Christmas Eve: CFPB, RESPA, Rocket, Walmart, and lawsuits

In the news, besides American Airlines grounding all flights (it’s back running now), is Burt, the 90-year-old crocodile from Crocodile Dundee, dying yesterday in Australia. My guess is that he’s long retired from doing much of anything. What do retired mortgage bankers do, besides immediately considering re-entering the business? Here’s one solution from Minnesota. Others travel. Millions sit down in their fancy seats and start flipping through the movies on the screen in front of their nose. Where do they come from? (The movies, not the noses.)

Small teams at the airlines make decisions on what gets added to the library. Delta has a team of four that decides what gets onto 165,000 screens on 840 jets, Southwest has a single person picking what makes it onto their media servers, United has a team of eight picking what goes on in the 500 planes where it has seat-back screens. American carries 1,500 titles overall and averages 500 movies and tends to add 200 new titles a month. The best/most popular airline movie (yes, they watch what you watch) is Crazy Rich Asians. 

Employment; lender wanted

“Evergreen Home Loans® is seeking to acquire a midsized mortgage company that shares our values and commitment to exceptional customer service. With over 37 years of experience, Evergreen is dedicated to helping homeowners achieve their dreams through innovative loan products and a people-first approach. We will take care of your Loan Officers and provide them with the tools to succeed, creating an environment where they can thrive. This acquisition is an opportunity to join forces, combining strengths to achieve lasting success and expand our reach. All inquiries will be handled confidentially. If your company is interested in exploring this opportunity, please contact Evergreen’s founder, Don Burton, directly. (206.300.9965) Let’s build a stronger future together!”

“Loan Officers! What Legacy Will You Leave? Your career is more than just a series of deals, it’s your legacy. At radius, we offer the tools, leadership, and culture to help you leave a lasting impact in the mortgage industry. If you’re ready to create something enduring, let’s connect and discuss your future. For confidential inquiries, contact Carla Herrera (781-742-6500).

In the Northwest and California, Banner Bank is searching for Mortgage Loan Officers looking for a diverse product group to create lasting client, Realtor and builder relationships. At Banner you have Portfolio lending, Construction to Perm financing, Fannie, Freddie, FHA, VA, and USDA along with equity products for HELOC, bridge financing and Lot Loans to serve your clients. Banner has opportunities for lenders looking for local decision looking to build or build onto their career with support for homebuyer education, CRA lending (state bond and Portfolio) as well as access to internal and external DPA to add value to your eligible clients and make more loans possible. Banner is the right fit for an established team, or the individual looking to grow their business and take the next step in their career. Please send resumes to Aaron Miller.

Lender and broker software, services, and products

An open letter from Polly Founder and CEO, Adam Carmel: "As we near the end of another incredible year, I am reflecting on Polly's mission, our vision, and what we have been able to achieve in collaboration with our customer partners. When Polly was founded in 2019, it was clear then—and even more so now—that legacy pricing technology was doing the mortgage industry a disservice. The average cost to originate a loan has increased over 500% in the last 20+ years, and yet, the mortgage industry was burdened by the same antiquated capital markets software. I thought to myself…" Read more!

Tired of meeting people, and being asked, “What does your company do?" Gaffney Austin can fix that! When it comes to the mortgage business, the crew at Gaffney Austin are the communication experts, available to handle all your PR needs. Looking to get your company in the news or nab notable industry awards? Gaffney Austin’s got you. The staff will work with you to create a powerful communications strategy designed to elevate your company’s public profile and expand your reach. Gaffney Austin builds impactful media campaigns that deliver real results.

Would you get on a plane with broken or outdated flight controls? Would you feel safe flying blind, hoping all systems are functioning? Managing a mortgage business without complete, real-time insights is like piloting a plane without a dashboard. Are you equipped with the key reporting and analytics to steer your business confidently? With Gallus Insights, you’ll have the data and clarity you need right at your fingertips… No guesswork, just precision. Ready to elevate your data game? Connect with Augie Del Rio, founder and CEO of Gallus Insights, to learn how Gallus can help you take control.

The CFPB (and its lawyers) is working overtime

Remember when Wells Fargo was “called onto the carpet” (a holdover saying from a factory worker being called into the office when he was in trouble) for its financial planners opening up bank accounts without permission?

The Consumer Financial Protection Bureau (CFPB) sued Walmart and Branch Messenger for forcing delivery drivers to use costly deposit accounts to get paid and for deceiving workers (“last mile” drivers in Walmart’s Spark Driver program) about how they could access their earnings. The CFPB’s lawsuit alleges that Walmart and Branch opened Branch accounts for Spark Drivers, and Walmart then deposited drivers’ pay into these accounts, without the drivers’ consent. Walmart told Spark Drivers that they were required to use Branch to get paid and that they would terminate workers who did not want to use these accounts.

Walmart and Branch also misled workers about the availability of same-day access to their earnings. Drivers had to follow a complex process to access their funds, and when they finally did, they faced further delays or fees if they needed to transfer the money they earned into an account of their choice. This resulted in workers paying more than $10 million in fees to transfer their earnings to an account of their choice.

But wait, there’s more CFPB news! News that if it is upheld, plenty of lenders may be left wondering what, exactly, they can do; home builders may just legally continue to offer incentives. Everyone else is left wondering what they can do.

Yesterday the Consumer Financial Protection Bureau (CFPB) sued Rocket Homes to stop it from providing incentives to real estate brokers and agents in exchange for steering homebuyers to Rocket Mortgage, LLC for loans. The CFPB also sued Jason Mitchell, his real estate brokerage firm, JMG Holding Partners LLC, which does business as The Jason Mitchell Group, and the individual real estate brokerage companies in the 41 states and the District of Columbia where it does business (The Mitchell Group), for “their role in the unlawful scheme.”

“Rocket Homes pressured real estate brokers and agents not to share valuable information with their clients concerning products not offered by Rocket Mortgage, such as the availability of down payment assistance programs, which often save homebuyers thousands of dollars. The CFPB is suing Rocket Homes, The Mitchell Group, and Jason Mitchell to stop the kickback scheme, provide consumer redress, and obtain a civil penalty which will be deposited into the CFPB’s victims relief fund.

“’Rocket engaged in a kickback scheme that discouraged homebuyers from comparison shopping and getting the best deal,’ said CFPB Director Rohit Chopra. ‘At a time when homeownership feels out of reach for so many, companies should not illegally block competition in ways that drive up the cost of housing.’”

“Rocket Homes Real Estate, LLC is incorporated in Michigan and is an affiliate of Rocket Companies, Inc. (NYSE: RKT), which also operates Rocket Mortgage, one of the largest mortgage lenders in America. Rocket Homes’ main office and principal place of business is located in Detroit, Michigan. Rocket Homes operates a referral network throughout the United States that matches consumers with real estate brokerages. The Jason Mitchell Group is primarily located in Scottsdale, Arizona and has 45 affiliated real estate brokerages in 41 states and the District of Columbia.”

“The CFPB’s investigation found that Rocket Homes gave referrals and other incentives to real estate brokerages under an agreement or understanding that the real estate brokers and agents would refer real estate settlement business to Rocket Mortgage and a separate Rocket affiliate called Amrock, which handles title, closing, and escrow services.”

“The CFPB’s investigation further found that The Mitchell Group referred thousands of clients to Rocket Mortgage and Amrock. Jason Mitchell offered ‘Dog Bone’ awards of $250 gift cards to Mitchell Group agents who made the most referrals to The Mitchell Group’s favored partners, including Rocket Mortgage and Amrock.

“Specifically, the CFPB alleges that Rocket Homes violated the Real Estate Settlement Procedures Act by… Providing kickbacks in exchange for referrals: Rocket Homes gave incentives, such as home-buyer referrals and priority for future homebuyer referrals from the network, in exchange for brokers’ and agents’ mortgage lending and settlement service referrals. Requiring brokers and agents to steer consumers toward Rocket Mortgage: Rocket Homes required that the brokers and agents receiving its referrals ‘preserve and protect’ the relationship between the consumer and Rocket Mortgage by steering clients away from other competing lenders and preventing brokers and agents from sharing valuable information with their clients concerning products not offered by Rocket Mortgage, including the availability of programs that provide assistance for a borrower’s down payment.

“The CFPB further alleges that The Mitchell Group and Jason Mitchell also violated the Real Estate Settlement Procedures Act through its participation in Rocket’s kickback and steering scheme. The Mitchell Group encouraged its network of real estate brokers and agents to engage in coercive tactics to get consumers to use Rocket Mortgage for their home loans. Agents were trained to suggest that house settlements could fall through if the homebuyer wanted to comparison shop with Rocket Mortgage’s competitors.”

“Under the Consumer Financial Protection Act, the CFPB has the authority to take action against institutions violating consumer financial laws. The CFPB also has the authority to enforce the Real Estate Settlement Procedures Act. The CFPB’s lawsuit against Rocket Homes, The Mitchell Group, and Jason Mitchell seeks a stop to alleged unlawful conduct, redress for harmed borrowers, and the imposition of a civil money penalty.”

Capital markets: who’s locking a rate on Christmas Eve?

A quiet week got off to a quiet start, though bonds continued last week's selling trend, pushing yields higher on Monday. Yesterday’s economic data showed mixed signals, with durable goods orders falling 1.1 percent month-over-month in November, worse than the expected 0.3 percent decline following an upwardly revised 0.8 percent increase in October. However, business spending rebounded, as new orders for nondefense capital goods excluding aircraft rose 0.7 percent, a recovery from the previous month's 0.1 percent drop. Consumer confidence, as measured by the Conference Board, dropped sharply to 104.7 in December from an upwardly revised 112.8 in November, indicating that consumers were less optimistic about future business conditions and incomes.

Meanwhile, new home sales rose 5.9 percent month-over-month in November to a seasonally adjusted annual rate of 664,000, slightly below consensus, but up 8.7 percent year-over-year, with lower selling prices helping to mitigate affordability challenges from rising mortgage rates.

Mortgage rates have risen sharply in recent months, 7 percent or higher, reflecting expectations for a more measured pace of future rate cuts, election-related policy uncertainties, stalled inflation progress, and ongoing economic growth. Federal Reserve Chairman Powell indicated that while the Fed lowered the fed funds rate at its most recent meeting, it may pause future cuts to better assess inflation, balancing the need to control inflation with supporting economic growth. The high-interest rate environment, combined with tight housing inventory, continues to challenge the residential mortgage market, despite slight improvements in inflation. The Fed’s approach in 2025 will likely focus on maintaining this balance amid a still strong but softening labor market.

It’s a light economic calendar today with an early close ahead of the Christmas Day holiday tomorrow. Economic releases consist of Philly Fed non-manufacturing firm and regional indexes for December and Richmond Fed manufacturing and services indexes for December. We begin Christmas Eve with Agency MBS prices roughly unchanged from Monday, the 2-year yielding 4.35, and the 10-year yielding 4.61 after closing yesterday at 4.60 percent.

Joe M., a VP with a major aggregator, writes:

‘Twas the night before Christmas and all through the shop,

the LOs are pushing another loan to the top.

The processors all running on sugar laced highs,

trying to satisfy all borrowers why’s.

The lock desk keeps searching for more YSP,

but now they realize that service is key.

Management still looking to close one more loan,

in order for borrowers to get a new home.

Compliance team readies for changes to come,

just hoping these updates really are done.

Closing and shipping are running on caffeine,

trying to help the American dream.

So put down your smart phone, your BlackBerry and tablet,

give thanks to your co-workers and make it a habit.

As we close out the year and look to the next,

and look at the clutter that now fills our desks,

we give thanks for our jobs our family our friends,

for that we are grateful so I thank you again!

Merry Christmas from Chrisman LLC.