Daily Mortgage News & Commentary

Apr. 2: Compliance tidbits; Angel Oak shifts back lock policy; Fannie green deals; Saturday Spotlight: Seroka Brand Development

There is one thing that every mortgage lender and vendor have in common: they eat. Here is the favorite comfort food by US state. Did they get your state right? Grilled Cheese is king! And for you movie fans out there, the official Princess Bride Cookbook hits bookstore shelves in December. If you want to skip wonderful, locally-owned bookstores, pre-order it now. (It should have been called “As You Dish.”) Speaking of “local,” some builders are turning to local materials when building homes. Rather than sit back and wait for supplies to become available, innovative architects and designers are turning to alternative materials and methods in home building. And who doesn’t want to read a periodical titled, “Mansion Global”? Yes, humans are resourceful sometimes. Whale oil becomes too expensive? Switch to petroleum. Gas station attendants too much to deal with? Automatic pumps. Appraisals are too time consuming and expensive? Appraisal waivers. Underwriters maxed out at 2-3 files per day? How ‘bout some software that leverages them up to 10 files per day! And so on and so on. But the cost to originate a single family loan in the United States continues to climb, with a good chunk of it being used to cover compliance costs. Compliance news below.

Saturday Spotlight: Seroka Brand Development 

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A mortgage and real estate industry agency with deep roots

In 3-5 sentences, describe your company (when was it founded and why, what it does, where, recent growth and plans for near-term future growth).

Pat Seroka, our Chairman and CEO, founded the company in 1987. Pat’s vision was to provide comprehensive PR and marketing support for the financial industry. One of his first clients was a growing wholesale lender. Pat’s firm helped it become Chicago’s largest and continued to serve it for many years after they were purchased by First Chicago Corp. Pat’s son, John, now serves as president and leads the company’s focused growth in the mortgage and real estate industries nationwide.

Tell us about what type of volunteer work employees are encouraged to engage in, or charities your company supports, and why

We believe volunteer work is a personal endeavor and do not influence our employees’ charity support. Rather, we encourage them to seek out organizations that match their interests and invest their time and resources accordingly.

What does your company do to help elevate your employees’ growth? Describe any mentoring programs, outside classes or training, in-house training. How does the company help people develop?

Our team members regularly attend classes and events to ensure we consistently deliver the most cutting-edge marketing support to our clients. Because of our industry focus, we also utilize the MBA’s training programs. In fact, one of the first resources we offer new employees is appropriate MBA online and in-person training classes.

Tell us how your company maintains its culture in a work-from-home environment, or how you plan on bringing employees back into the office, if applicable.

 

Seroka went virtual in 2012 to gain access to a larger talent pool of marketing and PR experts that also have experience in the mortgage industry. We became an early adopter of technology and hired the best staff we could find, regardless of geography. This has served our company and national roster of clients very well. We also take advantage of client meetings and conventions to visit staff in different parts of the country. So, while working remotely became a novelty for others during Covid, we already had the systems in place and it has benefited the company and our clients.

Things you are most proud of that don’t have to do with sales

The most rewarding aspect of our 35+ year history has been the friendships we’ve made with so many people in the industry. We’ve enjoyed watching their careers mature and seeing our relationships deepen. The second thing, as Pat says, has been watching his sons, John and Scott, join the family business and take it to the next generation.

Fun fact about Seroka Brand Development

Pat co-chaired the MBA’s first Marketing Committee with Warren Dunn, MBA’s VP of Marketing, in the late 1980’s.

  

Is there anything else you’d like to share along these lines?  

Yes! We’re looking for another copywriter and account manager to join our growing team. If you know anyone, please have them reach out to Pat Seroka or john@seroka.com!

(For more information on having your firm’s extracurricular activities, employee growth, and your charitable side featured, contact Chrisman LLC’s Anjelica Nixt.)

Angel Oak retracts lock policy changes

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A change was made Thursday. “Due to the extreme market volatility in the MBS market, all locks will now be converted to 30-day locks commencing from the original rate lock date. As long as the loan is able to close within 30 days of the original lock date, the loan will close at the currently locked rate (March 14, 2022). If the loan is not able to close before the lock expiration date, the loan will have to be relocked at the current market rate as of the date of expiration.”

But Friday there was an update to the Angel Oak Mortgage Solutions Lock Policy. “On Thursday March 31st, we announced a change in our lock policy. We are retracting those changes and are in the process of making the appropriate system updates to reflect the original information of your borrower’s loans.

We understand the change yesterday caused confusion and stress for you and your borrowers and for that we apologize. Please know that Angel Oak is fully committed to our Broker Partners and the Non-QM community. We stand fully committed to you and the reputation you have worked hard to build over the course of your career. Please continue to communicate with your account executive and work with them on any questions you may have.”

Compliance: expensive, but think of the savings

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Mortgage Quality Management and Research (MQMR) recently published a Compliance Hot Topic letter on if servicers should image Release of Liens. As a best practice, the pre-recorded Release of Lien (ROL) should be imaged to prove compliance with state guidelines. That is because when a loan is paid in full, the current servicer is responsible for preparing and recording the ROL/reconveyance. However, timing requirements for filing the ROL vary by state. Therefore, without imaging the prepared document before sending it for filing, the servicer has no proof that the ROL was completed promptly and accurately to meet state requirements.

Additionally, if the county clerk sends the filed ROL directly to the borrower instead of back to the servicer, the servicer has no record of the ROL being completed accurately and timely. Should an external auditor request this information, requesting a copy from the county and providing it on time could be challenging. It can take 90 days or more for the servicer to receive the recorded ROL from the county to send it to the borrower. In the meantime, if the servicer did not image the pre-recorded ROL, there is no proof that the documentation was completed as required.

Lenders Compliance Group recently wrote about the sampling methodologies for pre-funding and post-closing quality control in terms of discretionary audits. It is prudent for companies to be checking quality control and loss mitigation risk factors at least quarterly. Fannie has certain expectations with regard to selection sampling. There are two methodologies: (1) Random Sampling and (2) Discretionary Sampling. The random sample provides a high-level view of loan quality. The discretionary sample is a subset of loans within the total population that focuses on specific characteristics, such as high-risk loans, adverse findings, and so forth. Read the full piece for tips on Pre-Funding Selection, Post-Closing Selection, and Discretionary Audits.

MQMR asks, “Did you know that it is permissible for a mortgage lender to obtain verbal authorization from a mortgage loan applicant to pull credit?” Yes, but it is recommended that the lender require its mortgage loan originators to document the date and time they received such verbal authorization. Some applicants who do not complete the loan application process and do not remember authorizing the credit pull will file a complaint, which can be remedied by referencing a written record of when authorization was provided and to whom it was provided can be beneficial for a mortgage lender.”

 

In recent months, the CFPB has taken several actions against mortgage lenders for deceptive advertising particularly related to VA loans and reverse mortgages. The consent orders highlight marketing practices that mortgage lenders must follow, such as reviewing marketing material to ensure it does not contain any false, misleading, or inaccurate information, clearly disclosing the lender on advertising, quoting available rates, loan terms, points, and APR to consumers, and being upfront about appraisal and income documentation.

 

Both banks and nonbanks are required to perform an independent audit of their anti-money laundering (AML) program under the Bank Secrecy Act.  Many states now require entities to produce AML policies and procedures, as well as AML risk assessments and independent AML audit results as part of examinations. Sound practice is for an entity to perform an independent audit of its AML program at least every 12-18 months, commensurate with the entity’s risk profile. The individual or individuals completing the audit must be fully familiar with AML requirements, cannot be involved in any of the AML functions of the Company, and should report results directly to the entity’s Board of Directors or Executive Management.

MQMR notes, “Testing should cover all of the entity’s activities and the results should be sufficiently detailed to assist the Board of Directors and/or Executive Management in identifying areas of weakness so that improvements may be made and additional controls may be established.  Among other items, the Company’s written policies and procedures should be reviewed as well as the qualifications of the AML Officer and the Company’s training materials and attendance logs.”

Agency deals

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Deals that take place in the secondary markets directly influence rates offered to borrowers in the primary markets. Let’s take a gander at what Fannie Mae has been up to lately in the “green” sector.

Fannie Mae announced that it has completed the issuance of $100 billion of green multifamily MBS, helping transform housing finance and creating a more sustainable future for U.S. communities. This milestone illustrates how Fannie Mae’s scale and capacity can foster liquidity to support the greening of U.S. housing stock. Since April 2020, in addition to creating green financing for multifamily housing, Fannie Mae launched green MBS backed by newly constructed single-family residential homes with green building certifications that meet or exceed the national program requirements for ENERGY STAR 3.0 Certified Homes. As of November 30, 2021, Fannie Mae has issued 44 transactions pooling loans for newly built single-family homes totaling $486 million. Fannie Mae’s goal is to help reduce housing’s overall carbon footprint and meet new market demand.

Fannie Mae priced a $781 million Green Multifamily DUS REMIC under its Fannie Mae Guaranteed Multifamily Structures (GeMS) program. FNA 2022-M1G marks the second Fannie Mae GeMS issuance of 2022. The M1G marks the 19th GeMS issuance backed by Green MBS collateral and is the first issued since Fannie Mae reached the $100 billion Green MBS milestone at the end of 2020. It was backed by two groups of fixed-rate, green MBS collateral – 7-year and 10-year.

Now in the second decade of its Multifamily Green Financing business, Fannie Mae remains committed to generating positive environmental and social impact through its two Multifamily Green products: the Green Building Certification program and Green Rewards, an energy- and water consumption-reduction program. Combined, Fannie Mae has issued over $102 billion of Multifamily MBS backed by these financing products. Through the GeMS program, Fannie Mae has re-securitized into REMICs an additional $14 billion backed by Green MBS. For additional information, please refer to the Fannie Mae GeMS REMIC Term Sheet (FNA 2022-M1G) available on the Fannie Mae GeMS Archive page.

A skeptical anthropologist was cataloguing South American folk remedies with the assistance of a tribal elder who indicated that the leaves of a particular fern were a sure cure for any case of constipation.

When the anthropologist expressed his doubts, the elder looked him in the eye and said, “Let me tell you, with fronds like these, you don’t need enemas.”

Visit www.robchrisman.com for more information on our industry partners, access archived commentaries, or to subscribe to the Daily Mortgage News and Commentary. If you’re interested, visit my periodic blog at the STRATMOR Group web site. The current blog is, “Lenders Continue to Pivot” about how lenders and MLOs continue to shift to a purchase-centric focus. The Commentary’s podcast is live and at any place you obtain your podcasts (like Apple or Spotify).

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(Market data provided in partnership with MBS Live. For free job postings and to view candidate resumes visit LenderNews. This newsletter is for sophisticated mortgage professionals only. There are no paid endorsements by me. For up-to-date mortgage news visit Mortgage News Daily. For archived commentaries, or to subscribe, go to www.robchrisman.com. Copyright 2022 Chrisman LLC. All rights reserved. Occasional paid job & product listings do appear. This report or any portion hereof may not be reprinted, sold, or redistributed without the written consent of Rob Chrisman.)