Fiserv to Give CFPB Data; Warning on Suspect Warehouse Lender

By: Rob Chrisman

Hundreds of capital markets folks have returned, bleary-eyed, to their roosts around the country. Unfortunately, as Cantor Fitzgerald's Dave Gottfried aptly phrased it, New York is a "world class city with developing country airports."

The CFPB, which hangs heavy over every gathering of lenders, has told Fiserv to hand over anonymous data related to financial institution overdraft programs, as it seeks to gather more data. Fiserv is reportedly warning customers that possible price increases could follow given the cost to comply with the request.

My goodness! I took a while and collected the recent CFPB headlines. Anyone who thinks that the CFPB's scope is contained, or that Congress controls it, had better think again. Just a quick smattering: "CFPB Holds a Field Hearing on Student Loan Servicing Issues," "CFPB issues request for information regarding student loan servicing and re-launches its "Repay Student Debt" tool," "CFPB Files Proposed Consent Orders Related to Wireless Billing Practices," "CFPB Addresses Section 8," "CFPB fixes roads under enumerated authority," "CFPB extends comment period on credit card issues," "CFPB files complaint against companies offering mortgage payment program," "CFPB Releases Updated Mortgage Origination Examination Procedures," "CFPB Releases its 2014 Fair Lending Report," and on and on.

I received this note. "Rob, there's certainly been an increased focus on vendor management by the CFPB and even some state regulators. All lenders, whether engaged in just loan origination, servicing or both are now required to have a compliant vendor management program. That means policies, procedures, appropriate information on the vendor with back up documentation, a compliant contract and a documented decision along with a continuing monitoring program that includes performance benchmarks for high risk vendors. There's an easy, cost-effective, and compliant solution. RML Advisors, founded by former MBA Chairwoman Regina M. Lowrie, has just updated the RML Vendor Management Toolkit, an end-to-end low cost solution for lenders to create and manage a compliant vendor management program. The Toolkit includes everything a lender needs with a step by step instruction guide together with a recommended policy template, a risk rating guideline, letter/email request templates, information forms, contract review forms, an analysis summary form and a new vendor requirements form. Also included is 12 months of support and automatic updates. What's more the support includes helping the client through the complete information and documentation process on a single (1) Tier 1 (high) risk vendor to help accelerate client training and implementation." E-mail Regina Lowrie or call her direct at 610-960-3748.

Along those lines, Michele Perrin of Perrin & Associates (714-669-0627) writes, "Rob - back in November I had been looking into an apparently fraudulent lender following the pattern of the ewarehouseone scam from 2010 and I thought that I had scared them off. But not so-- they are actively soliciting funds from unsuspecting mortgage companies. I just heard from PennyMac that one of their customers has sent $60,000 to Monarch Financial and now can't get anyone on the phone. Monarch Financial Corp. is offering very unrealistic rates of L+1.75% lines with a floor of 2% and $25 per file. I checked their website at www.monarchfinco.com, and it looked eerily similar to the one operated by ewarehouseone, which many of you will remember turned out to be a scam which robbed mortgage bankers of millions of dollars back in 2010. The same group apparently cropped up again in 2012 calling themselves 'Fortis,' but I was able to get the word out quickly enough that I believe we stopped them from getting application fees or other funds from any mortgage companies.

"Most of the links on Monarch's website connect to nothing, they list a number of people for contacts, none of whom are in LinkedIn, and their main number (212-687-0090) is answered by a robotic voice offering only voicemail, no humans. The domain name was set up last May by someone in Sunnyvale CA. The website says they are in New York, using an address which conveniently offers virtual offices, just like ewarehouseone. I spoke with 'Mike Cohen,' the supposed National Sales Director listed on the website at 212-388-0035. He could tell me nothing about the organization, and when I asked how long they had been in business, said that they had been around 'awhile,' then said I was asking way too many questions and hung up on me! Can you help me to get the word out to mortgage companies to ask a lot of questions and call current warehouse lenders if they are approached by a lender they don't know?" I am not confirming or denying this report, but anyone with questions or comments should contact Michele at the link or phone number above.

The Dodd-Frank Act is nearing its fifth anniversary and continues to alter the regulatory landscape for the financial-services industry. Probably from a golf course somewhere, former Sen. Chris Dodd, a co-author of the law, offered up his take on its implementation and efforts to revise it. Dodd also notes that the law will not stop the next crisis. "The question is can you minimize the impact of it because you identify it early enough and you start taking remedial steps to address it, instead of waiting until the system collapses as it did in the fall of 2008," he said.

The Fed St. Louis has released a survey that finds farm income and land values in its district, which certainly includes a lot of ag land, are continuing to head lower (down 2.5% YOY in Q1).

On a more nationwide level, "Rob, I read in your commentary that Freddie Mac bumped their residential estimate for this year to $1.35 trillion, yet the MBA's is at $1.28 trillion. What's the difference?" That's right, what's the difference? Seriously, Freddie's forecast includes 2nds and the MBA's forecast does not. Second mortgages are a hot topic. Of course every LO out there, if rates move higher and home prices are appreciating, are going to have trouble refinancing someone out of a 3.5% 30-year fixed rate loan and into a 4.5%. They would love to have a good program for HELOCs and 2nds, and independent mortgage banks are watching banks moving along the inside track in this channel.

Neither snow nor rain nor heat nor gloom of night keeps attorneys from writing up bank M&A agreements. Just in the last week several were announced...Hamilton State Bank ($1.6B, GA) will acquire Highland Commercial Bank ($122mm, GA). Heartland Financial USA ($6.2B, IA) will acquire First Scottsdale Bank ($108mm, AZ) for about $17.7mm in cash or roughly 1.05x tangible book. Kitsap Bank ($1.0B, WA) will acquire Fife Commercial Bank ($85mm, WA). First National Bank of Northern California ($915mm, CA) will acquire America California Bank ($134mm, CA) for about $21.5mm in cash or roughly 1.20x tangible book. Seacoast National Bank ($3.1B, FL) will acquire asset based lending and invoice factoring company First Growth Capital. Farmers State Bank ($140mm, SD) will acquire Fulton State Bank ($68mm, SD). First Commonwealth Bank ($6.3B, PA) will acquire First Community Bank ($101mm, OH) for about $14.75mm in cash or roughly 1.2x tangible book. WashingtonFirst Bank ($1.3B, VA) will acquire direct mortgage lender 1st Portfolio Holding Corp (VA) for about $7.7mm in stock. Madison County Bank ($306mm, NE) will acquire Winside State Bank ($27mm, NE) for about $4.3mm in stock.

First Republic announced it would be raising $100 million through the sale of stock and use the proceeds to fund its growth.

Do you think that the economy is doing pretty well? You wouldn't know it by mortgage applications. Either more folks are paying cash or things are slowing down on lock desks around the nation for another reason - like things are slowing down in other places as well. Mortgage applications fell again last week, per the MBA's measure, which has now fallen every week for the last four. This time by 1.5% on a seasonally adjusted basis compared to the previous week. Purchases fell 4%. Refi biz accounted for 52% of apps.

The Fed Minutes from April's meeting were released yesterday with officials not expecting to raise rates at their next meeting in June. By now this should be of no surprise to anyone, and in fact Chicago Fed President Evans (FOMC voter) delivered a speech on current economic conditions and monetary policy in Munich and reiterated his view that he would like to wait until early 2016 to hike rates. Other members saw the economic weakness from the first quarter as persisting

Today we've had Initial Jobless Claims for the week ending 05/16 and Continuing Jobless Claims for the week ending 05/09 (up 10k from 264k to 274k, and -12k, respectively, with the 4-week moving average dropping 5,500). At 10AM EDT we'll have April's Existing Home Sales, the May Philadelphia Fed survey, and April Leading Indicators. We closed the 10-year at an easy to remember 2.25% and this morning we're sitting around 2.25% and agency MBS prices are roughly unchanged or down a smidge.


Jobs and Announcements

For the folks who know that debits are on the left and credits on the right, a 20 year old company in the northeast is looking for an experienced CFO. The company is a Ginnie, Fannie, and Freddie approved lender, issuer and servicer with a large servicing portfolio. 100% of all loans are servicing retained and the company is currently funding $1B per month in loan originations through correspondent, third party origination and retail channels. Capital Raising and Loan Servicing experience a plus. If you are interested please forward your confidential resume to me at rchrisman@robchrisman. com.

DAS Acquisition Company, d/b/a USA Mortgage (DAS), is searching for a Chief Compliance Officer to continue the development of, administer, and oversee the Company's compliance program with all applicable federal and state mortgage banking laws and regulations. The successful candidate will report to the Company's COO and CEO and will be responsible for working with the lines of business and support areas to ensure oversight of a sound compliance management system. DAS is a mortgage bank that is licensed in 13 states and headquartered in beautiful St. Louis, Missouri, the nation's 19th largest MSA. Closing over $1 Billion for 6 straight years, the Company is a dominant residential lender in the State of Missouri and in particular the St. Louis and Springfield metropolitan areas. The Company is a sales centric, retail lender which sells its loans to investors in conjunction with the protocols set forth by Fannie Mae, Freddie Mac, FHA, VA, USDA, and various State bond programs. "Every year since the Company's inception in 2001, the St. Louis Business Journal has named us among the top choices for a residential lender in the St. Louis metropolitan area ... please come see why."  Send your confidential cover letter and resume to the Company's CEO Doug Schukar.

In personnel news, the Mortgage Industry Advisory Corporation ("MIAC") announced that K. Daniel Libby, CFA has joined its team as Senior Vice President.  Mr. Libby will play a significant role across all of MIAC's services and products ranging from investment risk and balance sheet advisory to data and software services.

Congratulations to Desmond Smith who has joined Capital One Financial Corporation as Head of Sales for Capital One Home Loans. "In this role, Smith will join the Home Loans leadership team with responsibility for building a mortgage sales team throughout the company's branch footprint. Smith brings more than 20 years of experience working for other top financial institutions." Yes, quite a pedigree: Smith joins Capital One from Citibank where he served as Managing Director responsible for all originations across channels including Distributed Retail, Direct to Consumer, Relationship Retail, Strategic Markets and Correspondent Lending. Prior to joining Citigroup, he was SVP of National Retail Sales at JPMorgan Chase Bank, and spent some time at Wells Fargo.

And last but certainly not least congrats to Lara Rausch of Paramount Residential Mortgage Group - she is the new V.P. of Products and Training. This includes not only the PRMG sales and operations team but also PRMG's customers across all channels through the entity known as PRMG University.