Jul. 27, 2012: How long should you keep a loan file? Government report on appraisals; one take on DOJ/Wells settlement
Rob Chrisman
“Rob,
do you have any idea how long an originator, broker,
whoever, has to keep a copy of the loan file? That is
probably a question that has many conditions and answers, but
any insight would be helpful." It depends on when you think
you’ll have to defend yourself against a buyback! Seriously,
that is a simple question with a complex answer which is based
on the state, whether or not the loan funded or cancelled, who
the investor is/was, what the program is, whether or not
tribal lands are involved, who the agency is, who is servicing
the loan, etc. Fannie and Freddie, for example, have it in
their seller/servicer guides. But here, thanks to the folks at
DogMagic, uh, I mean DocMagic, is a handy-dandy guide: http://www.docmagic.com/media/docmagic/compliance/compliance09/retention.pdf.
In
addition, those interested in the job listing for
Mason-McDuffie Mortgage (seeking Producing Managers and Loan
Officers in California, Arizona, Nevada, Oregon, Washington,
Virginia, Indiana and Texas) should write to Danielle Danson at ddanson@mmcdcorp.com.
Here's
one take on the Department of Justice settlement with Wells
Fargo: http://nlpc.org/.
“Mitt
Romney's search for a VP continues. The reason it's taking so
long is because Romney has never hired an American before.”
Humor aside, but speaking of hiring, Spain's unemployment rate
is 24%. Given the benefits paid out, and the tax base, how is
Spain supposed to pay anyone anything on interest? Global
economic growth may be more heavily affected than previously
thought due to fallout from the European Financial Crisis
and resulting recession in Europe. The International
Monetary Fund (IMF) most recent economic forecast showed
growth slowing around the globe, with a slightly deeper
recession in Europe this year, weaker growth in China and much
of the developing world, and slower growth in the United
States. The slowdown is clearly evident in recent economic
data, which have shown manufacturing activity and consumer
spending weakening. There are several areas where the ongoing
Eurozone recession is affecting growth prospects for the
various states, notably a pullback in exports from these
states to Europe. But the impact is not limited to reduced
exports to Europe, as Europe’s recession is also weighing on
growth in China and other parts of emerging world, reducing
the demand for U.S.-produced goods there as well.
Besides
the direct effect on exports, regional economies may also be
affected by a slowdown in international tourism. This
continuing uncertainty surrounding the European banking system
is contributing to tighter lending standards, increased stock
market volatility and widening credit spreads around the
world, which raises the hurdle rate for new investment and
further restrains economic growth. So be careful what you wish
for – slower world economies mean lower rates here in the
U.S., but it would be nice to have the economies pick up a
little steam.
Brian
Coester with Coester Appraisals noticed that the
Government Accountability Office released a report in late
June that scrutinized real estate valuations in the wake of
the recent mortgage crisis. The report revealed that valuations
received through broker price opinions and automated
valuation models take less time and are less costly than
traditional appraisal reports, but traditional appraisal
reports are still mandated for almost all first-lien
residential loan originations due to their greater
reliability. Almost all appraisal reports utilize the
sales comparison approach, which bases the property value on
recent sales of similar properties. Fannie, Freddie and the
Federal Housing Administration all require the use of
comparable properties in appraisals. The report noted that
appraisal management companies are becoming more prominent
because of regulations that prevent conflicts of interest in
the appraiser selection process. However, the expanded use of
AMCs has caused doubt about their oversight and impact on
appraisal quality — namely that they give higher priority to
low cost and speed than quality and competence. Federal
regulators and Fannie and Freddie claim that they hold lenders
responsible for ensuring that AMCs’ policies and practices
meet their requirements; however, lenders typically don’t
directly review the operations of the AMCs they use. The
Dodd-Frank Act requires state appraisal licensing boards to
supervise AMCs and that federal banking regulators, the
Federal Housing Finance Agency and the Consumer Financial
Protection Bureau create minimum standards for states to apply
in registering AMCs. But the ASC has been restricted in
meeting its responsibilities under Title XI of the Financial
Institutions Reform, Recovery, and Enforcement Act of1989. ASC
also lacks specific policies for determining whether
activities of the Appraisal Foundation that are funded by ASC
grants are Title XI-related. Link: http://www.gao.gov/assets/600/592000.pdf.
(Thank you Brian.)
Here,
as is nearly becoming standard, are some relatively recent
updates from vendors, agencies, and investors. As I warn
folks, these will give you a flavor for current trends but for
exact details read the bulletin.
Bank
of America has decided to buy Countrywide. (Okay, so not that
far behind...but if BofA could turn back time…)
MERSCORP
Holdings
announced Minnesota-based attorney William B. Butler of the
Butler Liberty Law, LLC has been sanctioned for continuing
to file and litigate frivolous, “show-me-the-note” lawsuits
designed to thwart foreclosure proceedings in Minnesota.
Butler has been ordered to personally pay the sum of $75,000,
plus an additional undetermined reimbursement of legal costs
incurred by counsel for MERS and its co-defendants. The judge
found sanctions were warranted because of Butler’s repeated
attempts to assert the rejected ‘show me the note’ theory, as
well as his baseless quiet title claims and meritless slander
of title arguments. The personal fine was levied due to “his
cruel arousal of unrealistic hope in his clients, all of whom
face foreclosure and for whom this is an extremely emotional
issue.” Butler’s insistence on re-litigating losing arguments
is staggering, and it comes with the cost, of multiplying the
expense of litigation and monopolizes scarce judicial
resources.
Fannie
Mae
has announced that it will implement Desktop Underwriter
(DU) Version 9.0 during the weekend of Oct. 20. Loan case files created in DU
Version 8.3 and resubmitted after the weekend of Oct. 20 will
continue to be underwritten through DU Version 8.3. According
to Fannie, the new DU version will include an update to the DU
credit risk assessment and eligibility requirements that
consider the probability of future serious delinquency, rather
than default. "Based on an analysis of recent loan case files
submitted to DU, the new credit risk assessment is expected to
have a minimal impact on the percentage of eligible
recommendations that lenders receive today," says Fannie Mae.
"DU Version 9.0 will evaluate loan case files using the same
risk factors currently evaluated in DU Version 8.3."
Furthermore, with DU Version 9.0, the retirement of the
Expanded Approval (EA) recommendations will be completed and
the EA-I recommendation will no longer be returned.
American
home
Mortgage Servicing, Inc. seems to be doing just fine
after its name change earlier this year. Remember that the
change to Homeward Residential, Inc. was to reflect
the Company’s expansion into the residential lending and other
real estate finance related businesses. The Correspondent
Lending division is known as Homeward Capital, which includes
Warehouse and Residential Lending. All mailing addresses are
remaining the same, but all email addresses will change from
@AHMSI3.com to @gohomeward.com. Also, any file purchased on or
after May 29 was required to reflect the new name of Homeward
Residential, Inc. and the Correspondent Lending website
address is www.homewardcapital.com.
Zions
Bank
reported 2Q earnings of $55.2mm, or double that of 1Q and
almost double the same period last year. Loan growth was
moderate and charge offs were down. Despite the growth,
earnings were below estimates and hurt by greater ALLL
provisions and shrinking NIM.
Region’s
2Q earnings spiked to $284mm, more than double 1Q and 4x
higher than the same period last year. Credit quality was up,
provisions down, loan growth flat and NIM improved. In
addition, the sale of Morgan Keegan added $4mm to net income
this quarter.
In
an effort to cut costs, company filings show Bank of
America has reduced its ATM network by 9% this year.
Speaking of bank news, a Fed study shows that U.S. banks
established more than 10,000 special subsidiaries over the
past 22 years using these structures to limit liability,
reduce capital, pay lower taxes or avoid regulation. Who can
blame them?
Life
continues on in the fixed-income markets as the market prices
in another Quantitative Easing (QE3) from the Fed. By the time
the dust settled on Thursday, traders reported average
volumes. So with the Fed averaging about $1.3 billion a day of
agency MBS purchases, there seem to be plenty of buyers for
whatever volumes are above that. So things drift along with
the 10-yr closing around 1.43% and MBS prices starting the day
where they began: worse by .125 on no substantive news. Yes,
rates are great, but originators report few “slam dunk” loans
– they all have a little hair on them.
Today
we had our first look at second quarter GDP. The median call
at +1.5%, down from Q1 growth of just 1.9%, and it came in at
exactly that. In addition, the report included revisions going
back to Q1 2009. We’ll also have the final July reading for
Consumer Sentiment, expected unchanged at “72.” Rates had slid
slightly higher, and stocks were showing another rally, prior
to the GDP news. And there they stayed: in the early going
the 10-yr is up to 1.48% and MBS prices are worse .125-.250.
(The
retirement series is interrupted for this late-breaking news.)
MENLO PARK, Calif. - After Facebook’s shares plummeted in
after-hours trading yesterday, Facebook C.E.O. Mark Zuckerberg
issued the following personal letter to all nine hundred
million Facebook users.
“Dear Facebook user:
Hey it’s Mark.
It seems like just yesterday that Facebook had its historic
I.P.O. and, thanks to you, my net worth soared to a staggering
$20 billion. What an awesome day that was for both of us.
Today was a different kind of day. Facebook shares are
plunging because the geniuses on Wall Street expect us to, and
I quote, ‘make money.’ That’s why your Facebook friend Mark
needs your help.
Facebook only makes money if people click on its ads. Do you
know what Facebook ads are? They’re those things on your
Facebook page that you have never clicked on even once.
But at Facebook we’re looking to change that. After doing
extensive market research, we learned that there is one time
when people actually do click on Facebook ads: when they’re
drunk. This is the same business model that iTunes is based
on. I’m sure a few of you have had the experience of using
Facebook late at night, only to wake up and find that you’ve
gotten seven auto-insurance quotes or enrolled as a
criminal-justice major at the University of Phoenix.
Why am I sharing this information with you? Simple. If you
want to save Facebook—and I know that you do—I need you to
start drinking now.
At Facebook headquarters, we like to have all-night coding
parties where we get shitfaced and write algorithms and other
computer stuff you wouldn’t understand. I want you to do the
same thing, except instead of coding, I want you to click on
random ads for Ancestry.com and Christian Mingle, over and
over and over again. You don’t even have to buy anything—just
keep clicking. And drinking.
Now, you might be asking yourself, ‘Why do I have to help Mark
out? Isn’t Facebook’s stock price his problem?’ Well, in a
sense, yes. But maybe this is a good time to remind you that I
have cached all of those photos you posted of yourself doing
Jägerbomb jello shots at that Tri Delt party in 2007. And I’ll
bet your future employers would love to take a peek at them.
Kthxbye
Mark”
(Thanks
to the Borowitz Report for that one.)
If
you're interested, visit my twice-a-month blog at the STRATMOR
Group web site located at www.stratmorgroup.com.
The current blog discusses the FinCen, SAR’s, and the impact
on mortgage lenders. If you have both the time and
inclination, make a comment on what I have written, or on
other comments so that folks can learn what's going on out
there from the other readers.
