Compliance and Construction Products; Legal Changes for Lenders on the East Coast
Rumors continue to swirl. Will a top-10 bank really terminate hundreds, possibly a thousand, of its retail originators in late July/early August for not meeting minimum production standards? Is Houlihan Lokey out there marketing a well-known company (a provider of compliance outsourcing solutions to lenders and servicers) to Radian, Black Knight, or overseas firms? Are hundreds of lenders engaged in small-scale unpublicized layoffs to eliminate overstaffing? Maybe I am merely making this stuff up. Maybe not.
Lender Products and Services
The American Bankers Association announced its endorsement of Built Technologies, a Nashville-based fintech company focused on simplifying the administration of residential and commercial construction loans through secure, cloud-based software. Built’s construction loan administration and business intelligence software was specifically designed to complement a bank’s core system(s), reducing the cost of servicing, increasing interest income via faster draw processing, and introducing unprecedented credit and collateral risk management capabilities to banks of all sizes. “We are delighted to be chosen as the ABA endorsed provider for construction lending technology,” said Chase Gilbert, CEO, Built Technologies. “We were impressed by the ABA’s due diligence process when choosing to work with us and it’s great to know we’re completely aligned on what their members need to solve this important problem.” This endorsement is the latest step in Built’s continued focus on bringing construction lending into the digital age.
“With another record month on the books, Strategic Compliance Partners is busy growing our Onsite Compliance solution for lenders. SCP Onsite Compliance is a total compliance management system, located at a Lender’s location, supported by SCP staff and industry leading compliance technologies. Lenders find themselves no longer worrying about compliance, or the costs of non-compliance. Better yet, clients have raved that savings are pouring in from the restructuring and expertise leveraged by partnering and SCP. Simply email Leslie Benjamin to schedule time to discuss your current program and how this program can fit into your organization. Looking to hire a Compliance officer? We can help with the top five must-haves for your next hire!”
State Lending Law Changes
Federal regulations that impact residential lending everywhere are one thing, but when each state is making changes it makes it tough, and expensive, to be a multi-state lender and track all these changes. If you’re lending in only one state, do you think the lending laws are tough? Try lending in many states and keeping track of all the changes. And this is especially the case as the CFPB, or whatever its name is these days, shifts its model – plenty of states are willing to create their own CFPB-style regulatory body. Whack a mole?
Transitional licensing is now applicable to New Jersey. The MBA of New Jersey lobbied for the bill known as the Economic Growth, Regulatory Relief, and Consumer Protection Act, which deals with a variety of issues. Section 106 of the bill provides for transitional licensing that permits MLOs meeting specified requirements to originate loans when moving from a licensed company in one state to one in another state or from a depository institution to a state licensed company for a period of 120 days, while the MLO goes through the licensing process.
NJ’s bill requests that the CFPB give clear and authoritative guidance on several provisions of TRID. “Qualified Mortgage” status is provided to portfolio loans originated by banks and credit unions with less than $10 billion in consolidated assets. The status does not apply to loans with interest-only or negative-amortization provisions, loans with points and fees above the 3 percent cap, or loans with prepayment penalties that violate current QM requirements. HMDA is amended in Section 104 of the bill to expand exemptions on itemized disclosures to HMDA added by the Dodd-Frank Act. Exempted from these disclosures are closed-end mortgages and open-end lines of credit for banks and credit unions which originate fewer than 500 such loans or lines of credit in the last two years, respectively.
Connecticut has modified its provisions regarding reverse mortgages to increase protections for consumers effective as of October 1, 2018. A new section has been added which prohibits any state or federally chartered bank or credit union from accepting a final application for a reverse mortgage or assessing any fees for such mortgage until it has informed the prospective applicant of the requirement to attend reverse mortgage counseling. The lender must also provide the applicant with a list of independent housing counseling agencies approved by the Department of Housing and Urban Development and receive a certification, signed by both the applicant and the counseling agency, confirming that the applicant has received counseling in person or by telephone from an approved independent housing counseling agency. The certification must include the date of the counseling session, and the name, address, and telephone number of both the applicant and the counselor. Counseling agencies are prohibited from receiving any compensation, whether directly or indirectly, from the lender. Any violation of these provisions constitutes an unfair or deceptive trade practice.
Maryland has enacted House Bill 78 which amends the provisions of the Maryland Foreclosed Property Registry effective January 1, 2019. Current law requires the Department of Labor, Licensing, and Regulation to establish an internet based Foreclosed Property Registry to be utilized by the purchaser at foreclosure of a residential property. Bill 78 adds to the current provisions the requirement that any changes to the information required to be submitted to the registry be provided within 21 business days of the change becoming known to the purchaser. Further, the bill requires that the Department of Labor, Licensing, and Regulation promulgate notice of the change to the authorized users of the database including those from the county and municipal corporation.
Maryland’s Senate Bill 755 amends provisions regarding the establishment of escrow accounts for utility assessments, effective October 18, 2018. SB 755 allows a lending institution, at the request of a borrower and at its option, to create an escrow account for a loan solely for the payment of water and sewer facilities assessments. Senate Bill 755 defines water and sewer facilities assessments as a fee or charge that is assessed to an owner of residential real property that is served by public water or wastewater facilities that have deferred water or sewer charges to cover or defray the costs of the installation or maintenance of said facilities. The fee or charge is required to have been established by a recorded Covenant or Declaration and the fee shall be paid to the lienholder of the lien recorded on the property.
Maryland also has amended its Consumer Protection Statute with House Bill 848 allowing a consumer to bring an action or proceeding against a consumer reporting agency. HB 848 also alters the method by which a consumer may place or remove a security freeze on his or her consumer report. The bill requires consumer reporting agencies to develop procedures to use secure connections to receive and process consumer requests to place a security freeze on a consumer report and to remove a freeze on a consumer report in an expedited manner. Agencies are required to register annually with the Commissioner of Financial Regulation of the Department of Labor, Licensing, and Regulation using the form promulgated by the Commissioner. It must also file a bond or bond alternative with the Commissioner unless granted an exemption by the Commissioner. The Commissioner may require the consumer reporting agency to register with the Nationwide Mortgage Licensing System. House Bill 848 also allows a consumer to file a written complaint against a consumer credit agency with the Commissioner.
Florida recently passed House Bill 193, which exempts certain individuals from the state’s mortgage loan originator and broker regulations, under certain circumstances. This bill will become effective on July 1, 2018. The new provisions exempt a securities dealer, investment advisor, or associated person registered under Ch. 517, F.S. from regulation as a mortgage broker or loan originator under Ch. 494, F.S. To be exempted, he or she must meet the specified requirements. The bill adds that any solicitation or referral made pursuant to the exemption must comply with the federal Real Estate Settlement Procedures Act, Ch. 517, F.S. and any applicable federal law or general law of the state of Florida. The Office of Financial Regulation believes that any loss of licensure revenues will be insignificant.
Maine has modified provisions under its Probate Code including its Uniform Power of Attorney Act. These provisions are effective on July 17, 2018. Sec. A-2. 18-C MRSA includes the following: Article 1 General Provisions, Definitions and Jurisdiction. Article 2 Intestacy, Wills and Donative Transfers. Article 3 Probate of Wills and Administration. Article 4 Foreign Personal Representative; Ancillary. Article 5 Uniform Guardianship and Protective Proceedings. Part 9 Maine Uniform Power of Attorney Act. Article 6 Non-probate Transfers on Death. Article 7 Trust Administration. Article 8 Miscellaneous Provisions. Article 9 Adoption. Maine Uniform Power of Attorney Act §5-902(7) defines power of attorney as “a writing or other record that grants authority to an agent to act in the place of the principal, whether or not the term ‘power of attorney’ is used.” The validity of power of attorney executed in Maine is determined by the date the power of attorney is executed.
Capital Markets
Former Federal Reserve Chairman Ben Bernanke said US economic growth faces a slowdown as effects of President Donald Trump's tax cuts and a $300 billion increase in spending fade over the next two years. Bernanke said the stimulus comes at the "very wrong moment" because of low unemployment.
Looking at interest rates, it is relatively quiet out there. The 10-year dropped to 2.92% to close last week amid reports that President Trump would call for the imposition of a 25.0% tariff on $50 billion worth of goods imported from China. Chinese officials responded with a 25.0% tariff on $34 billion worth of imports from the United States to be imposed on July 6th while a tariff on another $16 billion worth of goods could be imposed later. Additionally, the University of Michigan Consumer Sentiment Index Expectations Index declined to its lowest level since the start of the year due to less favorable prospects for the overall economy, which were tied in part to higher inflation expectations.
This week's U.S. economic calendar is relatively light on data with updates on housing, the current account and Markit PMIs. With the Federal Open Market Committee meeting out of the way, however, “Fedspeak” ramps up, with speeches this week from both the incoming and outgoing NY Fed Presidents, Draghi, Kuroda, Powell and RBA's Lowe in a policy panel at the ECB's Forum on Central Banking in Portugal. Kicking off today’s calendar is outgoing NY Fed President Dudley who will deliver opening remarks at the conference. The NAHB Housing Market Index (June) will be released at 10:00am with expectations for an unchanged reading of 70. Atlanta Fed President Bostic will speak on the economic outlook and monetary policy at 1:00pm in Savannah. Tomorrow we have housing starts and building permits. We start the week with rates a shade lower than last week: the 10-year is yielding 2.90% and agency MBS prices are better a couple ticks – mostly due to the trade war hurting the economy.
Employment and Promotions
Royal Pacific Funding is pleased to announce the promotion of Michael Turturro to the position of Vice President, Sales. Michael has been an integral part of the phenomenal growth of Royal Pacific Funding since he joined the company in mid-2016. He has achieved the Top Producer award for both 2016 and 2017 and is on a path to do the same in 2018. Michael Clary, COO, noted, “This promotion marks a stepping stone for Mr. Turturro and his plans to grow a dynamic team of top producing Account Executives. I’m watching the current growth trajectory of his team and looking forward to what the future holds. Congratulations to Michael on a very well-deserved promotion.”
“If you are ready to utilize your loan servicing knowledge and strong management skills with a new opportunity, Republic Bank would like to chat with you. We have an opening for a Director of Loan Servicing based at our downtown Louisville KY Corporate Headquarters. As a leading regional bank and a 2018 Best Places to Work Award Winner, we value our commitment to our clients by setting high service standards. If you have a passion for loan servicing and administration excellence, we’d like to talk. Competitive candidates will have a minimum of 10 years of banking or related experience coupled with at least 5 years of senior level management in mortgage servicing. Please apply at www.republicbank.com/careers. Questions can be directed to Maggie Reimer. Republic Bank is an Equal Opportunity Employer EEO M/F/Disability/Veteran.
XINNIX, the mortgage industry’s premier provider of sales and leadership performance programs, is expanding its team and looking for two National Sales Executives regionally located in the Midwest and Texas. Each National Sales Executive is responsible for having a strategic plan for each client, implementing that strategy and managing the client relationship. Want to join a dynamic team with award-winning culture and a passion for transforming the industry? Send your resume to Kevin Knaus, VP of National Sales.