Jun. 29, 2012: Mortgage IT job; macro tax implications of refinancing; investor updates including Fifth Third's cutting off NY
Rob Chrisman
The
popular press has latched on to the "The average U.S. rate on
the 30-year fixed mortgage stayed this week at the lowest level
on record" story. (In fact, the lack of volatility recently
prompted one trader to note, “This market is harder to move than
Joan River’s eyebrows.”) But through my travels and e-mails, my
belief is that mortgage bankers, Realtors, and others in the
"inside", for lack of a better term, couldn't care less. Lenders
are
all too busy trying to have pipelines close, deal with
underwriters auditing files seven days a week, allocating
scarce personnel, padding profit margins to slow volumes, and
buying lunches for their hard working staffs on the last
business day of June. Unfortunately it represents yet
another divergence in the public's perception of our business
versus what is really happening - few loans are "slam dunks."
Here's a quick thought that someone should mention to the U.S.
Government: with billions of dollars of loans being refinanced
every month, borrowers are lowering their monthly payments by
paying less interest. And if they're paying less in interest,
they can deduct less on their annual taxes, right? Which means
that, for a given income, a person's tax liability goes up,
right? So not only is the government making a killing on the
interest it is earning from mortgage backed securities, but
perhaps the government stands to make even more by people
paying more in taxes. For more in-depth reading, check out
http://pfr.sagepub.com/content/40/3/339
- I guess the government can use the added revenue to fund the
CFPB's expansion.
I
have been retained by a leading independent mortgage banker
who is looking to further strengthen its executive team with a
Chief Information Officer.
The mortgage banker, headquartered in the intermountain west
with a large national footprint and expected fundings this year
of $4 billion, has an immediate opportunity for the right
candidate who has a demonstrated ability to interpret technology
and market trends as a foundation for technology and product
roadmaps with application development and support, quality
assurance and business intelligence. The person should also be
an innovator with a deep understanding of the mortgage business
and best-of-breed technology solutions to develop systems that
are uniquely suited to meet the needs of our company, and extend
our technology advantage in the marketplace. The successful
candidate will have a strong background in business solutions
and change management, building high-performing teams and
practical experience in software development and vendor
management. If you know someone interested, please have them
send their resume to me at rchrisman@robchrisman.com.
The
MBA in New Jersey had a “town meeting” this week focused on the
impact of the CFPB and yes, non-depository mortgage companies
should listen up. “Under the Dodd-Frank legislation that
is currently being implemented bit by bit over the financial
services industry, the impacts will likely be most acutely
realized during the first field audit of non-depository mortgage
companies by the CFPB.” Ballard Spar’s Richard Andreano
noted the Anti-Steering provisions of Dodd-Frank apply to all
creditors, including depositories and non-depositories. While
this has everything to do with LO comp, it also has implications
for Fair Lending and TILA compliance and opens the door for
future litigation by adding penalties which include actual
damages, treble damages, costs, and attorney’s fees.
Additionally, the already extended 3 year statute of limitations
is waived completely for borrowers who go into foreclosure,
prompting Mr. Andreano to inform the audience of mortgage
lenders, bankers and brokers that “they need to start
documenting how the borrower reached a loan product decision,
and to retain that documentation in the file as part of a future
defense. This will likely come up in every future foreclosure
defense case”. When asked if “steering” can happen prior to an
application for a loan, such as during the initial fee worksheet
or sales process, he responded with an emphatic yes, and added
“no one, but for a few large banks, is even thinking about
this”. The implication being that they should be.
Marketing/advertising and sales practices are squarely within
the CFPB’s sights – attention that should help motivate mortgage
execs to think about the compliance aspects of these practices
and the technology that supports them.
On
the good side of things, MERS had yet another in a long
string of legal victories. A district judge in Florida
ruled this week in favor of MERS, dismissing a recording fee
suit. In Fuller v. MERS, Judge Schlesinger dismissed with
prejudice a six-count claim seeking relief under the provisions
of Florida’s Recording Statutes and alleging civil conspiracy,
unjust enrichment and fraud. Judge Schlesinger found that “MERS
has not committed an unlawful act, or a lawful act by unlawful
means,” saying, “First, this Court must be clear that the
recording of mortgage assignments, under Florida law, is at the
complete discretion of the party wishing to record the
document.” “This is the second significant and precedent-setting
decision for MERS in fee recording suits. Not only did Judge
Schlesinger determine MERS is lawful, he also noted that the
county clerk lacks standing to sue or collect damages from MERS
– as was also recently ruled in Kentucky,” said Janis Smith,
MERSCORP’s Vice President for Corporate Communications. “Recording the mortgage in
MERS’ name in the land records fulfills the purpose of the
recording statutes,” added Smith.
Here
are some somewhat recent investor updates, providing a
flavor for the environment. They just don’t stop. As always, it
is best to read the actual bulletin.
Fifth
Third’s
Wholesale and Correspondent Lending Groups,
effective July 1, announced to clients, “Due to recent changes
in the Mortgage Lending licensing requirements for the state of
New York, Fifth Third Mortgage Company will discontinue mortgage
lending for properties located in the state. No new applications
or registrations will be accepted after midnight eastern
standard time, Sunday July 1. Any existing or new registration
or applications in the Fifth Third pipeline prior to midnight
eastern standard time Sunday July 1, 2012 will be honored.”
In
Ohio, Westfield Bancorp will acquire Western Reserve Bancorp
for $18 million and pay off about $5 million in Western’s TARP.
Upon noticing an increase in errors when submitting
documentation, US Bank issued a reminder about Note and
Truth in Lending requirements. Note errors such as listing an
incorrect change date or margin, using the wrong index, and
discrepancies between the late fee on the Note and the late fee
in the documentation all decrease a loan’s chances of being
eligible for purchase. Putting down the wrong late fee can
result in a Fair Lending violation. Common Truth in Lending
mistakes to avoid include incorrect Note, disbursement, and one
month prior to payment dates for ARM programs where the first
change occurs after 60 months; using the wrong change date in
the “Maximum Ever” column; incorrect margins; and inaccurate
mortgage insurance or escrows.
Following the announcement that MERS registry would require the
ORG ID as of June 4th, Flagstar will be using the
Originating ORG ID Exception for transactions where it is
generating the MIN number and the originator closes in their own
name. Flagstar will continue this practice until July 5, 2012,
by which time all clients should have provided their ORG IDs by
emailing their confirmation and Flagstar Bank Lender ID to brokerdelegatee@flagstar.com.
Flagstar reminds clients that it will not purchase FHA loans
from DE Delegated Correspondents if the escrow balance was
deducted from the principal balance on the payoff statement
and/or listed in the 100 or 200 sections of the HUD-1 Settlement
statement as a credit. This applies to FHA loans that closed on
or after May 1, 2012.
Out on the West Coast Pinnacle rolled out its 30-year
fixed rate VA Jumbo loans, which are available for amounts less
than $1 million for purchase and cash-out refinances. The down
payment must be at least 25% of the purchase price or
Notification of Value, whichever is less, and borrowers must
have a minimum credit score of 660, no bankruptcies or
foreclosures within the past seven years, and no housing lates
in the past 12 months in order to qualify. A number of topics in
the PCM Guidelines have been clarified and updated, including
the sections on conforming and conforming high balance loans,
enhanced DU Refi Plus loans, HomePath loans, Good Neighbor Next
Door guidance, Pinnacle Plus products, the condo-PUD matrix and
questionnaire, and the PCM Mortgage Clause. The sections on
FHA, VA, and USDA loans have also been updated.
Everbank has increased the maximum LTV on 15-year fixed
rate DU Refi Plus loans to unlimited, effective for conforming
and high balance loans. A Property Field Waiver is needed for
15-year fixed rate loans with LTVs over 100%.
The Kinecta Wholesale Lock Policy, which allows any lock
that has expired to be re-locked for 30 days using either the
original lock date pricing less 50 basis points or current
market pricing, whichever is lower. Locks that have expired or
been cancelled by Kinecta or the originator are eligible for
current market pricing 45 days after the cancellation or lock
expiration date, whichever is longer, and locks re-locked within
the 45 days from the expiration or cancellation date are subject
to all prior extension fees.
Turning
to the markets, we’re still driven by Europe. Snoop Dogg was
detained in Norway after arriving with large amounts of pot and
cash, and Fox News reported that “European Leaders Reject
American Stimulus Package.” (Haha.) Thursday’s volumes were
below average, with the usual folks selling and the usual folks
buying (including the Fed with its usual $1.2 billion per day
– what will happen to agency product when it stops?). MBS
prices finished better by about .250 and our 10-yr T-note
finished better by about .375 (1.58%).
But
that was “so yesterday.” Overnight the markets received a “short
in the arm” as the EU surprised the world with some new
measures: it will propose a single bank supervisor, after which
euro-zone banks will have direct access to the ESM. This should
reduce the pressure on sovereign debt of Spain and Italy. Today
we’ve had Personal Income & Consumption. Respectively
expected +0.2 and unchanged respectively, that is exactly where
they came in.
Later
we’ll have the Chicago PMI (expected slightly higher) and the
final reading of Michigan Sentiment (called unchanged). With
the news from Europe rates are higher today, with 10-yr at
1.65% and MBS prices lower/worse by about .250.
Romney
Blasts Supreme Court, Calling Healthcare Act 'Worst Idea I Ever
Had'
Vows to Repeal Own Law
WASHINGTON – Just
minutes after the Supreme Court upheld President Obama’s
Affordable Care Act, Republican presidential nominee Mitt Romney
slammed the Court, calling the law “the worst idea I ever had.”
“I vow to repeal this law on my first day in office,” he told a
crowd at a campaign rally. “Until then, I will work tirelessly
to make people forget that I used to totally love it.”
At the White House, President Obama greeted the news of the
Court’s decision in muted fashion: “I haven’t been this pumped
since I smoked bin Laden.”
Dissenters in the 5-4 decision included Justice Antonin Scalia,
who wrote, “The only medical procedures the government should
pay for are exorcisms.”
Senate Minority Leader Mitch McConnell also had harsh words for
the healthcare law, telling reporters, “Under Obamacare, you
will be forced to marry a gay doctor.”
But perhaps the most negative appraisal came from Speaker of the
House John Boehner: "This is a dark day for America. If we are
forced to have healthcare, it's only a matter of time before we
have education."
(Thank
you to the Borowitz Report for this one.)
If
you're interested, visit my twice-a-month blog at the STRATMOR
Group web site located at www.stratmorgroup.com.
The current blog discusses the issue of the Freddie Mac &
Bank of America buybacks, and its potential impact on the
industry. If you have both the time and inclination, make a
comment on what I have written, or on other comments so that
folks can learn what's going on out there from the other
readers.
