Apr. 25: Mortgage jobs; reports on lending trends; Arizona law impacts builders; a jaw-dropping list of rules & regs governing lenders

Huh? Bank of America might have to pony up yet another $13 billion to settle more residential mortgage-backed security claims? No wonder the lending industry continues to face an uphill battle in overcoming what the government and public thinks of it: http://www.bloomberg.com/news/2014-04-24/u-s-said-to-ask-bofa-for-more-than-13-billion-over-rmbs.html. Of course, these headlines concern industry practices from years ago…


Turning to the present, one of the nation’s premiere mortgage companies, Gold Star Mortgage Financial Group, is interested in speaking with the industry’s finest Loan Originators and Branch Managers.  Headquartered in Ann Arbor, MI and expanding from coast-to-coast, Gold Star has become one of the fastest growing companies and top 50 lenders in the nation. Founded in 2000 and currently operating in 21 states, Gold Star’s commitment to relationship-based customer service, cutting edge technology and a superior operations infrastructure fuels its stability and success. Gold Star (http://www.goldstarfinancial.com/) has been recognized as an Inc. 500/5000 company, and most recently by Mortgage Technology Magazine as one of the nation’s Top Tech-Savvy Lenders. Very simply, Gold Star realizes what top industry leaders are seeking.  To learn more, contact Shawn Sirko at ssirko@goldstarfinancial.com.


And Catalyst Lending Inc., a Colorado-based retail mortgage banker, continues to grow.  Catalyst Lending is pleased to announce the additions of Noel McGarvey and Linda Grimes to the management team. Noel has joined as Senior Vice President of Operations responsible for processing, underwriting, closing, funding and post-closing. Noel will oversee the development and integration of operations staff in support of Catalyst Lending’s aggressive expansion.  Linda has joined as Product Development Manager, overseeing the identification, rollout and maintenance of an expanding list of investors and products. Catalyst Lending (https://www.catalystlending.com/) is aggressively pursuing growth opportunities in multiple markets, including loan officers, branches and organizations. Interested parties should contact Shawn Watts, EVP, at swmwatts@catalystlending.netCatalyst Lending is also looking to fill key positions including qualified DE/VA/USDA underwriters, closers and processors.  Catalyst offers competitive salaries and benefits and working remotely is an option currently supported and available for discussion.  Confidential resumes may be submitted to Noel McGarvey at nmcgarvey@catalystlending.net.


“Rob, have you ever seen a list of the alphabet soup of rules and regulations that a bank or lender has to comply with in today’s lending environment?” Let me start by saying a) that I am no compliance person, and b) every time I make a list, someone or something is excluded. But here is the reason why talented compliance people are in such high demand: HUD’s Reg. X (RESPA), Reg. Z (Truth in Lending), Fair Lending Reg. B (ECOA), Reg AA (Unfair, Deceptive, and Abusive Acts & Practices – UDAAP, Reg. N (Mortgage Acts and Practices – Advertising), Home Owners Protection Act (HOPA), Reg. C (home Mortgage Disclosure Act – HMDA), Fair Credit Reporting (FCRA), Fair & Accurate Credit Transactions Act (FACTA), Reg CC (Expedited Funds Availability), Servicemembers Civil Relief Act (SCRA), Flood Disaster Protection Act, CAN-SPAM Act, Reg. P (Privacy of Consumer Financial Information – Right to Privacy, Gramm-Leach-Bailey Act), Reg. BB (Community Reinvestment Act (CRA), Secure and Fair Mortgage Enforcement (SAFE Act – CFPB Reg. G), Electronic Signatures in Global and National Commerce (E-SIGN Act), Reg. E (Electronic Funds Transfer), Reg. O (Credit to Insiders), Reg. DO (Truth in Savings – TIS), Reg. D (Reserve Requirements), Reg. GG (Internet Gambling), and Reg. M (Consumer Leasing).


Some of these apply only to banks that take deposits, such as E and CC, but in dealing with “consumer affairs”, these are a great starting point for assessing your company’s risk areas. Each one has its own set of exams and key areas affected, along with legal, regulatory, reputational, and complexity risk. And many are monitored by different agencies or regulatory bodies inside the government. And it does not, of course, include all the state specific rules and regulations with which lenders grapple every day. And after typing these, it made me realize that I will never be able to have a grasp of all this.


Speaking of which, let’s catch up on a little state-level news. Lenders doing business in more than one state have to stay abreast of all these changes – I can’t imagine how some do it, and deal with the conflicts between Federal and state regulations.


Utah recently modified its provisions relating to exempted transactions under the State Consumer Credit Code and exemptions under the Financial Institution Mortgage Financing Regulation Act. An Exempt Transaction is: a type of securities transaction where a business does not need to file registrations with any regulatory bodies, provided the number of securities involved is relatively minor compared to the scope of the issuer’s operations and that no new securities are being issued. These revisions are effective on May 12, 2014.


Washington’s legislature has passed House Bill 2723 which amends the Foreclosure Fairness Act. The state’s Foreclosure Fairness Act encourages homeowners to utilize housing counseling, facilitate communication between homeowners and beneficiaries in an effort to avoid foreclosure whenever possible and to provide guidance where foreclosure mediation has been recommended. The recent amendments are effective June 12, 2014.


Delaware has adopted the proposed regulation changes that had been published in the February 2014 edition of the Delaware Register of Regulations. The main changes occur to chapters 21 and 22 of Title 5 of the Delaware Code, relating specifically to the operating regulations, reporting rules, recordkeeping and disclosure requirements, and fee schedules for mortgage loan brokers and licensed lenders.  The effective date of the amended regulations started on April 11, 2014.


Iowa’s House File 2324 amends various provisions, including those relating to residential real estate loan charges, monetary limits specified in the consumer credit code, loan charge limits for one or two family homes occupied by the borrower, debt collectors, and the sale of title insurance. The rule changes become effective on July 1, 2014.


Arizona has a new law that allows some home builders to be sued by lenders for deficiency: http://www.bizjournals.com/phoenix/news/2014/04/23/new-arizona-law-allows-some-home-builders-to-be.html.


Turing to things arguably more educational, and instructive, earlier this week Richey May released its 2013 Fourth Quarter Trend Report for independent mortgage bankers. To no great surprise, the report shows that production, refi and purchase volume decreased in Q4 2013, and that lenders responded by accepting borrowers with slightly lower FICO scores. (Approximately 1/3 of 29 firms included in the numbers that had not previously extended credit to borrowers with scores under 600, began to do so during the 4th quarter of 2013.) Interested parties can find the report through Richey May & Co. “Richey May quarterly trend reports, which are created using Richey May Select, highlight key performance indicators, such as overall volume and volume by transaction type, margins, operating costs, labor output, and more. These reports are provided free of charge to all Richey May Select subscribers.” The company also issues an annual salary report; independent mortgage bankers interested in providing confidential information used in Richey May Select’s analysis may contact Trevor Reinhart at Trevor@RicheyMay.com.


In its monthly call update on Monday, AEI’s International Center on Housing Risk will be taking a look at whether or not QM regulation has a discernable effect on residential lending. The institution provides research, commentary, and new tools for measuring risk in housing and mortgage markets. (“The recent financial crisis, and the resulting devastation for millions of families, largely stemmed from a failure to understand the build-up of risk in these markets.”) Its monthly update of the National Mortgage Risk Index and State Mortgage Risk Indices will be held Monday, April 28, from 10-10:30AM EDT (4-4:30AM Hawaii Time). Please RSVP to Emily Rapp at emily.rapp@aei.org today to receive the call-in information. “This month’s NMRI update shows nearly a quarter of all purchase loans in March had a debt-to-income ratio greater than the QM limit of 43%, little changed from the share in Q4:2013.  For the FHA’s purchase loans, more than 40% have a debt-to-income ratio exceeding the QM limit.  These high DTI loans are risky, with a stressed default rate nearly double that for all loans regardless of DTI.”


The Corporation for American Banking, a subsidiary of the ABA, announced that its endorsed lending programs saved participating member banks over $32m in 2013, which, for approximately 1,200 banks, works out to more than $46,655 each.  The programs offer special terms on Secondary Market sales, risk mitigation and compliance tools, management resources, portfolio analytics, quality control, and lending technology and have been used to produce over $280bn in production since 2001.


Guild Mortgage (Guild Mortgage Co.) is opening a new branch in Omaha. (I guess that is better than opening an old branch in Omaha.) The new addition will be the first Guild branch in the state of Nebraska as part of its planned expansion into the Midwest.


Novation Companies, Inc. recently announced that its subsidiary, StreetLinks, LLC, has been sold to Assurant, Inc. for $60 million in cash, plus a potential earn-out payment of up to $12 million post-closing based on StreetLinks future performance. Novation owned approximately 88% of StreetLinks and receives a corresponding share of the sales proceeds. The sale was unanimously approved by Novation’s board of directors. StreetLinks provides banks and mortgage lenders with full service appraisal management services and appraisal management software. Novation will utilize the proceeds from the sale to increase its investment in its cloud-based communications software subsidiary, CorvisaCloud, LLC, and for general corporate purposes.


Through all this, the fixed-income markets just are not doing much, which is fine with capital markets staffs and lock desk employees across the nation. The usual folks are buying agency MBS and the usual folks are selling – but just not as much as in the past. So either the agencies are continuing to purchase a larger portion of loans from lenders, or volumes are down industry-wide. Or both. The NYFRB reported net purchases of about $2 billion a day for the holiday-shortened week ending April 23, which was in line with the prior two weeks. (It will be interesting to watch the supply & demand of agency MBS in May when Fed buying drops to $1.8 billion a day – and supply is expected to increase. The two may cross in July.)


We did see some kind of flight to safety bid associated with Russia/Ukraine yesterday, but this was offset by better-than-expected Durable Goods news – but that is always volatile. There is not much news today, aside from second-tier final April Consumer Sentiment (expected to increase slightly). Ahead of that in the early going the 10-yr.’s yield, which closed Thursday at 2.69%, is now around 2.67% and MBS prices are better a shade.



Here is some English language trivia for your kids. One word that could be a noun, verb, adjective, adverb, and a preposition. (Do they still even teach those terms in school anymore?)

UP: This two-letter word in English has more meanings than any other two-letter word. It is listed in the dictionary as an [adv], [prep], [adj], [n] or [v].

It’s easy to understand UP, meaning toward the sky or at the top of the list, but when we awaken in the morning, why do we wake UP?

At a meeting, why does a topic come UP?  Why do we speak UP, and why are the officers UP for election and why is it UP to the secretary to write UP a report?  We call UP our friends, brighten UP a room, polish UP the silver, warm UP the leftovers and clean UP the kitchen.  We lock UP the house and fix UP the old car.

At other times, this little word has real special meaning.  People stir UP trouble, line UP for tickets, work UP an appetite, and think UP excuses.

To be dressed is one thing but to be dressed UP is special.

And this UP is confusing:  A drain must be opened UP because it is stopped UP.

We open UP a store in the morning but we close it UP at night.  We seem to be pretty mixed UP about UP!

To be knowledgeable about the proper uses of UP, look UP the word “UP” in the dictionary. In a desk-sized dictionary, it takes UP almost 1/4 of the page and can add UP to about thirty definitions.

If you are UP to it, you might try building UP a list of the many ways UP is used.  It will take UP a lot of your time, but if you don’t give UP, you may wind UP with a hundred or more.

When it threatens to rain, we say it is clouding UP.  When the sun comes out, we say it is clearing UP.  When it rains, it soaks UP the earth.  When it does not rain for a while, things dry UP. One could go on and on, but I’ll wrap it UP, for now – my time is UP!

Oh, and one more thing. What is often the first thing you do in the morning, and the last thing you do at night? U P! Did that one crack you UP? Don’t screw UP by sending this to everyone you look UP in your address book – or not – it’s UP to you. Now I’ll shut UP!




(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.)


Rob Chrisman