Jul. 25, 2011: Regulations and more regulations; carbon monoxide sensors; HUD training; FTC & MARS; news on loan limit extension
Rob Chrisman

When somebody begins a sentence with "It would be nice if...” the right thing to do is to wait politely for the speaker to finish. No project ever gets around to the “it-would-be-nice” features: or it they do, they regret it. Wait for sentences that begin, "We have to..." and pay close attention, and see if you agree. As in, "We have to have our government exercise some fiscal restraint..." Go ahead and accuse me of not seeing the big picture here. If I earn $3,000 per month and the limit on my credit card is $5,000, and I spend $6,000 every month, is it better for me to decrease my spending and/or increase my income, or, after debating with the missus for several weeks, call the credit card company and ask for a higher limit?

Whenever I make travel plans, I think of going to Arizona in August. I am glad that the folks at HUD feel the same way – maybe meeting space is cheap. "FHA Appraisal Training comes to Phoenix, AZ on August 9 – the class is free but the air conditioning is $400. (Actually it is all free, you just have to register.) Completing today’s FHA appraisal. This live training is being held in conjunction with the Arizona Board Meeting and Outreach Program. FHA trainers will conduct a 1-day class on how to complete an FHA appraisal and will discuss recent program changes that affect FHA appraisals. More info at: http://www.hud.gov/emarc/index.cfm?fuseactionemar.registerEvent&eventIdËœ0&updateN.
 
And later this week, on the 28th, there is a Webinar on Selling HUD REO Properties, presented by HUD and The California Association of Realtors for CAR members. Learn about selling HUD REO properties. Registration required, no fee. More info at: http://www.car.org/education/webinars/FHA/.
 
And on August 4^th, at the National Cowboy & Western Heritage Museum in Oklahoma City (I’ve been there!), HUD senior staff underwriters and appraisers, in conjunction with the Oklahoma Mortgage Bankers Association, will be offering both credit and appraisal training. For info and registration forms please contact OMBA President, Betty Shaw at: bshaw@spiritbank.com. Lastly, on the 4^th in Denver, FHA is offering “Energy Efficient Mortgage (EEM)” classroom training. It’s free - but register, and for more information go to http://www.hud.gov/emarc/index.cfm?fuseactionemar.registerEvent&eventId—1&updateN.
 
Friday was the last day of the public comment period, set up by the Federal Reserve Board for the proposed rules under Reg. Z. It would require creditors (such as mortgage companies) to determine a consumer's ability to repay a mortgage before making the loan and would establish minimum mortgage underwriting standards. The actual comments can be viewed at: http://www.federalreserve.gov/generalinfo/foia/index.cfm?doc_idR-1417&doc_ver1&ShowAllYes.

But another public comment issue has begun in the NMLS category. The Conference of State Bank Supervisors (CSBS) is seeking comments on the Reporting of State Regulatory Actions. “The goal of developing Reporting of State Regulatory Actions functionality in NMLS is to provide state regulators, consumers, and the public with information concerning regulatory actions taken by state regulators against companies and individuals through NMLS in order to improve transparency and information available concerning state-licensed and registered companies and professionals, facilitate the sharing of regulatory enforcement information among state regulators, etc. Read all about it by going to: http://csbs.informz.net/csbs/data/images/comments-for-reg-actions-final-7-22-2011.pdf.

On June 30 HUD published its final rule about the implementation of the SAFE Act.  The Rule clarified the number of times a candidate may take a SAFE MLO Test Component before being required to sit out the 180-day wait period. Starting 8/29 “The HUD Rule states that any person who takes the National or a State Component of the SAFE MLO Test must sit out for six month (180 days) after the person fails a test component three (3) times. Anyone who enrolls to take a test on or after August 29th will be subject to the new retake policy.  Any test candidate who enrolls and/or takes the National or State component of the test prior to August 29th is governed by the current policy.” Send your questions to Rich Madison, Sr. Director, Mortgage Education Programs at rmadison@csbs.org.
 
Over at the FDIC, a few more banks were shuttered Friday: in Florida American Momentum Bank took over Southshore Community Bank and LandMark Bank of Florida. And up in Colorado, Bank of Choice was closed by the Colorado Division of Banking, which appointed the FDIC as receiver, which brought in Bank Midwest, National Association, Kansas City, Missouri. By the way, if one wants to see the data on the latest number of professional liability lawsuits authorized by the FDIC Board of Directors and the total monetary value of these claims, one should visit http://www.fdic.gov/bank/individual/failed/pls/index.html.
 
We’re nearly done with earnings news for the 2^nd quarter. The latest round involved BB&T (profit was up 46%, driven by better credit quality and loan growth), Fifth Third (profit up 76% driven by improving credit conditions and lower loan-loss provisions), US Bancorp (commercial and home loans saw roughly 3% growth vs. the prior quarter offsetting runoff of construction and credit card loans), PNC (lower borrowing costs and higher lending to manufacturing, financial services, and health care were offset by distressed real estate loans and lower consumer lending), and M&T (average loans grew at an annualized rate of 2% and it benefitted from the acquisition of Wilmington Trust). Overall, aside from Bank of America, most lenders did well profit-wise during the second quarter.
 
Friday I listed a notice of a bulk servicing package for sale by Whole Loan Capital. Another company “in that space” is MountainView Servicing Group, who valued 565 mortgage servicing rights (MSR) portfolios for over 120 different clients in 2010, is currently marketing several MSR portfolios of GNMA, FNMA, FHLMC, and/or private servicing ranging in size from $30 million to $16 billion, along with flow deals. If interested in discussing the bulk or flow opportunities and other services, contact Matt Maurer at mmaurer@mvservicing.com.

About a week ago the FTC announced it would back off enforcing the Mortgage Assistance Relief Services Rule (MARS Rule) for certain real estate professionals. For those who know very little about this, including me, the five key components of the MARS Rule, which covers persons or entities that market or provide services to assist consumers in obtaining mortgage loan modifications or otherwise avoid foreclosure, “are: (1) a prohibition against false or misleading claims; (2) a disclosure requirement; (3) a prohibition on advance fee collection; (4) a prohibition against assisting or supporting a party that a person knows or consciously avoids knowing is engaged in a violation of the MARS Rule; and (5) requirements related to recordkeeping and compliance. This all kicked in near the start of 2011, but “in response to concerns expressed by real estate brokers and agents regarding the accuracy and comprehensibility of the required disclosures and the unintended consequences the advance fee ban could have on real estate professionals assisting in negotiating or obtaining a short sale, the FTC has decided to forbear any enforcement action regarding the MARS Rule, other than the prohibition against misrepresentation, against real estate professionals in connection with short sale assistance. The enforcement stay applies only to real estate brokers and real estate agents under their direction and control who are: (1) licensed and in good standing under applicable state law; (2) in compliance with state laws governing the practice of real estate professionals; and (3) assisting or attempting to assist a consumer in negotiating, obtaining or arranging a short sale of a dwelling in the course of securing the sale of the consumer’s home.”

What is the latest on the possible extension of the current "temporary" loan limits? Go to http://www.cnbc.com/id/43859013 for a little update.
 
No one likes thinking about carbon monoxide, but for over a year now out in the State of California has had a law requiring home owners to install carbon monoxide detectors in their homes. California residents must have carbon monoxide detectors in their homes as of July 1, 2011; this timeline applies only to all residential units (SFR, Condo, PUD, Manuf., 2-4 Units) that have appliances that burn fossil fuels or homes that have attached garages or fireplaces. It better be battery-powered, emit a loud noise, and be certified by a national testing lab, such as the Underwriters Laboratories – and it can also serve as a smoke detector. And put one outside of each bedroom, and one on every level. As California goes, so goes the nation.
 
Last week GMAC Bank Correspondent improved their adjustments, as many other lenders have done, for jumbo products. (Jumbo ARM products from +.250 to +.500 for FICO >r0 and LTV <p; Jumbo ARM incentive for +.250 for FICO>r0 and LTV<u and >70; Jumbo Fixed incentive for FICO >r0 and LTV<u for +.250.) This is until 9/1.
 
Chase recently turned some heads, referencing a HUD bulletin concerning the annual MIP change. As it turns out, the change in MIP was not announced via a Mortgagee Letter but instead the change was made directly to HUD TOTAL Scorecard and CHUMS. An astute reader noted, “We identified the change via a difference between our LOS and FHA TOTAL Scorecard annual MIP values. Loans with a loan terms <15 years and LTV’s <78% now reflect 0.00 in the Annual MIP returned from TOTAL Scorecard. Additionally if the Correspondent checks the FHAConnection Case Query screen, they will see a 0.0 factor for this segment of loans. The Correspondent would use the TOTAL Scorecard findings and the FHAConnection Case Query screen as their documentation. The Mortgagee Letter is still pending from HUD.”
 
There are still few complaints about these rates, and in fact Friday MBS prices improved by .250 while 10-year Treasury notes rallied .375 and went back to 2.96%. For scheduled news we have zip today. Tomorrow is the Case-Shiller 20-city Index, Consumer Confidence, and New Homes Sales. Wednesday is mortgage apps, Durable Goods, and the Fed's Beige Book. Thursday is Jobless Claims and Pending Home Sales, and then on Friday is GDP, the Employment Cost Index, Chicago PMI, and the Michigan Consumer Sentiment. But the focus this morning is on our government’s inability to put aside differences and come up with a deficit reduction plan; stocks are pointing down, the 10-yr is up to 3.01%, and MBS prices are worse .125-.250.
 
 
There is no joke today, as our hearts and minds go out to the families and friends of the 93 killed and 97 injured in Norway over the weekend – it is a terrible tragedy.