Enjoy access to a free NMLS renewal class when you attend an in-person event.
NAMB President’s Message: July 2016
Support HR 3393
HR 3393 is the House Bill to benefit smaller loan amounts, and to a larger degree, low income and minority borrowers. All too often, smaller loan amount borrowers find lenders unwilling to work on their loans due to the three percent loan originator compensation limit. This effect is magnified for small business entities that broker loans and must include the entire amount paid by the investor to the business in the three percent calculation putting them on uneven ground with banking institutions which have no such requirement. Banking institutions can earn additional funds by increasing the rate and earning more compensation in the service release/rebate portion of the transaction that is unavailable to the small business entities acting in a broker transaction. These limits on compensation make it hard for investors and originators to make enough money on these transactions to counter the substantial risk of working with small loan amounts and typically lower incomes. These low income-borrowers are forced to go to depositories where they end up paying substantially higher rates than they would in a mortgage originated by small businesses. If the borrowers do not meet the bank requirements, they often have no alternative.
Borrowers with lower valued homes, even if free and clear from liens, have virtually no options available due to the strict liability on owner-occupied transactions that make these loans high risk low return due to regulations. Wholesale lenders will set minimum loan amounts, as do most private money and non-QM lenders. Many times these lower income borrowers are the ones most in need of non-traditional/non QM loan products, but are also the most severe risk to lenders for non-compliance issues. A homeowner with a free and clear home looking for a home loan to keep up the property, get a new roof or plumbing must meet traditional banking guidelines to find a loan. Often times, these borrowers are immigrants or lower-income borrowers who do not have banking relationships or credit scores to the depositories’ guidelines.
HR 3393 will remove the compensation from the lender to the business from the three percent LO compensation calculation. All that will be included is the compensation earned by the individual loan originator, still meeting the intentions of the LO compensation rule. This will enable the small business company in a brokered transaction to cover more of their costs and compete with larger banking institutions on equal footing. This will make many more products available to smaller loan amounts and minority borrowers.
The CFPB has agreed in principle that this probably should be done and will help these borrowers, but since it is a modification of the Dodd-Frank Act, they prefer the solution come from the legislature. NAMB is working to make the issue easily understandable how including this compensation from the lender is effectively double-counting the compensation as it is already reflected in the interest rate the consumer receives.
NAMB needs you to call and write your congressional representatives and let them know to support HR 3393 and its companion bill in the Senate. This legislation will not completely correct the problems of lower loan borrowers, but is an important step to helping those who are served best by small business originators, willing to go the extra step to help these unbanked, lower income borrowers.
The CEO Perspective
A Message From NAMB CEO Donald J. Frommeyer
As we come to this time of the year, NAMB is changing and moving forward. By the time you read this, NAMB will have elected its new board of directors and will have held their planning session for the coming year, 2016-2017. Fred Kreger is going to be the new president, and Fred will be setting his sights on again moving the association forward. I do not have any inside information, but Fred will have already chosen his new Committee Chairs and will have informed the board of what items he would like to see happen this year. At the same time, we say goodbye to John Councilman who has served on the board for several years and he joins the ranks of the many presidents who have come before him and moves away from the board. Rocke Andrews will serve this year as immediate past president as he also moves away from a fun-filled and very busy year as NAMB president.
All of these changes will take place in Las Vegas on Sept. 26 at NAMB National at the Luxor. So while you are reading this, get on your computer and register for the event, make you hotel reservations and get your plane ticket. You are not going to want to miss this great event.
It looks like we have settled on Atlanta as the host town for NAMB East next March. More information will be forthcoming on the event over the next few months. As you all know, last year’s event was in Hilton Head and the committee has listened to your suggestions and concerns. This again will be about the originators so stay tuned to what we will have in store for you.
NAMB is still looking for members to join and be part of our committees. This is the easiest way for you to get involved and help your organization succeed. That is how I started and it really opened up my eyes as to why we need an association and what it does for you as a member. It is not like it was in the past. You don’t have to fly everywhere to be at a meeting. Most of all committee meetings are held via conference call or Webinar, so there is really no excuse for you not to be involved. Yes, it may take an hour or two out of you day, but in this age of technology, you can attend by using your phone or computer. So what’s holding you back? Send an e-mail to [email protected] and we will get you together with the committee chair and get you involved.
So do your part and become a participating member of NAMB, not a member just sitting on the sidelines.
Donald J. Frommeyer, CRMS is chief executive officer for NAMB—The Association of Mortgage Professionals. He may be reached by e-mail at [email protected].
The Greatest Credit Change Since the FICO Score
By Dave Luna
Trended credit data reports will be going live Sept. 26, 2016. With Fannie Mae’s implementation of DU 10.0, trended credit data will now be required. I have been doing Webinars with MGIC for the past few months talking about the changes that will go into play in September.
Here is a little bit of history.
TransUnion started working with Fannie Mae in November of 2013 with the new formatted credit reports. The credit reports have up to nine additional data sets and can be presented in 11 different formats. TransUnion’s proprietary Trended Data (TD) Credit Vision has been in use for years, undergoing testing with Fannie Mae for almost three years, the rollout was to occur in June, but got pushed back to September due to testing.
What is trended credit data? It shows what a borrower is actually paying on their debts instead of if the borrower paid on their own debt. This information would show if a borrower is trending towards being a less risky borrower. Fannie Mae uses this information to underwrite a file, and the likelihood of the borrower defaulting in the future due to the borrower’s “trend.”
The DU 10.0 rollout initially will only look at the last 24 months of revolving credit card debt. Trended data is available for all types of credit (installment, revolving, student loans, auto, mortgages, HELOCs), but the last 24 months of credit card history is what DU 10.0 will analyze. Could the other non-revolving debts be included in future DU releases? Perhaps, but it won’t be in 2016 and may not be in 2017.
All credit reporting companies have been providing the Trended Data (TD) reports since April 1, 2016. If you do not see trended credit data on your reports, please contact your credit provider to have them “turn on” your trended credit data, that way you will see exactly what Fannie Mae will receive. This additional information will not come to you for free, please be aware that when trended credit data goes live with DU 10.0, your credit report costs will increase. As I’ve traveled the country and interviewed thousands of you, I’ve come to the consensus that the average price increase will range between $1.50 to $3 per report on top of what you are currently paying.
DU 10.0 will look specifically at revolving credit cards. You may ask, what does revolving credit card information have to do with mortgages? That is why Fannie Mae is making the change. On Sept. 26, revolving credit card information could be an indicator of possible mortgage loan defaults. Something important to note, only two of the big three credit bureaus have a trended credit data product available for the Sept. 26 release. Experian, the user of FICO scores, will NOT have a trended credit data product available for the Sept. 26 release. So, will the use of Rapid Rescore products be used in the future? I’ve been asked this question countless times; the answer is, wasn’t Rapid Rescore used to correct errors in a borrower’s credit report? Rapid Rescore should NOT, unless there was an error, create 24 months of history. I’ve also been asked; what types of loans will not be affected by trended credit data. Will Freddie Mac and FHA/VA go to a trended credit data solution? For now, they won’t, however, in the future they may. Trended Data Credit reports will be for all mortgage products, even though Fannie Mae will be the only one using them in September.
In the Webinars that we did with MGIC, I’d like to go over the frequently asked questions. One of the many questions we received was, if a borrower shows that they’re paying a larger than normal payment on their credit card, would that payment be used for qualification purposes. Great question, the answer? No, because the borrower is only required to make the minimum payment.
Q: Will FICO Scores be changing with the new TD?
A: No, it does not appear so at this time.
Q: How does TD look at the borrower paying down debt to qualify?
A: The borrower will not be able to change what they have paid over the last 24 months. We can see what their trend is and see that the trend if for the borrower to have the debt they recently paid off.
Q: Will the process for ordering and receiving credit reports be changing?
A: No, the process of ordering and receiving credit reports will not change.
Q: What if a borrower disputes trended credit data, is there a vehicle for disputes?
A: Yes, the credit repositories will have the capacity to accept trended data consumer disputes. These disputes like all others should be directed to your provider and they will contact the credit repositories on behalf of your consumer.
Q: What if I need to take an Adverse Action based on trended data?
A: Adverse Actions and the required disclosures should all remain exactly the same when taking adverse action that comes from trended data.
Q: Will borrowers with no credit scores be able to get a loan through DU 10.0?
A: They may if borrowers have at least two trade-lines with one being housing and the other a non-traditional trade-line with at least a 24-month rating.
Q: What type of trade lines will have trended data included?
A: Only revolving credit will have trended information.
Q: What will the credit report look like with trended data?
A: Today there are 11 different formats. Each revolving account will include an additional line of information which displays a 24-month history of balance, scheduled payment and actual payment information.
Q: Will trended credit data affect FHA and/or VA loans?
A: The introduction of trended data will not impact FHA or VA applications to DU, and will only include such historical data on revolving credit card accounts for the most recent 24 months of payment history.
There will be other changes in DU 10.0 we only touched on Trended Data. For answers to other questions by Fannie Mae, visit FannieMae.com/Content/FAQ/DO-DU-Release-06252016-FAQs.pdf.
David Luna has more than 35 years of experience in the mortgage lending industry. He is president of Mortgage Educators and Compliance, an NMLS-approved education provider, and is a member of the NAMB board of directors. He can be reached by phone at (801) 676-2520 or e-mail [email protected].
Setting Goals: Reaching the Summit of Success
By Linda McCoy, CRMS
Setting goals and achieving them is how we succeed in life. I am proud to say my son just climbed to the top of Mount Rainier this past week. I was so proud. He had trained by himself for about six months so he would be able to make it to the top. It was just something he wanted to do.
My daughter ran a full marathon in Vancouver a few years ago after months of training. They keep striving to be the best they can be at whatever they decide to do. They both said it was the hardest thing they had ever had to do. They set their goals and then figured out a way to achieve them.
I have set a goal to try and make NAMB’s convention in the East the best that it can be. NAMB’s Convention Committee has spent many hours trying to plan a way for originators to attend and absorb the information needed to get them to the next level on their way to the top as an originator. NAMB tries to give you new and exciting ideas with an ever-changing lineup of lenders to help you step-by-step so you can improve your business. We can plan the best convention in all the world, but if you do not attend, it will not help you.
I recently did a Google search for “What could you do fun at a mortgage broker convention?” NAMB National in Las Vegas came up first after a paid advertisement. That tells me something about NAMB. We are doing something right. I have been on that committee for a few years and feel we have a winning convention there. That is what I want in the East, a happy home for NAMB EAST … one that we all look forward to attending year after year. I think the Location we have chosen for 2017 will be a surprise and exciting for many and one you will not want to miss.
You need to set your goals and make NAMB EAST a part of your training to become a more successful loan originator. Be a winner! I hope it will be something you just want to do!
Linda McCoy, CRMS of Mortgage Team 1 Inc. in Mobile, Ala. is a member of the NAMB board of directors. She may be reached by phone at (251) 650-0805 or e-mail [email protected].
NAMB’s Education Corner: Education Resources
By Bob Sweeney, CRMS
NAMB’s Summer School Webinar Series is well underway. We have completed two excellent Webinars, presented by Bayview Loan Servicing and Freedom Mortgage. The following is the schedule of Webinars for July and August:
►Fannie Mae: Tuesday, July 26
►Maximum Acceleration: Thursday, July 28
►Guaranty Trust: Tuesday, Aug. 2
►Silver Hill Funding: Thursday, Aug. 4
►MobilityRE: Tuesday, Aug. 9
►NAMB HR 2121 Update: Thursday, Aug. 11
►First Funding: Tuesday, Aug. 23
►Land Home Financial Services: Thursday, Aug. 25
Please mark your calendars for 2:00 p.m. EST on theses dates. Registration e-mails will be sent to all NAMB members well in advance of each Webinar. Remember we only have seats for the first 1,000 registrants.
Mortgage education resources are everywhere. I just recently listened to a Webinar sponsored by a national wholesale lender and presented by Steve Richman of Genworth Mortgage Insurance. It was one of the most informative Webinars I have listened to in recent memory. I was so impressed that I contacted Genworth to see if Steve was available for NAMB National. Much to my surprise, he is already on the agenda to speak at NAMB National. Now you have an opportunity to hear Steve presenting the session, “Generational Marketing and the Millennial Mindset.”
Mortgage insurance companies are excellent resources for training. Arch MI, Essent, Genworth, MGIC and Radian to name a few, have extensive training sites for originators. Not only do they have printed material, but most have archived past Webinars and they have a calendar for future live Webinars and events. Please take advantage of these educational resources.
We welcome any input from all mortgage professionals on suggestions for educational opportunities. Please feel free to contact me by e-mail at [email protected]
If you are not a member of NAMB, now is a great time to become a member. Go to your state association Web site or visit NAMB.org to join as a Professional Member.
Bob Sweeney, CRMS is senior sales manager at CrossCountry Mortgage, is director on the board of directors for NAMB–The Association of Mortgage Professionals and serves as NAMB’s Education Committee Chair. He can be reached by phone at (317) 625-3287 or e-mail [email protected].
Getting to Know: Michelle Velez, CMC
Director, NAMB—The Association of Mortgage Professionals
By Phil Hall
This has been a somewhat tumultuous year for Michelle Velez, CMC. She was a sales manager at W.J. Bradley Mortgage Capital LLC—a position she held for slightly more than 18 months—when the company shut down in March. Mercifully, she was able to move to Supreme Lending, where she became a producing branch manager based in San Mateo, Calif. While changing jobs, she continued to be involved with NAMB—The Association of Mortgage Professionals as a director. She is also still active in the California Association of Mortgage Professionals (CAMP), where she served as president from 2014-2015.
National Mortgage Professional Magazine recently spoke with Michelle regarding her work in this industry.
How did you get into the mortgage profession? Was this your original career choice?
My original career choice was in journalism with a focus on public relations professional or an attorney. I started working in the industry doing finance and insurance in the mid-1980s. I was working at a finance company, but I progressed from that to the mortgage industry in 1994.
How did you first get involved locally with the California Association of Mortgage Professionals (CAMP)?
I originally joined CAMP in 2001. One of my co-workers was on the board of the San Francisco Peninsula Chapter of CAMP, and she talked about all the good that the association was doing. I attended meetings for many years and finally thought that I wanted to be part of it. In late 2007, I decided I wanted to start doing something for my peers. I contacted my friend and asked if there was an opportunity to serve on the Chapter’s board of directors. The only opening was as chair of the Government Affairs Committee. I remember being told, “It’s boring, but it is one of our most important positions.”
I served as the Government Affairs Chair for two years. From there, I was asked to be president of the San Francisco Peninsula Chapter. I served as president for two years. I also served as vice president of Government Affairs for CAMP for two years before becoming president of the statewide association in 2014. I served as president through June 2015 and just completed my term as immediate past president on June 30, 2016.
What do you see as your most satisfying achievements in your roles with CAMP?
When I was president of CAMP’s San Francisco Peninsula Chapter, we went from being a mid-sized chapter in the state to the largest chapter in the state. As chapter president, my mantra for years was “Bringing it back to basics.” But as state president, I wanted to bring back communication. I remember attending meetings or meeting people in the association who always said they didn’t know all that CAMP does for them. I wrote a weekly newsletter that went out to our members in which I talked about local events, changes to guidelines and upcoming issues. I will continue this tradition on a monthly basis under our new state president.
How did you first become involved with NAMB?
I attended NAMB’s Legislative & Regulatory Conference in D.C. 2009, when I was Government Affairs Chair for CAMP. That was my first NAMB conference. After that, I started volunteering for various NAMB committees and joined the Membership Committee. I was later asked to join the Diversity and Inclusion Committee.
What are your current duties with NAMB?
As a NAMB director, I serve on the Communications Committee, Membership Committee and I am currently vice chair of the Government Affairs Committee.
Why do you believe it is important for mortgage professionals to become involved with NAMB?
I feel that NAMB and the state associations are the loan originators’ only voice, especially when dealing with federal and state legislators and regulators. A lot of times, originators feel left out, with no one helping them or working for them. They don’t feel the big companies are fulfilling their need.
What can the industry do to attract more young people into mortgage careers?
NAMB is working with Ginger Bell, Morf Media’s senior vice president of e-learning, to start a young professional network for the mortgage industry. Several educators are helping with the creation of live and online classes. Though, perhaps more can be done—state and national associations could attend college employment fairs to talk about the industry.
We have to remember that many Millennials saw what their parents went through during the housing crisis, either with short sales or the loss of a house in foreclosure. And there is a train of thought among many young people that getting a mortgage is not a good thing. We need to get out there with education and talk about how homeownership is a great tool. For a while, our industry had bad name. We worked very hard to show that we are not the bad apples.
What is the housing market like in California?
It depends on what part of state you are in. I’m in San Mateo County and right now it is a hot market. There is serious overbidding on properties. But there is a growing problem with a new trend involving contracts that encourage people not to have contingencies. They should have the option for an out if want to get out of a deal.
What do you see as the near-term challenges for the mortgage profession?
It is a good time to be in the industry. I don’t see a whole lot of regulation coming down right now. I think rates for all products will be increasing shortly—if I were to worry about something, I worry about that.
What are the challenges facing Supreme Lending in today's market?
I’m very new with this company—I’ve only been with them for a few months. I don’t see them having challenges. My former company, W.J. Bradley, closed, and the biggest challenge with them were structured like a hedge fund company. Supreme Lending is totally the opposite—they are working on a mortgage banking platform. The owner of the company started out as a mortgage broker and he still has that small company mentality, which is very important. It is also important to me that this company supports NAMB.
Looking back on your career, what do you see as you greatest accomplishments?
Being the voice of consumer is one of my greatest accomplishments. That is probably the best thing I can do. I was also honored to be voted 2012 Broker of the Year by CAMP.
What are your near-term professional goals?
I would like to bring in three more loan originators to my team. I had a couple of setbacks this year due to my former company closing, but things are on track now and I would like increase personal production. I am also looking forward to the learning experience of being on the NAMB board.
Outside of work, how do you spend your leisure time?
I perform at the Northern California Renaissance Faire and the Great Dickens Christmas Faire. One of my favorite subjects in school was history and I’m able to reenact history through performing at these events through singing and acting. I play the trumpet and I am studying sword fighting. I’m an avid reader and enjoy a great mystery novel.
Phil Hall is managing editor of National Mortgage Professional Magazine. He may be reached by e-mail at [email protected].