Aug. 28: Compliance & sales jobs; First American RESPA case; plenty of changes in the FHA, VA, & USDA world

I, being a capital markets guy, was very interested in the MBA sending a comment letter to the Basel Committee on its proposal, “Interest Rate Risk in the Banking Book” (Consultative Document). As drafted, the Consultative Document would layer on additional risk-based capital for interest rate risk based upon a series of rate shocks and their impact on the economic value of the bank and the impact on the bank’s net interest margin. Do lenders really need to tie up more capital? Policy advisers to the Basel Committee on Banking Supervision are considering easing the leverage ratio, sources say. Industry groups’ request to exclude client collateral when calculating banks’ total assets had been rejected by regulators. Changes in capital requirements make offering derivatives more expensive, market participants say. Bloomberg


On that note, Columbia, South Carolina-based Homeowners Mortgage Enterprises, Inc. has an immediate opening for a Mortgage Compliance Administrator to support its locations in the Southeast. The successful candidate will support the Compliance Officer in administering the compliance management system through the execution of a comprehensive compliance testing program and provide reports of findings to senior management. A bachelor’s degree is preferred with at least 5 years of mortgage compliance experience, and work experience will be strongly considered in job selection. Also good are a detailed knowledge of FHA, VA, Rural Housing, Multiple State Housing requirements in the South, Secondary Market, and mortgage insurance guidelines. Click here for a full job description and to apply.


It’s a virtual world where many work from home. A well-known industry vendor is searching for a candidate to fill a key sales management role within the organization. Candidates will be required to have extensive technology sales and leadership experience, as well as strong mortgage industry relationships and knowledge. The company has seen large-scale recent growth, and as a result is expanding its customer service interface. Interested candidates can submit resumes to me on a confidential basis. (I apologize for not being able to provide more details, but suffice it to say it is a very reputable company and confidentiality is important.)


And CrossCountry Mortgage is looking for highly motivated, licensed, and experience mortgage loan originators to join its team, “and be a part of one of the fastest growing companies in the nation focused on real estate agents and other third party referral sources by providing industry leading service to borrowers through our MSA platform. We work with several investors as well as sell directly to the agencies and have our own servicing portfolio. Opportunities are available in AZ, CA, TX, and NV. CrossCountry Mortgage is non-depository mortgage lender headquartered in Brecksville, OH. Contact Carmen Scalise (440.262.3290), Director of Talent Acquisition. All inquiries are confidential.


In company news, Ditech Mortgage Corp.’s approved clients learned that starting Monday “the States of New York and Hawaii will be eligible for Delegated and Conditional Delegated Clients who underwrite and close loans in their own name.” There are delegated and conditional delegated approval authority levels, as one would expect, and none for “Non-Delegated Approval Authority.” “Loans currently registered in the state of Hawaii must be underwritten using approved delegation. Loans cannot be sent to ditech for prior approval.”


In lawsuit news there may be some interest among title companies and settlement agents in the 9th Circuit Court opinion in the First American case. Especially when the case “…alleges that First American Corporation and its wholly owned subsidiary First American Title Insurance Company, engaged in a national scheme of paying title agencies things of value in exchange for the title agencies’ agreement to refer future title insurance business to First American, in violation of the Real Estate Settlement Procedures Act (RESPA).”


My cats Myrtle and Gusto are keenly interested in the banking system since it holds they money used to pay for their salmon kibble. What does Alan Greenspan seem to think about the banking crisis, and how to stop the next one? Here you go. In other banking news, BB&T said it plans to close 25 branches once it acquires National Penn, as it moves to cut non-interest expenses by 30% and remove overlap. In the last week we learned that Heartland Bank and Trust Co ($2.5B, IL) will buy American Midwest Bank ($499mm, IL). Planters Bank & Trust Co ($855mm, MS) will acquire Covenant Bank ($222mm, MS). First Federal Savings and Loan Assn ($1.6B, OH) will acquire Belpre Savings Bank ($52mm, OH). In fact Dealogic reports US banks have announced $24 billion in mergers (+63% YOY), while the number of deals was 219 (-12% YOY).


“Rob, I read that banks are increasing their agency holdings of mortgages. Do you know how much, and maybe why now?” Yes, and by “mortgages” I assume you mean agency mortgage-backed securities. When you want to know consolidated financial holdings of banks you can head on over to the National Information Center which tracks changes in bank assets and liabilities (FDIC is also a good source). NIC recently released Q2 data which showed agency MBS holdings increased $29.5B for the top 50 banks in their Hold-To-Maturity and Available-For-Sale portfolios during Q2 15. Most of the rise came in conventional pass-through holdings, which climbed $28.4B. GNMA security holdings went up $8.4B and agency CMO holdings decreased $7.2B. Wells Fargo had the largest rise in agency MBS holdings, adding $11.8B, followed by Bank of America which added $9.3B. JPMorgan Chase reduced its holdings by $5.9B. I plan to write something in the coming weeks with a little more depth regarding why large institutions place, and remove, MBS on their balance sheets; however, for the time being, risk in owning MBS is concentrated in: Credit, Liquidity, and the Embedded Option. Credit; what am I buying? Liquidity; can I easily sell the asset? Embedded Option; is the borrower going to refinance and cut the cash-flow off? I believe credit it pretty good in agency product right now. Liquidity isn’t a real concern, either. Prepays over the next few years (you’ll have to take a view on where rates will be heading) I would imagine will become quite low. All of the above is just another day of monetizing cash flows.


I remember when firms actually wanted to be known as financial companies. Met Life Fights Risk Label by Saying It’s Not a U.S. Finance Firm, according to Bloomberg and recently legal filings. In court papers filed in Washington on August 21st, MetLife argues it doesn’t meet FSOC’s legal definition (under Dodd-Frank) of a U.S. non-bank financial firm, in part because it has substantial foreign operations. Ian Katz and Andrew Harris write, “The filing is the latest salvo in the court battle between MetLife and a council of U.S. regulators that last year deemed the New York-based insurer a potential threat to the financial system. The label subjects MetLife to tough Federal Reserve oversight, and could lead to strict constraints on how much money it can borrow and how much capital it must set aside.” The Financial Stability Oversight Council, led by Treasury Secretary Jacob Lew, is charged with identifying financial companies that are so big and interconnected that their failure could threaten the U.S. economy. This is an interesting one to watch, as a MetLife victory would almost certainly weaken FSOC’s ability to label companies and would allow other firms to appeal its decisions.


What kind of changes are coming up, and have recently been made, in the FHA, VA, and USDA world?


First off, Quicken came out with a handy-dandy grid on what is going to change for FHA.


“Rob, your readers should know that part of the new FHA guidelines starting next month require a credit report for the non-borrowing spouse, however, you can’t order a credit report without a SSN. How are lenders going to comply? And all of the eSign stuff is great, but the SSA still requires a wet signature to get a SSN verified. A chain is only as strong as the weakest link. So, if the government agencies refuse to allow E-signatures for their documents then won’t that mitigate some of the efficiencies and improvements created by the increase in e-Signatures?”


M&T Bank posted information regarding streamline issuance of USDA Conditional Commitment. The process includes availability of document upload prior to GUS final submission. Document upload permissions have been expanded to include additional GUS Security Roles and the new GUS Display Documents and GUS Upload Documents pages. M&T offers a complete set of on‐demand training presentations, 30-45 minutes long that can be accessed by users at any time.


And M&T’s recent Correspondent Product Bulletin includes information regarding USDA’s published changes to their appraisal requirements. These changes are: the Cost Approach is no longer required, the USDA should not be listed as an intended user, and When HUD revises their Property Standard Handbook’s, appraisers will need to refer to the correct HUD Handbook when they state the property meets HUD property standards.


Some believe that USDA loans are about to become more expensive.


AmeriHome has removed several overlays on its FHA Standard, FHA Streamline Refinance, VA and VA IRRL and USDA. The changes are effective immediately irrespective of commitment or commitment type. Government overlay Matrix and Program Guides have been updated.


Sun West has updated Sunsoft to allow loan submissions and locks on FHA Streamline Refinance loans with odd amortization terms from 16 to 29 years. Customers can now lower their monthly mortgage payment without increasing their term back to 30 years. Log into Sun West’s Sunsoft system for details.


Mortgagees using the FHA B2G Interface in FHA connection should be aware updates have been posted. Details should be reviewed in their entirety, as they contain information on changes that mortgagees will need to make to their systems and processes by the Origination through Post-Closing/Endorsement section’s September 14, 2015 effective date.  Mortgagees should particularly note the following: Appraisal Logging; Case Number Assignment; Escrow Closeout; Insurance Application; and Case Query.


The FHA has released its Single-Family Loan Quality Assessment Methodology also known as the “Defect Taxonomy”. The methodology focuses on three concepts, identifying a defect, capturing sources and case of a defect and assessing severity of a defect. This method is able to identify the source and cause of the defect determined by nine defect categories to include, borrower income, borrower credit/liabilities, loan to value and max mortgage amount, borrower assets, property eligibility, property appraisal, borrower eligibility and qualification, mortgage eligibility and lender operations. FHA will then evaluate each loan and assign an overall loan rating based upon the defect codes. The loan will then receive an overall rating regardless of how many defects are present as the defect code with the highest tier severity determines the overall loan rating.


What’s all the fuss about? The FHA has updated its Single Family Housing Policy Handbook to consolidate content from FHA’s Administration of Insured Home Mortgages in order to create a unified format for FHA policy, using clear and consistent language. Topics of clarification and changes include, escrowing of funds, late charges, determination that the property is vacant or abandoned, loss mitigation agreements, cash reserves and exceptions to owner occupancy requirements.


A while back Gary C. wrote to me warning readers of looking at possibly outdated information on completing the HUD 92900a and sending what HUD sent him. “HUD/VA Addendum to Uniform Residential Loan Application (92900-A) the form 92900-A has been modified on page 3 to capture necessary information for sponsored originators. The following information will be collected: Loan Origination Company – Entity’s Legal Name; Loan Origination Company Tax ID – Employer Identification Number issued by the Internal Revenue Service (IRS); NMLS ID of the Loan Origination Company – The unique identifier of the company, if licensed with NMLS.


“For those loans originated by a sponsored originator, the sponsoring mortgagee must enter its name and address in block 15 on pages 1 and 3. Directly below block 15 on page 3 are the new fields the mortgagee must enter for capturing the sponsored origination information described above. On the Universal Residential Loan Application, the actual interviewer’s name, signature and telephone number must appear on page 4, regardless of who employs the interviewer (e.g., a sponsored originator). While common practice in the industry is for the interviewer to also sign page 1 of the initial 92900-A, if a sponsored originator is involved, it is now required that the sponsoring mortgagee must sign and date page 1 of this form. He also referenced Mortgagee Letter 2010-33.” Thanks Gary!


Looking at the markets, after some volatility we ended Thursday right about where we started the day despite a very strong upward revision to second quarter GDP growth. Critics were quick to point out that the GDP number does not tell the whole story of our economy. And this morning we’ve already had July’s Personal Income & Personal Consumption/Spending, and core PCE Prices: +.4%, +.3%, and +.1% respectively. Ahead is August’s Michigan Sentiment at 10AM EDT. After the early numbers we’re at 2.16% on the 10-year and agency MBS prices are better by nearly .125.



With well over a year to go until the election, the humor is heating up. Well, at least some will find this short video humorous. Others maybe not.





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Rob Chrisman