CMLA Proposals; Bad Reverse Mortgage Press; Lots of Training Updates
Yesterday the commentary mentioned a question, "Rob, how can I gear up my consumer direct division to go after purchase business?" I received this note from an LO in Virginia: "What kind of answer did this person expect? His business model was based on going after the low hanging fruit (refis) for the past few years and after one bad month of rate movement he expects to turn on a light switch and purchase business will fall on his lap? How about you break it to him, you need to build solid Realtor relationships through marketing daily and then back it up with service and knowledge. He also needs to compete with those loan officers who saw the writing on the wall and have been building up a purchase referral base while the mortgage dot com companies were chasing refi business and paying their loan officers like garbage. Best of luck to his consumer direct division."
What is the daily commentary without a little legal chatter? The Community Mortgage Lenders of America (CMLA) announced that it had introduced a "Section by Section analysis of the Community Mortgage Lenders Act of 2013 and an actual copy of the Bill." (This coincides with the 2nd Annual CMLA Washington Fly In that is taking place at the Washington Hilton and as appropriate throughout the District.) "The attached represents the signature work of the Association is support of its missions and to the best of my knowledge, no one else has strategically approached relief efforts for the small to mid-sized community lender." It addresses streamlining excessive regulations, asking for an exemption for Basel III requirements for small banks and mortgage loans, secondary mortgage market assurances, limited CFPB examination authority, Safe Act exemption, disparate impact, and so on. If you are interested in seeing the CMLA's proposals, you can write to me, or to Kevin M. Cuff, Executive Director, at kmcuff@thecmla.com.
The Federal Deposit Insurance Corporation (FDIC) announced settlements with First California Bank (FCB), Westlake Village, California, and Achieve Financial Services, LLP (Achieve), Austin, Texas, for unfair and deceptive practices in violation of Section 5 of the Federal Trade Commission Act (Section 5) and violations of the Treasury Rule, 31 C.F.R. § 210, governing the use of the Automated Clearing House system to deliver federal benefit payments to prepaid debit cards. Under the settlements, each entity has agreed to a Consent Order, Order for Restitution, and Order to Pay Civil Money Penalty (collectively, Orders). Achieve and FCB have agreed to provide restitution of approximately $1.1 million to over 64,000 cardholders. In addition, the FDIC has assessed civil money penalties of $600,000 against FCB and $110,000 against Achieve. The FDIC determined that Achieve and FCB engaged in unfair and deceptive practices in violation of Section 5 in the marketing and servicing of the AchieveCard, a prepaid, reloadable MasterCard.
With the finalization of the CFPB rules implementation approaching in 2014, many lenders are looking for guidance in navigating the swirl of new regulations that burden even the strongest compliance teams. The CFPB recently announced fines of $5,000 per day per violation, $25,000 for a known violation and up to $1M for reckless violations. The key to avoiding and mitigating hefty fines is understanding and preparing for the new rules. Regulators are still defining these rules and enforcement activities. For example, while the framework established on May 23, 2013 between the CSBS and the CFPB was intended to coordinate Federal and State consumer protection supervision and enforcement, uncertainty is still in the wind as many State regulators and State AG's are hesitant to exercise authority under Dodd Frank to enforce Federal Consumer financial laws.
The CFPB announced they are increasing their capacity to conduct examinations of financial institutions and non-banks. Companies need to scale their compliance functions, and there are companies out there to assist. As an example, ISGN offers a "cost effective option through a shared services model that brings expertise to lenders where and when they need it most. ISGN's CFBP Mock Audit assists these institutions in preparing for the CFPB exam, providing fair lending analysis and a review of policies, procedures and practices to identify internal compliance related deficiencies." To learn more about the CFPB Mock Audit, email Page Caldwell at sales@isgn.com. (And no, this is not a paid ad.)
Those poor seniors...and those poor reverse mortgage companies. While reverse mortgages can be a big help to seniors as they head into retirement, a new report from the National Center for Policy Analysis (NCPA) says recent trends show trouble in the market that may cost taxpayers billions of dollars. "One major problem, the group notes, is that borrowers are now applying for reverse mortgages at earlier ages. According to a 2012 MetLife survey, the average borrower is now 71.5 years old; however, one in five borrowers are between the ages of 62-64, putting them at the low end on the eligibility range. Moreover, two-thirds of borrowers are now using reverse mortgages to pay down debt, including conventional mortgage debt.
"Approximately 84 percent of borrowers under the age of 70 have some kind of debt to pay; 72 percent are dealing with mortgage debt (with or without other debts). About 62 percent of borrowers age 70 and older had mortgage debt with which to contend. In addition, the MetLife survey found that one-third of homeowners using reverse mortgages have a mortgage balance that is at least half of their home value." An audit of 15 lenders performed by the Government Accountability Office (GAO) found that none of the audited firms covered all of the required topics, and seven did not offer up any information on other, less complicated financial products.
Let's play a little catch up with recent MI, investor, bank, and training updates. As always, it is best to read the full bulletin - but these will give you a flavor for what is going on out there.
United Guaranty has revised a number of underwriting requirements and clarified the annual renewal premium calculations for HARP modifications. The changes affect the sections on DU and LP recommendations, the ineligibility matrix, additional documentation for Agency AUS-underwritten loans, high bal and Jumbo loan amounts, HFA loans using expanded requirements, balloon mortgages, construction-to-permanent loans, DU Refi Plus and Relief Refinance loans, buy-out refinances, acceptable sources of funds, disaster relief grants, valid credit scores, bankruptcy, short refinances, authorized user accounts, debts paid by businesses, condos, co-ops, and mixed use properties as they pertain to the Performance Premium Full-File and RAP guidelines. The clarification of the annual renewal premium calculations for HARP modifications states that, if the loan being modified is already in the 11th year, the annual renewal premium remains at that same rate for the remainder of the terms, while the premium schedule restarts if the coverage has not yet entered the 11th year.
HomeTrust Bancshares has signed an agreement whereby it will acquire BankGreenville in a merger approved unanimously both companies' Boards of Directors. Following the merger, which is scheduled to close in Q3 of 2011, the combined company with have $1.7 billion in assets.
Sterling Financial Corporation has announced that its principal operating subsidiary, Sterling Savings Bank, will acquire Commerce National Bank for cash consideration of $15.10 per common share. The transaction, which expands Sterling's current footprint in Southern California, is valued at approximately $42.9 million.
BFC Financial and BBX Capital (formerly BankAtlantic Bancorp) have entered into an agreement in which the latter will become a wholly owned subsidiary of the former. The transaction will be consummated after all conditions to closing under the initial agreement are satisfied and will combine BFC's consolidated assets of $1.5 billion with BBX's $470.7 million.
As a reminder, Fannie Mae Is presenting a webinar on the changes to its updated post-purchase review process as it pertains to the new rep and warrant framework on June 6th. Details and registration links are available HERE.
Fannie Mae is offering a "Beyond Approve/Eligible: Interpreting the DU Underwriting Findings Report" web training on June 11th. The course will go over potential red flag messages, verification messages, approval conditions, and non-traditional underwriting scenarios. Register HERE.
The Mortgage Bankers Association of New Jersey and the New Jersey Association of Mortgage Bankers will be holding a "Day with the Department of Banking and Insurance" on July 10th in Iselin, NJ. The event will feature reps from the DOBI who will speak on the latest New Jersey licensing developments, amendments to the RMLA, education and testing, and a variety of other regulatory issues. Register HERE.
On June 11th, the FHA will be holding an underwriting guidelines webinar with a focus on credit, income, and asset documentation; calculations, and best practices when qualifying borrowers. This is the first of a three-part series on credit, income, and asset guidelines, the last two trainings for which will be held on July 16th and August 13th. The FHA will also host an on-site training in Chicago in late July. Register for the June 11th training HERE.
The FHA, in conjunction with HUD, will provide a webinar on underwriting FHA mortgages on June 12th. The training will provide an overview of manual underwriting, what causes a file to require it, and automatic and discretionary downgrades. Get registration info HERE.
The FHA will be offering an on-site training in Salt Lake City, UT on June 26th that will cover a variety of topical issues, including insuring and eligibility, maximum mortgage calculations, refinances, REO properties, and income and asset scenarios. Find out more and to register HERE, or email denverhoc-pudtraining@hud.gov.
The following day, the FHA is hosting an appraisal training workshop to go over inspection requirements, frequently asked questions, and the 50 most common appraisal review deficiencies. Registration links are available HERE.
Tuesday the markets did a lot, but on the surface appeared to do not much at all. Very few price changes went out as current coupon MBS prices finished the day worse by less than .125 and the 10-yr ended at 2.14%.
The two things to watch today are the ADP Employment which provides a potential preview of Friday's jobs report from the BLS, and the Fed's Beige Book which will provide the FOMC with a picture of the U.S. economy in preparation for its June 18-19 meeting. Both reports could cause significant market volatility as participants gauge what it might mean for when the Fed could begin tapering its asset purchases. Besides that we'll have the Mortgage Bankers Association's mortgage application indexes (w/e 5/31) at 7AM (are anyone's locks stronger?), final Q1 productivity and unit labor costs (expected unchanged at +0.7 percent and +0.5 percent, respectively), and Factory Orders for April, and ISM non-manufacturing (May), which is projected slightly higher to 53.5 from 53.1.