Dec. 19, 2012: Should be a happy builder conference this year; thoughts on the CFPB complaint process
Rob Chrisman
In
paying a short visit to Kansas, I learned that there are
plenty of “oldest trick in the book”’s from which to choose –
but here is one that actually helps community banks. The
Outdoor Advertising Association of America reports more
billboard advertisements are used by local small businesses
than large national ones and represent 75% of total revenue.
It turns out that about 80% of companies that advertise this
way have less than 50 employees, so clever community bankers,
as they drive around town, look closely at every billboard
they pass and check the name of the business advertising.
Then, when they get back to the office, turn in the names of
those companies to relationship teams to try and generate new
business.
A
couple weeks ago the commentary mentioned the MBA/STRATMOR
Peer Group Survey and Roundtable Program. ("This program
creates a forum for participating mortgage banking companies
to review their financial results and operating practices in
relation to their peers...detailed benchmarking outputs by
production channel...1.5-day roundtable meetings that allow
companies to network and share ideas and issues with peers.")
I received a lot of questions about the surveys and peer
meetings, which are very good, but as a reminder it is best to
ask about participating by contacting Marina Walsh in MBA's
research and economics division, at mwalsh@mortgagebankers.org,
or Jim Cameron at STRATMOR Group at jim.cameron@stratmorgroup.com.
On
to something a little less fun. Uh oh. I can't weigh in on the
validity of this comment, but it comes from a reliable
wholesale rep and if true is the first thing I’ve seen come
out of an exam. "After our recent CFPB visit they made us
make changes...no more Flat Fee, required us to have
Borrower Paid and Lender paid at the same level...max Lender
Paid at 3%, but at least they didn't tell us we had to only
offer one comp plan. Also coming is the inability to let
Brokers fix their GFE's if there is a problem with even one of
the ancillary boxes, so after sitting in line for GFE review
the broker will have to start over. If the brokers don't see
the writing on the wall they never will.”
Continuing
with the CFPB thoughts, I received this note on the CFPB’s
complaint process. "Imagine you owned a company and a
group that worked for you spent millions of dollars developing
a free service to increase customer goodwill. Now imagine if
1% of the customers that used the service were so unhappy that
they went to the trouble to file complaints. What would you
guess the satisfaction levels of the other 99% of users to be
and how much goodwill would you guess was being generated? This
really illustrates the problem of regulators believing they
can create a perfect world without having any experience of
the difficulty of actually delivering a service that people
will pay for. I think the major regulatory issue for the
mortgage industry today is that the government has permeated
every aspect and corner of the business and that its
involvement is hodge-podge and uncoordinated. Even if all the
separate agencies and regulators had perfect intent and
execution, they are uncoordinated and one agency often acts to
counter another agency’s impact rather than something
happening in the market. Between the Fed, FIDC, FHFA, CFPB,
OCC, FTC, FHA, etc., etc. -
the federal government somehow needs to get a grip on its
overall impact on housing and finance. While I don't
think the federal government caused the financial crisis, it
certainly enabled it."
Congrats to Kevin Watters, who, besides having the honor of
probably having to spell out his last name as many times as I
have, was just promoted by JPMorgan Chase to be chief of its
home loan business, relieving Co-Chief Operating Officer Frank
Bisignano of the temporary assignment to clean up the lender's
mortgage issues. Watters, 44, had been responsible since 2010
for originating mortgages and now will also oversee mortgage
servicing and problem loans and hold the title CEO of Mortgage
Banking.
Let’s
move on to some bank, investor, and vendor news. As always, it
is best to read the full bulletin for details, but these will
give you an idea about trends.
Kansas’
CoreFirst Bank & Trust ($1.1B) will close three
branches in January after monitoring foot traffic for 5 years
and finding these branches had seen steep declines. (Let’s not
make any snap decisions!) Meanwhile, Missouri’s First Bank
($6.5 billion) indicates it will sell 8 of its 19 branches in
Florida to Homebanc ($521mm, FL) for an undisclosed sum and
close 3 other branches, as it consolidates within the state
and moves to save costs.
Arvest
Bank
($13.9B, AR) said it will purchase 29 banking offices from
Bank of America for an undisclosed sum in AR, KS, MO and OK.
The purchase adds $750mm in deposits and 650k new customers.
On
the flip side, on Friday Community Bank of the Ozarks, Sunrise
Beach, Missouri, was closed and business transferred to the Bank
of Sullivan, Sullivan, Missouri.
In
response to an increased number of borrowers retaining their
previous home while purchasing a new primary residence, US
Bank has updated its conventional policy to allow the
current primary residence to be pending sale, converted to an
investment property, or converted to a second home.
Conventional borrowers will be subject to additional
underwriting guidelines, which require the existing full PITI
housing payment, the proposed PITI housing payment of the
subject mortgage, and documentation for reserves equal to six
month PITI for both mortgages to be submitted as part of the
underwriting analysis. The relevant FHA guidelines are in
effect for all FHA products, for which borrowers will be need
to submit the same additional information as described above
for conventional loans. This applied to all applications
taken on or after December 10th.
US Bank now allows borrowers to use long-term disability
income to qualify for loans provided that the income has been
verified as deemed likely to continue for at least three years
from the date of the mortgage application. In order to be
eligible, borrowers receiving long-term disability will need
to submit the most recent two months’ bank statements and
either the policy or a benefits statement in order for US Bank
to determine their current eligibility, the amount and
frequency of the payments, and whether or not there is a
contractually established termination of modification date.
GMAC has updated its disaster policy for DU Refi Plus
loans to require a re-inspection after a Major Disaster
Declaration has been issued by FEMA. In cases where the
inspection reveals that the property has been damaged, an
interior and exterior inspection will be required and any
necessary repairs will need to be completed before closing.
Same Servicer DU Refi Plus properties do not need to be
re-inspected.
MSI has announced that it will not be applying the
Fannie fees for Property Inspection and Property Fieldwork
Waivers. As such, sellers are not permitted to charge
borrowers any kind of “waiver fees” or disclose them on the
GFE or HUD-1. Any loans with previous underwriting conditions
that call for PIW or PFW fee disclosure will be cleared by
MSI.
The MSI relock policy has been amended to allow a third relock
in cases where the maximum relock period is less than ten
calendar days, the seller has provided a valid closing date,
and all parties agree to have pricing be worse case based on
the last relock price. Third relocks will also be subject to
a 0.375 fee in addition to worse case pricing.
Stonegate Mortgage has updated its FHA product
guidelines and now requires all loans with credit scores
between 620 and 639 apart from 203(k) and Streamline
refinances to have received a DU Approve/Eligible or LP
Accept/Eligible in order to qualify. The FHA Streamline
refinance guidelines have also been revised to require a
Verbal Verification of Employment, a full credit report, and a
mortgage pay history. Loans with credit scores between 620
and 639 are now able to qualify provided that they receive a
DU Approve/Eligible or LP Accept Eligible. The new guidelines
are effective for all loans locked on or after December
3rd. Stonegate is also levying additional fees on FHA
Streamline refinances with FICO scores under 680. All such
transactions with FICO scores between 620 and 639 will be
subject to a 1.5% fee on top of the existing costs, while
those with scores between 640 and 659 will incur a 1% fee. An
extra 0.50% will apply to loans with scores between 660 and
679.
In
response to recent high volume, Plaza Mortgage will be
increasing its appraisal fees. Consult the Plaza Lock Desk
for more information.
Franklin American has implemented new pricing adjusters
for jumbo loans in Florida, Nevada, Arizona, Michigan, and
California. Consult the FAMC matrix for full details.
Now
is a good time to be a builder, apparently. Forget about all that
shadow inventory or foreclosure noise – that is yesterday’s
news! The National Association of Home Builders/Wells Fargo
index of builder confidence increased to 47, the highest since
April 2006. “Builders across the country are reporting some of
the best sales conditions they’ve seen in more than five
years, with more serious buyers coming forward and a shrinking
number of vacant and foreclosed properties on the market,”
observed NAHB Chairman Barry Rutenberg, a home builder from
Gainesville, Fla. “However, one thing that is still holding
back potential home sales is the difficulty that many families
are encountering in getting qualified for a mortgage due to
today’s overly stringent lending standards.” (Editor’s note: I
know plenty of mortgage investors who are perfectly happy with
the current lending standards, and can’t believe their volume
numbers with the current standards.)
Things
are really slowing down heading into a week when they are
going to slow down even more. Folks may be at work, but
productivity won’t be setting any records! As a prelude,
Tuesday rates drifted higher and MBS prices worsened (although
not as much as Treasury prices) on
slightly-higher-than-average volume. Our risk-free 10-yr
T-note sold off almost .625 in price and closed at 1.83% as
investors remained less risk averse on perceptions of progress
on the fiscal cliff. MBS prices worsened about .250 in price.
Today
we’ve had the MBA applications data, which confirms what lock
desks already knew. Apps dropped last week by almost 13%, with
refi’s tumbling 14% and purchases dropping 5%. We also will
see the Housing Starts and Building Permits tandem for
November. Housing Starts is projected to decline 2.3% while
Permits is expected to increase slightly. At 1PM the Treasury
auctions $29 billion in 7-year notes which is the final coupon
auction for 2012. In the early going the 10-yr is slightly
better at 1.81% but don’t look for much improvement in MBS
or rate sheet prices this morning, and in fact may even
be a little worse depending on what the lender did about
yesterday’s sell off.
(A repeat, but it becoming a tradition.)
Three men died on Christmas Eve and were met by Saint Peter at
the pearly gates.
"In honor of this holy season" Saint Peter said, "You must
each possess something that symbolizes Christmas to get into
heaven."
The Englishman fumbled through his pockets and pulled out a
lighter. He flicked it on. "It's a candle," he said.
"You may pass through the pearly gates", said Saint Peter.
The Scotsman reached into his pocket and pulled out a set of
keys. He shook them and said, "They're bells."
Saint Peter said, "You may pass through the pearly gates".
The Irishman started searching desperately through his pockets
and finally pulled out a pair of ladies' panties.
St. Peter looked at the man with a raised eyebrow and asked,
"And just what do those symbolize?"
The Irishman replied, "These are Carols."
And So The Christmas Season Begins......
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 role of the IRS and REMIC’s in
the current credit crisis. 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.
