CAMPs REAL TIME LEGISLATIVE INFORMATION UNDER THE DOME

Survey: Loan Production Costs Expected to Rise

Author: Tory Barringer in Daily Dose, News, Origination October 30, 2014

With less than one year left before the Truth in Lending Act (TILA) and the Real Estate Settlement Procedures Act (RESPA) disclosure rule goes live, a new survey finds more lenders are battling with increased loan costs as quality control becomes the top concern.

In a poll [1] of mortgage executives conducted at the Mortgage Bankers Association’s (MBA) Annual Convention earlier this month, data management solutions firm Capsilon [2] found 95 percent of lenders surveyed are either somewhat concerned about loan quality right now, with four in five saying they are “very concerned.”

With the TILA/RESPA requirements scheduled to go into effect in August 2015, 84 percent of survey respondents said their companies have already started preparations to be compliant by the deadline. More surprisingly, Capsilon said, was that 7 percent of respondents said their companies have not yet begun preparations, while 9 percent were unsure.

As the majority of lenders prepare for the deadline, the survey also found firms are planning to pay more money for compliance-related activities next year on top of the increased costs they’ve already taken in 2014.

According to the findings, 80 percent of executives surveyed reported that their 2014 loan production costs are somewhat or significantly higher than they were last year as a result of regulatory requirements, and 39 percent anticipate spending more for compliance next year.

The results fit with MBA’s most recent report on mortgage banking profits [3], which found total loan production expenses averaged $6,932 per origination in the second quarter, down more than $1,000 from the first quarter but up more than $1,000 from the same time the year before.

“Clearly, this survey data confirms that lenders are struggling with increasing costs as they contend with a myriad of new regulations that require a heightened focus on data integrity and loan quality,” said Capsilon CEO Sanjeev Malaney.

To help keep labor costs and hassle down, Malaney recommends lenders adopt an automated, data-centric model to stay competitive.

“Technology gives lenders the ability to move to a straight-through loan processing model, where much of the workflow is automated, with only a small percentage of loans requiring human intervention,” he said.

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Wednesday, October 29, 2014

I just love October! The cool fall weather, all things pumpkin, and most of all…we get to play dress up on Friday! I love Halloween. Most of you know I love to dress up. I love to see how creative everyone is with their costumes! Speaking of October, who has it better than us? NO ONE! I was hoping to be able to congratulate the San Francisco Giants but true torture and we have a game 7 tonight. Let’s do this Giants!!!

It’s almost time to renew your NMLS License. The NMLS

 is launching “Your License is Your Business” campaign to encourage loan originators to submit their annual renewal requests in November. You are able to do this beginning on November 1st. By renewing in November, you will be less likely to have a lapse in licensing. 94% of all renewal applications submitted in November are approved by December 31st.  To renew your license, you can log in to the System, select the state agency and the license type, pay the fees and submit a renewal request, you must also complete the required hours of continuing education prior to submission. As only two-thirds of license renewal requests are submitted in November and the NMLS is encouraging licensees to submit a renewal request by November 15th.

NAMB NEEDS YOUR HELP!!!

I know this has been in the Echo for the past few weeks but NAMB is seeking your help so they may tell your story. They have only had a couple hundred responses. We need more because the CFPB is looking for data from the mortgage industry in order to make favorable adjustments to the stringent regulatory changes that are currently in place. Now is not a time to say, “My voice doesn’t matter.”

They need your input in a survey that shouldn’t take more than 5 or 10 minutes of your time. You can estimate your numbers if you cannot remember the exact numbers.  Here is the link:

https://www.surveymonkey.com/s/NAMB_cfpb

The major data points we would like to see are:

  • TOTAL number of Loans closed in YTD.
  • TOTAL Dollar Volume of your loans YTD.
  • TOTAL amount of Mortgage rebates that you gave to the customer to help pay their closing costs YTD. This amount will be the sheet price of the loan, minus your Lender Comp, minus any hits and this would be the net amount that you would have given back to the customer to help pay fees and reduce closing costs.

The bottom line is CAMP is working with NAMB to keep the lines of communication open with our regulators. Together we can improve the state of housing and do what is best for the consumer and small business mortgage professionals. It doesn’t matter if you are a mortgage broker or a mortgage banker, CAMP/NAMB is here for you…the mortgage professional.

On the Legislative Front:

I’ve been saying for the past couple of weeks that we are all quiet on the Legislative front. We continue to be quiet but I want to remind everyone to get out and vote next Tuesday. You may or may not have important races coming up but there are a couple of candidates that really need our vote. Remember, Ted Grose, a former CAMB State President,  is in a closely contested race in the 62nd district and he needs your vote. Mark Steinorth is running for Assembly in the 40th district and could use your vote. Lastly, for those of you in the 31st Congressional District, Paul Chabot has pledged to help homeowners (looking specifically for Veterans) and he could use your vote.

Upcoming Chapter Events:

Southern Los Angeles County CAMP is hosting “How CAMP is working for you” Scott Griffin and I will be attending on Wednesday, November 12, 2014 from 11:30 to 1pm. in Long Beach. Exact location to follow. For more information, contact Chapter President, Nelson Otero 714-373-5700 or notero@firstalliedfinancialservices.com

Silicon Valley CAMP is hosting their monthly breakfast meeting on Friday, November 14, 2014 from 8:30 to 10 at Three Flames Restaurant, Banquet Room, 1547 Meridian Avenue, San Jose, CA 95125. No need to register, pay at the door.

San Francisco Peninsula CAMP is hosting “Everything you need to know about Credit Scoring and More” on Wednesday, November 19, 2014 at Dominic’s @ Oyster Point, 360 Oyster Point Blvd, South San Francisco, CA. For more information, contact Chapter President Donna Aldrich at 415-345-4320 or donna@donnaaldrich.com

Online Training:

New CAMP Benefit

Do you hate to sit in an all-day class? Are you too busy to give up just One day of your time? Do you still need your NMLS CE? Check out our new CAMP benefit, Online Training: CAMP members now receive discounted rates for online NMLS training.

Click Here for More Details

 

Live Chapter Continuing Education:

Inland Empire Chapter is hosting a live 8 hour NMLS class on Thursday, November 6, 2014. This will be held at the PRMG Training Room, 1265 Corona Point Court, Corona CA 92879. Huge discount for CAMP members! Register at www.iecamb.com

North Bay Chapter will be holding a final NMLS training class on Tuesday, December 2, 2014. This will be held in Petaluma. More details to follow but you can contact Rick Reith at 415-740-8834 for more info.

Silicon Valley Chapter will be holding their final NMLS training class on Wednesday,December 3, 2014This will be held at the Silicon Valley Business Center, 1900 Camden Avenue, San Jose, CA. Click here to register: http://www.siliconvalleycamp.com/event-1780648

CAMP Statewide Calendar

If you would like me to include upcoming events please send me an email.

Until next week,

Michelle Velez, President

California Association of Mortgage Professionals

shellvelez@gmail.com  I  thecampsite.org

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Affordability and mortgage lending issues abound

October 28, 2014

Decades from now, when history writes the story of the Millennials, they may well be remembered as the first generation for whom using smartphones and social media was as natural as taking a breath. Yet unless things change, there’s a good possibility they’ll also be known as the generation that couldn’t afford to buy or rent a home.

It’s ironic that when the first Millennials were born, their Baby Boomer parents couldn’t afford a home either. Looking back to October 1981, interest rates on a 30-year, fixed-rate mortgage exceeded 18%. It wasn’t until rates fell below 10% in 1986, and to the 7% range in the early 2000s, that affordability ceased to be a major impediment to homeownership.

Today, California’s housing affordability problem is back – only this time it is fueled by rising home prices and lack of access to capital rather than double-digit interest rates.

On Nov. 14, the California Association of Realtors will convene economists, policymakers, and practitioners for “The Real Estate Summit: Partnering for Change in California.” The summit will explore the issue of housing affordability, as well as California’s infrastructure, foreign investment, consumer trends, housing finance, and policy implications.

So how serious is the problem?

CAR’s Housing Affordability Index – which tracks the percentage of households that can afford a median-priced, single-family detached home assuming current interest rates and 20% down – fell from 33% in the first quarter of 2014 to 30% in the second quarter, a 26% decline from a peak of 56% in early 2012. While home buyers needed to earn an annual income of $56,320 to purchase the median-priced house two years ago, today they need an additional $37,270, or $93,590 total annually, to qualify.

The reasons behind the decline in affordability are many:  slower-than-expected economic growth, incomes that haven’t kept pace with rising home prices or rents, pent-up demand, lack of supply, tighter lending criteria in response to new mortgage regulations from Congress, and indecision about the future of Fannie Mae and Freddie Mac, to name a few.

What the numbers don’t reveal is the impact the problem is having on individuals and families. Nationally, more than half of adults surveyed say they’ve taken a second job, postponed retirement contributions, run up credit cards, or moved to a cheaper neighborhood in order to cover their rent or mortgage over the past three years, according to the MacArthur Foundation. Another study reports that 45% of college-educated Millennials have moved back in with their parents because they can’t find a job or the one they have doesn’t cover student loans and a place to live.

A lack of new home construction is likely to cause further affordability issues unless housing starts increase in line with local job gains, according to the National Association of Realtors. Its analysis found that too few homes are being constructed in relation to local job market conditions, and that lack of construction has “hamstrung” supply and slowed home sales.

Here in California, it has been estimated that the post-recovery real estate market could easily absorb 250,000 new units of owner-occupied or rental housing – a need that isn’t even close to being fulfilled.

What’s the key reason?

Many small builders continue to experience limited access to credit and rising construction costs. Despite strong demand, the number of single-family housing permits issued in August 2014 declined by nearly 21% from the same month in 2013, while the number of multifamily permits was down almost 24% year over year.

There are some who believe California’s housing affordability problem will work itself out as the economy improves and consumer expectations align with real estate market realities.

They may be right.

The question is: What will be the ultimate cost of such inaction, both now and over the long term?

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U.S. Urges AIG, MGIC to Back Fastest-Growing VA Loans

Private insurers are considering a request by U.S. officials to guarantee mortgages for veterans — the fastest growing part of the market.

The Department of Housing and Urban Development is urging mortgage insurers that rely on Fannie Mae and Freddie Mac for business to offer supplemental protection for lenders to military members and veterans. Only 25% of VA loan amounts are backed by the Department of Veterans Affairs — a limit that keeps some firms from fully participating in the program, Ginnie Mae President Ted Tozer said.

As soldiers returned to America after more than 2.6 million served overseas since 2001, and the cost of Federal Housing Administration insurance jumped, the VA share of home lending has soared, accounting for almost 9% in the second quarter, at least a 20-year high. Insurers including American International Group Inc. and MGIC Investment Corp. are looking at these loans as their role in the mortgage market expands.

“It’s something I’m definitely interested in exploring,” Donna DeMaio, who runs AIG’s United Guaranty mortgage-insurance unit, said in an interview at a Mortgage Bankers Association conference last week. “I’m really interested in new ways we can help produce access to credit.”

The 25% cap on VA insurance “leaves a lot of small lenders awfully exposed and reluctant to offer veterans credit under this initiative,” HUD Secretary Julian Castro said during his speech at the conference in Las Vegas. Getting another layer of protection would make them “feel confident when offering these loans — giving more of our nation’s heroes a chance to buy a home in the country they risked everything to protect.”

When smaller lenders do offer VA loans, they often sell the servicing contracts to larger lenders to get rid of the default risk, said Tozer of Ginnie Mae, which guarantees $1.5 trillion of bonds mostly backed by FHA and VA loans. That leaves those smaller lenders with a diminished role in the VA market, reducing competition that can cut borrowing costs and limiting underwriting flexibilities.

Mike Frueh, director of the VA’s loan guaranty service, said that while the 70-year-old program has about 1,500 firms making loans that it guarantees, the agency supports using extra insurance to draw in more. The reduction of lenders’ money at risk, a key part of VA lending since its creation, would be addressed by the insurers wanting “to make sure they’re making a safe bet.”

Robert Van Raaphorst, a spokesman for the Mortgage Bankers Association, said that the group couldn’t yet comment on the idea.

VA lending, which doesn’t require a down payment, has expanded as the U.S. draws down troops after more than a decade of combat in Iraq and Afghanistan. The VA has also taken business from FHA after that agency, which guarantees loans with down payments as low as 3.5%, increased the cost of its insurance to rebuild its depleted fund.

VA loans accounted for about $26 billion or 9% of mortgages made in the second quarter, up from 7% in all of 2013 and less than 2% a decade ago. The loans were used to finance 8% of all home purchases in the three months through September, an increase from 4% in the three months through May 2010.

Higher FHA insurance premiums are also pushing borrowers to get loans from government-controlled Fannie Mae and Freddie Mac. They require loans with less than 20% down payments to carry mortgage insurance that covers the initial losses.

FHA borrowers must now pay as much as 1.35 percentage point in annual mortgage-insurance premiums, along with an upfront fee of 1.75% of the loan balance. Prior to October 2010, borrowers paid an annual amount of 0.55%.

“As more business shifts to the private market and away from the FHA,” the mortgage insurers are benefiting, MGIC Chief Executive Officer Curt Culver said on an Oct. 15 conference call with analysts.

The industry backed 14% to 15% of new loans last quarter, he said. That’s up from less than 5% in 2009 and 2010.

“As private capital we certainly would like to explore as many ways as possible to prudently participate in the housing recovery and expansion,” including supplemental VA loan insurance, Mike Zimmerman, a spokesman for Milwaukee-based MGIC, said in an email.

Whether the company expands into the VA market and generates adequate returns depends on issues including the level of capital that will be required under pending changes to Fannie Mae and Freddie Mac rules and state requirements, he said.

Radian Group Inc. is “interested in offering insurance on government mortgages both VA and FHA, but our participation will depend on the terms and structure,” Emily Riley, a spokeswoman, said in an email.

The potential “incremental” profit opportunity depends on what kind of margins would be possible, said Jason Stewart, an analyst at Compass Point Research & Trading LLC. Some of the mortgage insurers may not have enough spare capital at this point in time to even entertain the idea, he said.

“It’s a good thing to explore,” Stewart said.

After surging in 2013, mortgage insurer shares have struggled this year amid slowing home sales and the potential for tighter rules for the industry. Shares of MGIC, which tripled last year, have gained 0.2% since Dec. 31 to $8.46. Radian is up 8.6% to $15.34 this year, after more than doubling in 2012 and again the following year.

Insurers formed after the housing market crashed in 2008 have also suffered. Shares of Essent Group Ltd. are down 3.2% in 2014, while NMI Holdings Inc. has slumped 32%.

Insurers, which have seen little demand since the financial crisis to back loans that banks hold on their books, probably can get additional business from Fannie Mae and Freddie Mac as more borrowers learn to avoid higher FHA fees, NMI Chairman and CEO Brad Shuster said in an interview. His firm wants to hear more about the VA opportunity, seeing it as a “potential expansionary measure,” as he said.

“It’s an interesting idea, it’s certainly one we’re exploring,” said Adolfo Marzol, an executive vice president at Essent Guaranty Inc.

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Monday, October 27

I NEED ALL OF YOU TO PAY ATTENTION TO THIS … IT’S VERY IMPORTANT!!

NAMB—The Association of Mortgage Professionals is currently working on a survey that we need everyone to complete. As of today, we only have about 160 people who have answered it and we need a lot of responses, like more than 500! This is information we are gathering to present to the Consumer Financial Protection Bureau (CFPB). Please understand that we will not release the name of the company on the report, but we need to have this information for the validity of the report. Please take just five minutes of your time and complete this survey now. The link to the survey can be found here.

As you know, we are still out there pushing you to enroll for the NAMB Lending Integrity Seal of Approval. Many originators need to understand that people are looking everywhere for a reason to use an originator that sets them apart from every other originator. They want qualified, professional and ethical men and women who will help them achieve the American dream of homeownership. Only NAMB members are eligible to carry the Lending Integrity Seal of Approval and it will set you apart from all of the rest out there. So do not delay. Go on to www.namb.org and complete your registration NAMB’s Board of Directors held a meeting this week, and we are in the planning stages of the 2015 Legislative & Regulatory Conference in Washington, D.C. We will soon have a date for this event, and then we can all begin to start the process of planning appointments to see and visit with our elected officials. However, you should start looking to see which members of Congress are not running this term and begin to make contacts with them now. Contact your representatives and arrange a meeting to help you in the future. There has never been a better time to introduce yourself to those who make the rules.
And on another note, right around the corner is Election Day, Tuesday, Nov. 4. Make sure that you get out there and vote. Everyone’s vote counts and this means you too!
I want to thank all of you who were involved with the NAMB National event in Las Vegas, including the staff, workers, volunteers, members of the NAMB Board of Directors, exhibitors and speakers, Vince Valvo, the NAMB National Committee, and NAMB National Committee Chair Nathan Pierce for a great and successful conference. But, I specifically want to THANK YOU, the attendees, for without you, it could not have happened. I would like to see 3,000 people attend NAMB National next year … that is my goal. We will be back again at the Luxor on Oct. 17-19, 2015, and we will again have all of the space, along with some additional space, to make sure that we have room for everything. I will keep you informed as to when you need to begin registering for this event and getting your flights scheduled for next year.
Last week, I attached information on the NAMB UPS program. It is something that NAMB is involved in so that members can save money. I am repeating the information for those of you who lost it or forgot. You can receive these discounts even if you already have a UPS account. Remember, the more you ship, the more you can save with UPS. To enroll and start saving immediately, visit www.savewithups.com/namb or call (800) MEMBERS (1-800-636-2377), Monday-Friday, 8:00 a.m.-6:00 p.m. EST. Make sure that you mention you are an NAMB member. Contact UPS for specific services and discounts. Introductory Program discounts will be applied to accounts for Weeks 1 through 4 on the UPS Savings Program. Week 1 includes the date that discounts are applied. Weeks are calculated Sunday through Saturday..
I would be remiss if I didn’t remind all of you that Nov. 1, 2014 is the beginning of the 2014 NMLS Renewal period. Please make sure that you get your education completed and you get this renewal completed, so that you can be ahead of the game and get your license renewal early and avoid waiting until the last minute to complete this. Any questions on this, please contact the NMLS for more details.
Halloween is this Friday, so please be careful and make it enjoyable as a family outing or a family gathering.
Until next week!

Donald J. Frommeyer, CRMS, CEO
NAMB—The Association of Mortgage Professionals
namb.ceo@namb.org www.joinnamb.com

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Help NAMB Tell Your Story

NAMB Government Affairs Update

2014 Mortgage Survey

The CFPB Wants To See Data

Recently the Government Affairs team met with the CFPB to discuss mortgage brokerage compensation, the 3% cap on points and fees, as well as loan origination compensation. The CFPB provided excellent industry insight and guidance into several of the key areas plaguing mortgage originators and mortgage brokerage entities.

It is obvious the CFPB is a data driven organization and NAMB is determined to show them that the mortgage broker model is extremely effective in mitigating upfront costs for consumers. We are also determined to show them that thousands of small businesses are being adversely impacted due to the limitation on entity revenue.

So, here we are. Your industry needs your help. Your industry needs you to participate and respond to this survey to the best of your ability.

If you don’t have exact numbers, please provide us with your best estimate.

Take the NAMB Survey HERE

The major data points we would like to see are:

  1. TOTAL number of Loans closed in YTD.
  2. TOTAL Dollar Volume of your loans YTD.
  3. TOTAL amount of Mortgage rebates that you gave to the customer to help pay their closing costs YTD. This amount will be the sheet price of the loan, minus your Lender Comp, minus any hits and this would be the net amount that you would have given back to the customer to help pay fees and reduce closing costs.

Each survey participant will receive the video webinar,

Getting More Business With Realtors presented by Maximum Acceleration. In addition, Mortgage Educators will be giving away 5

8-hr NMLS classes to be used for 2014 or 2015.

Here is the bottom line, NAMB has open lines of communication with our regulators and will continue to work with them to improve the state of housing and do what is best for the consumer and small business mortgage professionals.

Just remember, It does not matter if you are a mortgage broker or a mortgage banker, NAMB is here for you…the mortgage professional.

For more information on NAMB’s Government Affairs projects or on how you can get involved, contact Rick Bettencourt anytime at governmentaffairs@namb.org.

Please share this with your colleagues. Thank you for your time and support.

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CFPB finalizes amendments to mortgage rules

Posted: 23 Oct 2014 08:05 AM PDT

Richard J. Andreano, Jr.

The CFPB has issued a final rule amending certain provisions of the 2013 Title XIV final mortgage rules.  While in its press release the CFPB describes the amendments as “minor adjustments to its mortgage rules,” the final rule contains several major changes from the CFPB’s proposal.

QM Points and Fees Cure.  Generally, to be considered a qualified mortgage (QM), a mortgage loan must not contain points and fees that exceed three percent (3%) of the loan if the principal is $100,000 or more.  The final rule addresses the scenario when a lender discovers post-consummation that a loan it originated is not a QM because the points and fees exceeded the 3% (or other applicable) cap.

As proposed, the rule creates a procedure permitting the lender to refund the overage amount of points and fees to the borrower within 210 days of consummation and keep the loan’s QM status.  However, while allowing a longer cure period than the proposal’s 120 day period, the final rule only allows a cure for loans consummated on or after the final rule’s effective date and on or before the sunset date of January 10, 2021.  Also unlike the proposal, the final rule includes events that cut off the ability to cure.  The cure is only available prior to the occurrence of any of the following events: (1) the consumer’s institution of an action in connection with the loan; (2) the creditor, assignee or servicer receiving written notice from the consumer that the loan’s points and fees exceed the applicable limit, or (3) the consumer becoming 60 days past due.  And in another significant change from the proposal, the final rule requires the lender to pay interest on the points and fees overage at the contract rate applicable during the period from consummation until payment is made to the consumer.

The final rule includes a requirement for the lender to maintain and follow policies and procedures for “post-consummation review of points and fees” (but expressly does not require a full loan review as some commenters thought the proposal would have mandated).  However, the final rule does not include the CFPB’s proposed requirement that the lender must have originated the mortgage loan in good faith as a QM.

Alternative Small Servicer Definition.  Under the RESPA-TILA mortgage servicing rules, “small servicers” (as defined by the servicing rules) are exempt from certain provisions of the rules if they service 5,000 or fewer mortgage loans annually and meet other requirements.  The CFPB proposed an alternative definition of a small servicer to address concerns that nonprofits that receive fees to service loans for other associated nonprofits might not be able to qualify for the small servicer exemption.  As proposed, the final rule expands the definition of a small servicer to include a nonprofit entity that services 5,000 or fewer mortgage loans, including any mortgage loans services on behalf of associated nonprofit entities, for all of which the servicer or an associated nonprofit is the creditor.

Nonprofit Lender Exemption from ATR Provisions.  The ability-to-repay (ATR) rule exempts certain nonprofits that make mortgage loans to low or moderate income borrowers from certain provisions of the rule if they make no more than 200 dwelling-secured loans per year and meet other specific requirements.  As proposed, the final rule amends the exemption so that subordinate lien loans for down payment assistance and certain other purposes that are interest-free, forgivable, and meet certain other conditions (so-called “soft seconds”) would not count toward the annual 200 loan limit.

Effective Date.  Except for a commentary revision dealing with the relationship between the QM cure and the RESPA/Regulation X tolerance cure under the TILA-RESPA integrated disclosure rule that becomes effective next year, the final rule becomes effective upon its publication in the Federal Register.  Under Regulation X, if any charges at settlement exceed the charges listed in the good faith estimate by more than the permitted tolerance, the lender can cure the tolerance violation by reimbursing the amount by which the tolerance was exceeded on or within 30 calendar days after settlement.  The final rule adds a comment that provides that amounts paid to a consumer pursuant to the QM cure can be offset by amounts paid to the consumer pursuant to the RESPA/Regulation X tolerance cure to the extent the amount paid to cure the tolerance violation is being applied to points and fees.  Effective August 1, 2015, to coincide with the effective date of the CFPB’s final rule integrating the TILA and RESPA application and closing disclosures, that comment will be replaced with a substantially similar new comment that references the tolerance cure provision in the TILA-RESPA integrated disclosure rule.

Unaddressed Issues.  In its proposal, the CFPB requested comments on two additional issues: (1) whether and how to provide for a cure provision for QM loans that inadvertently exceed the 43% debt-to-income ratio required under the ATR rule; and (2) the credit extension limit applicable to the small creditor exemption under various Dodd-Frank rules.  The final rule does not address these issues.  In the final rule’s supplementary information, the CFPB states that it is considering comments submitted on these issues and whether to address them in a future rulemaking.

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Wednesday, October 22, 2014

We have a little more than a week left in October. While I’m really enjoying the cooler fall weather, I’m hoping for rain. We did have one day of rain but it’s really not enough. On a different note, I’m happy to see the SF Giants in the World Series. I don’t know about you but I thought that was an amazing game last night!

The CFPB is seeking comments on a proposed rule amending Regulation C to implement amendments to the Home Mortgage Disclosure Act. The Bureau is looking to add several new reporting requirements and to clarify several existing requirements. One of the items in question is the required time for re-disclosure once a file is locked. The question is what would the lender interpretation be? Is this another requirement that will hold up your loan? How will the new disclosure be required to be delivered? You can review the proposed rule and make comments by clicking the link below: http://www.consumerfinance.gov/notice-and-comment/

 

Are you still utilizing FHA insured loans for houses that are owned by the seller for less than 90 days? If so, you should have a conversation with your Realtor referral partners. FHA guidelines are set to revert back to requiring a seller to own a home for a minimum of 90 days before reselling the home at the end of this year.

Would you like to make a difference for your industry but don’t have a lot of time? You can help by providing information. NAMB is seeking your help so they may tell your story. The CFPB is looking for data from the mortgage industry in order to make favorable adjustments to the stringent regulatory changes that are currently in place. Now is not a time to say, “My voice doesn’t matter.” They need your input in a survey that shouldn’t take more than 5 or 10 minutes of your time. You can estimate your numbers if you cannot remember the exact numbers.  Here is the link:  Click Here

The major data points we would like to see are:

  • TOTAL number of Loans closed in YTD.
  • TOTAL Dollar Volume of your loans YTD.
  • TOTAL amount of Mortgage rebates that you gave to the customer to help pay their closing costs YTD. This amount will be the sheet price of the loan, minus your Lender Comp, minus any hits and this would be the net amount that you would have given back to the customer to help pay fees and reduce closing costs.

Each survey participant will receive the video webinar, Getting More Business With Realtors presented by Maximum Acceleration. In addition, Mortgage Educators will be giving away 5 8-hr NMLS classes to be used for 2014 or 2015.

The bottom line is CAMP is working with NAMB to keep the lines of communication open with our regulators. Together we can improve the state of housing and do what is best for the consumer and small business mortgage professionals. It doesn’t matter if you are a mortgage broker or a mortgage banker, CAMP/NAMB is here for you…the mortgage professional.

Legislative update:

Things are quiet on the State and Federal Legislative fronts. However, there is an issue brewing in San Francisco that I would like you to be aware of. Why? Because if it passes in San Francisco, it could be coming to your home town soon!

Proposition G is currently on the Ballot in San Francisco. It would have a negative effect on your clients and could hurt the San Francisco housing market. If passed, Prop G would impose a tax up to 24% on the total sale price of homes with 2 or more units and single-family homes with in-law units sold within 5 years of ownership. With the median home sale price in San Francisco over $1 million, homeowners may face up to $240,000 in taxes if they choose to sell their home.  This tax will scare away middle-class homebuyers, drive up prices for new renters and tenants, and damage the housing market as a whole. Did I mention that this tax is also retroactive? It does have a sliding scale but I’m sure you can see what this will do to the housing market.

The NO on G campaign is looking for help. Grass roots door knocking, phone calls or just a donation. If you would like to read more on this, click on here for more details:http://www.stopthehousingtax.com/

Upcoming Chapter Events:

Southern Los Angeles County CAMP is hosting “How CAMP is working for you” Scott Griffin and I will be attending on Wednesday, November 12, 2014 from 11:30 to 1pm. in Long Beach. Exact location to follow. For more information, contact Chapter President, Nelson Otero 714-373-5700 or notero@firstalliedfinancialservices.com

Silicon Valley CAMP is hosting their monthly breakfast meeting on Friday, November 14, 2014 from 8:30 to 10 at Three Flames Restaurant, Banquet Room, 1547 Meridian Avenue, San Jose, CA 95125. No need to register, pay at the door.

San Francisco Peninsula CAMP is hosting “Everything you need to know about Credit Scoring and More” on Wednesday, November 19, 2014 at Dominic’s @ Oyster Point, 360 Oyster Point Blvd, South San Francisco, CA. For more information, contact Chapter President Donna Aldrich at 415-345-4320 or donna@donnaaldrich.com

Online Training:

New CAMP Benefit

Do you hate to sit in an all-day class? Are you too busy to give up just One day of your time? Do you still need your NMLS CE? Check out our new CAMP benefit, Online Training: CAMP members now receive discounted rates for online NMLS training.

Click Here for More Details

 

Live Chapter Continuing Education:

Greater Sacramento Chapter is hosting a live 8 hour NMLS class here in the Sacramento area on Tuesday,

October 28, 2014. We are welcoming back Ginger Bell from Strategic Compliance Partners to teach this class once again. This fulfills the yearly 8 hour continuing education requirement for Mortgage Loan Originators. The price (including lunch) is $99 for CAMP members and $139 for non-members. Please be sure to register ASAP to save your spot. Registration link and additional information here: Click Here

Inland Empire Chapter is hosting a live 8 hour NMLS class on Thursday, November 6, 2014. This will be held at the PRMG Training Room, 1265 Corona Point Court, Corona CA 92879. Huge discount for CAMP members! Register at www.iecamb.com

North Bay Chapter will be holding a final NMLS training class on Tuesday, December 2, 2014. This will be held in Petaluma. More details to follow but you can contact Rick Reith at 415-740-8834 for more info.

Silicon Valley Chapter will be holding their final NMLS training class on Wednesday,December 3, 2014This will be held at the Silicon Valley Business Center, 1900 Camden Avenue, San Jose, CA. Click here to register: http://www.siliconvalleycamp.com/event-1780648

CAMP Statewide Calendar

If you would like me to include upcoming events please send me an email

Until next week,

Michelle Velez, President

California Association of Mortgage Professionals

shellvelez@gmail.com  I  thecampsite.org

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Financial Regulators Finalize QRM Rule

Author: Tory Barringer October 21, 2014 0

Federal regulators announced on Tuesday they have finalized a rule establishing a risk retention framework for mortgage lenders securitizing and selling loans.

The so-called qualified residential mortgage (QRM) rule, which was put up for consideration by FDIC’s board of directors Tuesday morning, would require banks to retain at least 5 percent of a loan’s risk when packing mortgages to sell to investors in the secondary market. The rule comes as a response to last decade’s housing bubble, when lenders let their standards slip and passed on the risk to investors, resulting in an economic crash as those mortgages defaulted.

The QRM rule is one of the bigger provisions mandated by the 2010 Dodd-Frank Act, with co-author Barney Frank remarking in the past that risk retention is “the single most important part of the bill.”

Regulatory leaders agreed, assuring lawmakers last month that they were close to completing the rulemaking.

The road to finalizing a QRM rule has been a bumpy one. Regulators—including FDIC, HUD, the Federal Reserve, the Securities and Exchange Commission, the Office of the Comptroller of the Currency (OCC), and the Federal Housing Finance Agency (FHFA)—first proposed a draft in 2011.

The group released a second proposal in 2013, removing some of the more contentious provisions—in particular, a requirement that banks must retain risk on mortgages with down payments lower than 20 percent—in response to industry concerns.

The finalized rule is more closely aligned with the Consumer Financial Protection Bureau’s (CFPB) qualified mortgage (QM) rule implemented early this year. Both rules exclude from qualification mortgages with debt-to-income ratios exceeding 43 percent, and both prohibit loans with riskier features like balloon payments or terms longer than 30 years.

In separate statements released Tuesday, regulators expressed optimism that the finalized rule will give the housing finance sector greater certainty, opening the door for more activity from private investors.

“Aligning the Qualified Residential Mortgage standard with the existing Qualified Mortgage definition also means more clarity for lenders and encourages safe and sound lending to creditworthy borrowers,” FHFA Director Mel Watt said. “Lenders have wanted and needed to know what the new rules of the road are and this rule defines them.”

Comptroller of the Currency Thomas J. Curry said securitizations can provide an incentive for lax underwriting if the weak credits can be transferred from originators to investors with no further responsibility for the loans.

“The rule we are approving today will require lenders to retain some of the risk for the loans that go into securitized pools except for home mortgages that meet the standards necessary under the qualified residential mortgage, or QRM, exception,” Curry said. “Under this rule, QRM is equivalent to QM – that is, the Qualified Mortgage rule approved by the Consumer Financial Protection Bureau.”

Industry groups were also optimistic about Tuesday’s announcement, praising policymakers’ efforts to avoid confusion by lining up QM and QRM together.

“This rule was required by Dodd-Frank to ensure that loans sold into the secondary market are properly underwritten, a goal which the QM rule also helps to ensure.  It is appropriate and good policy to align the two,” said Frank Keating, president and CEO of the American Bankers Association. “This will encourage lenders to continue offering carefully underwritten QM loans, and avoid placing further hurdles before qualified borrowers, allowing them to achieve the American dream of homeownership.”

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MBA calls the policy changes “extremely positive”

Sarah Wheeler
October 20, 2014

Federal Housing Finance Agency Director Met Watt and U.S. Secretary of Housing and Urban Development Julian Castro announced their plans to address some of the housing finance industry pain points in what MBA CEO David Stevens called “extremely positive” policy steps.

Speaking at the Mortgage Bankers Association Annual Convention & Expo on Monday, Watt and Castro outlined changes that would reduce confusion and risks for lenders.

“We know that access to credit remains tight for many borrowers, and we are also working to address this issue in a responsible and thoughtful manner,” Watt said. “Additionally, FHFA continues to evaluate ways to refine and improve the loss mitigation and foreclosure prevention policies at the Enterprises, because we understand that many individuals and families are still facing the possibility of foreclosure and are looking for alternatives to stay in their homes.”

Watt said that the FHFA was clarifying the Representations and Warranty Framework to help reduce repurchases.

“We know that the Representation and Warranty Framework did not provide enough clarity to enable lenders to understand when Fannie Mae
or Freddie Mac would exercise their remedy to require repurchase of a loan. And, we know that this issue has contributed to lenders imposing
credit overlays that drive up the cost of lending and also restrict lending to borrowers with less than perfect credit scores or with less conventional financial situations.”
Watt said the FHFA’s changes include clearly defining life-of loan exclusions, which fall into six categories:
1.  Misrepresentations, misstatements and omissions
2.  Data inaccuracies
3.  Charter compliance issues
4.  First-lien priority and title matters
5.  Legal compliance violations
6.  Unacceptable mortgage products
For loans that have already earned repurchase relief, Watt said that only life-of-loan exclusions can trigger a repurchase under the Reps and warranties framework.
In one of the most significant policy changes, Watt announced that the FHFA is setting a minimum number of loans that must be identified with misrepresentations or data inaccuracies to trigger the life-of-loan exclusion, so that the GSEs will be responding to a pattern of misrepresentations or data inaccuracies, not just outliers.
The FHFA is also adding a “significance” requirement to the misrepresentation and inaccuracies definition so that GSEs can factor in whether the inaccuracy would have prevented funding the loan at the front end.

Watt said the GSEs would be announcing more details on changes related to reps and warranties in the near future, including:

  • Developing an independent dispute resolution process
  • Identifying cure mechanisms and alternative remedies for lower-severity loan defects
  • Servicing representations and warranties
  • Modifying compensatory fees and foreclosure timelines.
“We have started to move mortgage finance back to a responsible state of normalcy – one that encourages responsible lending to creditworthy
borrowers while maintaining safety and soundness of the Enterprises,” Watt said. “While there is still more to do, FHFA and the Enterprises have
demonstrated the willingness and commitment to develop a better Representation and Warranty Framework for all parties.
“I hope our actions provide sufficient certainty to enable your companies to reassess existing credit overlays and more aggressively make responsible loans available to creditworthy borrowers. This will result in a housing market that is not only better for borrowers, but also better for the Enterprises and lenders and beneficial to our country, Watt said.
Watt also announced that the FHFA and GSEs are working to develop “sensible and responsible guidelines” for mortgages with loan-to-value ratios between 95% and 97%.

Watt said the The FHFA and GSEs are in the process of creating the Common Securitization Platform, which will create a shared securitization infrastructure for Fannie Mae and Freddie Mac that will operate under the Common Securitization Solutions corporate structure. The FHFA will be naming a CEO to the CSS by the end of the year, Watt said.

“The CSP is more than a simple technology project, and it will require significant changes to each of the Enterprises’ business practices,” Watt said.
The director also asked mortgage banker’s to comment on the membership requirements of Federal Home Loan Banks during the extended comment period. “I want to emphasize that getting input and feedback from stakeholders is a crucial part of FHFA’s policymaking process. So give us your input, not only on our FHLB Proposed Rule, but on other policy initiatives and decisions we are evaluating,” Watt said.
Julian Castro began his speech by reiterating that HUD understands the importance of credit availability.

“Credit is the lifeblood of the housing industry,” Castro said. “It’s in our entire nation’s interest to help more responsible Americans succeed in the housing market by expanding access to credit.”

Castro outlined HUD’s plan to expand access to credit with its Blueprint for Access initiatives:

  • Overhauling the Single Family Housing Policy Handbook to give lenders clarity on policies and compliance
  • Launching the Supplemental Performance Metric to capture a more in-depth view of a lender’s portfolio performance, comparing lenders on their performance with others doing business in specific credit score ranges
  • Redrafting the Loan Defect Taxonomy to streamline 99 different codes into nine categories of loan defects
  • Initiating a Ginnie Mae pilot program to give smaller lenders more access to the secondary market

The policy changes from Watt and Castro were anticipated from comments made last week, as HousingWire covered in a report from the Wall Street Journal. Stevens and other leaders also referenced the changes in their speeches this morning, challenging the regulators to ease the incredibly strict underwriting standards now required to originate a mortgage loan.

Following the announcement, Compass Point analysts said in a note to clients, “We view this development with cautious optimism as it reinforces our belief that policymakers are willing to embrace initiatives aimed at increasing the flow of mortgage credit.” Compass Point listed the biggest winners of this kind of credit box expansion as originators, private mortgage insurers and home builders.

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