased MI adjustments and eliminated both the High-Balance Adjustment and the Rate/Term Adjustment. You can also check out their lender-paid PMI on three percent down. This is a great alternative that beats FHA. Isn’t it time you started working with UWM?

Are we really ready for TRID?
I hear people saying, “Let’s just get it started. We are as ready as we will ever be.” That may be true but that doesn’t mean we are ready. There will undoubtedly be errors and mistakes and disagreements on compliance. Calyx Software just released its final TRID version this week and Wolters Kluwer, the gold standard of forms, found it had left something out on the forms this week as well. MBA says a third of its members surveyed said they are not ready. Next week will be interesting, but not half as interesting as when the loans taken next week move to closing.

Democrat co-sponsors needed to get the three percent cap removed
HR 3393 would remove lender comp from the QM points and fees cap. The CFPB had said in its LO Comp Rule that this was warranted but needed legislation to make the change. If you would like the three percent Dodd/Frank cap, which is really 2.75 percent, the ball is in your court. You will need to take the step of contacting your representative and ask them to sign on as a co-sponsor to help lower-income borrowers. This year, these representatives are looking to get re-elected and will at least listen. If you are unsure how to do this, contact NAMB at [email protected]. Without more co-sponsors this legislation will not move. We are told originators and brokers are not contacting their representatives asking for them to cosponsor the legislation. It is time to act!

House Committee passes bill to make CFPB run by Commission
A bill introduced by Rep. Randy Neugebauer, HR 1266, that would replace the CFPB Director with a commission composed of both Democrats and Republicans, passed out of Committee. The interesting part is that is what was originally proposed by Elizabeth Warren and the Obama Administration. The argument against having a sole director is the CFPB will always have a target on its back as long it has a Democrat appointed Director and aligns primarily with Democrats. Apparently, this argument resulted in two Democrats, Krysten Sinema and David Scott cosponsoring the bill.

Cordray says TRID will have grace period ... kind of
In his testimony before the House Financial Services Committee, Richard Cordray said, “There is obviously a lot of angst around it and people are trying to make their systems work. We have said, and we're working now to provide written guidance on this, and we're working with the other agencies so we all provide the same written guidance on this, that for some period of months—and I'm not going to be specific about it; it might be longer—there will be a diagnostic approach to this. Nobody believes that the market participants are trying to abuse consumers here. They're just trying to change their systems and get it right. It will be diagnostic and corrective, not punitive, and there will be time for them to get it right and not have to be perfect on the first day."

Cordray said he is “pushing hard” to put out a formal announcement by Oct. 3rd. Hedging his bets like a true politician, Cordray also said, “I don't think it's appropriate for me to say I won't enforce the law when my job is to enforce the law," Meanwhile, the House is set to vote on a bill next week that would delay TRID enforcement for real.

The more you dig into the Loan Estimate, the worse it gets
Filling out the Loan Estimate looks pretty easy a first blush. But, when you look at the CFPB’s minutia instructions, it’s a different story. This week, we have the word “Estimate.” One would wonder why that would be a big deal. It appears everything is a big deal for the CFPB. They claim in the Final Rule that you must follow capitalization rules and everything on the Loan Estimate must exactly match the Closing Disclosure. Of course, that must not apply to the CFPB. They use the word “est.” in the rule but on the forms, it shows as “EST.” Better yet, on the Loan Estimate, it shows as “EST. PROP.VALUE” while on the Closing Disclosure it is “Estimated Prop. Value.” Even funnier, are their comments that the Rule says to use the word “Estimated," but you are supposed to follow what is on the forms if it is different. This is the very worst case of “Do what I say, not what I do.” If the CFPB can’t keep it straight, how can they expect mortgage companies to comply? This would be normally just silliness except some class-action lawyers could make millions off these trivial conflicts.

Justice Department priority is mortgage discrimination
In its latest press release, the DOJ said, “The Justice Department continues to focus on discriminatory conduct in mortgage lending.” Deputy Assistant Attorney General for Civil Rights Greg Friel said on a call with reporters, that lending discrimination is "a priority focus" for DOJ. Friel said, "We're going to actively pursue these, and we have several active investigations." DOJ said they will not only look at redlining but also at pricing disparities.

NAMB National is less than 20 days away!
NAMB National in Las Vegas happens Oct. 17-19. Every year, this conference grows by leaps and bounds. With several weeks left to go, over 2,700 mortgage professionals have registered. You’ll be able to talk to top managers at your wholesale lenders, see the latest technology, learn how to comply with the changes in regulations and so much more. Plus, there will huge prizes galore. Big screen TVs, tablets, a professional drone, trips, and more There will be parties everywhere and free entertainment. Come get your continuing education at the same time. It will be awesome!

Two new things you must do besides give the TRID LE Form
If you don’t yet have the replacement for the Settlement Cost booklets, you need to get them ASAP. They must be mailed or delivered to the consumer within three days of application by the creditor or the mortgage broker. The second important thing you must do is make certain you have the CFPB wording at the top of anything that contains some of the information found in the Loan Estimate. You must put in at least 12-point text at the top of the form “Your actual rate, payment, and costs could be higher. Get an official Loan Estimate before choosing a loan.” If your document is provided prior to the Loan Estimate and even just a payment or any other cost term is in it, it must contain that disclaimer.

Mat Ishbia hits the media again supporting mortgage brokers
Last week, we featured an appearance by United Wholesale CEO Mat Ishbia, demolishing a bank representative on BankRate. Mat is kind of like a one-man army. He has taken it as his mission to tell the public why they should be using a mortgage broker. This week, Mat appeared on Fox News Business Channel. He makes strong arguments why people should use a broker. You’ll get to hear Mat speak at NAMB National. He will energize you. Wouldn’t it be great to hear more wholesale lenders taking our message to the public?

Loan originators make good money
In a survey of wages, found that a mortgage originator with seven years of experience and a bachelor’s degree earns $95,804/year. The average LO only earns $42,250 because of lack of years in the business and a degree. The average U.S. salary with a college degree is $77,806/year. The top salary spot with a bachelors goes to nuclear engineers at $168,000.

Homeownership rate still declining
Why is this so important to loan originators? If people don’t buy homes, they don’t get a mortgage. There will be no refinance. Freddie Mac showed some interesting charts that show the greatest increase in debt is student loans. But before we throw the blame there, most student debt is less than $50,000 and college grads make a lot more. Could it be that people just don’t want to go through the grueling process of getting a mortgage?

Realtor death warning to those who meet clients alone
The man accused of killing Arkansas Realtor, Beverly Carter, said the reason he chose her is that she worked alone. Carter’s professional picture showed she was an attractive woman whom the suspect lured to show a vacant house. Loan originators often post pictures and take applications at locations that may put them at risk. You would do well to heed the steps for safety Realtors are urging their members to take.

Rate outlook
There won’t be a government shutdown, at least not for a few months. The House voted 277-151 for a two-month stop-gap spending bill that will temporarily avoid a government shutdown. The Senate had already passed the bill 78-20. The bill will keep the government funded through Dec. 11 and will be readily signed by President Barack Obama.

Just as seemingly certain as the Fed raising rates, everyone believes mortgages rates will be considerably higher in 2016. Freddie Mac, whose market survey sets the standard, reports a current interest rate of 3.9 percent with a projection for 2016 of 4.8 percent. That is a 25 percent increase in payment which could price a lot of people out of the market if it is correct.

Rates are in a holding pattern for the moment with slight bounces every day. It looks like inflation is still very tame with the PCE earlier this week showing zero percent inflation. Jobs gains were moderate and unemployment claims are stuck in the same range. Look for rates to be within a tight trading range for a little while.


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].


Oct 01, 2015