State-Level News, Lending Law Changes; Accounting and Forecasting Products

Regardless of presidential administration, immigrants, and millions others, need places to live, and this morning a story was published about Fannie Mae entering the construction loan biz. With builders supplying about half of the calculated demand, it could help. Now, if someone could do something about the traffic problems... On that subject, over 51,000 Texans were still living in hotel rooms as of last week as they had been displaced from their homes, and 26,000 are in temporary housing of their own selection.

Continued Updates on State Lending Laws

In California, will increased labor wages help or hinder the California housing market? This is the question being asked as California prepares to enact the biggest expansion of union-backed pay mandates for construction workers since the late 1990s.

In the investment world, US states such as Nevada, Connecticut, New York, New Jersey, Massachusetts and California have either signed into law legislation putting in place fiduciary requirements for brokers (like stock brokers) or are considering it as the federal government ponders rolling back its own rule. In some cases, the states' legislation goes beyond the tax-advantaged retirement savings regulated by the federal rule and calls for brokers to uphold a fiduciary standard for all accounts.

Thank you to Jon Rogers, Senior Division Manager of Single Family Lending with West Virginia's Housing Development Fund, who wrote, "Your link to the West Virginia consumer legislation should be corrected. It should be this." In it, West Virginia amended its provisions regarding its Consumer Credit and Protection Act, including regulations on payments made to a creditor, lenders holding payments, the statute of limitations for claims relating to the setting aside of a foreclosure sale, etc. Jon noted, "The actual legislation for each is here: https://legiscan.com/WV/bill/SB344/2017 and https://legiscan.com/WV/bill/SB563/2017." Thanks Jon!The Iowa Finance Authority has recently clarified and simplified the rules governing the state's Military Service Member Home Ownership Assistance Program, effective November 29, 2017.

MHOA allows for one-time assistance of up to $5,000 per eligible service member (including veterans), which may be used toward a down payment and/or closing costs for the purchase of a qualified home. If co-purchasers are both eligible service members, only one may use the MHOA per home purchase.  If another home is purchased later, the other eligible service member may use the MHOA on the second home. Eligible service members must have served a cumulative 90 days of active duty between August 2, 1990 and April 6, 1991, or between September 11, 2001 and the present. Federal status injured service persons or a surviving spouse are also eligible based on the required serve dates. Eligible homes must be in the state of Iowa, and must be occupied as the service member's primary residence.

When the purchase of a home under the MHOA is to be financed, the service member must apply through a participating lender. If the service member qualifies for the program, the mortgage financing provided must be a qualified mortgage.  Once the lender has received all the information required from the service member, the lender must then transmit copies of the necessary documentation to the Iowa finance authority. The authority must then submit the status documentation to the Iowa Department of Veteran's Affairs for verification that the applicant is an eligible service member.  The Iowa Department of Veteran's Affairs will be the final authority as to whether an applicant is an eligible service member. 

The state of Montana has updated the definition of "alter" as used in MCA 32-9-124(1)(l): mortgage licensees may not "knowingly withhold, abstract, remove, mutilate, destroy, alter, or keep secret any books, records, or other information from the department [of administration]."

Documents may not be altered by: Using correction fluid, correction tape, or any other means of changing or covering over a date or signature not on the original; Inserting a signature or date not on the original; or making any other change to a document. Permissible error corrections include: Reprint the document, have it re-signed, and retain the original document noting in the file why the document was reprinted and re-signed; or Strike out the error, put the correct text beside it, and initial and date the change.

The Utah Department of Commerce, Division of Real Estate, adopted provisions relating to licensing and registration procedures under its Residential Mortgage Practices and Licensing Act (RMPLA). These provisions are effective immediately. The amendment eliminates the requirement that a mortgage loan originator pass a test with Utah-specific questions for licensure, and substitutes in its place a requirement for passing the nationally recognized Uniform Standard Test. The rule clarifies the timing and reorders the procedures and the experience required for an applicant for licensure as a lending manager and notifies an applicant that failure to adequately document their experience will result in the denial of an application for licensure. The amendment also allows a lending manager applicant who passes one test portion of the exam but fails the other 90 days from the date on which the individual achieves a passing score on the first portion of the exam to pass the failed portion. Furthermore, the rule provides that a lending manager applicant has 90 days from achieving a passing score on both portions of the licensing exam and 12 months from completion of pre-licensing education to apply for licensure.

Illinois Department of Financial and Professional Regulation adopted rules to repeal and amend certain portions of its RMLA. Section 1050.490 contains amendments to the bonding requirements that enable the use of the new electronic surety bond and remove the submission of paper surety bonds. Sections 1050.710-1050.750 related to foreclosure rate are repealed because Public Act 99-0015 amended the regulations' underlying Act Section 4-8 to now instead address Loan Delinquency data and its implementation. Sections 1050.810-1050.820 & 1050.860 are amended to repeal consumer notice provisions because these notice provisions are preempted by the federal Consumer Financial Protection Bureau (CFPB). Licensee must comply with the notice requirement set forth in 12 CFR 1024.33 when providing notice to mortgagor of transfer.

Section 1050.1010 is amended to add reference to the CFPB's TRID Loan Estimate and the "Your Home Loan Toolkit" document. Section 1050.1176 is amended to allow servicers to preserve their records in electronic or digital format rather than adhere to a paper record-keeping requirement. Section 1050.1230 and 1050.1305 are repealed because there are CFPB-required notifications to consumers of loan term changes in the TRID process. Section 1050.1320 is amended add a reference to the CFPB's adopted TRID Loan Estimate form in addition to the Good Faith Estimate.

North Carolina enacted House Bill 770, which amends North Carolina General Statues regarding substitution of trustees in mortgages and deeds of trust. Section § 45-10(a) now prohibits an attorney serving as trustee or substitute trustee from representing either the noteholders or the interests of the borrower while initiating a foreclosure proceeding. Additionally, an attorney who has as trustee initiated a foreclosure proceeding may resign as trustee after the foreclosure is contested and act as counsel to the noteholders.

The term "noteholders" is defined for purposes of § 45-10 to mean "the holders or owners of a majority in the amount of the indebtedness, notes, bonds, or other instruments evidencing a promise to pay money and secured by mortgages, deeds of trust, or other instruments conveying real property, or creating a lien thereon."

Capital Markets

A little up, a little down. Yesterday bond prices were a little down: the 30-year U.S. Treasury bond recorded its first decline in nearly two weeks. While the market reversed from its recent trend, the selling was not very aggressive. The 10-yr note closed 5 ticks lower to yield 2.33%, while the 5-year T-Note and agency MBS prices ended the day worse less than .125.

This morning the big focus was on Chinese inflation which firmed by more than anticipated, assuming the stats are reliable. In this country we've had initial jobless claims (+10k to 239k, still the lowest in 44 years). Coming up is the non-market moving wholesale inventories for September, and the final leg of this week's Refunding when $15 billion new 30-year bonds are auctioned. In the early going rates are up slightly, on no substantive news, with the 10-year yielding 2.34% and agency MBS prices down/worse a few ticks (32nds) versus last night's close.

Opportunities and Products

An innovative and growing technology company based in Dallas, TX is looking for a Client Success Manager who can work with the company's existing client base to help lenders leverage mortgage data and analytics to achieve greater success in capturing more profitable business. The successful candidate must have excellent people skills, an analytical mind, and a deep understanding of mortgage products and pricing with 3+ years of margin management, secondary and/or loan pricing experience. If this sounds like a great fit for you, please submit your resume confidentially to Rob Chrisman.

BKM Sowan Horan, an accounting firm based in Texas focusing on mortgage bankers, has successfully facilitated several R&D tax credit studies. We partner with an industry leader in R&D tax credits and to date have helped clients receive more than $250k in tax credits. If you are interested in discussing the topic, we are available at the MBA's Accounting and Financial Management Conference in San Antonio or we would be happy to schedule a call or in-person meeting. Please contact Brad Marckx with any questions.

"loanDepot, the #No. 2 non-bank mortgage lender, has hired 425 loan officers in 2017 alone. Whether you look at the number of new employees joining every month, new branches emerging in cities across the nation, or sheer volume of loans funded, it's clear the company is highly focused on growth - not just in numbers but in talent. This is this important because loanDepot's next generation technology is designed specifically with a forward-thinking mortgage professional in mind. Balancing the need for face-to-face interaction at the branch with the ability to work online for convenience and easy access throughout the loan process is a requirement in the digital age upon us - and it's something borrowers are begging for through the mortgage process. The company's 180+ retail stores across the US are rapidly expanding their teams to educate borrowers about the myriad of lending options available at their fingertips. If you are looking for the right opportunity to join or open a branch, please connect with Cassidy O'Sullivan today."

"Laurel Caliendo, President and CEO of Connecticut-based Village Mortgage, is a force of nature. What began as a fledgling mortgage brokerage business run from Laurel's home in the early 1990s, Village Mortgage is now a thriving mortgage bank and premier lender in New England that recently extended its reach with wholesale operations in Nevada and Florida. With Alight Mortgage Lending, Laurel and senior executives are integrating operational and financial data and running financial scenarios in real time to streamline decision making. User permissions allow branch managers and other team leaders to access data relevant to their pieces of the business so they can keep financials updated. Analysis is visualized through Alight Enterprise dashboards. "Being able to run my business like an investment portfolio-managing assets and cash through real-time scenario analysis and being able to more closely predict financial outcomes-is a game changer," Laurel says. To read the full story, visit Alight's website.