Jeff O. writes, “When I saw the title ‘Ellie Mae’s outage’ I thought that perhaps it involved my beloved Beverly Hillbillies star. That would have had major implications for many young boys back in the day. Granny would have had a heart attack, and Uncle Jed’s response would of course be, ‘The dickens you say’.” I don’t know how I let the Elly May pun slip by me earlier this week, but, joking aside, one veteran compliance person wrote saying, “Without our LOS, we have blank paper. The 3 day time clock for initial disclosures doesn’t stop ticking because there’s a malicious attack on a vendor. If disclosures don’t go out on time, many investors won’t buy the loan. The need for a backup, or entirely different, plan became crystal clear to senior management.” Every system or counterparty should have a back-up plan in place – easier said than done. Ellie is not the only one bringing the exciting new buzzword (DDoS) to our attention. Now we have the FFIEC: http://www.ffiec.gov/press.htm. And who the heck made it a small “o” in the acronym?
On the jobs front, PHH Home Loans, LLC Midwest is continuing to expand its Retail Division in Chicago and Minneapolis. PHH Home Loan’s is in its 24th year in the MN and IL markets and seeks experienced LO’s who are in need of a broader product menu and dedicated back office support where they are partnered with loan processors familiar with their predominant product sets. “PHH Home Loans brings the strength of one of the largest non-bank mortgage companies through our parent, PHH Mortgage Corporation and combines it with our local presence, diverse product menu, management guidance, processing support and technology”, remarked President Mary Baymler who has been with the company since its inception. PHH is looking to fill Illinois retail positions in its Lisle, Barrington, and Northbrook locations with Minnesota openings in Edina, Coon Rapids, and Maplewood. Interested applicants should send their resume, summary introduction and basic production history via email to the human resources director at [email protected]. PHH Home Loans is proud to be an EEO/AA employer M/F/D/V and maintains a drug-free workplace and performs pre-employment substance abuse testing.
And a few thousand miles away, in Southern California, New American Funding is searching for a Chief Servicing Officer. The candidate will be responsible for planning, directing and overseeing the build out of a start-up servicing division for a nationwide mortgage banker in Orange County. The Loan Servicing Division is comprised of Collections, Default/Foreclosure, Customer Service, Escrow, Payment Processing/Payoff, and Investor Reporting. He or she will be required to build, organize, recruit and oversee these departments as the division is developed. The CSO will work with Executive Management in adhering to an existing pro-forma. The candidate will play an integral part in selecting the servicing platform, negotiating the contract for the platform and launching all automation, and interacting with all levels of Mortgage Origination management for Human Resources, LOS interface, IT needs, Accounting functions, and Legal and Compliance matters. For a complete job description, or to send a confidential resume, contact Erin Forbes at [email protected].
The Financial Services Committee is the CFPB’s biggest fan, right? Snort. Here is the latest:
Leading up to that, according to a Politico report, a CFPB spokesman has said that the two invited CFPB representatives will not be participating in the hearing held yesterday by the House Financial Services Committee’s Subcommittee on Oversight and Investigations.
Entitled “Allegations of Discrimination and Retaliation within the Consumer Financial Protection Bureau,” the hearing included testimony from a CFPB employee who alleged she experienced gender discrimination and retaliation for filing an Equal Employment Opportunity complaint with the CFPB’s Human Capital Office. The CFPB’s spokesman, Sam Gilford, is reported to have said that the CFPB’s participation in the hearing would violate employee privacy and due process rights and undermine the CFPB’s Equal Employment Opportunity and labor relations processes. The two invited CFPB representatives are M. Stacey Bach, Assistant Director of the CFPB’s Office of Equal Opportunity Employment, and Liza Strong, Director of Employee Relations.
And did the CFPB really pay for a “fake” consumer advocate to travel to a meeting expecting him to publicly support the agency, only to watch him denounce the CFPB? Stranger than fiction: http://www.americanbanker.com/issues/179_62/how-the-cfpb-seeks-to-shape-the-message-1066604-1.html.
On the positive side of things, the CFPB recently issued an 89-page small entity compliance guide for the TILA-RESPA Integrated Disclosure Rule. Don’t forget that the CFPB issued the final rule in November to integrate the initial and final mortgage loan disclosures under the Truth in Lending Act and RESPA. The final rule appeared in the December 31, 2013 Federal Register, and the rule becomes effective August 1, 2015. Lot of time, right? But time has a way of passing quickly…so don’t waste time in implementing the changes.
The Guide is divided into 17 main sections, and initially provides an overview of the final rule and its scope. The Guide addresses the initial disclosure—the Loan Estimate—including the requirements for delivery, content and revisions, and the limits on the amount charges disclosed in the Loan Estimate may increase. It also addresses the final disclosure—the Closing Disclosure—including requirements for delivery, content and revisions. The Guide makes clear that the integrated disclosures provided for in the rule may not be implemented before August 1, 2015. The document includes information about two separate disclosure requirements—the escrow closing notice for cases in which a required escrow account will be terminated, and the disclosure of a lender’s applicable policies regarding acceptance of partial payments that must be included in a mortgage transfer notice.
And for folks who like to follow the numerous lawsuits in residential lending, Alan Kaplinsky, the author of the CFPB Monitor, writes, “In what appears to be the first lawsuit by a state attorney general of its kind, the Illinois AG recently filed a state court lawsuit against a small loan lender alleging violations of the Dodd-Frank prohibition of unfair, deceptive or abusive acts or practices in addition to violations of state law. Section 1042 of Dodd-Frank (12 U.S.C. 5552) authorizes state AGs to bring civil actions in the name of the state against state-licensed entities to enforce provisions of Dodd-Frank. According to the complaint, the lender (which was licensed under Illinois law) offered lines of credit on which it charged a stated annual interest rate ranging from 18% to 24%. It alleges that to evade the state law 36% annual interest rate cap, the lender charged borrowers a mandatory ‘account protection fee’ ranging from $10-$15 for every $50 of the borrower’s outstanding balance which was payable every two weeks in addition to accrued daily interest. The complaint charges that the fee was ‘nothing more than undisclosed interest, resulting in an actual interest rate between 350% and 500%. It also alleges that the lender instructed borrowers to make a monthly minimum payment, but did not apply any of the minimum payment toward principal. In addition to alleging that the lender misrepresented the true cost of its loans, the complaint alleges that the lender’s loan product was “structurally unfair” because the account protection fee resulted in “an endless cycle of debt.”
The endless question: who assumes the risk? Forget Amelia Earhart, and where DB Cooper ended up (although I’m pretty sure I met him at an MBA conference once in ‘99). If we could answer that one question, while still insuring liquidity in the marketplace, and maybe in the process mitigate the tax payer from future exposure, we’d have really made a difference. I continue to be asked about it, and I was reminded that Ed Pinto, who is one never to shy away from agency talk, especially with respect to FHA reform, wrote an interesting article, Creating a Straight, Broad Highway to Debt-Free Ownership (http://www.aei-ideas.org/2014/01/homeownership-and-the-state-of-the-union/). Contained within the pages of “Housing Risk Watch” (formerly known as, “FHA Watch“), Mr. Pinto argues in favor of a reduced role by the FHA, and a return to business practices which were once in practice at the agency. He writes, “The solution is to create a straight, broad highway to debt-free ownership for working-class families who have the desire and discipline to become homeowners. This would involve: Developing a risk grid for the FHA that balances credit history, down payment, loan term, and debt-to-income ratio/residual income test. No FHA-insured home buyer should be given a mortgage with a default rating under stress of greater than 10 percent.” The article does a fine job of examining where FHA practices were, where they are, and where they should be. Also contained in that month’s newsletter is an article entitled, Spotlight on Mortgage Risk: Fannie Leads Freddie in Year-over-Year Increase in Risk, which is worth a read.
So what’s going on over in the commercial real estate market? According to Lawrence Yun, the National Association of Realtors (NAR) Chief Economist, “Growth in commercial real estate sectors continues at a moderate pace from a very slow pace of absorption, despite job additions to the economy. Companies appear hesitant to add new space.” Office demand, according to Mr. Yun is expected to see a slow and gradual improvement, and the demand for retail space is benefiting from improved household wealth, while industrial real estate is stable with increasing international trade, which requires warehouse space. Published in late February, NAR’s latest Commercial Real Estate Outlook (http://www.realtor.org/reports/commercial-real-estate-outlook) offers overall projections for four major commercial sectors and analyzes quarterly data in the office, industrial, retail and multifamily markets.
For a smidgeon of vendor and training news…
Secure Settlements (a data intelligence and risk analytics company) announced its partnership with RFIB Group Ltd. and certain underwriters at Lloyd’s of London to offer a new product that will insure lenders utilizing SSI’s ClosingGuard service against losses arising at the closing table. “Endorsing the effectiveness of SSI’s suite of online risk management products for the vetting of closing agents, the group of insurance professionals is launching the Mortgage Settlement Insurance (MSI™) Policy in support of the SSI program. The MSI Policy is designed to protect retail mortgage lenders that utilize SSI’s ClosingGuard closing agent vetting product against losses arising at the closing table from such perils as fraud, theft and documentation error. Coverage extends to warehouse banks and secondary market investors including GSEs, and may be available as well to consumers who are indemnified for losses at the closing table.”
And anyone near New York in mid-May and wanting to learn how to value a bank might want to check out Fundamentals of Bank Valuation put on by SNL. “This in-depth program features up to date case studies that will provide essential, real-world context. What you’ll learn: navigating bank financial statements, identifying key operating levers and evaluating earnings quality, the fundamental ratios necessary to successfully analyze banks, discounted cash flow modeling, capacity-to-pay/earnings dilution analysis, dissecting and interpreting a fairness opinion, best practices for the effective use of peer comparables, transaction premium and discounted cash flow valuation approaches. To register, or learn more about the program, please click here.”
Nationstar announced a bit of a management shakeup. NSM announced the appointment of a new CFO and a new Chief Strategy and External Affairs Officer. David Hisey, the current CFO, will move into the newly created role of CSO and Chief External Affairs Officer, while Robert Stiles, currently the CFO of Solutionstar, will become the new CFO of Nationstar.
Turning to the markets, the stock market is sniffing at an improving economy, and the bond market might be doing the same. The reason du jour was the ADP employment report: while March was in line with expectations at +191k in jobs created, revisions to January and February netted out to +33k. Although rates went higher, agency MBS prices worse by about .250) did better than Treasury prices due to the perceived lack of applications and volume (remember those supply & demand curves from high school!).
The “big daddy” of U.S. economic news comes out tomorrow, but today we’ll have Initial Claims, expected higher to 316k from 311k, and February International Trade (-$38.5 billion projected). ISM non-manufacturing (Mar) will be released at 10AM EST and is predicted lower to 52.0 from 53.5., and an hour later is a Treasury announcement detailing next week’s auctions of 3- and 10-year notes and 30-year bonds (estimated unchanged at $64 billion). We’re basically unchanged from Wednesday afternoon at 2.80%.
The local bar was so sure that its bartender was the strongest man around that they offered a standing $1,000 bet. The bartender would squeeze a lemon until all the juice ran into a glass, and hand the lemon to a patron. Anyone who could squeeze one more drop of juice out would win the money.
Many people had tried…. over time: weightlifters, longshoremen, etc., but nobody could do it.
One day, this scrawny little fellow came into the bar, wearing thick glasses and a polyester suit, and said in a small voice, “I’d like to try the bet.”
After the laughter had died down, the bartender said, “OK”; grabbed the lemon; and squeezed away. Then he handed the wrinkled remains of the rind to the little fellow. But the crowd’s laughter turned to total silence…. as the man clenched his little fist around the lemon…. and six drops fell into the glass.
As the crowd cheered, the bartender paid the $1,000, and asked the little man, “What do you do for a living? Are you a lumberjack, a weight-lifter, or what?”
The little fellow quietly replied: “I work for the IRS.”
(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.)