"I bought a really cool shovel. It was ground breaking." What isn't so clever is the "borrower brutalization," as one veteran called it, that we see. He wrote, "I have been through two purchase transactions in the last twelve months, both with an extremely competent originator. She did a great job specifically of guiding me through the paper trail process, and explaining the SAR issues she faces. It was really crazy. I, like many others, believe that the fear of making a mistake at all levels of the credit process is really crippling to the industry and to the housing recovery. Whoever is making the rules is far away from the actual process and I am certain that well qualified borrowers are not able to participate in the intended QE3 stimulus of low mortgage rates. Someone should get the Keynesian stimulus guys at the Fed together with those in Congress who are pushing for more documentation - they appear at cross purposes." [Editor’s note: I agree with the “crippling to the industry” comment but the “housing recovery” seems to be doing pretty well. And continued mention of rising values in the press, which is what regulators and politicians see, does not help the argument.]

And now, briefly, back to the broker and banker discussion. "I have seen a lot of back and forth between bankers and brokers in your blogs.  Among other things, I man the scenario help desk for our company, so I work with our salespeople on both brokered and banked loans.  One thing I can honestly say is that the service level provided to the client is entirely based on the individual salesperson and is not contingent on the company they work for, outside of whether they have received the proper training at some point in their career.  I think the SAFE Act has ensured that all salespeople, brokered or banked, now receive an adequate base of training in order to get licensed, which wasn’t the case before.  Those who are trained beyond this base (or seek it out themselves) are usually the top salespeople.  I’d bet that most who read your blog (or any industry blog) probably value knowledge enough to seek out professional education when needed.  It turns out that knowing your salesperson, or having a reference to someone who is trustworthy is probably the best way to go as a consumer. As for the level of service a salesperson gets from the lender, I think there is some truth to the idea that a banker will get faster underwriting and closing times, but not everywhere.  Most of our salespeople here will refer a loan away if it needs to be brokered due to an extra 3 weeks in underwriting at another lender (our total turn time is about 45 days, application to closing).  However, my friend recently closed his refinance with a Wells Fargo branch (he knows the MLO, personally) right around day 100, so not every lender is faster.  Correspondent lenders typically tend to be the fastest because their entire revenue model is dependent on turning over the pipeline as efficiently (not necessarily quickly) as possible."

Regardless of who employs the originator, as the commentary pointed out a week or two ago education is key. I received this note from Justin L. out in California. "The reason why I am e-mailing you is because I agree 100% about how 'A successful LO is educating their clients on what to expect with today’s current situation in the Lending Industry.' I created a binder with pictures, examples, explanations, definitions, and bullet points on how a loan works, what is the secondary mortgage market, and what to expect while going through the loan process about four months ago. (I am new to this industry having only been licensed in NMLS for six months.) The reason I agree with this position is simple. I accept the responsibility that I think is inherent to this profession and I refuse to hide behind the old mantra, 'Well, the consumer should have known what they were getting themselves into.' My responsibility to my clients is to educate, the end result is they secure a loan to buy a part of the American Dream. (I feel a better educated borrower is a more responsible borrower.) If I did my job, then my client and their family will have a home that not only they can call their own, but they will be able to afford their monthly mortgage payment and stop living paycheck to paycheck. My attitude towards my profession stems from my experience as a US Army Recruiter. It was my duty for almost four years to help shape the lives of very young Americans in a way that they and their families would benefit from the experience for the rest of their lives and never have any regrets about their decision."

And, "I especially liked the comments on setting expectations with borrowers and realtors in today lending environment. Unfortunately borrowers and most Realtors don't remember anything you tell them at the beginning of the transaction and are STILL surprised when you become their proctologist. I always follow up my conversation with an email reiterating the conversation and freely forward it back to them later in the transaction as a 'friendly' reminder."

Thank you for the input, and now on to the ever-present agency news. As always, it is best to read the actual bulletin for full details.

We’ve mentioned this before, but as a reminder the VA has published its 2013 county loan limits, which apply to all loans closed from January 1 to December 31, 2013. Out in California, for example, all counties apart from Alameda, Contra Costa, Los Angeles, Marin, Mono, Monterey, Napa, Orange, San Benito, San Diego, San Francisco, San Luis Obispo, San Mateo, Santa Barbara, Santa Clara, Santa Cruz, Sonoma, and Ventura Counties in California are subject to a limit of $417,000. Here is an itemized list: http://www.benefits.va.gov/HOMELOANS/documents/docs/2013_county_loan_limits.pdf.

Freddie Mac is revising its guidelines on Verbal Verification of Employment for employed borrowers and business existence verification for self-employed borrowers.  These are both required to be completed by a third-party source where applicable after the note date but prior to the loan delivery date.  Lenders are also required to represent and the warrant that all purchase document requirements have been fulfilled as of the delivery date, as Freddie will not consider the loan eligible for purchase otherwise.

As was announced back in November, the expiration date for the Relief Refinance Mortgage program will now be based on the date on which the loan’s application was received rather than the note date.  Relief Refinance Mortgages are still slated to expire on December 31, 2013.
Freddie is also updating requirements for secondary financing documentation to provide more flexibility when documenting terms, fees and costs, and evidence of subordination of secondary financing to the first lien.  The Seller Guide has been updated to clarify that all requirements relating to secondary financing apply to all financing subordinate in lien priority to the first priority.

As part of the FHFA’s Uniform Mortgage Data Program initiative, the GSEs have published the Phase 2 specification for the Uniform Loan Data Delivery Dataset.  The specification consists of 19 data points, 15 of which were optional under Phase 1 and one of which was optional for Fannie but Conditionally Required for Freddie.  The entire Phase 2 specification will be mandatory for all loans whose applications are received on or after March 1, 2014.  For full details, see the ULDD Phase 2 Notification from the Fannie website.  The Uniform Mortgage Servicing Dataset Overview and January 2013 DU Release Notes have also been published and are now available on the site.

In the continuing effort to provide relief in the wake of Hurricane Sandy, Freddie has established several temporary disaster policy guidelines.  Properties in affected areas with borrowers who were delinquent before the disaster will need to be re-inspected, which will replace the next regularly scheduled monthly exterior property inspection.  Properties with current borrowers are also required to have their exteriors inspected.  With regards to reimbursement for inspection costs, the servicer will be reimbursed up to $20 per delinquent borrower’s property inspection and up to $10 per current borrower’s exterior inspection. For borrowers transitioning from forbearance to trial period plans, servicers must determine whether or not their financial circumstances continue to be adversely affected by the hurricane based on a property inspection and verbal confirmation from the borrower.  Based on the findings, servicers may offer the borrower a new HAMP or Standard Modification Trial Period Plan or obtain an updated Borrower Response Package to re-evaluate eligibility for either of those options.

Fannie Mae has published four “Quick Guides” for those who seeking additional information about the Uniform Loan Delivery Dataset, all of which are available on the ULDD website here

https://www.fanniemae.com/content/job_aid/uldd-quick-guide-schedule-mortgages-mbs.pdf;jsessionidÅ 635E1E121CA952F5E6BAC49B38D5AF.cportal-cl03.

And the most recent guides cover mapping data on Loan Delivery reports for whole loans and MBS pools and MBS and Cash Loan Schedule of Mortgages. The DU Version 9.0 FAQ has also been updated and can be found at

https://www.fanniemae.com/singlefamily/desktop-underwriter.

These are actual comments made by South Carolina Troopers that were taken off their car videos:

1. "You know, stop lights don't come any redder than the one you just went through."
2. "Relax, the handcuffs are tight because they're new. They'll stretch after you wear them a while."
3. "If you take your hands off the car, I'll make your birth certificate a worthless document."
4. "If you run, you'll only go to jail tired."
5. "Can you run faster than 1200 feet per second? Because that's the speed of the bullet that'll be chasing you."
6. "You don't know how fast you were going? I guess that means I can write anything I want to on the ticket, huh?"
7. "Yes, sir, you can talk to the shift supervisor, but I don't think it will help. Oh, did I mention that I'm the shift supervisor?"
8. "Warning! You want a warning? O.K, I'm warning you not to do that again or I'll give you another ticket."
9. "The answer to this last question will determine whether you are drunk or not. Was Mickey Mouse a cat or a dog?"
10. "Fair? You want me to be fair? Listen, fair is a place where you go to ride on rides, eat cotton candy and corn dogs and step in monkey poop."
11. "Yeah, we have a quota. Two more tickets and my wife gets a toaster oven."
12. "In God we trust; all others we run through NCIC." (National Crime Information Center)
13. "Just how big were those 'two beers' you say you had?"
14. "No sir, we don't have quotas anymore. We used to, but now we're allowed to write as many tickets as we can."
15. "I'm glad to hear that the Chief (of Police) is a personal friend of yours. So you know someone who can post your bail."
AND THE WINNER IS....
16. "You didn't think we give pretty women tickets? You're right, we don't. Sign here."
 

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 role of the IRS and REMIC’s in the current credit crisis. 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.

Rob