Appraisal AIR Links; Last Week's CFPB Changes Including ATR/QM; Upcoming Training & Seminars
I am heading off to Indiana this morning, but still had time to catch this OCC release about a company to cheat consumers who are trying to rebuild their credit. And we wonder why the lending and financial services industry has such a black eye. The OCC sent out an alert telling banks to be on the look-out for the latest scam, and LOs should do the same.
A few weeks ago Forbes reported that JPMorgan Chase will cut up to 15k jobs in its mortgage unit by the end of 2014, as activity slows down and in an effort to save some about $3 billion per year. Other banks such as Wells Fargo have followed with cut backs. But Jeff Babcock with the STRATMOR Group, which among other things carries out peer group studies, chimed in, "With respect to refi applications falling below 50%, the independent lenders in the peer group originated 59% purchase business in 2011 and 52% in 2012. This compares with the midsize and large banks which were in the 30% - 35% range. To me, this shows that independent mortgage bankers have been consistently been working their referral sources during the refi and HARP boom while the banks lived off the easy refi business."
A reliable source writes, "I read with interest your story about recruiting LOs with compensation schemes the run afoul of regulations. We see these same recruiters pitching special appraisal operations as incentives. The pitch goes something like, 'If you join our organization as a net branch, you can have your preferred appraisers added to our panel of appraisers, which we manage internally (or through a captive AMC), and then when you send appraisal requests to us, we will send the appraisal orders to your hand picked panel.' This is clearly a violation of Appraisal Independence Requirements."
Brian from Arizona asks, "HVCC sunset a few years ago, yet most banks still seem to believe that they must continue to follow HVCC guidelines. Are there appraisal ordering rules in the new rules? Where can a person see those rules?" I turned to Mike Ousley, president and CEO of Direct Valuation Services, who replied, "There are two references to the replacement to HVCC. One is in Dodd-Frank, HR 4173-11, Subtitle F, Sec. 1473 (Appraisal Activities), - page down to section 1473. One can also find the CFPB's appraisal regulations from January 18 here."
For Fannie Mae's announcements, which most lenders use, visit this page. And one can visit Coester Valuation Management Services to answer more compliance questions on appraisals.
David Dunham with Integra Mortgage wrote in and provided a good link regarding Saturday's commentary, and addressing the Mortgage Disclosure Improvement Act (MDIA). It is a couple years old but is worth a gander.
"Rob, I heard a bunch of changes might be coming from the CFPB. What's up now?" Last week the CFPB caught the attention of compliance folks by releasing a more complete and updated set of FFIEC exam procedures for Regs Z, X and B, reflecting the new mortgage rules. There will have to be one more round of updates shortly to these procedures once the open items in the last rulemaking update are finalized. The CFPB is working on that now, and does not anticipate further updates via rulemaking prior to the January 2014 effective dates so it will be able to work with the other regulators via the FFIEC forum to do the final exam procedure touch-ups before the effective dates. The CFPB expects that this will keep the rules stable for industry going down the home stretch to January once it finalizes this last proposal issued in late June.
The CFPB has some further links and color on (1) the ATR/QM guide update and (2) the last expected rulemaking update - both the exam procedures and the compliance guide update represent very timely news as the agency has just provided them on the website within last few business days.
Here is the direct link to the updated ATR/QM compliance guide. The CFPB has issued an update to the Small Entity Compliance Guide for the Ability-to-Repay and Qualified Mortgage (ATR/QM) Rule. This update incorporates clarifications and amendments to the rules issued on May 29, 2013 and July 10, 2013.
This is the "mortgage rules at a glance" page, although someone at the CFPB would help us all by putting some dates on these things. To link to the last meaningful outstanding update to the mortgage rules - the "June update," scroll down to the second table - "Title XIV Rule Updates." The June update link is near the bottom.
I have it from a very good source that the CFPB is working to finalize the June rule updates as quickly as possible so lenders and servicers can lock down their final implementation details. The comment period closed on July 22nd. This rule proposes minor clarifications impacting most of the Title XIV rules. The more significant updates relate to certain provisions in the Servicing rules (e.g. clarifications to prohibited activity during the 120 day foreclosure pause; providing short term forbearance based on an incomplete loss mitigation application) and the Loan Originator rule (e.g. clarifications regarding the definition of loan originator; credit insurance financing prohibition).
The CFPB has been issuing such rulemaking updates during the spring and summer of 2013 in direct response to critical questions raised by industry regarding the final rules as issued in January 2013. At this time, the CFPB does not intend to propose further changes via rulemaking prior to the January 2014 rule effective dates. I understand that the CFPB will continue to provide guidance on the rules as requested by industry stakeholders via non-rulemaking methods, including oral guidance. Speaking of which (yes, that was intentional) requests for oral guidance in response to specific questions on any CFPB regulation can be directed to CFPB_reginquiries@cfpb.gov or (202) 435-7700.
Let's turn to some training and events!
The Oklahoma Mortgage Bankers Association presents a "Summer Sizzling Seminar" this week on Thursday, 8/22 - and includes chow at noon! Registration starts at 9AM CST, and the day includes presentations from MBA president Dave Stevens and attorney Mitch Kider. To register and/or for more information contact Ms. Dickerson at ldickerson@easybanking.net.
New Jersey-based Mortgage Finance School has been approved by NMLS to offer both preliminary and continuing education courses, the first of which will be held from August 19-21st on the Parsippany, NJ campus. The first continuing education courses, which will be for New Jersey, New York, and Pennsylvania, will be held from August 29-30th. More details on the courses being offered HERE.
The Federal Reserve Board of Governors is hosting a webinar on "Conducting Consumer Compliance Risk Assessments-Examiner Insights" as part of its Outlook Live series on August 20th. The talk will outline what risk assessments are, the role they play in the industry, how to complete them for specific business lines or products, and red flags. More information and registration HERE .
The FHA will be presenting a webinar on the specifics of loan calculations when underwriting FHA loans on August 21st. Along with calculating acceptable loan amounts for a variety of scenarios, the training will cover differences between FHA and conventional loans and FHA mortgage insurance. Register HERE.
On August 27th, FHA will be holding an on-site training in Helena, MT to go over recent updates to credit and appraisal guidelines. Originators, underwriters, and appraisers are all encouraged to attend. Registration is available HERE.
An on-site FHA loss mitigation training will be held in Jacksonville, FL on August 28th for HUD-approved counseling agencies, servicing lenders, and non-profit organizations. The session will go over the recent changes to the home retention waterfall and pre-foreclosure sale announced in Mortgagee Letter 2013-32. Interested parties can register HERE.
Rates...up a little, down a little...Last week they were up and in fact 10-yr Treasury yields reached the highest level in two years. (Unlike the previous week, when MBS prices were about unchanged, last week current coupon prices worsened nearly two points.) Housing Starts came in very close to expectations. Consumer Sentiment declined to 80.0, far below the consensus of 85.5.
Overall, U.S. economic data released in the middle of August are consistent with an economy that has moderate, but not robust, momentum halfway through the third quarter. On the upside of the story, house prices have increased significantly over the last year and that is a positive for consumers. On the down side of the story, business investment remains weak. A broader consensus formed that the Fed will begin to taper its bond purchase program in September or October, and investors reacted by selling US stocks and bonds. The US economic data released this week provided little reason for the Fed to wait, and the European data showed unexpected strength.
It is a new week, and the big news might be Wednesday's release of the FOMC Minutes from the July 31 Fed meeting. Besides that it is a pretty light news week, with zip today and tomorrow, although we do have Existing Home Sales on Wednesday, Leading Economic Indicators, the FHFA Housing Price Index, & Jobless Claims on Thursday, and New Home Sales on Friday. In the early going the 10-yr is up to 2.84% and current coupon MBS prices are worse about .125.
"Perks" of reaching 50 and beyond! (Part 1 of 2)
1. Kidnappers are not very interested in you.
2. In a hostage situation, you are likely to be released first.
3. No one expects you to run --anywhere.
4. People call at 9 PM (or 9 AM) and ask, 'Did I wake you?'
5. People no longer view you as a hypochondriac.
6. There is nothing left to learn the hard way.
7. Things you buy now won't wear out.
8. You can eat supper at 4 PM.
9. You can live without sex but not your glasses.
10. You get into heated arguments about pension plans.