Nov. 3: Mortgage jobs; disaster forbearance primer; more on MSAs, referrals, and RESPA (inc. a webinar), classic joke

Rob Chrisman

Rob Chrisman began his career in mortgage banking – primarily capital markets – 31 years ago in 1985 with First California Mortgage, assisting in Secondary Marketing until 1988, when he joined Tuttle & Co., a leading mortgage pipeline risk management firm. He was an account manager and partner at Tuttle & Co. until 1996, when he moved to Scotland with his family for 9 months. Read more...

“Please understand that we are acutely aware of the challenges created for homebuyers, lenders and realtors when we are unable to meet desired timelines but we are doing the best we can with the limited human resources we have. We are not uncaring, unconcerned or being bureaucratic. Our GRH Team is a group of dedicated and knowledgeable professionals who work tirelessly to provide homeownership opportunities to families living in rural areas, while diligently protecting the quality and risk of our portfolio. It would be helpful to plan for longer application review times and to share that with your borrowers to minimize their issues with delays that simply cannot be avoided because of lack of human resources.” What a way to lead off the commentary… this is the sign-off on file status e-mails generated by the USDA.

 

On the jobs front, First Century Bank, N. A., an FDIC bank, is looking for Account Executives throughout the Western arena. There are open territories in So. California, Colorado, Washington, Oregon, Nevada, Utah, and Arizona with a complete menu of products. Management is looking for experienced AEs to help continue to grow the business and work with a winning operations team. They have combined experience of 50+ years in the business, dedication to superior customer service and have an excellent system platform. Please send resumes to wholesalesupport@myfirstcenturybank.com.

 

And California’s Opes Advisors, Inc., well known in the non-conforming lending space is currently seeking a Senior Credit Manager for the organization. “Opes is uniquely positioned in the Western US Market and is expanding its product offering and developing internal product niches. This has created the need for a new Sr. Credit leader who would love to lead the organization forward in the design and implementation of new credit policy for the Opes Product Offering. Opes Advisors is a financial advisory firm offering mortgage banking and wealth management services.  It is dedicated to helping clients make effective financial decisions that support their financial goals today and into retirement through the integration of real estate and real estate financing: a major financial decision for clients is an innovation for both mortgage banking and wealth management industries.” For confidential inquiries contact VP of Secondary and Capital Markets John Boyles.

 

For a good lesson in compliance, Donna Beinfeld sent in a thoughtful reminder saying, “Whenever a borrower’s property is located in a natural disaster area (as declared on the federal or state level) the borrower may be eligible for a suspended mortgage payment plan known as forbearance. Origination (not yet closed): Agencies and investors often issue a requirement for a property to be inspected prior to close if it is located in a disaster area. Loan Servicing: Loans that are currently being serviced may qualify for a forbearance agreement depending on an agency’s guidelines, and type of natural disaster that has occurred.  Typical term for a forbearance agreement (suspended payments) is six month, which may vary. A forbearance is considered a loan modification since the deferred payments impact the maturity date on the recorded security instrument.” Donna was kind enough to send along links to agency links on the topic: Fannie Mae, Freddie Mac, HUD, VA, and the CFPB.

 

Saturday’s commentary had information on MSAs, RESPA and referrals. Attorney Brian Levy writes, “RESPA doesn’t expressly say you can pay for advertising. The exception actually says you can pay for the reasonable value of ‘goods and services rendered’. This is the same exception that Marketing Services Agreements rely upon for their legal premise. RESPA, however, does not expressly say you can pay for “leads” and one should be careful to obtain particularized legal advice in engaging in receipt or payment for settlement service leads. While payment for leads seems to be a common practice, it’s easy to see how there is a slippery slope from paying for a lead to paying for a referral. Similarly, it can be easy to label an MSA as an illegal referral fee if the payments exceed the reasonable value of services actually provided. The CFPB has made it clear that it is skeptical of MSA’s that are disguised referral fees (see my further comments on Lighthouse below).  Likewise, I would not assume any lead generation agreement is legal and would seek legal counsel to be sure that any proposed lead arrangement meets the “goods and services rendered” exception.

 

“And…, even ‘the editor’ can get dragged into the ‘attorney wars’. Your inclusion of the definition of MSA from the Lighthouse Consent Order requires some context. That particular definition of MSA was offered by the CFPB in the Consent Order solely for the purpose of defining what Lighthouse Title could not do in the future as part of their punishment. It was not used by the CFPB as a definition of illegal marketing agreements generally, or even to describe what Lighthouse had previously done wrong. The distinction is important because in defining an MSA as they have in this particular section, CFPB would be re-writing RESPA by making a distinction between fees paid to settlement service providers vs. others. As noted by many of your commenters in recent posts, RESPA says you can’t pay referral fees to anyone: settlement service provider or not. In other words, to apply the Lighthouse MSA definition broadly, the CFPB would have to say that the ‘goods and services rendered’ exception doesn’t apply to payments to other settlement service providers; something which the statute clearly doesn’t permit them to say. In designing a punishment specific for Lighthouse in a Consent Order, on the other hand, they could prohibit any activity Lighthouse would agree to. While the CFPB can write regulations (following notice and comment procedures) to interpret a statute, the CFPB’s application of a penalty to a wrongdoer does not permit them to change the statute for everyone. That said, it is probably a very important insight into what CFPB would like to do.” Thank you very much to Brian S. Levy.

 

And regarding Brian’s note above, attorney Marx Sterbcow points out that, “Brian Levy hits it out of the park as usual. Lead Generation companies/advertising is particularly worrisome these days ESPECIALLY where Loan Officers or Lenders are involved. We expect CFPB enforcement actions to be announced involving not only RESPA but LO Comp and state Safe Act violations with respect to Lead Generation participants and Lead Generation companies themselves. Here was a blog post we did on the Lead Generation topic a few months ago. Love that he used the term ‘RESPA attorney wars’.”

 

Lastly, there is a webinar series coming up next week titled, “Marketing Services Agreements and More: The Latest Lay of the Land”. There is Webinar #1 and Webinar #2. “Marketing Service Agreements (MSAs), work share arrangements, office rentals, and lead share arrangements have long been considered by real estate brokers, mortgage companies, title/settlement service providers and others as valuable relationships in the home purchase marketplace. These arrangements also are on the radar screen of the Consumer Financial Protection Bureau (CFPB), which has the authority to enforce the Real Estate Settlement Procedures Act (RESPA). RESPRO®’s Two-Part Fall Webinar series, “Marketing Services Agreements & More” will feature leading experts who will share insights on “best practices” for these arrangements and provide advice on the “Do’s and Don’ts” under RESPA’s referral fee prohibitions. Participants of each Webinar will have an opportunity to ask questions and will receive the full PowerPoint presentation.”

 

Freddie Mac has updated third party verifications and general requirements for verifying documents. Documents obtained from a foreign country must be filled out in English or the loan originator must provide a translated copy. All foreign currency must be converted to U.S. dollars and have proof that the borrower owned the funds prior to the transfer.  Employment, income and asset verifications gathered from third-party verification providers must be received by the originator directly from the third-party servicer. Third-party employment verifications must include the same information as required for verbal verifications of employment and third-party income verifications must contain enough information to determine stable monthly income. Verifications of employment, income and source of funds and payment history must be dated no more than 120 days before, where applicable, the Note Date, the modification date for Seller-Owned Modified Mortgages, the Conversion Date for Seller-Owned Converted Mortgage, the Effective Date of Permanent Financing for Construction Conversion and Renovation Mortgages or the applicable assumption agreement date.

 

Fannie Mae Announcement provides new guidance for handling insurance losses based on the mortgage loan status at the time the servicer receives notification of property damage, regardless of the cause of that damage. In addition, the Report of Property (Hazard) Insurance Loss (Form 176) has been updated and is available on Fannie Mae’s website.

 

Bulletin 2014-18 announced the following Freddie Mac selling updates:  Freddie Mac is removing certain restrictions on Home Possible Mortgages to make credit available to more borrowers. Some of the changes include revising the maximum DTI ratio for Manually Underwritten Mortgages from 43% to 45%, permitting Construction Conversion and Renovation Mortgages and permitting the use of gift funds to meet minimum reserve requirements. These changes are effective for mortgages with settlement dates on or after November 24, 2014. Other updates include Higher Priced Covered Transactions to encompass primary residences, second homes and investment properties and when an HMPL is also considered an HPCT secured by a primary residence, it will be considered an HMPL to ensure consistency. Freddie Mac is also permitting third-party asset verifications and effective immediately, Freddie Mac will purchase one-year ARMS under WAC ARM Cash.

 

Sigh. Another week, another set of U.S. data, including the employment data on Friday. We have plenty of scheduled news ahead of that, all of which might be trumped by events overseas. One interesting thing is that Fed Chairperson Janet Yellen will meet with President Obama at the White House Mon to discuss the outlook for the US economy. And most polls are showing Republican gains in Congress, which means that the White House is strategizing on possibly changing tactics since two more years of bickering and gridlock is probably not in the nation’s best interest.

 

Putting that thought aside for the time being, today we’ll have some Institute of Supply Management numbers and Construction Spending. Tomorrow we’ll have some forgettable Trade Balance figures along with Factory Orders. Wednesday we have the ADP employment numbers (a real crapshoot when it comes to ADP predicting Friday’s data); Thursday is Jobless Claims, Challenger Job Cut numbers, and some productivity figures. And then Friday we’ll have the usual set of Unemployment Rate, Nonfarm Payroll, Hourly Earnings, etc.

 

I head off this morning to Salt Lake City for a few days, so wanted to send the commentary out early: the market is just waking up. The 10-yr T-note closed Friday with a yield of 2.34% and in the early going is at 2.31% with agency MBS prices a shade better.

 

 

(This has become a staple, pre-election story…)

If you start with a cage containing five monkeys, and inside the cage hang a banana on a string from the top, and then you place a set of stairs under the banana, before long a monkey will go to the stairs and climb toward the banana.

As soon as he touches the stairs, you spray ALL the monkeys with cold water.

After a while another monkey makes an attempt with same result — ALL the monkeys are sprayed with cold water. Pretty soon when another monkey tries to climb the stairs, the other monkeys will try to prevent it.

Now, put the cold water away.

Remove one monkey from the cage and replace it with a new monkey. The new monkey sees the banana and attempts to climb the stairs. To his shock, ALL of the other monkeys beat the “Monkey Crap” out of him.

After another attempt and attack, he knows that if he tries to climb the stairs he will be assaulted.

Next, remove another of the original five monkeys, replacing it with a new monkey.

The newcomer goes to the stairs and is attacked. The previous newcomer takes part in the punishment — with enthusiasm — because he is now part of the “team.”

Then, replace a third original monkey with a new monkey, followed by the fourth, then the fifth. Every time the newest monkey takes to the stairs, he is attacked.

Now, the monkeys that are beating him up have no idea why they were not permitted to climb the stairs. Neither do they know why they are participating in the beating of the newest monkey.

Finally, having replaced all of the original monkeys, none of the remaining monkeys will have ever been sprayed with cold water. Nevertheless, not one of the monkeys will try to climb the stairway for the banana.

Why, you ask? Because in their minds, that is the way it has always been!

This, my friends, is how today’s House and Senate operates; and this is why, from time to time: ALL of the monkeys need to be REPLACED AT THE SAME TIME!

DISCLAIMER: This is meant as no disrespect to monkeys.

 

 

Rob

 

(Copyright 2014 Chrisman LLC. All rights reserved. Occasional paid job listings do appear. This report or any portion hereof may not be reprinted, sold or redistributed without the written consent of Rob Chrisman.)