QM Rules Released by CFPB this Week? Good News on Basel III; More Mortgage Jobs

Hey, I like commercial real estate just as much as the next guy, but it seems that the GAO (Government Accountability Office), in its "Causes and Consequences of Recent Bank Failures," reports that commercial real estate was the cause of most small bank failures. Brokered deposits were also mentioned.  [READ: GAO Study Finds Small Bank Failures have Minimal Impact on Community]

After completing its 25th quarter of consecutive revenue growth, LoanSifter has a solid trajectory in product & pricing technology and is looking for experienced Account Executives, Business Development Managers, and Technical Sales Support staff to help propel even faster growth in 2013.   With a comprehensive suite of secondary marketing, originator and consumer-facing technology, these individuals would have the opportunity to not only leverage relationships and experience, but also stay on the cutting edge of mortgage technology, with capacity to focus on a broad range of opportunities, from mortgage companies to banks & credit unions.  National and regional positions are available.  For more information, please contact Mark Coupland, VP of Business Development at Mark@LoanSifter .com.

On Q Financial is looking for a Sales Manager to expand its Direct-to-Consumer Business. On Q (onqfinancial .com), a private mortgage lending firm headquartered in Scottsdale, AZ, and is experiencing significant growth throughout the US. The Sales Manager will be responsible for the management of significant growth strategies over the next 5 years, recruiting and training.  Requirements include 5 years sales management experience in centralized mortgage origination business, strong management, problem-solving, communication skills, and results oriented. Candidates should forward their resumes to john.bergman@onqfinancial .com.

January is proving to be a newsy/volatile month for the industry. Last week we had the delay in truly resolving the fiscal cliff, the Fed minutes discussing residential MBS purchases, and then the unemployment data. Still ahead of us this month are the releases of six key mortgage rules currently being finalized by the CFPB, including the "ability to repay" QM rule. These decisions will put mortgage issues squarely in the spotlight and usher in a year focused on implementation before the rules take effect. The Bureau of Consumer Financial Protection (CFPB) recently announced that they will hold two field hearings in January, one in Baltimore on the 10th and one in Atlanta on the 17th, on forthcoming Dodd-Frank final rules. There is speculation that the January 10th hearing will discuss the Qualified Mortgage rule and the January 17th hearing the forthcoming servicing rules, but nothing has been confirmed by the CFPB at this time. How much time will the industry have to change policies, procedures, and underwriting guidelines? "Not enough" is the wrong answer, nor is, "But they're big and have an IT department and we don't," but lenders and investors would like a year. More

The Dodd-Frank Act mandates that regulators publish the following final rules no later than January 21, 2013: Ability to Repay/Qualified Mortgage (QM); HOEPA/High Cost Mortgage; Loan Originator Compensation and Qualification; Servicing Standards; Escrow Accounts; ECOA Appraisal Notice; and Appraisals for Higher Risk Mortgages. Furthermore, the MBA is expecting several additional final or proposed rules later in 2013, including: Risk Retention/Qualified Residential Mortgage (QRM); RESPA-TILA Disclosure Integration; HUD Disparate Impact Enforcement Standards; Anti-Steering; Basel III Capital Standards; and Expanded HMDA Reporting Rule.

Pssst - wanna buy some servicing? If you've got some coin, and can elbow your way past Ocwen, Nationstar, and Walter Investment, you too can have a seat at the Bank of America $300 billion servicing sale table.

It seems Bank of America is really trying to move ahead. "Bank of America today announced agreements with Fannie Mae to resolve outstanding and potential repurchase and certain other claims relating to the origination, sale and delivery of substantially all residential mortgage loans originated and sold directly to Fannie Mae from January 1, 2000 through December 31, 2008 by entities related to Countrywide Financial Corporation (legacy Countrywide) and Bank of America, National Association (BANA)."  [READ: Bank of America to Pay Fannie Mae $3.6B to Resolve Repurchase Issues]

And we've had news, generally viewed as good for U.S. banks involved in residential mortgage lending, about Basel III. It seems that good quality RMBS (residential mortgage backed securities) will be included in the liquidity buffer for banks!  The Financial Times reports that, "regulators announced that the first ever global liquidity standards would be less onerous than expected and not be fully enforced until 2019, four years later than expected...the final rule approved by the supervisors of the Basel Committee on Banking Supervision is significantly more flexible than the draft version put forward more than two years ago. Banks will be able to count a much wider variety of liquid assets towards their buffers, including some equities and high-quality mortgage-backed securities. The calculation methods have also been changed in ways that will significantly reduce the total size of the liquidity buffers many institutions have to hold against outflows from possible depositor runs and corporate and interbank credit lines.  More

Apparently late last week there was a problem with the VA site with regards to privacy and functionality (http://vip.vba.va.gov). It issued a new registration statement, reproduced here in its entirety, for users: "Lender Registration Instructions for the Veterans Information Portal (VIP). Before you begin, have ready: Lender (or agent) identification number, Social Security Number, E-mail address, home address and telephone number. 1. Click on "User Registration".  (Located on the left-hand side of the screen.) 2. Next, choose "No" when asked if you are a veteran inquiring about benefits.  Select "VA Affiliate". 3. The next two screens require your personal information and your contact information.  All items with an asterisk (*) are required to be completed. 4. On the "Login Security Information" screen, you will create your user ID and password. a. The login must be at least eight characters long, start with a letter, only have numbers and letters, and contain no spaces b. The password must be at least eight characters long, must contain at least one capital letter, one lower-case letter, and one number OR special character (i.e. @#$). On this screen you will also be asked to answer five security questions.  The answers you provide to these questions will be used to retrieve a forgotten password or ID. 5. The next screen asks for your organization type.  Choose "VA Affiliate".  You will also be asked for your business email (if it is different than the email provided in step 3). 6. The "Community Subscription" page requires your "VA Affiliation".  Please choose "Lender."  You will then need to provide your VA lender ID number and PIN (usually the last four digits of your ID number). Agents will need to choose "lender" in order to obtain access to the same programs as your sponsoring lenders.  Please do not choose "other requester". 7.  Read and accept the terms and conditions, then click "submit" to complete the registration."

Turning to the markets, was last week's volatility really warranted? Some traders on Wall Street suggest that these lower dollar prices (higher rates) have created an attractive entry point for investors looking for yield. "And, given that Feb thru March will be characterized by high headline risk due to the cliff and thus a likely risk off environment, so getting in down here probably makes sense."

After the release of the Fed's minutes, and the information on residential MBS purchases lasting through 2013 caused the markets to move, David Zervos with Jefferies wisely observed, "...In April of last year 'several participants' saw a rise in the funds rate by NOW. Of course we all know what happened. The hawks were steamrolled - in September the FOMC announced $40 billion in additional MBS purchases and in December they unveiled QEuntil6.5. Quite a "miss" on the projection for these several (or is it a few) participants. Also its worth noting that back in April 2012, just a mere 9 months ago, six members saw a higher funds rate by the end of 2013 - with two members up at a lofty 1.75 percent. Oh how the mighty have fallen. So fast forward to the release of the supposedly 'hawkish' minutes as the market went into a full scale freak out on the following statement: 'In considering the outlook for the labor market and the broader economy, a few members expressed the view that ongoing asset purchases would likely be warranted until about the end of 2013, while a few others emphasized the need for considerable policy accommodation but did not state a specific time frame or total for purchases. Several others thought that it would probably be appropriate to slow or to stop purchases well before the end of 2013, citing concerns about financial stability or the size of the balance sheet. One member viewed any additional purchases as unwarranted.'"

Mr. Zervos continued, "Is that a material change? Absolutely NOT. This little Fed minutes freak-out is ridiculous. Four days ago the US economy was supposedly on the brink of meltdown - a 3.6 percent smack down to GDP was within spitting distance of pushing us over a cliff. Recessions were being forecast by all the usual suspects and clouds of gloom hung over the risk asset complex. But it was a false alarm. Surprise, surprise Armageddon didn't arrive - AGAIN. Somehow this market just is not happy unless is has something to flip out about. In fact, since 2009 the market can't seem to get through a couple of hours of trading without some new reason to fear Armageddon - Greece, fiscal cliffs, Spain, flash crashes, Italy, global warming, China, Arab springs, North Korea, debt ceilings and the nauseating list goes on! So just a few days into our new year "cliftoff", we found a new worry for all the Chicken Littles - Fed tightening....PULLEASE."

This week is incredibly light on the economic calendar with the scheduled data releases expected to have a minimal effect on financial markets. We don't have much until Thursday's Initial Jobless Claims, and then on Friday International Trade will update levels and trends in the overall trade balance. So far this morning we're unchanged from Friday's close with the 10-yr sitting at 1.91% at agency MBS prices also near the closing levels.


 A circus owner runs an ad for a lion tamer and two people show up.
One is a retired banker in his late sixties and the other is a gorgeous blond in her mid-twenties.
The circus owner tells them, "I'm not going to sugar coat it. This is one ferocious lion. He ate my last tamer, so you two had better be good or you're history. Here's your equipment --chair, whip and a gun. Who wants to try out first?"
The girl says, "I'll go first." She walks past the chair, the whip, and the gun, and steps right into the lion's cage.
The lion starts to snarl and pant and begins to charge her. About halfway there, she throws open her coat revealing her beautiful naked body.
The lion stops dead in his tracks, sheepishly crawls up to her and starts licking her feet and ankles. He continues to lick and kiss her entire body for several minutes and then rests his head at her feet.
The circus owner's jaw is on the floor. He says, "I've never seen a display like that in my life." He then turns to the retired golfer and asks, "Can you top that?"
The tough old banker replies, "No problem, just get that lion out of there."