I received a note yesterday from the CEO of a mid-sized lender. "Rob, I have begun thinking that the CFPB is the best thing that ever happened to my business. There is no way anyone in their right mind would ever want to start a mortgage company from scratch. The government is concerned about 'too big to fail,' yet its regulators continue, through their practices, to promote exactly that. How many new banks were established in 2011? I've heard rumors of 'none.' Today's Proposal #1 (New Loan Estimates and New Closing Disclosures) and Proposal #2 (High Cost Mortgage Protections) are just more of the same thing that will eliminate new lenders, and force smaller lenders to either join us larger lenders or go away. 1099 pages of simplification? That represents job security!” (More on the details of the CFPB’s plan a few paragraphs down.)

And yes, the hiring continues. Down in New Jersey, 100% retail lender Oceanside Mortgage Company is searching for a secondary marketing executive.  Recent GNMA pooling experience and sub-servicer oversight is a must.  Oceanside is a retail lender, licensed in 16 states and based in NJ funding approximately $40 million per month of FHA loans. (The company's website is www.yourfha.com.) Oceanside is currently not GNMA approved, but the candidate is expected to assist in gaining its approval. The company will consider letting the candidate work remotely. If you know someone who might fit the bill, they should contact Steve Stone at sstone@yourfha.com.
 
And I have been retained by an established lender in the California Bay Area that is searching for an Underwriting Manager. The ideal candidate must have FHA, VA, and all the other typical credentials, either live in Northern California or be prepared to move there, and have adequate management experience to assume a Vice President or Director role. The company expects to fund more than $1.5 billion in 2012, and is licensed in six states. Resumes should be directed to me at rchrisman@robchrisman.com, confidentiality assured. (I am attending a conference in San Francisco for a few days, and then will be in San Diego, and will respond when I can.)

Back on to the CFPB. Yesterday’s commentary contained a link to its employee salaries, and now we know why they’re making the big bucks. It seems like the CFPB is taking years to design two forms, but maybe I’m wrong – early comments indicate that the forms are pretty straightforward, but it wants more comments. Here are the links to them: Estimate at http://files.consumerfinance.gov/f/201207_cfpb_loan-estimate.pdf and the disclosure at http://files.consumerfinance.gov/f/201207_cfpb_closing-disclosure.pdf.

The public has until Nov. 6 to weigh in on the changes to the mortgage forms and can do so here: http://www.regulations.gov/#!documentDetail;DÏPB-2012-0028-0001. And we have until Sept. 7 to weigh in on the expansion of the definition for high-cost mortgages and can do so here: http://www.regulations.gov/#%21documentDetail;DÏPB-2012-0029-0001.

What turned heads was the 1099 page document focused on the new rule, proposed by CFPB, that would provide special protections from fees and risky loan terms for consumers who take out mortgages that are considered "high cost" by virtue of the interest rates, points and fees, or prepayment penalties. It is an expansion of the Home Ownership and Equity Protection Act (HOEPA).  The proposal would generally ban potentially risky features such as balloon payments and would completely ban prepayment penalties on high-cost loans. The rule would also ban fees for modifying loans, restrict fees when customers ask for a payoff statement, and cap late fees. But heck, shouldn’t companies be allowed to make them if the risk is known, and the borrower told?

Anyway, in addition the proposed rule would require counseling for consumers before they could take out a high-cost mortgage and would implement TILA counseling requirements where first-time borrowers are considering a loan that permits negative amortization. The proposal will be available for public comment for 60 days (until September 7) with some provisions subject to comment until November 6.  A final rule will be published next January. Here are the 1099 pages in all their glory: http://files.consumerfinance.gov/f/201207_cfpb_proposed-rule_integrated-mortgage-disclosures.pdf.

Lots of folks were excited when they saw the news about the IndyMac-shareholder settlement: http://www.washingtonpost.com/business/industries/indymac-leaders-agree-to-settle-shareholder-class-action-litigation-for-65-million/2012/07/08/gJQAP8EyWW_story.html. But American Banker was quick to point out that it is completely covered by the Directors and Officers (D&O) policy.  Plaintiff's probably wanted to make sure they got something before the FDIC takes the rest. "Michael Perry and other former executives of IndyMac Bancorp, holding company of the thrift that spectacularly failed four years ago, settled a shareholder suit. The D&O insurer will pay the investors $6.5 million; Perry and his former colleagues will not have to reach into their own pockets. The D&O policy has an estimated $80 million left, and there are other suits pending against Perry and other IndyMac managers, including one brought by the FDIC seeking $600 million."

And here's a little PR that our industry doesn't need, or warrant. A Texas woman is suing JPMorgan Chase, claiming that the bank’s eviction caused the heart attack of her husband, a retired minister. Wanda Jo Engel alleges that JPMorgan’s wrongful home foreclosure and eviction created so much stress that it "overwhelmed" her husband, Harry Engel, ultimately triggering his death. She and her children, Steve, Debra and Josh, are suing the bank for wrongful death and wrongful foreclosure and eviction among other claims, according to a lawsuit filed in Dallas County Court.

Remember The Mortgage Debt Relief Act of 2007? Well, it expires at the end of this year - I wonder if the expiration of its tax implications is part of the "fiscal cliff" that our legislators seem unable to stave off. Of course, the easy way out is just to extend everything, "kicking the can down the road." After all, they made the rules and the deadlines; they can extend them, right? Regardless, here is a reminder of the Act: http://www.irs.gov/individuals/article/0,,id9414,00.html/.

Here are some somewhat recent investor/M&A/training/agency updates, providing a flavor for the environment. They just don’t stop. As always, it is best to read the actual bulletin.

Plaza Mortgage is hosting a complementary Plaza Training Webinar on “Reverse Mortgage Basics” today from 11-12 PST. To sign up, go to https://www2.gotomeeting.com/register/634426858.

With much of the industry in a wait-and-see mode regarding private-label investment and securitization, one company is making news by bringing back one of the most maligned mortgage products - stated income loans. Housing Wire reported that Rancho Financial, a division of Skyline Financial (whose CEO is industry giant Bill Dallas) is now offering the product, albeit under fairly strict conditions. Borrowers must have a credit score of 740 or higher, provide at least 30% down, submit bank statements to verify assets, have at least a two-year history of self-employment, complete with a CPA letter or business license, and a 12-month reserve. The company explicitly expects that the days of Fannie Mae and Freddie Mac are numbered, and are seeing this offering as a forward-looking approach designed to help galvanize private sector investment and participation. http://www.housingwire.com/news/rancho-financial-brings-back-stated-income

Mortgage Guaranty Insurance Corporation (MGIC) recently issued its Operational Summary for the month of May. The Summary shows continuing improvement in the company's inventory of delinquent loans and a slight increase in new business, from $1.7 billion of new primary insurance written in April to $2.0 billion in May. At the beginning of the period there were 156,698 loans in that inventory, down from 160,473 at the beginning of April and 175,639 at the beginning of this year.  Activity during the month included 10,907 notices of new delinquencies, 3801 claims paid, 8537 cures, and 294 rescissions or denials.  By the end of May the inventory was down to 154,973 loans, a net reduction of 1,725 during the month and 20,666 since January 1. Comparable activity in April included 10,134 new notices, 3,967 claims paid, 9,717 cures, and 236 rescissions or denials for a net reduction of 3,775 loans during the month. At the end of the first quarter of 2012 (March 31), the MGIC, the principal subsidiary of MGIC Investment Corporation, was providing insurance covered for 1.1 million mortgages, a total of $169.0 billion of in force primary insurance.

Given the fires in Colorado, Freddie reminds clients of its disaster policies. People should look for information in the Seller/Servicer Guide Vol. 2, Chapter 68, “Servicing Mortgages Impacted by a Disaster.” “Our disaster relief policies provide a number of ways for mortgage servicers to help affected borrowers in the presidentially declared Major Disaster Areas where Federal Individual Assistance programs are being made available. Freddie Mac, for example, gives servicers the discretion to reduce or suspend mortgage payments for up to 12 months for borrowers with Freddie Mac-owned mortgages. Each case must be individually assessed to determine what assistance will best fit the homeowner's circumstances. Freddie Mac also strongly encourages servicers to help affected borrowers with Freddie Mac-owned loans by: 1) Suspending foreclosure and eviction proceedings for up to 12 months; 2) Waiving assessments of penalties or late fees against borrowers with disaster-damaged homes; and 3) Not reporting forbearance or delinquencies caused by the disaster to the nation's credit bureaus.”

On Friday, over in Georgia, Montgomery Bank & Trust was closed by the Georgia Department of Banking and Finance, which appointed the FDIC as receiver. The FDIC entered into a purchase and assumption agreement with Ameris Bank to assume all of the deposits. Speaking of problems in Georgia banks, check out this separate fraud case: http://www.cnn.com/2012/07/08/us/georgia-wire-fraud/index.html?hpthp_t2.