Aug. 2: Vendor updates; letters on Uber for real estate deals, primer on overlays, developing an anti-money laundering program

“Have you heard a breakdown of the generations that are out buying houses?” You bet: there are 76 million Boomers (born between 1946 and 1964), 57 million Generation X (born 1965 to 1980) and 82 million Millennials (born 1981 to 2000). Boomers began to hit the retirement age of 65 three years ago, and yes, there are more Millennials than Boomers. And those Millennials sure don’t like 40 pages of upfront disclosures… but then again, who does? If someone can buy a $100,000 car and fill out 1-2 pages, but the file for a $100,000 home is 4 inches thick, how long do we think folks will put up with that? While we’re on the age topic, census data finds 12% fewer households under age 35 owned a home as of Q1 of 2014 than when compared to Q1 of 2008 (36.2% vs. 41.3%).


“Rob, are you hearing anything on the street about Uber in the real estate market, competing with Realtors?” I have, although the NAR lobby is so strong that I would expect it to be an uphill battle. I have seen no actual news on it, but plenty of talk about it. “For Sale by Owner” listings are still far outweighed by those using a real estate agent who has access to MLS. And LOs love to point to the 6% commission as being gospel, and only in the priciest or most competitive markets moved to 5%, and suggesting it could be lower. Those on the real estate side of things say that by the time the 6% is split (buyer and seller’s agents) and then again (agent and their broker), it becomes whittled down. But who knows how things might change…


I received this note from the owner of a mid-sized lender in the Northeast. “This may sound like a naïve question, but how do investors set overlays? And do they have people who regularly review them?” I could fill up several pages on this topic, but overlays (typically over and above Fannie, Freddie, FHA, or VA guidelines or pricing) come about for a few reasons. Those who have been in the business a while, or with servicing, have a track record of certain loans and how those perform: experience with poor performance and losses are a powerful motivator. Remember that, in theory, the Agencies are often controlled by politics (home ownership goals, underserved borrowers), whereas lenders are motivated by profits and avoidance of loss. Who is covering the loss? Follow the money!


Regarding reviewing them once they’re in the manual… well, you’ll have to ask your investor. Usually reviews are created externally – an LO, broker, AE, rep, or customer complains about it. There aren’t too many lenders that can afford to have staff whose sole job is to constantly review price and underwriting with an eye on risk levels (compliance, credit, price, etc.) and performance.


Last Saturday I had a note in about talk of Freddie Mac asking some independent mortgage banks to post additional collateral (cash or marketable securities) in order to support previously and expected future sold volume. I suggested asking your Freddie rep for information. As it turns out, I had a few folks write to say that Fannie is doing the same thing: taking cash collateral from certain companies. And if you have Fannie questions, ask your Fannie rep!


On the subject of loan modifications Doug Thorpe opines, “While reading a lot of the recent focus on whether FHFA Watts will agree to allow loan mods, one huge question looms in my mind. The premise for loan mods is basically this: ‘Geez, the market dropped, you are now underwater, let’s relieve some pressure by adjusting what you spent for that house.’ Ok I get that. If anyone then receives the adjustment, and five years later the property appreciates again, will they be willing to reimburse the investor for that reduction via a HELOC- like takeout of the new found equity? If not, why are we trying to adjust a law of financial physics? Assets of any kind can suffer cyclical depreciation/appreciation of value. Residential real estate just happens to have a longer cycle.”


“One misguided CFPB regulation is ‘for the best interest of the consumer’ is the 3-day appraisal rule. I have client traveling out of state. When they left we were just getting loan approval and the final u/w condition was for appraiser to correct the spelling of the HOA. This triggered the 3 day rule and my client had to sign the acknowledgment of receiving the revised appraisal. It took us 3 days for client to get to place where they could receive the document, sign it and send it back. This means from the appraisal correction received by the u/w to getting the signed acknowledgment back from the client to the end of the 3 day rule added six days to our process, and caused a lock extension—one that we could charge to the client making the rule not a benefit to the consumer but a detriment and financial liability.”


Regarding the minimum wage, and the lack of ability of a certain percentage of American citizens to finance a house, from Southern California I received, “The number of people working at or below minimum wage is skewed by folks in the service industry, particularly the food service industry. It is standard to pay a server minimum wage because they make tips. So the real number of those working at that level is much lower. Why on earth would lenders look at the ability of a person in a minimum wage, entry level job to purchase a home? They are renters. It is beyond comprehension to look at the folks in that wage strata as home buyers.  To me it is purely a politically driven agenda to boost the minimum wage and bring on more inflation. It just kills me that the media wants the world to think there is injustice because 1% of the population works at minimum wage. An even worse example is when they look at recent college graduates and home ownership. This generation of ‘follow your zen and get participation trophies’ is so loaded down with student loans they can’t buy dinner, much less a home. ‘You know what you say to someone with a degree in art history…..I’D LIKE A VENTI CARAMEL MACHIATTO’. While few of us knew what we wanted to be when we were 18, we all had aspirations of what we wanted. If they select a path that makes them feel good but doesn’t help them be a productive member of society, or even be able to understand 10% of the stuff your commentary discusses every day, why should their status of homeownership matter?”


Jaynee writes, “Hey Rob, I would like to contribute a comment toward the “haves versus have-nots” discussion. I would hesitate to call them “haves” and “have-nots” and instead strongly suggest, (based on observation) that they should be referred to as “wills” and “will-nots”. Clearly if someone is willing to work, and they work hard, they can come out ahead and do well in this country as so many immigrants have been able to do, even those that started with no money and no proficiency with speaking English. If anyone is not willing to work, and do not like working hard or paying their bills, they will end up in the poverty group in this country and everywhere else for that matter.”


Pete Mills with the MBA writes, “MBA’s Compliance Essentials program has a module on developing a mortgage bank AML program.  The MBA Compliance Essentials Anti-Money Laundering and Suspicious Activity Reports Resource Guide reviews the relationship between Mortgage Fraud and Money Laundering, examines AML requirements and responsibilities of RMLOs , and provides information on how to identify suspicious activity and when and how to comply with SAR reporting requirements.  The guide provides a robust template for the development of a FinCEN-compliant AML program.  This guide was developed in partnership with our friends at Buckley Sandler – great counsel and only $400.”


Let’s play random catch up on what some vendors have been up to. As we all know, lenders are increasingly using outside counterparties (as long as they can monitor them!) for their expertise and to turn fixed costs into variable costs.


FORMFREE was issued a U.S. Patent for Innovative Verification Technology, the world’s first automated asset verification system, AccountChek, poised for widespread adoption: formfree.


Ellie Mae has a new eBook, “Compliance in the Age of Dodd-Frank: A Guide to the New Regulations of 2014 and Beyond,” provides a high-level overview of the key regulations affecting our industry, and provide valuable information about what to consider when confronted with the challenge of proving—and maintaining—compliance. Download the eBook at: Ellie Mae eBook.


DITECH has selected Ellie Mae’s Encompass as its mortgage management solution.


AlaMode is conducting a Modern Appraiser Roadshow, its newest workshop. Over the course of three days, its experts will cover a variety of topics, including ways to go mobile, desktop sketching, speeding up form filling, realistic solutions to common workflow problems, and more. You’ll also get hands-on experience with a variety of mobile devices and tablets. Attend all three days or select specific days to fit your schedule; cost is $99 per day or $297 for all 3 days. For dates, cities and more information, visit Workshop.


A la mode’s latest mobile appraising software includes, not only sketching abilities, but the complete 1004, 1004 UAD, 2055 UAD, Condo, Land, GP, and more. This update adds the non-UAD 2055 and GP Condo forms too. Get a new sketching interface specifically designed for “phablet”-sized Android devices. Get a new photo grid with all the report’s images — easily see what shots you still need. And, as always, sketching is as easy as swiping and tapping with your finger or stylus. To find out more information on TOTAL for Mobile Sketch, visit: alamode.


Comergence, a firm that develops implements and hosts innovative third-party risk-management platforms for the mortgage industry, has announced that LenderLive Network Inc., an end-to-end mortgage service provider, has selected and deployed REALM for Third Party Originators.


Altisource (financial technology company) will be acquiring Mortgage Builder Software Inc.

(a mortgage loan origination software provider).


Alight and AMB Announce partnership to provide comprehensive Financial Management tools


OpenClose, an enterprise-class end-to-end loan origination system (LOS) provider, announced that lenders are successfully using the secondary marketing component of its LOS, LenderAssist, to “deliver greater insight and control for secondary marketing departments. Starting at the point of origination, LenderAssist enables secondary marketing personnel to view real-time pricing, adjustments, locks and more, all from a single screen for the retail, wholesale and correspondent lending channels. When changes occur with a loan, secondary has access to the exact same audit screen that underwriters do. This allows for continuous audits, ensuring that all information is correct, compliant, and loans are sold for the greatest profit: openclose.



Two 70-year-old men had been friends all of their lives.

When it was clear that Frank was dying, Joe visited him every day.

One day Joe said, “Frank, we both loved playing golf all our lives, and we started playing soon after high school. Please do me one favor: when you get to heaven, somehow you must let me know if there’s golf there.”

Frank looked up at Joe from his deathbed and said, “Joe, you’ve been my best friend for many years. If it’s at all possible, I’ll do this favor for you.”

Shortly after that, Frank died.

A few weeks later, Joe was awakened from a sound sleep by a blinding flash of white light and a voice calling out to him, “Joe, Joe.”

“Who is it,” asked Joe, sitting up suddenly. “Who is it?”

“Joe — it’s me, Frank”

“You’re not Frank. Frank just died.”

“I’m telling you, it’s me, Frank,” insisted the voice.

“Frank, Where are you?”

“In heaven,” replied Frank. “I have some really good news and a little bad news.”

“Tell me the good news first,” said Joe.

“The good news,” Frank said with joy and enthusiasm, “is that there is golf in heaven. Better yet, all of our old buddies who died before me are here too. Even better than that, we’re all young again. Better still, it’s always summertime and it never rains. And best of all, we can play golf all we want, and we never get tired. “And we get to play with all the Greats of the past.

“That’s fantastic,” said Joe “It’s beyond my wildest dreams! So what’s the bad news?”

“You’re in my foursome this Saturday”





(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.)

Rob Chrisman