Feb. 11: Jobs & training; NewDay fined by CFPB; VA lenders in Super Lien States: watch those reps & warrants!

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...

There are plenty of states with plenty of mountains. In fact, while many say it is “as flat as a pancake” in Kansas, you might be interested to know that the state doesn’t even make the list for the top 5 flattest. The flattest state is in fact Florida with its highest point only 345 feet above sea level. Next in line are Illinois, North Dakota, Louisiana, Minnesota, Delaware, and then Kansas. Sometimes what you think you see isn’t always reality when you get down to the real facts. Speaking of facts, yesterday the CFPB made another public example of another lender. This time it was NewDay Financial for “deceptive mortgage advertising and kickbacks.” Not a big enough fine to force the company out of business, but big enough to hurt. The move prompted one industry vet to opine, “I am concerned that there are still lenders who believe there is some ‘legitimate’ way to pay others for referrals. I wish the CFPB would take on the real estate companies involved in this as well to get their attention.”

 

In the jobs arena, SecurityNational Mortgage Corp (SNMC), with 80 branches in the US, is expanding in the State of Colorado and is hiring experienced Branch Managers, Loan Originators, Processors and Support Staff for new branches in Denver, Colorado Springs, Boulder, Fort Collins, Grand Junction and mountain resort communities of Vail Valley, Steamboat Springs, Aspen and Telluride. Security National Mortgage Corp, a publically traded company and a division of 50-year old Security National Financial (Nasdaq:SNFCA) “offers a full range of products including USDA/rural loans, reverse mortgages, state specific and construction loans to insure that we meet the needs of our customers.  In addition, SNMC specializes in Super Jumbo 1st Position Lines of Credit, comprehensive builder programs and in-house Portfolio Loan Products to meet the special needs of builders, mountain resort communities and our most demanding affluent clients. For a confidential interview to learn more about employment opportunities with SNMC in this region contact Charles Heyne. SNMC NMLS #3116.

 

CBC National Bank continues to expand its reverse lending platform. CBC has hired Nancy Pedone to help further develop its distributed reverse origination model.  Pedone is a reverse lending industry veteran whose leadership within the channel is well established. “We are very pleased to have Nancy join our team,” said Daniel Diaddigo, who leads bank’s reverse lending initiative. As National Sales Leader, Pedone will extend her success hiring and developing reverse mortgage sales specialists throughout the U.S. CBC is a well led, best of class, Nationally Chartered Bank. CBC’s dynamic mortgage banking platform is led by Charles Wagner and a team of seasoned mortgage bankers, originating $200-225 million a month in mortgages across channels. CBC National Bank, a division of Coastal Banking Company, Inc. (OTCBB:CBCO), is a FNMA direct and FHA lender funding loans in all states. Its mortgage lending division is based in Atlanta with commercial loan production offices in Jacksonville, Fort Myers and Vero Beach, Fla., Greensboro, NC, and Brunswick, Ga.

 

“Getting crushed by EPOs?  Call MQMR today to learn about how Bankers Performance can help with early detection and save you money, along with other powerful analytics for critical business decisions.  We contact your borrowers during the first three months of post-closing to administer customer service surveys and payment reminders. During contact with the borrower, Bankers Performance captures red flags such as consumer complaints, borrower payment confusion, life changing events, and, most importantly in this market, feedback that the borrower may be looking to refinance.  If your borrower is looking to refinance and hasn’t contacted you, then 1) you may have a customer service issue, and 2) a nice EPO bill coming your way.  Know and act, don’t find out and react.”
Moving on to training, renovation lending products were a massive growth area for many last year and REMN Wholesale’s leadership in this world shows no signs of slowing down. While many lenders offer these products, not everyone is skilled enough to market them correctly. On February 12, REMN Wholesale will be hosting a webinar focused on how to market these products beyond buyers simply interested in purchasing foreclosures. (REMN’s success in renovation lending has led to it needing to hire experienced account executives in all regions. Interested applicants should send their resume to aerecruiting@remn.com.)

 

MBA Education is offering mortgage accounting webinar series that include topics: drill into accounting, loan level accounting, hedging for accountants, and GAAP reporting. Webinar series begins February 19th, sign up for all 4 webinars and receive a 15% discount. For details and registration, click here.

 

Out in California, Silicon Valley CAMP is proud to present a Marketing Class by David Luna which will talk about online marketing, networking, building data base, taking application and much more. It’s the one event every mortgage professional must attend. It will be on 2/20/15 from 10 am to 2:30 pm in San Jose.

 

And in Wisconsin the WMBA Legislative Committee will be hosting its 1st Annual Legislative Day at the Capitol on March 17 and is calling all WMBA Members to participate in this exciting inaugural event. This is an opportunity to continue to build the WMBA brand and strengthen relationships with state legislators affecting financial institution policy.

 

Speaking of organizations, NAR is urging Congress to allow people to use drones to market homes.

 

The MBA and National Council of State Housing Agencies asked the CFPB to clarify the LO comp rule on HFA loans. Recently the MBA and the National Council of State Housing Agencies (NCSHA) submitted a letter to CFPB Director Richard Cordray strongly urging that, in order to promote access to credit, the Bureau adopt a specific exemption to the Loan Originator Compensation(LO Comp) rule for loans made under Housing Finance Agency (HFA) programs. HFA programs not only provide lower- and moderate-income borrowers access to credit, but also generally require housing counseling and financial education. However, the assistance provided through these programs is not without costs. Because of robust underwriting and other program requirements, HFA loans are often more expensive to produce. The LO Comp rule prohibits lenders from using the terms of the transaction (not including loan amount) or any factor that could be considered a “proxy” for a loan’s terms to determine the loan originator compensation. Because lenders are not explicitly able to pay lower commission rates for HFA products, these loans have become uneconomical. While the Bureau has suggested that the LO Comp rule may permit variations in loan originator compensation based on whether a borrower is a low- or moderate-income, lenders and investors are not comfortable with the guidance offered thus far. Accordingly, the letter indicates a specific exemption is still needed to assure HFA financing is available for borrowers that need it most.

 

How about the latest on Super Lien States, VA loans, and HOAs? Some astute compliance folks out there have noticed a problem with VA guarantees and judge’s rulings on how Home Owner Associations’ liens come before the mortgage. In VA Guaranty documentation requirements, the VA requires proof that the HOA is willing to subordinate on a loan level prior to guarantying the loan. (Of course, this is not generally reviewed by the VA, since most loans are guaranteed electronically now, and the Lender Reps and Warrants that the loan meets the VA guidelines as part of the Guaranty process.) The problem is that in Nevada and other super lien states, they don’t. This is because based on the recent Nevada court case, no HOA agrees to subordinate to the VA, or any other mortgage. So the question many lenders are raising is since everyone processes the VA guarantees electronically, is the industry just turning a blind eye, and hopes that whatever servicer ends up with the loan will take the 60 day letter from the HOA? (IF in fact, the HOA sends a 60 day delinquent letter – remember that the court ruling didn’t compel the HOA to actually provide notice), and pay up the HOA dues themselves.

 

If anyone wants to review where in the NOV the requirement is, it’s #3:  “Lien Supported Assessment”.  Here’s a cut and paste of the language. (Note that there is a box in front of #3 that the Lender clicks to certify this. “3. Lien-supported assessment. This property is located in a development with a mandatory membership in a homeowner’s association. The lender is responsible for ensuring that title meets VA requirements for such property and that the homeowner association assessments are subordinate to the VA-guaranteed mortgage.” This seems to many to be a situation where, due to the court ruling, in Nevada, a VA Lender could only make such a certification to the VA on a loan level basis IF the Lender actually attains loan level written assurances from the specific HOA that it will subordinate to the mortgage lien. Call it what you will: unintended consequences, federal versus states’ rights, conflicting regulations, but compliance departments of lenders who have done a VA loan on a property with an HOA in one of the 20 super lien states are wondering if the VA rescind their guarantees due to this legal quagmire.

 

The NOV condition is very clear and requires the lender to ensure that the HOA assessments are subordinate to the mortgage. As best I understand the situation, and I am not a compliance expert, this is virtually impossible unless the HOA is willing to execute a subordination agreement. Frankly, there is no incentive for the HOA to execute such agreement, unless the industry pushes back and refrains from doing VA loans in super lien states. Are we having fun yet?

 

The Wall Street Journal reported that a U.S. housing regulator is considering limiting one of the most powerful tools federal attorneys in the Justice Department have to punish banks for making mistakes in mortgage lending, a move the Federal Housing Administration hopes will encourage banks to give more home loans to worthy but weaker borrowers. “The recognition of the fairly outrageous penalties that could be paid relative to the actual loss is extraordinary,” said David Stevens, president of the Mortgage Bankers Association.

 

As CEOs know, FHA is easier to work with especially as related to pushing back loans. The FHA has an indemnification protocol for all loans whereas many believe that the GSEs make it too difficult and arbitrary.  As one travels down the FICO grid, more manufacturing errors present themselves, and the FHA, generally, is more tolerant.

 

The MBA Mortgage Application Index was released this morning, falling last week by 9.0% versus an increase of +1.3% from the report the previous week.  Refinance applications were down 10.3% and purchase applications were down 6.5%. Geez it’s tough to staff for this volatility!

 

The Mortgage Bankers Association also published its year-end ranking of commercial and multi-family mortgage servicer volumes as of December 31st, 2014. The MBA reported that Wells Fargo led the ranking with $474.4 billion in U.S. master and primary servicing. Second in line was PNC Real Estate/Midland Loan Services at $396.8 billion followed by Berkadia Commercial Mortgage LLC with $236.3 billion and KeyBank National Association with $174.4 billion. A primary servicer is responsible for obtaining loan payments, executing property inspections and other related activities. A master servicer collects cash and data from primary servicers in order to provide that cash and data to investors. These four companies were top ranked among master and primary services of commercial/multifamily loans in U.S. commercial MBS, collateralized debt obligations and other asset-backed securities. Wells Fargo ranked as top servicer for loans held in warehouse facilities and Berkadia ranked highest for all other investor loan types. PNC/Midland was ranked as top master of primary servicer of commercial bank and savings institution loans; of loans for credit companies, pension funds, and investment funds; and of loans for FHA and Ginnie Mae. To read more about the MBA’s rankings, click here.

 

 

For exciting bond market news today… there is none, unless you count our Treasury auctioning off $24 billion in 10-yr notes at 1PM EST. The 10-yr closed Tuesday at 1.99% and that is exactly where we are today, although agency MBS prices are better a shade.

 

 

(Valentine’s Day is Saturday!)

A QUIET ROMANTIC DINNER

A man and a woman were having a quiet, romantic dinner. They were gazing lovingly at each other and were holding hands.

The waitress, taking another order at a table a few steps away, suddenly noticed the woman slowly sliding down her chair and under the table – but the man stared straight ahead.

The waitress watched as the woman slid all the way down her chair and out of sight under the table.

Still, the man stared straight ahead.

The waitress, thinking this behavior a bit risqué and worried that it might offend other diners, went over to the table and, tactfully, began by saying to the man, “Pardon me, sir, but I think your wife just slid under the table.”

The man calmly looked up at her and said, “No, she didn’t. She just walked in the door.”

 

 

Rob

 

(Copyright 2015 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.)