Dec. 29: Opportunities & expansion; lawsuit update on Wells, Credit Suisse, and S&P; how much does it cost to securitize a loan?

We’re staring at 2015 this week and “I want to retire this year!” may be the refrain from various lenders when asked about New Year’s resolutions. But where are the best places to retire? Well, Zillow has an interactive “tool” that may help. Thanks, Rich, for sending along. Other data shows about 17% of the 76 million Baby Boomers have already retired and about 10k will retire every day for the next 15 years. And note that the stock market has been doing fine in spite of some forecasts that retirees, in order to cover their living expenses, would be selling all their holdings thus driving stock prices down. It hasn’t happened.


What is happening is that companies are expanding. Greg Frost is looking for a few more Branch Partners. Yes, it’s the same Greg Frost who was the mortgage industry’s first Billion dollar Loan Originator and current popular motivational sales trainer.  Greg’s organization currently has Branch Partners in New Mexico, Arizona, California, Colorado, Texas, South Dakota, Illinois, Iowa and Mississippi.  If you’re operating in one of these states, and would like to investigate his very profitable “Net Revenue Sharing” business model, just click here to schedule a confidential conversation with Greg. Imagine working with and being mentored by one of the industry’s’ most prolific mortgage professionals. Click Here now.


And congrats to industry veteran Jeffrey A. Franklin who recently joined Pendo Management Group, a nationwide Real Estate Appraisal Management Company that was just named the 90th Fastest Growing Company in the country, according to Inc. magazine. Jeffrey has over 20 years of industry experience including origination, marketing and Appraisal Management sales and operations. Prior to joining Pendo, Jeffrey most recently held executive level positions at Eppraisal Network and SettlementOne Valuation. His previous positions include managerial and executive positions for Royal Mortgage Banc, Specialized Direct Response, and Co-Founder/CEO of Phios Direct, Inc.


For better or worse no one in the industry will disagree that legal outlays and compliance related expenses have skyrocketed for residential lenders, and these costs are passed on to borrowers. And the lawsuit news continues to flow.


Many think that the older rating agencies have not seen the punitive impact of mistakes made in rating securities. Standard & Poor’s Ratings Services is close to an agreement with regulators that will settle investigations into its ratings of commercial mortgage-backed bonds, sources said. The deal could be finalized as early as January, they said.


At the other end of things, Credit Suisse lost its bid to have a case dismissed – the judge said, “Thanks but no thanks” and things must proceed.


Wells Fargo & Co. has been ordered to pay $54.8 million in damages tied to a class-action lawsuit alleging that fees charged by two mortgage servicers were excessive. On Friday, a Manhattan federal jury ruled against Wells in a suit alleging that late fees charged by now-defunct mortgage firms The Money Store and HomEq were improper and unlawful.


And Wells Fargo, HSBC Holdings Plc, Bank of New York Mellon Corp., and Deutsche Bank AG were sued by an Irish securities firm that claims the banks failed to protect investors in their role as trustees of securities backed by home loans that defaulted after the 2008 credit crisis.


Also of note is that Edward O’Donnell, a former executive at mortgage lender Countrywide Financial, is set to collect a cool $57.6 million from Bank of America for his role in exposing fraudulent activity at the firm. As you may recall a federal jury ruled that Countrywide Financial (now owned by BofA) had defrauded government-backed firms Fannie Mae and Freddie Mac by selling them defective mortgages. O’Donnell is entitled to 16% of a $350 million payment from Bank of America, according to documents filed this week in the Southern District Court of New York. The payment is a portion of the $16.65 billion settlement that Bank of America has to pay. It’s the biggest financial settlement in history. O’Donnell’s piece of the $350 million is equal to about $56 million. He’s also entitled to an additional $1.6 million payment from Bank of America, to total about $57.6 million, which must be paid within a “reasonable time,” according to the federal court document.


Here’s a doozie. It costs $900 to conduct due diligence on each loan pledged as collateral for an RMBS. That was the number that was tossed out at SFIG’s ABS East Conference in Miami Beach.  If you don’t believe it, drop a line to Eileen O’Grady who attended the conference. Eileen is a mortgage capital markets veteran, who has signed on as Capital Markets Business Development Manager at LoanScoreCard.  She wrote, “Nine.Hundred.Bucks.  Any volunteers to start looking at loan files? That’s $225,000 per annum.  For.One. Loan. Per.Day.” Eileen also captured some other interesting bullets from ABS East, like the big push for the 15 year “Wealth Building Home Loan” by the Fed and others; the somewhat baffling AB II regulation, which tries to balance bond data transparency against borrower right to privacy; and the pressure on Aggregators, Servicers, Trustees and others in the RMBS industry to spend a lot more money on technology, so they can stay in a lot less liquid RMBS marketplace.  Dilemma.  Email Eileen or hear about it yourself at the ABS West in Vegas Feb 8 – 11, 2015. (Maybe I can find my sports jacket that I lost at MBA.)


(“Eileen would also be happy to tell you about LoanScoreCard, a highly affordable rules-based system that can provide Custom Automated Underwriting to lenders, aggregators and investors.  LSC can be deployed as a point-of-sale tool, and at any other point in the transaction flow, and can automate and deliver investor’s credit criteria to over 3500 insured financial institutions, with more distribution points coming online regularly.  Eileen believes LSC can be the “Third Horseman” after DU and LP for the growing portfolio lending and private market niches.  The bonus is that LSC can auto-approve for FHA Total Scorecard loans and can render a QM Compliance Finding, which, after the recent QRM decision, has become uber-important again.”)


October Research, LLC produced a free report, sponsored by SoftPro that provides guidance to title agents on implementing best practices and creating a comprehensive compliance program. The report includes information on how to apply compliance standards, whether you are in the beginning or final stages in the process. A list of companies and how their products, services and tools can help you stay afloat and comply with the new regulatory changes is incorporated into the report. The special report features licensing, escrow trust accounting, protecting NPI, settlement processes, policy production, insurance coverage and consumer complaints. The report serves as a one-stop-shop for those looking for a simplified process to meet regulatory compliance needs.


Besides most lenders going to 97%, let’s continue playing catch up with some random lender & investor news in the last several weeks to check the trends.


Wells Fargo Funding is publishing a revised version of its seller guide section 750: Rural Housing Loan Underwriting. Additionally, its website has been optimized for Microsoft® Internet Explorer® version 11.


US Bank posted information regarding amendatory escape clauses and an NMLS reminder. Click on the link for its lender updates.


Caliber Home Loans, Inc. has expanded its Fresh Start Program, a specialized mortgage solution designed specifically for self-employed business owners and borrowers who have experienced a recent life or credit event, or investors that are currently unable to find a program in the marketplace that meets their needs as they work to re-establish a strong credit history. Visit Caliber’s web page for details.


SSN discrepancies on the borrower’s credit report must be resolved by providing a letter of explanation, signed and dated, from the borrower to explain the discrepancy. SSN discrepancy appearing on the AUS (DU or LP) findings, it is an issue with the borrower’s own SSN. Any SSN that cannot be resolved by the Correspondent must be validated with the Social Security Administration (SSA) using Form SSA-89. If verification is required but the SSN cannot be validated with the SSA, the loan is not eligible for purchase by Citi Bank. For more information, refer to Section 807 of the Correspondent Manual.


Franklin American Mortgage Company FAMC’s updated Correspondent National bulletin 14-35  includes information on suspense notification, updates to its manual, and funding fee increase information.


Flagstar Wholesale revised its VA allowable fees for Credit Report and AUS Findings effective for all VA loan applications signed by the borrower or lender on or after November 24. The allowable fees for credit reports and AUS findings are based on whether the loan receives an Approve, Accept or Refer response through an Automated Underwriting System (AUS). Flagstar also posted that all loans with seller concessions not listed on the appraisal will require a revised appraisal. The revised appraisal will be sent to the borrower and the loan cannot be closed until three days after the receipt of the appraisal by the borrower.


Lock Extensions at Mountain West Finance (MWF) Wholesale are calculated in 7 day increments. The cost for each 7 day extension is .125 with a maximum extension period of 28 days (which would cost .50). However, with the rates remaining low as of late, MWF has been offering 15 days extensions for free subject to current market conditions. For more information, visit MWF website.


Effective with Best Efforts locks and Mandatory commitments done after December 8, 2014, Nationstar Mortgage will implement two new pricing adjusters, based on FICO score. This applies to all government loans and all amortization periods. Nationstar will update the current Loan Size pricing adjuster for loans < $100,000. Also available, Correspondent Seller Guide Update, click the link to  download 2014-22.


Looking at the markets, we’re seeing lower rates so far this morning. The Federal Reserve said it is suspending until Jan. 2 all agency mortgage-backed-securities operations. And for now through Jan. 13 the central bank said it intends to buy no more than $10.8 billion of agency MBS. We have a decent amount of news this week although it doesn’t commence until tomorrow’s S&P/Case-Shiller series of two-month-old numbers (these are for October). We also have Consumer Confidence tomorrow. Wednesday, the last day of the year, will be the MBA’s application data and also the Chicago Purchasing Manager’s survey and Pending Home Sales. With the market closure on January 1st we can all expect low MBS liquidity on December 31st. Lastly, on Friday, January 2nd, ISM Manufacturing Survey will publish the composite index of purchasing managers at 300 manufacturing firms nationwide about the general direction of production, new orders, order backlogs, inventories and other variables into the manufacturing health.


For numbers we had a 2.25% close on the 10-yr Friday and in the early going we’re at 2.22% with agency MBS prices better by .125-.250 depending on coupon and type.



A Catholic Priest, a Baptist Preacher and a Rabbi all served as Chaplains to the students of Northern Michigan University at Marquette in the Upper Peninsula of Michigan. They would get together two or three times a week for coffee and to talk shop.

One day, someone made the comment that preaching to people isn’t really all that hard, a real challenge would be to preach to a bear. One thing led to another, and they decided to do an experiment. They would all go out into the woods, find a bear, preach to it, and attempt to convert it to their religion.

Seven days later, they got together to discuss their experiences.

Father Flannery, who had his arm in a sling, was on crutches, and had various bandages on his body and limbs, went first.

“Well,” he said, “I went into the woods to find a bear. And when I found him, I began to read to him from my Catechism. Well, that bear wanted nothing to do with me and began to slap me around. So I grabbed my holy water bottle, sprinkled him and, Holy Mary Mother of God, he became as gentle as a lamb. The Bishop is coming out next week to give him first communion and confirmation.”

Reverend Billy Bob the Baptist spoke next. He was in a wheelchair, had one arm and both legs in casts. In his best fire-and-brimstone oratory, he exclaimed, “WELL, brothers, you KNOW that we Baptists don’t sprinkle holy water! I went out and I FOUND a bear. And then I began to read to the bear from God’s HOLY WORD! But that bear wanted nothing to do with me. So I took HOLD of him and we began to wrestle. We wrestled down the hill until we came to a creek. So I quickly DUNKED him and BAPTIZED his hairy soul. And just like you said, he became as gentle as a lamb. We spent the rest of the day praising Jesus. Hallelujah!”

The Priest and the Reverend both looked down at the Rabbi, who was lying in bed in a body cast and traction with IVs and monitors running in and out of him. He was in extremely bad shape.

The Rabbi said: “Looking back on it, circumcision may not have been the best way to start.”





(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