June 5: Secondary & Ops jobs; Abacus acquitted; upcoming events & trainings; CFPB targets LO comp, captive insurance, and reverse mortgages

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...

Huh? National Donut Day? Most donut shops have a few employees, but in 2013 our Census Bureau tells us there were 23 million businesses without paid employees, an increase of 4.4 million since 2003. Non-employer businesses included family-run businesses to home-based commentary writers. Florida had the largest increase in non-employer businesses, especially in the real estate and rental sectors. Nevada outpaced all states in the percentage increase in non-employer establishments, gaining 4.2 percent, with accommodation and food services leading all sectors. Los Angeles County added more non-employer businesses than any other county and Miami, Florida experienced the largest gain in the number of businesses than any other city.

 

Speaking of jobs & employment, Fairway Independent Mortgage Corp is looking to fill Agency Loan Delivery positions to support the company’s growth. The positions are a part of the Secondary Marketing group at Fairway located in Naperville, IL (a Chicago suburb), and will be primarily responsible for delivering loans to Fannie Mae, Freddie Mac, and Ginnie Mae. Local candidates only. “Fairway is a top independent mortgage company, originating $5.6 billion in 2014 with over 200 branches nationwide and over 2,500 employees. Fairway has a strong focus on purchase business and is dedicated to providing the highest level of customer service and support. For questions, or to submit a resume, please contact Amber Medina.

 

An FDIC Bank continues to grow and is searching for experienced underwriters (must be VA/FHA), Wholesale Customer Service Reps (CSR) and shippers. (For the underwriters management prefers northern California with the ability of working from home if they need to.) “We are an Atlanta, GA based bank with Mortgage Operations located in Sacramento CA; every member of the senior management team has over 20 years of experience in the mortgage industry and are dedicated to providing a superior customer experience for all our business partners and our clients.” Please send your confidential resume to me at rchrisman@robchrisman.com. (Please specify position.)

 

Legal congratulations are in order! Abacus Federal Savings Bank was acquitted of all charges in its Fannie Mae N.Y. mortgage fraud trial. Wow – good mortgage news for a lender coming out of New York!

 

No one wants to hear, “Uh, Mr. Johnson, there’s a Richard Cordray holding for you on line 2.” (Unless your name isn’t Johnson, right?) The CFPB ordered PHH to pay a $109 million penalty related to captive reinsurance. At the end of 1Q, the company had announced that the CFPB had recommended a $6.4 million penalty, which was being appealed, but the company had recorded a reserve of that size. In November 2014, the company received a recommended decision from the administrative law judge for a $6.4 million payment to the CFPB. Both the company and the CFPB appealed. In the action, Richard Cordray overruled the judge and increased the penalty by basing the penalty on a larger cohort of loans that the administrative law judge had used. According to the CFPB release, this action can be appealed, although the $109 million would need to be put into escrow while the appeal proceeds. It is unknown yet whether any potential settlement would be tax deductible. Jody Shenn with Bloomberg writes that, “Cordray’s decision holds that PHH breached Real Estate Settlement Procedures Act every time it accepted kickback payment on or after July 21, 2008, going beyond prior ruling, which had limited PHH’s violations to kickbacks that were connected with loans that closed on or after July 21, 2008. The decision marks first appeal of a bureau administrative enforcement proceeding.”

 

Three thousand miles away in California, RPM Mortgage has agreed to pay the Consumer Financial Protection Bureau $19 million to settle allegations that it incentivized its loan officers to steer borrowers into higher cost mortgages by “illegally” paying bonuses to them. Per the CFPB RPM paid millions of dollars in such bonuses, the CFPB said. (In 2011, regulators banned such incentive payments under the LO compensation rule.)  And according to a civil complaint filed in Federal District Court for the Northern District of California, RPM allowed LOs to use expense accounts to pay for pricing incentives to close the loans. “From April 2011 through December 2013, RPM allowed loan originators to use their expense accounts to finance thousands of pricing concessions that enabled the loan officers to close and earn commissions on transactions they otherwise would have lost.” With court approval RPM will pay $18 million in “redress” to affected borrowers and a $1 million fine while CEO Rob Hirt also will pay a $1 million fine.

 

After this news I heard very positive things from several companies that had abolished point banks years ago yet still had to compete in recruiting LOs against companies offering similar programs. And loan officers are wondering if and when they will be named in CFPB enforcement orders and settlements, similar to the group from Wells Fargo a while back. Certainly LOs are responsible for making sure their own compensation plans meet current regulatory guidelines. For those seeking more guidance, these rules spell things out pretty well. And this piece published a couple years ago spells things out pretty well.

 

David H. Stevens, president & CEO of the Mortgage Bankers Association, wrote, “The Consumer Financial Protection Bureau’s latest enforcement announcement is emblematic of a larger concern — the Bureau’s pattern of issuing dense and complicated rules and then declining to provide written supervisory guidance to clarify issues of common concern in the industry. The rule at play here – the Loan Originator Compensation rule – was originally issued by the Fed in 2010 and then taken over by the CFPB in the wake of Dodd Frank.  The rule has long been a subject of industry confusion because of its broad and prescriptive reach into the smallest details of lender compensation plans and the lack of clear guidance on how to comply. “In fact, MBA repeatedly asked for clarification from the Fed, and later the CFPB, on some of the very same issues that are the subject of this complaint.  Eventually, in 2014, the CFPB amended the rule and provided some additional guidance.  However, the Bureau appears now to be applying those amendments retroactively. It should be no surprise, therefore, that this ‘regulate by enforcement’ approach has created tight credit conditions, as fearful lenders avoid even prudent risk-taking activities.  The repetition of this misguided approach across a variety of new mortgage-related rules is increasing the costs and restricting the availability of credit for qualified borrowers.   It is time for the Bureau to end this approach and begin providing meaningful guidance where it is needed and sought by stakeholders.  The CFPB should reserve aggressive enforcement actions and punitive monetary penalties for egregious violations that result in proven consumer harm.”

 

Lastly, the CFPB released the results of a focus group study that found many consumers were left with false impressions after viewing reverse mortgage advertisements. After seeing the ads, many were confused about reverse mortgages being loans. And as an industry we have to tailor things to the lowest common denominator, right? Many were also left with the impression that reverse mortgages were a government benefit, or that they would ensure consumers could stay in their homes for the rest of their lives, according to the CFPB. The CFPB said it would issue an advisory warning consumers that many reverse mortgage ads are misleading.

 

Is there such a thing as too much training and too much conferencing?

 

Southern Los Angeles Chapter of CAMP announced its upcoming meeting on June 10th will highlight Felicia Bowers, compliance officer of Sierra Pacific Mortgage. The discussion will focus on an in-depth analysis of upcoming TRID legislation.

 

Join the Maryland Mortgage Bankers Association on June 17th for an in-depth look at the changes to the real estate settlements and documentation in this comprehensive seminar, MMBA’s TILA-REPA Integrated Disclosure Forms and Processes Event.

 

How will the new CFPB regulations affect your business?  If you are anywhere near Boise, Idaho on June 11th, be sure to join trainer Ken Perry for “a trip behind the curtain” to explain the Mysteries of TRID.  Ken will be joined by Erin Sheckler of NexTitle and Mike Turner of Front Street Brokers to discuss best practices for making sure your business is ready.

 

Plaza Home Mortgage is offering training opportunities throughout the month of June:

Condo Financing Options June 9, HECM Financial Assessment…June 16, 203K Overview (Wholesale) June 18, and Reverse Mortgage June 18.

 

The Michigan Mortgage Lenders Association is offering a variety of networking events filled with information and fun. MMLA SE Chapter Tiger Baseball Outing June 26th and MMLA SE Chapter July 23rd Thirsty Thursday Event registration and information is available now. To view and register for more MMLA events, click the link for the MMLA Community Calendar.

 

Looking for all things TRID?  The month of June has three webinars available from MGIC & David Luna, President of Mortgage Educators and Compliance. Click the link for details and registration, MGIC TRID webinars June 12th, 25th, and 30th

 

Sun West announced the addition of the USDA Guideline Training video that enables you to easily access the underwriting guidelines for USDA Rural Development loan programs. This video covers general understanding of USDA guidelines and eligibility criteria of USDA RD Guaranteed.

 

NAMB is offering up the June 22-24th “Ultimate Mortgage Expo” in New Orleans. Click the link to view the Agenda and registration for the Ultimate Mortgage Expo, New Orleans.

 

The California MBA is hosting its 20th Annual Western States Loan Servicing Conference August 2 – 4, 2015 at the Westin Gaslamp Hotel in San Diego. This is the largest regional residential servicing conference on the west coast. Topics to include a Servicer Panel, How to Build Your Servicing Platform, Trends in Litigation, Bankruptcy and Enforcement Actions, discussion on regulatory issues relating to the servicing industry that will include regulators from both the state and federal level.  Also, with the move of this conference from Las Vegas to San Diego, the California MBA will be celebrating with an opening reception featuring a tasting of some of California’s best micro-breweries and kicking off the conference with a golf tournament on the 2nd!

 

Turning to rate sheets, yesterday’s market saw quite a bounce off the lows of the day. European sovereign debt took heavy losses overnight and that helped to start things in the U.S. “in the red.” But then we had Initial Jobless Claims (declined to 276,000 from an upwardly revised 284,000) and learned that Nonfarm Productivity was revised down to -3.1% for the first quarter from an initial reading of -1.9%. Also helping things was Fed Governor (and voter) Tarullo saying that U.S. economic growth has lost some momentum and that wage growth has not materialized alongside job creation.

 

But that was all so… yesterday. This morning we’ve had the official jobs data. The consensus for Nonfarm Payrolls was +225k and it came in at +280k with back months revised higher by over 30k. The unemployment rate was expected steady at 5.4%; it came in at 5.5%. And average hourly earnings (expected slightly higher) was +.3%. We had a 2.31% close on the 10-yr Thursday, came in at 2.34%, and this morning after the spate of jobs data we’re at 2.43% with Agency MBS prices worse roughly .75. Ouch!

 

 

It is hard to believe it is already June. With that in mind, here the “Standard BBQ Operating Procedures” released recently. Please read:

We are about to enter the BBQ season. Therefore it is important to refresh your memory on the etiquette of this sublime outdoor cooking activity. When a man “volunteers” to do the BBQ the following chain of events are put into motion:

Routine…

(1) The woman buys the food.

(2) The woman makes the salad, prepares the vegetables, and makes dessert.

(3) The woman prepares the meat for cooking, places it on a tray along with the necessary cooking utensils and sauces, and takes it to the man who is lounging beside the grill – beer in hand.

(4) The woman remains outside the compulsory nine feet exclusion zone where the exuberance of testosterone and other manly bonding activities can take place without the interference of the woman.

Here comes the important part:

(5) THE MAN PLACES THE MEAT ON THE GRILL.

More routine…

(6) The woman goes inside to organize the plates, cutlery and condiments.

(7) The woman comes out to tell the man that the meat is looking great. He thanks her and asks if she will bring another beer while he flips the meat.

Important again:

(8) THE MAN TAKES THE MEAT OFF THE GRILL AND HANDS IT TO THE WOMAN.

More routine…

(9) The woman prepares the plates, salad, bread, utensils, napkins, sauces, and brings them to the table.

(10) After eating, the woman clears the table and does the dishes.

And most important of all:

(11) Everyone PRAISES the man and thanks HIM for his cooking efforts.

(12) The man asks the woman how she enjoyed “her night off”, and, upon seeing her annoyed reaction, concludes that there’s just no pleasing some women.

 

 

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.)