Construction, Vendor and Recruiting Products; Compliance and Dodd-Frank Notes
As all the pre-printed “Patriots: 2018 Super Bowl Champions” t-shirts are being shipped off for donation to 3rd world countries (yes, that is what happens), the real estate market in this country continues to be hot. What does $500k take down in Denver? Here you go – thanks to Brian B. who sent this along.
Compliance and Dodd Frank-Related Changes
“For example, on a $300k loan I’ll see a discount point of 1% ($3,000) to buy down the rate and in turn I’ll see a credit of $3,000 to offset the discount point. Again, our pricing would be equivalent to the discount point, but we would not be able to provide the lender credit. So, my concern is that in this competitive environment, this tactic is nothing more than a pure ‘bait & switch.’ Get the client on board with a low rate, show them the lender credit so their fees are lower, have them go through the refinance and then at the end process a COC (Change of Circumstance) when the appraisal comes in slightly lower (or something similar) and voila! The lender credit disappears, the fees are higher, and this can be explained as the appraisal came in lower (or something similar). The client is too far invested (paid for appraisal, time, etc.) in the loan to cancel, and doesn’t want to start over again.”
I asked Ken Perry of The Knowledge Coop about the situation above, and he replied, “This is just one of the many things the CFPB could have dealt with had its priorities not changed. It’s still very deceptive and a potential violation of RESPA, but it will take attorneys to fight back in these situations.”
Politics certainly overlaps with lending, and I received this note on last week’s PHH vs. CFPB ruling. “MSAs are kickbacks, pure and simple. I would not expect Mulvaney to protect consumers given he is a Trump hack. Hopefully America will wake up in 2018 and beyond and run these carpetbaggers out of Washington.” As a reminder, acting CFPB Director Mick Mulvaney has taken the office of Fair Lending and Equal Opportunity and moved it under his direct control. Consumer advocates are unhappy, and lenders are focused on the big change - Mulvaney will be in charge of enforcement, which is in keeping with the philosophy he outlined in his memo to the CFPB.
Ken writes, “Of course NAR speaks out about MSAs and fees for service. Lenders are shaken down by brokers, owners and teams for arrangements to subsidize lopsided real estate commission splits and lender pay for access. I am disappointed the mortgage banking industry has not stood together to refuse these solicitations and allowing us to compete on an even playing field.”
And Les reminds us, “All these ‘Do Gooders’ forget one thing: That the compensation rules, while checking predatory lending, also prevent the consumer from negotiating a better rate. For those brokers and lenders that post rates, there is no compromise or negotiating. It therefore leaves the borrower unable to do so.”
The UCD mandate which had been put on hold in September 2017 is effective now and mandatory as of January 31, 2018. Pacific Union will now require the following elements for UCD processing from our Correspondent Lenders: All Lenders must register with both GSEs. The Lender must create a UCD XML file from the final Closing Disclosure (CD). The Lender must upload that UCD XML to both Fannie Mae and Freddie Mac and receive the appropriate response. For Fannie Mae, the Lender must transfer the UCD XML to Pacific Union, as well as get a Successful UCD Findings Report from FNMA. For FHLMC, the Lender must receive a Successful UCD Feedback Certificate. For FHLMC, the transfer process isn’t available but as soon as it is, we will send out instructions on how it will work. The Lender must submit those responses in their Legal Package upload to Pacific Union.
Pacific Union will require its delegated correspondent clients to provide the Universal Loan Identifier (ULI) number along with the new Demographic Information Addendum, which will be required for all mortgage loan applications taken on or after January 1, 2018. This is a new HMDA Requirement which becomes effective the first day of January.
PennyMac Correspondent Group has posted two new announcements. 18-05: FNMA SEL 2017-10: Title in an LLC and Premium Pricing and 18-06: FHLMC 2017-28: Updates Employment After the Note Date, Land Trust.
Wells Fargo Funding is updating its’ requirements to help remedy material Reg. Z discrepancies by removing the requirement for a lender attestation that rescission was re-opened and no notice was received canceling the transaction and retiring the Rescission Attestation Form (Form 13).
Mountain West Financial Wholesale has posted that the VA Debt Questionnaire is no longer required and will not be included in its documents package. The VA Debt Certification is not the same form and is still a VA requirement. In addition, the Certification of Military Activation disclosure will now allow the LO to check the originator box when eSigning the “Lender’s Certification” portion.
Due to the ever-growing threat posed to information and financial systems by nation-state, the New York State Department of Financial Services (DFS) is imposing new regulation under which each company will be required to assess its specific risk profile and design a program that addresses its risks in a robust fashion. Access Business Technologies (ABT) offers the compliant technology that financial businesses will need; effective March 1,2018. Learn more about how to become compliant from an expert in cybersecurity.
Stocks have been garnering all the headlines recently. Most are still labeling the equity sell-off normal and healthy, a period of digestion and consolidation amid a backdrop that remains favorable for risk assets (solid growth, strong earnings, reasonable valuations, etc.), although sentiment clearly has shifted over the last 72 trading hours.
As Jerome Powell takes over as chairman of the Federal Reserve, he will be faced with historical signs that an economical bubble ready to burst is in the making. Experts say the big challenge will be to maintain growth. Strong economic data and the possibility of rising inflation have sparked a brisk US government bond sell-off, pushing up Treasury yields and contributing to a stock market downturn.
Unlike Friday, Monday was typical of bond market / equity market correlation and the 10-year Treasury note improved by 7 basis points to finish the day yielding 2.77 percent. When equities sell-off it usually creates demand for safe-haven asset classes like bonds though given the recent volatility, bonds could change course today or over the remainder of the week. Based on yesterday’s movement, the expected probability of a rate hike decreased from 76% to 63% according to the CME FedWatch Tool.
This week has a light economic calendar and yesterday’s ISM Non-Manufacturing Index jumped to its highest reading since August 2005 and added another set of data pointing towards accelerating growth. Today’s calendar kicks off with international trade (widening to $53.1 billion, widest in almost a decade and likely to subtract from economic growth), Redbook same-store sales and December job openings. Additionally, we are staring down another budget extension later this week which many expect will be another short-term stop-gap. This looming issue is still the debt ceiling limit extension needed by early March to avoid a Treasury default. After yesterday’s rally we find the 10-year yielding 2.74% and 30-year agency MBS prices worse almost .125.
Jobs and Products
Over 50 years of combined experience and 19 of those with Stearns Wholesale Lending. That is the dynamic team of Jonathan McCash, Nick Pabarcus and Ryan Rathert who have been promoted to Senior Vice Presidents with the company. McCash, who joined Stearns in 2012 as an RVP, thrives on building energetic and top-performing sales teams. Rathert came onboard as SVP, Finance, in 2014 with analytical expertise that has been pivotal to the development of financial tools used for forecasting, reporting and making strategic decisions. Pabarcus has been with Stearns since 2011 where he first led the Correspondent Channel and most recently launched numerous successful initiatives in Wholesale. This leadership trio has brought enthusiasm and an innovative approach to the business that has energized the Stearns Wholesale Team and positioned them for increased growth and industry leadership.
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