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News From NAMB: September 10, 2015

John Councilman
Sep 10, 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)
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Three percent cap legislation not getting enough co-sponsors
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 3% 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!

Think twice before issuing loan estimate, fines are huge
Many companies think the Loan Estimate is not such a big deal for compliance. From what we see in the CFPB’s instructions, that may not be the case. The CFPB is so insistent that everything be perfect, that so much as not putting a curve on the reversed headings can be a violation. A lot of what goes on the form is counter intuitive. You have to be very careful what a triggering event is for the payment table and what is not. Actual dates are not allowed in some places and rounding has its own strange nuances. Ranges are allowed and not allowed, depending on various parameters. I wonder how many compliance people are in total agreement on implementation. The penalties start at $5,000 per day and are $25,000 per day for reckless behavior. We won’t even talk about the $1 million per day.

Are liar loans back?
One would think that there would be no residential loans that would be made that do not require proof of income according to the Ability-to-Repay Rule set out by the CFPB. There are clear standards in that rule as to how income is to be verified. However, non-owner-occupied residential properties are not covered by TILA and do not require proof of income. It appears some borrowers are purchasing homes as investment properties that they eventually intend to live in.

What is the government hiding in the FannieGate suits?
The Treasury Department has fought tooth and nail for the public not to know the details of how they took over Fannie Mae and Freddie Mac. The companies suing Treasury have uncovered secret memos that they are using in their suit. The New York Times wanted those memos and documents to be opened to the public. Treasury fought it and the judge went along with them. There have been accusations that Treasury knew that they didn’t need to seize the GSEs and did so only as a cash cow for government coffers.

Do we really understand how the CFPB will enforce TRID?
The consensus among industry leaders is that we still don’t know what the CFPB really wants and how they plan to enforce TRID.  Supposedly, the CFPB will be “sensitive” to those making a good faith effort to comply, whatever that means.  We don’t know when that sensitive period ends.  Does anyone know what “best information reasonably available” really means?  What is “Good Faith?”  How far do you have to dig to give an acceptable Loan Estimate?  NAMB and other trade groups are calling on the CFPB to be more specific.

Last week to 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.

The conference has over 2,700 registrants so far, a new record. It is going to be huge!

Poll says consumers not thrilled with CFPB
A recent Zogby poll found that only 19 percent of Americans had even heard of the CFPB. While most consumers liked the idea of someone protecting them from being cheated, they were not fond of many other CFPB policies. Seventy-one percent believed that a consumer has the responsibility to determine whether to take out a loan if the terms are clearly presented. Most were worried about the CFPB’s vast information gathering and its security.

TRID does not accurately show title insurance
The American Land Title Association (ALTA) has pointed out to the CFPB that the split of owner vs. lender title insurance is not accurate. This can be significant in some states and be misleading to consumers. It will be interesting to see how splits of other costs are handled over time.

Are NMLS fees too high?
A writer for the Orange County Register thinks so. Jeff Lazerson points out that the NMLS is raking in record profits thanks to its congressionally granted monopoly. The registry now has $82 million dollars in accrued profits at the end of 2014 and the future looks limitless. The article points out that California’s cost of licensing has doubled since they joined the registry which he attributes to the cumbersome interface to the registry. Apparently, there is no one the registry answers to for such things as salaries and other spending.

The line continues to blur on mini-correspondents
A major supplier of warehouse lines of credit, Texas Capital Bank, is opening a correspondent lending division to complement its warehouse lending. Although it is certain that the warehouse lines may be used for other lenders, the independence of the warehouse line becomes blurred as lenders wear both hats.

Pot growers need hard money loans
There is a ton of money flowing in recently legalized marijuana markets. The problem is that growing pot is still illegal under federal law even though a few states have legalized it. Banks don’t want to lend to growers and sellers and you can’t count illegal income for any QM-type loan. So, it looks like hard-money lenders are cleaning up on great loans.

Non-banks face more regulation than banks
The Community Home Lenders Association has compiled a comparison of banks vs. non-banks. The association points out, line by line, how banks escape some regulations while non-banks are forced to comply with all mortgage compliance regulations imposed upon banks plus some. Because banks accept deposits, they are required to have certain other requirements which are not related to mortgage compliance.

Rate Outlook
The international economy still seems to be giving uncertainty to the American economy. This has pushed down rates a little but not as much as one would expect from the drop in the stock market which has dropped nearly 2,000 points on the DOW.

It is little wonder lenders are not lowering rates with all of the uncertainty out there.  Adding to the mix is the President now saying he will shut down the government if he doesn’t get a spending limit raise.

The 10-year Treasury auction yesterday had strong demand which should have pushed rates lower. Jobless claims remain stubbornly stuck near 300,000.  We are all waiting to see if the Fed raises short-term rates at its meeting next week. Former Treasury Secretary Larry Summers is now on record opposing a September hike. September still remains a good time frame for the hike since that meeting also contains the Fed’s Summary of Economic Projections.


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].


Sep 10, 2015