CFPB RESPA-TILA Update Site; Bank Stress Test Results; FICO Changes Coming?
The total number of pages of the Federal Tax Rules, i.e., the IRS explanation of income tax code and regulations, has increased by 34,108 pages (to 74,608) since 1995, an increase of 5 new pages a day, 365 days a year for the last 19 years. I am sure that the promotion of "Sell Two Homes and Your Next Vacation is On Us!" is some type of taxable event. My guess is that Fischer Homes' attorneys took a long hard look at recent CFPB rulemaking to make sure everything was copacetic with no hint of steering or referral kickbacks. There's also a link to its partner, Victory Mortgage. (The ad that was sent to me says to "talk to one of their sales counselors for details" on Fischer's 6-month giveaway prize program.)
First Century Bank, N. A. an FDIC Bank is expanding. The Mortgage Division is located in Sacramento, CA, and is part of a well-capitalized bank has been named ABA's Top 25 ROE in the nation and is looking to hire Account Executives throughout the Western arena. FCB is hiring in California, Washington, Oregon, Nevada, Utah, Colorado and Arizona, and is looking for experienced Account Executives to help continue to grow the business and work with a winning operations team. Senior management have a combined experience of 50+ years in the business, dedication to superior customer service and have an excellent system platform. Please send resumes to Terry.Alessi@myfirstcenturybank. com.
On the other side of the nation, as part of its 2014 expansion plans, Hamilton Group Funding, a 10 year old mortgage banker, currently operating in 15 states, is offering a ground floor opportunity for new or existing retail branches and loan officers to join their fast growing and financially stable business. Hamilton Group Funding has openings in Texas, Florida, Georgia, Louisiana, South Carolina, Tennessee, Michigan and Pennsylvania. Hamilton offers the ability to tailor business to the local needs of each market. Its experienced operations team supports HGF's branches with consistent 24-48 hour turn times in underwriting and closing, all within in a paperless environment. The lender offers full benefits, including 401K. Confidential inquires should be sent to Ross Bennett, SVP, Director- National Production at ross.bennett@hgfloans. com.
Although management reports that the problem is now corrected, the many users of Ellie Mae's Encompass received this note yesterday, on the last day of the month, from the company: "As you are probably aware, Ellie Mae is experiencing an issue with Encompass that is affecting a number of our clients. This is resulting in delays in processing loans, or in some cases, the inability for some of our clients to close loans. Ellie Mae realizes the impact that this may have on your business, particularly considering that today is month and quarter end...We are also updating the Ellie Mae Status Center regularly with real-time updates."
For those who like survey results, Hammerhouse is releasing the results of its latest survey: "4th Annual Survey of Originator Opinions". Very cool, and here is the link to view the results.
Fed watchers over the last few years have had many things to study; on their list of course has been the FOMC's asset purchase program, and while Chairwoman Yellen unwinds the program, she is likely to apply a brand of monetary policy-making known as optimal control, which emphasizes that the target fed funds rate should be tailored to keep unemployment at a healthy level and unemployment close to 2%. Bill Gross of PIMCO, never one to shy away from voicing his opinion on the Fed, commented last week that "the below-target inflation rate, rather than a falling unemployment rate, will guide the Fed's decision to keep rates low for a prolonged period of time." Gross has asserted in prior market commentaries that the central bank is likely to hold the fed funds rate near zero until 2016, which will help short-maturity bonds outperform the rest of the market. It's a good conversation to have, however, an even better one is the one Wells Fargo asks: Is the Fed Funds effective? They write, "Is there a relationship between the federal funds target rate, inflation rate and the unemployment rate? Recently, the Federal Open Market Committee (FOMC) began rolling back its asset purchases program and, at some point in the future, the FOMC will start increasing its target for the fed funds rate. This raises the question, what would be the likely effect of an increase in the interest rate on inflation and the unemployment rates in our post-Great Recession world?"
Just when you get all your icons the way you liked them, with the wallpaper of your dog wearing a Santa Claus hat, someone has to come along and tell you that your Windows 3.1 machine is out of date. In the same vein, what's even better than FICO 8? FICO 9, or course! As almost everyone in the industry knows (maybe the temp worker at the front desk?) FICO is one of the leading predictive analysis firms in America. How leading, you ask? Well, in 2013, lenders purchased a whopping 10 billion FICO scores to determine whether or not certain individuals are eligible for loans. As market dynamics change over time, FICO typically works to create new models that address these shifts and better predict a person's creditworthiness, with FICO Score 9 being the latest in the run of developments. According to FICO's announcement (yes, the name of the corporation is actually FICO....with an original NYSE ticket symbol of: FICO) FICO 9 will be the first release in a suite of updated and new FICO Scores. It will be followed by industry-specific FICO Scores for credit cards, auto loans and mortgages.
An internet "troll", according to my college aged son, is someone who attempts to start arguments on forums by spreading lies, posting outrageous comments, or off-topic messages. I bring this up only after hearing for so long how the U.S. government is the only "real" employer in the labor market now, AND AFTER READING, the Census Bureau's recent release: Federal, State and Local Government Employment Down from Previous Year to 22 Million Jobs in 2012. According to the survey, there were 22.0 million total federal, state and local government employees in the U.S. in March 2012 (including part-time employees), down 115,733 or 0.5 percent from March 2011, according to a report released today by the U.S. Census Bureau. The number of federal government employees declined 2.2 percent from 2011 to 2.8 million in 2012, and the number of state government employees declined 0.5 percent from 2011 to 5.3 million in 2012. There were 14.0 million local government employees in 2012, which is not a statistically significant change from 2011. I've been informed that any negative response to the OP, that would be me I guess, can be construed as flaming....I guess. Don't people have any hobbies anymore?
The new TILA-RESPA regulatory implementation web page is now available on the CFPB website. See note below for the link and the initial resources posted there, including the plain language "compliance guide." As referenced in the note below, a second resource guide is coming very soon - Guide to the Forms - which will march through the fields on the Loan Estimate and Closing Disclosure, providing regulatory requirements for completing each and every field. Check out the TILA-RESPA rule compliance guide. The guide highlights issues that you might find helpful to consider when implementing the rule. It may also be helpful to settlement service providers, software providers, secondary market participants, and other firms that serve as business partners to creditors.
"In the coming weeks, we'll send you an update when a companion guide with details about completing the new integrated disclosure forms is available. We also posted Loan Estimate and Closing Disclosure forms in both English & Spanish and samples for different loan types." See all the resources available for the TILA-RESPA Integrated Disclosure rule.
As a reminder, Ginnie Mae announced that it guaranteed $22.93 billion in mortgage-backed securities in January 2014. While more than $21.18 billion in GNMA II securities were issued in January, issuance of GNMA I securities were much lower, totaling $1.41 billion. Most will remember from their high school English class, the difference between GNMA I and GNMA II bonds, but if you don't here's the scoop. They are basically one-in-the-same, with nothing in common at all; an MBS issued by an approved lender, for FHA/VA/RD/PIH, and similar guarantees. GNMA I pools can only have similar note rates, 50bps higher, than the pass-through coupon (i.e. all 4% note rates going into a 3.5% coupon, or, all 4.5% note rates going into a 4% coupon); while GNMA II pools allow from 25bps to 75bps in note rate spread to pass through (similar to typical FNMA/FHLMC MBS). Historically, GNMA II issuance, driven by note rate variance and ARM production, out paces GNMA I production, leading some to ask, "Why even have Ginnie I?" In addition, Ginnie Mae guaranteed $1.41 billion in multifamily securities in January. Issuance for the GNMA Home Equity Conversion Mortgage-Backed Securities (HMBS), included in GNMA II single-family pools, was $711 million. Total single-family issuance was $21.52 billion for January.
Eric Boucher, FHA condo approval specialist, writes, "I am in the process of writing several articles regarding FHA condominium project approvals and loans following the roundtable session that I attended at HUD's Headquarters in Washington DC earlier this week. I think that the most interesting to mortgage professionals is the possible return of condominium spot loans. This was discussed at length and HUD is under a lot of pressure from NAR, CAI, NAMB, etc. to bring them back. My feeling is that they will make a return but under much tighter controls than they were previously. Here is an article that I wrote about it. This one contains a bunch of small items that were discussed quickly. Probably the most interesting to mortgage professionals would be regarding case number assignments in multi-phased new construction condos and the extension for the temporary guidance for condo approvals as per Mortgagee Letter 2012-18. There was also talk of modifying the MI requirements because the insurance fund is flush with cash."
According to the Federal Reserve, U.S. big banks have enough capital buffers to withstand a drastic economic downturn, announcing March 20th that 29 out of 30 major banks met the minimum hurdle in its annual health check. All of the banks except Zions Bancorp stayed above the 5 percent requirement for top-tier capital in the latest round of stress tests (note to self: call Zions tomorrow and lift Blue Star Airlines call-options). Reuters writes, "The tests aim to show how banks would weather a financial collapse similar to the 2007-2009 crises. Banks had to show how they would cope with a halving of the stock market, and the eight largest banks had to weigh the impact of the default of their biggest trading counterparty." As you can imagine in a post '07 world, stress tests are closely watched by the financial markets, and are used as a sign of the industry's health. Ironically, along with Zions, Wells Fargo and Bank of America disagreed with the Feds tests, but for different reasons; Wells and BofA released the results of internal stress tests that showed them performing better than they did under the regulators' tests. You go Brian, and John!
Brokers around the nation greeted a reminder from U.S. Bank Home Mortgage on the third party broker origination front at U.S. Bank Home Mortgage. "We are currently accepting new customers into our third party broker channel to do conforming agency business."
The only news out yesterday was the 2nd tier Chicago Purchasing Manager's Survey. It fell to its lowest level in 8 months, prompting analysts to wonder about the strength of the US economic "rebound". Certainly housing values are up versus a year ago, but other indicators are not running on all cylinders... CPMI Chief Economist said: "March saw a significant weakening in activity following a five month spell of firm growth. It's too early to tell, though, if this is the start of a sustained slowdown or just a blip.
The only news out this morning is the ISM Manufacturing Index (from purchasing managers of 300 manufacturing firms about general trends) and Construction Spending. Overall, rates were pretty quiet yesterday, and overnight. The benchmark 10-yr T-note closed Monday with a yield of 2.72%, and this morning it is about where it began Monday - at 2.74% - and MBS prices are worse a shade - but about where we were yesterday morning. Yawn.