CFPB Issues Servicing Rules, Annual CARD, HOEPA, and QM Adjustments; Upcoming Events

The CFPB released a bulletin outlining expectations for mortgage servicers that transfer loans; bulletin includes information on how mortgage servicers should pay attention to new rules protecting consumers applying for loss mitigation help or trial modifications. The updated bulletin, which can be accessed here, replaces the CFPB's February 2013 guidance. The CFPB explains that its "concern in this area remains heightened due to the continuing high volume of servicing transfers."

Most view this updated bulletin as a more detailed supervisory tool rather than a departure from the CFPB's previous stance (in place since January) on mortgage servicing transfers. For example, the original bulletin included seven general information requests for certain servicers planning transfers and this bulletin includes the same list except it added the following request: "A detailed description of how the servicer will ensure that it is complying with the applicable new servicing rule provisions on transfers." The CFPB's approval is not necessary for a mortgage servicing transfer unless there is an overriding agreement (e.g. consent order) governing the company. Given the wave of transfers and the corresponding increase in headline pressure, it is not surprising to see continued regulatory headwinds impacting specialty servicers which are likely to further increase the costs associated with growth via acquisitions.

(Speaking of transferring servicing, MSR tapes? I've seen a few. MountainView Servicing Group has had two offerings, the first; a $1.6B FNMA/GNMA servicing portfolio. The package was 94% fixed rate, 94% retail, WaFICO 740, WaLTV 80%, WAC of 3.92%, $225k average loan size, with New York (30.9%), California (12.1 %), New Jersey (11.5%), and Virginia (5.6%); the second a $348M FHLMC/FNMA portfolio with 99% fixed rate/first lien, WaFICO 755, WaLTV 75%, WAC of 4.18%, $234k average loan size, with Colorado (61%), California (15%), Arizona (6.5%), and Illinois (6%); Interactive Mortgage Advisors' offerings included a $3.17B GNMA package with  3.67% Wtd Avg Note Rate, a 12 month Average Escrow Balances of 1.07% of UPB, sub-serviced by nationally known company, with DLQs (not including FC/BK) of 5.37%.)

But the CFPB impacts all areas of residential lending, not merely servicing, and recently released its annual CARD Act, HOEPA, and QM adjustments, as shown in this Ballard Spahr release. "The CFPB has published a final rule regarding various annual adjustments it is required to make under provisions of Regulation Z (TILA) that implement the CARD Act, HOEPA, and the ability to repay/qualified mortgage provisions of Dodd-Frank.  The adjustments made by the final rule are effective January 1, 2015. The CARD Act requires the CFPB to calculate annual adjustments of (1) the minimum interest charge threshold that triggers disclosure of the minimum interest charge in credit card applications, solicitations and account opening disclosures, and (2) the fee thresholds for the penalty fees safe harbor.  The calculation did not result in a change to the current $1.00 minimum interest charge threshold.  However, in the final rule, the CFPB increased the current penalty fee safe harbor of $26 for a first late payment and $37 for a subsequent violation within the following six months to, respectively, $27 and $38.

"HOEPA requires the CFPB to annually adjust the total loan amount threshold that determines whether a transaction is a high cost mortgage when the points and fees are either 5 percent or 8 percent of such amount.  In the final rule, the CFPB increased the current dollar thresholds from, respectively, $20,000 to $20,391, and $1,000 to $1,020. Pursuant to its ability to repay/QM rule, the CFPB must annually adjust the points and fees limits that a loan must not exceed to satisfy the requirements for a QM.  The CFPB must also annually adjust the related loan amount limits.  In the final rule, the CFPB increased these limits to the following: For a loan amount greater than or equal to $101,953 (currently $100,000), points and fees may not exceed 3 percent of the total loan amount. For a loan amount greater than or equal to $61,172 (currently $60,000) but less than $101,953 (currently $100,000), points and fees may not exceed $3,059 (currently $3,000). For a loan amount greater than or equal to $20,391 (currently $20,000) but less than $61,172 (currently $60,000), points and fees may not exceed 5 percent of the total loan amount. For a loan amount greater than or equal to $12,744 (currently $12,500) but less than $20,391 (currently $20,000), points and fees may not exceed $1,020 (currently $1,000). For a loan amount less than $12,744 (currently $12,500), points and fees may not exceed 8 percent of the total loan amount." But hey, don't take Ballard Spahr's word for it - read all about it in the Federal Register.

A quick lender name note: Bay Bancorp Inc. is renaming its mortgage division "Bay Bank Mortgage" as part of a plan to drastically increase the size of it. The name replaces Carrollton Mortgage Services, which was left over from the bank's $25 million acquisition of Columbia-based Carrollton Bank in April 2013.

Upcoming events and training opportunities.

MBA of Greater Philadelphia and co-sponsor, MBA-NJ, are offering CE Classroom 8 Hour PA SAFE Comprehensive on Tuesday, September 23: Registration.

A La Mode's Modern Appraiser Road Show in Sacramento September 8th-10th.  Every minute of our three-day CE-based training will fuel your business: Register.

If you're in New Mexico in late August, Register for the NMMLA housing conference.

MBA St. Louis Education Seminar and Expo on September 11th will include session topics on Property Valuation, Selling in a Purchase Market, Serving a Diverse Market, American Land Title Association Best Practices, Continuing Education - Missouri State Test, and Combined Disclosure Statements Roundtable.

Ellie Mae Encompass Experience 2015 conference will be held Feb. 22 - 26, 2015 at the Walt Disney World Swan and Dolphin Resort in Orlando, Fla. Early Registration.

Don't' forget the MBA's "Manual Underwriting and Risk Analysis Workshop in a QM World" on September 9th in Miami Florida: Register Now.

Ellie Mae's RESPA-TILA Integrated Mortgage Disclosures Webinar series: Delivery Timing and Tolerances is scheduled for August 20th.

The Florida Association of Mortgage Professionals (FAMP) 2014 State Convention and Trade Show is September 4-6 at Shingle Creek Resort, Orlando Florida. "Two Day Tradeshow, Two Luncheons with the Regulators That Impact Your Lives, Three NMLS Approved 8-Hour Continuing Education Sessions, Breakout Sessions With The Experts That Can Enlighten and Guide You In the Fields of Compliance, Technological Trends, Sales and Marketing and Products Designed To Help You Work Smarter Than Your Competition, Golf Outing At Shingle Creek Resort." Exhibitors and Attendees - Click Here To Go To The FAMP Convention Web Page or e-mail frank@famb.org for additional information.

NMMLA is offering 8 Hour SAFE Comprehensive CE on September 16th to satisfy all Continuing Education Requirements for NM Loan Originators Register.

CAMP South L.A. registration for Duane Gomer's Mortgage Loan Origination 8 hours of live continuing education comprehensive course scheduled for Saturday, October 4th is available now.

The CFPB is hosting webinar to answer some frequently asked questions about the TILA-RESPA Integrated Disclosure rule on Tuesday, August 26th Register. This will be the second in a series of webinars to address the new rule as creditors, mortgage brokers, settlement agents, software developers, and other stakeholders work to implement it over the next year.

Acquisition Strategies for Mobile Webinar from American Banker on August 21st (tomorrow!) will look at three approaches to mobile app design and marketing tactics that can reel in new customers.

The volatility that we saw last week is dissipating from the market. (Let's see what happens in October when the Fed isn't engaged in QE3!) Yesterday we saw a combination of lack of market-moving news from overseas (Ukraine and Israel) and good news here stateside. Housing Starts rose almost 16% in July to their highest level in eight months, and Building Permits increased by 8.1% to a 1.05 million pace, the fastest rate of building applications for single-family dwellings since November.  No wonder builders are optimistic! From a year ago, home construction was up 21.7%.  Starts on single-family homes, which reflect the bulk of the market, climbed 8.3% in July from June.  Construction of multifamily units-mostly condominiums and apartments--rose 33% to a pace of 423,000 units, the highest level since January 2006. We also were reminded about the lack of inflation, in spite of the best forecasts by "experts". The Consumer Price Index was +.1% in July, the smallest gain since February. QE has not caused the widespread inflation many thought - yet.

Originators keep producing, and the Fed keeps buying. The New York Fed's daily MBS operations amounted to $1.591 billion total, or 92.2% of the scheduled $1.725 billion slated for purchase. But rates edged higher, basically because they wanted to, and 30-yr agency MBS prices closed lower/worse about .125.

The economic calendar at midweek features the Fed minutes from the July 29-30th meeting. These come out at 2PM EST, 8AM HST, as the market will no doubt be scrounging for any information and tidbits beforehand. In the early going this morning the 10-yr yield is slightly higher at 2.41% and agency MBS prices are worse a tad.

Jobs

On the recruiting side of things, "A number of loan officers over the last few weeks have reached out to me because their mortgage firms can't seem to close loans effectively", says Dr. Rick Roque, founder of MENLO, a retail production growth firm whose focus is on loan officer groups looking to make a transition to better capitalized and supportive mortgage platforms.  "To mitigate risk, overlays and over-'conditioning' files prior to close are a few examples how retail companies undermine the production efforts of loan officers - this is either directly related to being under-capitalized or a function of poor management regarding managing risk".  Dr. Roque works closely with loan officer teams doing $2,000,000 to $20,000,000 per month in origination volume who are looking for a more stable and reliable mortgage platform. Specific geographies of interest are Arizona, California, Missouri, Illinois, Kansas, Florida, Virginia and Maryland. MENLO estimates roughly 1200 broker and mini correspondent firms across the U.S., as well as a 10% attrition in the enterprise market (mergers, etc.) will consolidate the retail market further in the 4th quarter and 1st quarter(s) of 2015 due to market conditions. For more information contact Dr. Roque.

On the wholesale & correspondent side, AmeriHome Mortgage Correspondent is looking for sales professionals. Amerihome just introduced a High LTV (89.9%), no MI option with its Core Jumbo 5/1 Program, added premium pricing (101.50) to their Expanded Program (loans to 600 FICO, 83% LTV, no MI, 2 yrs. out of BK/FC, 1 yr. DIL & SS) and USDA loans. "These programs and enhancements are in addition to its current full slate of agency and non-agency product offerings; giving clients access to 'a true one stop/full service correspondent investor'. To support their continued growth, John Hedlund, Managing Director Correspondent Lending Division continues to add experienced sales professionals to the team...joining Chris Maturo - West, John Hill - West, and Steve Lemon - South East, are Gil Lopez - Central - a long time correspondent and capital markets sales professional out of Houston, Texas, and Paul Rofino - who brings 25 years plus correspondent and wholesale sales experience to Amerihome and his clients.