August 8: State-level lending changes – who can keep track? I have to keep LO web ads for how long?

Watching loan officer ads is a full-time job. The Mortgage Bankers Association of the Carolinas wrote up this compliance tidbit: “Are lenders required to retain web page advertisements?” Yes. The Mortgage Acts and Practices Rule requires lenders to retain commercial communications, including web pages, for a period of 24 months from the date a person makes or disseminates the communication. Don’t take my word for it, check out, Title 12 (Banks and Banking), section 1000-1099 (CFPB), and the section 1014, section 5 (Record keeping requirements). Or you can try going straight to I don’t know much about marketing practices, but occasionally I am asked about marketing software. In this case, in June Guild Mortgage selected Vantage Marketing from Vantage Production, and I know that Vantage keeps marketing materials for at least the required amount of time:


When a broker directs a loan to a particular wholesaler, often times the borrower never quite knows where they will be sending their payments in a couple months. There has been a transition in servicing: 4-5 years ago, the top five servicers held 60% of the servicing, but now the top five hold 49%. And there are a couple “upstarts” that have broken into the top ten, ranked Wells Fargo, Chase, Bank of America, Ocwen, Citi, Nationstar, US Bank, and PHH, per Inside Mortgage Finance. Why are more companies holding on to servicing? “Economics/revenue” and “wanting to keep the client” are often cited, although for some it seems that they are just going along with the natural evolution of residential lending.


That revenue reason is a big one – after all, who wants to leave money on the table? Not the United States Government, thus many tongues are wagging about yesterday’s profit numbers from Freddie and about whether or not the government is really going to give that up by shutting Freddie down. Freddie will pay $4.4 billion to the Treasury Department as a result of its seventh consecutive profitable quarter (this time of $5 billion). Freddie Mac finished the second quarter with net worth of $7.4 billion and is required to pay everything above $3 billion to Treasury in return for the taxpayer aid it has received under conservatorship. F&F received about $190 billion in assistance, and have paid back about $132 billion – which counts as a return on the U.S. investment in the firms and not repayment of their debt to taxpayers.


Yes, the government can’t stay away from housing. It is good to be aware of what the President said Tuesday in Phoenix, and also what is on the table in Congress. In the ongoing “who’s looking out for us more” race in D.C., House Financial Services Committee Chairman Jeb Hensarling (R-TX), along with subcommittee chairs Scott Garrett (R-NJ), Randy Neugebauer (R-TX), and Shelley Moore Capito (R-WV), unveiled the Protecting American Taxpayers and Homeowners (PATH) Act of 2013. This act provides for comprehensive reform of the government’s role in housing finance. Chairman Hensarling introduced the bill, “The PATH Act creates a housing finance system that’s designed for homeowners so every American who works hard and plays by the rules can have opportunities and choices to buy homes they can afford to keep. It creates a housing finance system that’s designed for hardworking taxpayers so they never again have to bail out corrupt financial government enterprises like Fannie Mae and Freddie Mac, whose top executives engaged in accounting shenanigans to trigger huge bonuses for themselves.” With all due respect to the Chairman, I don’t really find the above quote that note-worthy, but I never turn down the opportunity to squeeze in the word ‘shenanigans’. See


But who cares about what is going on at the Federal level when it is so darned hard to keep track with what is going on at the state level? This condensed list is just a smattering of recent activities – fun for lenders making home loans in a multiple of states!


North Carolina’s General Assembly amended a number of NC SAFE provisions related and applying to applications for the licensure of transitional mortgage loan originators filed on or after September 1, 2013. The amendments allow mortgage originators holding out-of-state licenses to apply for a limited term license, so that they may continue lawfully conducting business while transitioning between or working within multiple jurisdictions.


Michigan has revised its mortgage modification program, and adopted provisions under the federal loss mitigation program, effective immediately. Complete and full details can be found compliments of Bankers Advisory here:


Hawaii recently adopted the Uniform Mediation Act in order to address a number of different issues related to the mediation process. The rules adopted will govern mediation agreements and referrals made on or after July 1, 2013. As of January 1, 2014 all mediation agreements, whenever made, will be governed by the Uniform Mediation Act. Eight states already have enacted the Uniform Mediation Act, led by Nebraska in May 2003. Illinois followed nearly a month later, while New Jersey, Ohio, Iowa, Washington, Indiana, and the District of Columbia all enacted it during the last two years.


Delaware has amended its “Clean Credit and Identity Theft Protection Act.” Under the new provisions a consumer reporting agency may no longer charge consumers for a one-time reissue of the personal identification number; however, charges for any subsequent re-issuance are considered valid. Victims of identity theft, having filed valid incident reports, may not be charged any fee for placing a security freeze on their credit reports. Consumers have the right to bring a civil action against anyone who violates his or her rights under the credit reporting laws.


Oregon legislature recently passed Enrolled Senate Bill 574, amending statutes relating to security freezes on protected consumers’ consumer reports. The Act provides procedures for requesting security freezes and protective records for “protected consumers”. Under the revisions, a representative may request a security freeze be placed upon a protected consumer’s consumer report or protective record. Also, the Act provides procedures for requesting security freezes, temporary lifts of security freezes, and deletion of protective records


Indiana has recently updated their lending regulations, effective on July 1, 2013. Consumer credit sales, non-supervised loans, and supervised loans are all affected by the regulatory changes. More details can be found here:


Louisiana has modified their provisions regarding seizures and sales of property provisions. The new provisions focus on: the notice to judgment debtors in money judgments after the seizure, the type of service and timing of the notice, notice of scheduled sale date plus any changes, and the information to be included in the notice.


Texas Supreme Court issued an opinion on June 21, 2013 which addresses three different issues raised in regard to home equity loans; home equity fees and interest, loan closing requirements, and notice requirements. Here is the bottom line for Texas lenders: all fees—including fees paid to the lender—are capped at 3 percent, all aspects of the loan closing process must occur at the office of the lender, an attorney, or a title company, and lenders are entitled to a “rebuttable presumption” that homeowners received required notices on the third day after mailing.


Nevada has modified several provisions regarding the foreclosure of owner occupied property, effective October 1, 2013. Under current law, the trustee of a deed of trust has the power to sell the attached property, subject to certain restrictions. Current law also allows judicial foreclosure to recover debt, or to enforce a right secured by another lien on the property. The new bill requires at least thirty days before recording a notice of default and election to sell, prohibits the recording of a notice of default and election to sell, or the commencement of a judicial foreclosure action involving a failure to make payment, until the servicer makes contact with, or attempts to contact the borrower.


North Carolina made modifications to its Consumer Finance Act ( to include an increase the minimum amount of loans authorized by the CFA from $10,000 to $15,000, and requires a license from the Commissioner of Banks;  authorizes licensed lenders, for loans up to $3,000, to charge interest rates of 36 percent on outstanding balances up to $1,500, and 15 percent on the remainder of the unpaid balance, whereas existing law authorizes 36 percent interest rates on outstanding balances up to $600; authorizes licensed lenders, for loans up to $15,000, to charge 30 percent interest rate on outstanding balances up to $5,000, 24 percent on outstanding balances up to $10,000, and 18 percent on the remainder of the unpaid balance, whereas existing law authorized 30 percent interest rates on outstanding balances up to $1,000 and 18 percent on the remainder of the unpaid balance. The amendments have been criticized in North Carolina by levels of government officials and consumer protection groups for allowing consumer finance lenders to charge more interest and higher fees to those consumers that already cannot afford the heavy financial burden.


The Missouri General Assembly recently passed a new bill ( amending a statute regarding real estate loans. The statute, found at Section A. Chapter 443, is amended to now include a new section 443.454. The new section precludes local laws from affecting the rights associated with secured real estate loans. Enforcement and servicing of such loans are now specifically governed by only state and federal law.


New York’s Department of Financial Services has issued additional guidance on the interpretation of state banking laws. This is in response to recent readings of section 6-m of the New York Banking Law, which have resulted in a number of loans being incorrectly deemed sub-prime. Section 6-m defines the term “sub-prime” (not to be confused with Mayor Bloomberg’s section 6-n which defines “big gulp”) as “a home loan in which the fully indexed annual percentage rate exceeds by more than one and three-quarters percentage points for a first-lien loan, or by more than three and three-quarters percentage points for a subordinate-lien loan, the average commitment rate for loans in the northeast region with a comparable duration to the duration of such home loan, as published by the Federal Home Loan Mortgage Corporation as posted in the week prior to the week when the lender receives a completed application.” The increase in interest rates, combined with lenders usage of the closing date to determine the “fully indexed rate,” has caused a fear that recently originated loans now fall into the sub-prime definition. This amendment provided lenders with more specific dates to use when determining the fully indexed rate.


Many people in our industry are Notary Publics, and if you’re one doing business in North Carolina, this story is of some interest to you. In June, North Carolina’s General Assembly ratified amended the Notary Public Act. Traditionally, notary publics will perform signature acknowledgements, administer oaths and affirmations, and verify or prove signatures presented on security instruments. The amendments take effect for all notarial acts performed on or after July 1, 2013, and retroactively validate acts-having been duly recorded and accompanied by a seal or stamp-dating back to December 2005, as well as, most minor or typographical errors regardless of when the act was performed or recorded.


There still isn’t much going on with rates – much to the delight of many. Yes, a little up, a little down, but no great volatility. (Tradeweb reported mortgage-backed securities volume remained below normal at 88 percent of the 30-day average – about $1 billion from mortgage-backed security sellers.) The 10-yr closed Wednesday at a yield of 2.60%, and MBS prices were slightly better.


Today we wrap up the quarterly refunding with the Treasury auctioning $16 billion in 30-year bonds at noon Central time. We’ve had Initial Jobless Claims (+336k was expected from +326k previously, it came in at 333k, up from a revised 328k – no big deal). Rates have crept higher – the 10-yr is at 2.61% and MBS prices a shade lower.



Part 3 of 4 of some trivia…

In ancient Greece, tossing an apple to a girl was a traditional proposal of marriage. Catching it meant she accepted. (Or she didn’t want it to hit her in the face.)

Warner Communications paid $28 million for the copyright to the song Happy Birthday. Intelligent people have more zinc and copper in their hair.

A comet’s tail always points away from the sun.

The Swine Flu vaccine in 1976 caused more death and illness than the disease it was intended to prevent.

Caffeine increases the power of aspirin and other painkillers, which is why it is found in some medicines.

The military salute is a motion that evolved from medieval times, when knights in armor raised their visors to reveal their identity.

If you get into the bottom of a well or a tall chimney and look up, you can see stars, even in the middle of the day.


Copyright 2013 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