Even though we’re in the “dog days” of summer, and the waning days of August, there are still issues that are on the top of CEOs’ minds. Cyber-security is on the upswing, as is hoping for reform of the appraiser certification process, the continued burden of (sometimes overlapping) regulation, and looming HMDA, 1003, & Basel-related changes are definitely a conversation at lenders. And let’s not forget the rumored CFPB enforcement actions lined up for late summer and autumn.
Also, somewhat on the flip side, are closing loans in August and September of still-swollen pipelines, looking ahead to eMortgages, lenders wanting to do the right thing, increased efficiencies and profitability, and the feeling that these are great times to be in residential lending.
Regarding the proposed new 1003 I found this in my e-mail inbox: “Did you notice for a husband and wife it is now 11 pages? This is going to hurt small business trying to do ESign.”
Lenders, depository banks, and companies of all shapes and sizes continue to increase spending on cybersecurity. One place to start is Wells Fargo’s alert titled Business Email Compromise Scam, “to alert you of sophisticated scams targeting businesses working with businesses that regularly perform wire transfer payments. Since then, the scope of this type of mortgage fraud has expanded to include lenders, realtors, and borrowers being instructed to divert funds to hackers by changing wiring instructions.”
Sounding like any other organization, hackers have goals, budgets, division of labor, and so on. Always good to know your enemy. A decent read is an article titled “Hacking the Hackers.” IBM put out a piece on ransomware. And, of course, the FBI is aware of the issue and trying to help individuals and organizations guard against ransomware.
NAR just rolled out a new topic page on realtor.org to provide more information on privacy and data security. The page includes background on the federal government’s efforts to address these challenges as well as tools to help real estate professionals manage and secure customer/employee information. I have also attached examples of client alert forms being used by some real estate companies.
“Please be aware that there are numerous e-mail phishing scams involving wiring funds in conjunction with a real estate transaction. note neither Long & Foster Realtors (Foster) nor its agents will ever request you wire to via mail, fax or text message. and not attempt send any instructions of kind electronic means. recommends if by means verify the correct were received known representative intended recipient. Also, it is important confirm recipient substituted without your direct written and/verbal consent. If have purporting from settlement company other entity, please authenticity at least one independent prior initiating transfer funds. When wiring funds, never rely exclusively on an e-mail, fax, or text communication.”
As an example, Realtors in San Antonio post scams, how they worked or how they were caught, at http://www.sabor.com/index.php/realtor-toolbox/realtorr-safety-and-fraud.html
How about this story about a bank teller that was caught embezzling money from dormant bank accounts?
What are vendors doing about it? As one example, Andrew Liput weighed in. “Wells Fargo Bank and the FBI recently issued separate alerts throughout the industry regarding settlement agent wire fraud. The reports provided details of a widespread scam whereby criminals are hacking attorney and title agent e-mail addresses and changing wire instructions prior to closing. When the new instructions are not validated the criminals make off with the mortgage proceeds. While most lenders request written wiring instructions, whether to satisfy warehouse bank requirements or their own internal risk management policies, very few verify them. The assumption is made that if the instructions are being sent from the e-mail address of an attorney or title company then they must be valid. Some lenders are taking an extra step and checking the ABA routing number and bank account number with the Federal Reserve Web site to verify that the account is actually at the bank indicated. However, these processes are not a foolproof method to avoid the type of fraud warned of by federal law enforcement.”
Liput’s note went on. “The most efficient way to protect your bank from wire fraud through this latest criminal scheme is to only wire funds to a verified account. Verifying an account means more than simply checking the Federal Reserve records. It requires true verification, at the source, that: A) The account is truly a trust account and not a business or personal account; B) The account holder and authorized signers match the company owners; and C) The account is in good standing and not fraught with bounced checks or fraud alerts.
“At Secure Insight we have always prided ourselves in building something more than a ‘check the box’ risk management platform. The Secure Insight platform has always included a direct at the source trust account verification and ongoing monitoring component. We are proud to say that none of our bank clients would ever wire funds for any reason to an account that has not been independently verified by our analysts. If an account is reported as ‘changed’ or ‘updated’ it is analyzed and verified by SSI before our lender clients will send the wire using the new account details. Because of this none of our clients could possibly be victimized by the phishing scam if they use our Closing Guard tool as it is designed.”
Unfortunately, a frequent target of scams is the elderly. From Ohio Jim Dellner writes, “Has anyone else noticed this recently? I saw Tom Selleck doing a commercial for reverse mortgages. Apparently he is someone who is trusted by seniors, joining the ranks of earlier spokesmen like Wilford Brimley and Fred Thompson. In the ad Tom assures viewers (twice!) that no, the reverse mortgage is not a way for ‘the bank to get your property.’ The writers of this ad must be aware that to this day, many people have the impression that banks make loans in order to foreclose and own or resell property, as if it’s part of their business plan. It was just a little distressing to me to see the lack of understanding that exists about lending and the role of banks and lenders of all kinds. The public in general just doesn’t know that banks are much happier when borrowers pay than when they don’t, or that defaults and foreclosures are how banks lose money, not how they make it.
Shifting topics, in this case to a topic with seemingly no end in sight: what does an “application” mean? You’d think that all lenders and regulators would be aligned. But no, for some reason that is not the case. Riddle me this: “We are working to improve our HMDA reporting policy and wonder how, if at all, does the TRID rule definition of application trigger or affect HMDA reporting?
Jonathan Foxx’s team scribes, “The short answer is that receipt of some or all of the six pieces of TRID application information does not necessarily trigger an ‘application’ for purposes of HMDA reporting. Under Regulation C, an application for HMDA reporting purposes is defined as an oral or written request for a home purchase loan, a home improvement loan, or a refinancing that is made in accordance with procedures used by a financial institution for the type of credit requested. [12 CFR §1003.2] Pursuant to TRID, if a consumer submits an application, a requirement to provide the Loan Estimate is triggered under §1026.19(e).”
But “An application under TRID is defined as the submission of the six pieces of information with which we are now so familiar: (1) the consumer’s name, (2) the consumer’s income, (3) the consumer’s Social Security number to obtain a credit report (4) the property address, (5) an estimate of the value of the property, and (6) the mortgage loan amount sought.
“Unlike the TRID rule, Regulation C does not contain a clear, succinct definition of the term application. Rather, the Regulation C definition of application depends on a creditor’s particular policy and procedures, which may or not mirror receipt of the six pieces of application under the TRID rule.”
(Rated PG, I guess. A repeat, but what the heck! This time 7,800 miles away in Australia.)
A store that sells new husbands has opened in Melbourne, where a woman may go to choose a husband. Among the instructions at the entrance is a description of how the store operates:
You may visit this store ONLY
There are six floors and the value of the products increase as the shopper ascends the flights. The shopper may choose any item from a particular floor, or may choose to go up to the next floor, but you cannot go back down except to exit the building!
So, a woman goes to the Husband Store to find a husband.
On the first floor the sign on the door reads:
These men Have Jobs
She is intrigued, but continues to the second floor, where the sign reads:
These men Have Jobs and Love Kids.
“That’s nice,” she thinks, “but I want more.”
So she continues upward. The third floor sign reads:
These men Have Jobs, Love Kids, and are Extremely Good Looking.
“Wow,” she thinks, but feels compelled to keep going.
She goes to the fourth floor and the sign reads:
These men Have Jobs, Love Kids, are Drop-dead Good Looking and Help With Housework.
“Oh, mercy me!” she exclaims, “I can hardly stand it!”
Still, she goes to the fifth floor and the sign reads:
These men Have Jobs, Love Kids, are Drop-dead Gorgeous, Help with Housework, and Have a Strong Romantic Streak.
She is so tempted to stay, but she goes to the sixth floor, where the sign reads:
You are visitor 31,456,012 to this floor. There are no men on this floor. This floor exists solely as proof that women are impossible to please. Thank you for shopping at the Husband Store
To avoid gender bias charges, the store’s owner opened a New Wives store just across the street.
The first floor has wives that love sex.
The second floor has wives that love sex and have money and like beer.
The third, fourth, fifth and sixth floors have never been visited!
(Copyright 2016 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.)