Habla Espanol? No? How about someone in your office? Being bi-lingual is a good thing. Many Hispanics speak English, the official language of the United States, but I bring this up because Hispanic demand for housing is “en fuego” and is experiencing the largest homeownership gains of any minority group. Conversely, the Wall Street Journal reports that the U.S. Census Bureau states that, “For blacks, the homeownership rate has fallen to its lowest level on record…” Hispanics make up 18% of the U.S. population but accounted for 63% of the new U.S. homeowner gains over the last ten years. The WSJ article notes that, “Hispanic borrowers took out 9.4% of mortgages in the U.S. last year.” Some lenders, apparently, are using a tax ID number instead of a Social Security number. Hispanics also make up a large percentage of people in their 20’s and 30s, and if you need a good chart showing income based on age, here you go (thanks Brian B. for sending).
Cybersecurity & ransomware
What parent of multiple kids hasn’t heard, “It’s her fault!” “No it’s not, it’s his fault!”? Who is responsible for Capital One’s massive breach earlier this week involving data stored on Amazon Web Services’ infrastructure? It was purloined by a 33-year-old former employee of the web services company. So, Amazon’s got some exposure in all of this, right? Not likely due to contract law. But where did they go wrong?
Ransomware attacks? As announced previously in this commentary, Supreme Lending recently held a conference call during which nearly 100 owners, CEOs, CIOs, and CISOs of mortgage banks learned about how Supreme Lending was attacked and responded to a recent ransomware attack. During the call, Supreme explained the technical aspects of the attack, including how the hackers obtained access to the network, and then discussed the process of negotiating and paying the ransom through an intermediary that specializes in executing ransomware payments.
After that, Supreme shared how its Incident Response and Business Continuity Plan enabled it to respond effectively and quickly to the attack from both an IT and business perspective to get the company back up-and-running quickly. One of the most informative parts of the call included a discussion of lessons learned and takeaways from the experience. The call finished with a Q&A session during which Supreme’s IT and business leaders handled as many questions as time would allow. Following the call, founder and president of Supreme, Scott Everett, received many messages thanking Supreme for candidly sharing its experience in the hope that others in the industry would not have to go through the same experience. (For more information, contact COO Jeff Joyce.)
The US Federal Deposit Insurance Corp. and the Federal Reserve are potentially making themselves vulnerable to theft of sensitive financial data because they don’t have comprehensive views of their agencies’ cybersecurity weaknesses, internal watchdogs say. The FDIC inspector general has identified security control shortcomings, while the Fed’s inspector general has said decentralized information technology “results in an incomplete view of security risks facing the agency as a whole.”
Current notes on the current environment
Rick Bechtel, Head of U.S. Residential Lending for TD Bank, believes, “Mortgage rates are hovering near historical lows and it continues to make sense for many homeowners to consider refinancing. There’s a common misconception, however, that a Fed rate cut will have a direct and immediate impact on mortgage rates. It won’t. Mortgage rates are based on the treasury market which has already baked in an assumption of this upcoming rate cut, meaning any action coming out of the Fed this week is unlikely to directly impact mortgage rates. But this is not a well-understood concept, so we’re likely to see a spike in consumers inquiring about rates and eligibility for refinancing if a rate cut hits the headlines this week.”
And Jon Giles, Head of Home Equity Lending for TD Bank, observed prior to the rate cut, “The expected Fed rate cut would have a direct impact on borrowing through a home equity line of credit. Many HELOCs are priced based on Prime, which is the interest rate banks generally charge their most credit-worthy customers. If the Fed cuts rates this week, it would create a similar scale Prime rate cut – so borrowers with a Prime-based HELOC would see a lower rate on future statements. At the same time, consumers seeking affordable financing options could take advantage of the rate cut to take out a new HELOC at a very low rate.”
NMLS & Nevada state law changes
“Rob, for Hawaii, if an MLO is held responsible for any errors, what is the exposure for the lender? I’m assuming it opens the door for litigation against the lender as they’re the ones with presumably deeper pockets. Should lenders beware?”
I know little of about Hawaiian lending laws, so I turned to Ken Perry with the Knowledge Coop, who also teaches CE courses around the country, including Hawaii this month, for an answer. He returned with, “Oh definitely! Hawaii has one of the more aggressive regulators right now. Between the regulator and attorneys, companies will typically be looked at pretty closely if there is an LO who gets hit for a violation. Depending on the law violated, if the company can show that they provided clear policies, solid training and monitoring then they can likely make it out of many situations safely.”
Ken also mentioned that, “In a surprising twist in the mortgage education space, the regulator responsible for NMLS licensing and education sent an announcement out this week regarding Mortgage training institute, MTI. As it turns out they have been in a lengthy lawsuit over alleged copyright violations. The allegations include stealing the federal NMLS test questions to use verbatim in their test prep and pre-licensing education classes. NMLS course providers are warned at least annually of the fact that the questions are never to be reproduced in any way, especially to help people game the test. The company and trainers involved have been barred from being involved in NMLS classes for the next 5 years.
The Nevada opt-out right will extend only to the sale of personally identifiable information that was collected by an operator through a website or online service. The Nevada opt-out right will apply only with respect to “the exchange of covered information for monetary consideration” to a person who will license or sell that information to others. Essentially, the Nevada opt-out right is for the “sale” of information for purposes of allowing a third party to then resell such information. Moreover, the Nevada opt-out right is for more “traditional” sales, covering only the exchange of information for “monetary consideration,” and not also the “valuable consideration” covered by the CCPA.
The Nevada Department of Business and Industry, Division of Mortgage Lending has adopted several provisions regarding licensure by endorsement of escrow agents and agencies.
Section two of the amended regulation establishes standards for the licensure by endorsement of a natural person as an escrow agent or escrow agency. Section three states the duties of the Commissioner regarding application questions, Approval and Denial of an Application.
Nevada has updated its provisions regarding the collection of personal information. Provisions in Senate bill 302, section 1, has added a provision concerning governmental agencies acting as data collectors.
Government agencies which collect and maintain records containing personal information of a Nevada resident must comply with the current version of the CIS Controls as published by the Center for Internet Security, Inc. or corresponding standards used by the National Institute of Standards and Technology of the United States Department of Commerce.
It must create and maintain a list of controls and standards to be adhered to by the State pursuant to any federal laws or regulations. This list must be made available to the public.
There is an added requirement to permanently remove any data stored on electronic waste prior to disposal of said waste. “Electronic waste” is defined as electronic equipment that for any reason has entered the waste collection, recovery, treatment, processing, or recycling system.
The Legislative Auditor’s audit reports must not contain any information that the he or she determines could potentially expose the State to a breach of security.
Nevada has modified several provisions regarding real property pursuant to Senate Bill 382. These provisions are effective as of October 1, 2019.
Section 1 of the bill adds additional definitions, including those for “noncommercial lender,” “proprietary lease,” and “residential foreclosure.” Many of these newly added definitions are found elsewhere in Nevada provisions regarding deeds of trust.
Under existing law, parties to a deed of trust may set out certain amounts for statutory covenants. Section 5 has been amended to specify the amounts that apply if parties fail to set these amounts. Under this new provision, if no amount is set out, the amount shall be the full replacement value of the buildings and improvements which are on the premises or which shall be erected upon the premises.
Section 23 of the bill prohibits a mortgage of real property from being deemed a conveyance for the purpose of enabling the mortgagor to take possession of the real property in the absence of a foreclosure sale or in accordance with a court order.
Nevada has modified several provisions regarding the licensing and regulation of certain short-term loans, high-interest loans, title loans, and installment loans, including adopting some of the provisions set forth in the federal Military Lending Act. The effective dates of these provisions range from October 1, 2019 to July 1, 2020.
Prior to making a consumer credit loan to a covered service member or a dependent of a covered service member, a licensee must provide the following information, both orally and in writing: 1) a statement of the annual percentage rate of interest on the loan; 2) any disclosures required by the provisions of the Truth in Lending Act; and 3) a clear description of the payment obligations of the covered service member or the dependent of the covered service member.
A licensee making a consumer credit loan to a covered service member or a dependent of a covered service member may not charge an annual percentage rate greater than the lesser of thirty-sex percent or the maximum rate provided in the federal Military Lending Act.
Another new provision requires the Commissioner to implement and maintain a database of all deferred deposit loans, title loans, and high-interest loans in Nevada, for purposes of ensuring compliance with existing state and federal laws. Licensees making such loans are required to report and update certain information through the database. The Commission must also establish a fee for the administration and operation of the database to be charged and collected from licensees using the database.
Lenders know that Nevada, Ohio, Michigan, Minnesota, Tennessee, Indiana, Virginia, Montana, Texas, and Vermont permit RON (remote online notarization). Earlier this year Idaho Governor Brad Little signed legislation (SB 1111) to enact RON in the state, which was closely followed by similar action this week in both Kentucky (SB 114) and Utah (SB-52) by their respective governors. North & South Dakota have enacted RON laws. The MBA reports that, “Language of each of these new laws follows the contours of the model state RON bill from MBA and the American Land Title Association (ALTA), which can be found on the MBA Remote Online Notarization Resource Center.”
(Thanks to Spencer D. for this one.)
A lawyer, who had a wife and 12 children, needed to move because his rental agreement was terminated by the owner, who wanted to reoccupy the home.
When he said he had 12 children, no one would rent a home to him because they felt that the children would destroy the place.
So he sent his wife for a walk to the cemetery with 11 of their kids.
He took the remaining one with him to see rental homes with the real estate agent.
He loved one of the homes and the price was right. The agent asked, “How many children do you have?”
He answered, “Twelve.”
The agent asked, “Where are the others?”
The lawyer, with his best courtroom sad look, answered, “They’re in the cemetery with their mother.”
MORAL: It’s not necessary to lie; one has only to choose the right words. And don’t forget, most politicians are lawyers.
Visit www.robchrisman.com for more information on our industry partners, access archived commentaries, or to subscribe to the Daily Mortgage News and Commentary. If you’re interested, visit my periodic blog at the STRATMOR Group web site. The current blog is, “Residential Lending, Banks, and Market Share.” 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.
(Market data provided in partnership with MBS Live. For free job postings and to view candidate resumes visit LenderNews. Currently there are hundreds of mortgage professionals looking for operations, secondary and management roles. For up-to-date mortgage news visit Mortgage News Daily. For archived commentaries, or to subscribe, go to www.robchrisman.com. Copyright 2019 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.)