Jan. 11: Notes on LO comp confusion & AU QM; why you should belong to a club that would have you as a member!

Let’s start with some recent notes that I have received, providing a sense of what is on the mind of mortgage bankers.


“I’m intrigued by Wells’ new SWAT mortgage team…..underwriters and funders running around in black spandex and balaclavas, LOs and processors repelling down multifamily units? I hear Chase is coming out with their new proprietary team called SEAL Team 6 1/2…..’6 1/2 days to close,’ get it? And I’ve heard rumors of Citi rolling out its own Delta Force. This is all very exciting.” [That all being said, the Wells’ retail portfolio retention news was a sharp reminder to independent mortgage banks of a bank’s potential.]


I received this note from an originator in New Jersey. “We are a small company brokering all of our loans and I find it interesting to note that there is a divide amongst lenders regarding the interpretation of the final Loan Originator Compensation Rule. Several lender bulletins (Provident Funding, Green Tree Servicing) have stated that the rule now prohibits any negotiated compensation, including consumer-paid (or borrower-paid) compensation. These lenders now require that the same compensation level apply to both compensation methods and that the broker cannot reduce its compensation, even in a consumer-paid comp transaction. Other lenders (New Penn, Fifth Third, Franklin American) are continuing to allow borrower-paid compensation to vary from lender-paid compensation as long as the borrower-paid comp is not greater than the lender-paid level and is not lower by more than a certain margin. This would seem to be a fairly central issue so it is surprising to see these differences.”


“Rob, Appendix Q specifically states that 2 years tax returns are required on self-employed borrowers.  We’ve spoken a lot about the agency carve out for DTI but I haven’t seen anything on documentation.  If the AUs asks for one year tax returns and that’s what we obtain, am I still QM eligible under the agency carve out?” I am not an underwriter, but Freddie Mac has plenty of them, and responded, “The answer is ‘yes’. A loan originated to our requirements qualifies under the safe harbor (unless it is already exempt under the ruling).”


I am fortunate to be able to visit with local, state, and national mortgage banker & broker associations, and I have seen their membership ranks swell. And I am periodically asked by others, “Why should I, or my company, join up with an association?” I took the liberty of asking the directors/presidents of several groups, including the MBA, for their thoughts – and thank you for responding.


Lisa Vercher, Executive Vice President of the Texas Mortgage Bankers Association (www.texasmba.com) writes, “TMBA membership affords a number of benefits including governmental and legislative advocacy, educational programming, peer interaction, and networking opportunities. Now more than ever membership is crucial to the protection and prosperity of our industry. Mortgage professionals can become leaders in the industry by actively participating as volunteers and committee members. These leaders play an integral role in sharing information, ideas, best practices, and current market developments which are vital for the success of the industry. Such leadership also provides opportunities to target trends and issues relevant to the mortgage industry with other committee members, peers, competitors and potential partners, while providing an opportunity for creative problem solving as well as professional enrichment.”


“The number one reason to support your state MBA is for the legislative and regulatory advocacy. Your state MBA is on the front line with policy makers who make decisions that affect your ability to run your companies and provide services to your customers. Just because you don’t have an interest in the political arena doesn’t mean it doesn’t have an interest in you! Support the associations that support you and your business” contributed Susan Milazzo, Executive Director of the California Mortgage Bankers Association (www.cmba.com).


Kent Carter with the Oklahoma Mortgage Bankers Association sent, “As was stated at the 100th Annual MBA Convention in October, the mortgage finance industry has moved from “too big to fail” to “too small to comply.” The advantage of receiving ongoing assistance from the MBA as well as critical compliance training at the local and state level allows independent mortgage companies and community banks to remain important resources for consumers. Educational programs and the ongoing dissemination of industry changes makes being a member of state organizations critical to those who intend to remain permanent mortgage lenders. Our advocacy efforts have kept some of the overreaching aspects of Dodd/Frank from harming the consumer with unrealistic demands. You and our state organizations will prosper with the involvement of all mortgage professionals.” (http://www.oklahomamortgagebankersassociation.com/)


Joanne Misuraca, Executive Director of the Michigan Mortgage Lenders Association (www.mmla.net), writes, “With all the legislative and regulatory changes affecting the industry, being a member of your state or local organization is the best way to keep up with it all! Participating on its committees, attending its educational events and networking with other members helps you stay connected and informed. The association provides the real estate finance industry access to the Legislature and state regulatory agencies to help produce and maintain the type of legislation and regulatory climate that permits lenders to fully meet the real estate financing needs of residents. It also provides educational opportunities to help members keep abreast of the rapidly changing mortgage origination, underwriting and servicing environment. The MMLA maintains timely contact with its members through newsletters, email legislative alerts and the MMLA website to relate industry trends and developments.”


Casey Fleming with the California Association of Mortgage Professionals (http://www.ca-amp.org/) opines, “I am a member of CAMP because it makes me a better mortgage advisor.  My participation in CAMP helps me in three ways. First, education: CAMP offers educational opportunities of higher quality than any other single source, and at very competitive prices.  By taking advantage of the opportunities CAMP presents I learn more about best professional practices.  This enhances my knowledge and continually improves my skills and my service. The second is information. There was a time when a loan officer only had to take loan applications – that time is past. Today to be successful one has to understand economic trends, regulatory changes, and financial analysis.  In CAMP I need do nothing more than attend events to stay current. And the third is mindset. It is easy in our industry to focus on the function of closing loans and to lose sight of the importance of what we do. A mortgage is usually the single largest debt any family will ever have. What we do makes a difference in people’s lives, and how we do it matters.  Ethics, competence and professionalism cannot be taught, but they can be ingrained by associating with others who share noble values. There are many more practical reasons to join CAMP and actively participate.  But for me, I am here because it helps me do what I do better for people I care about.”


Candice Nicodin, President of the Mortgage Bankers Association of the Carolinas (www.MBAC.org) pens, “Membership either at the state or local level is more diverse than ever. Each sector has wants and needs, therefore our paint brush must cover a broader area. As our members expand we keep an open ear and welcome change. Coming together as one unifies our position and allows for our voice to be heard. Our arsenal of defense for our members includes education, legislative issues or networking. It is our responsibility to keep our industry healthy and that is done with active participation within our membership.” And Rhonda Marcum, Executive Director of MBAC adds, “Membership in the state association amplifies the voice of the individual members on state and federal legislative issues impacting our industry. It provides access to the educational venue provided through the state and serves as an excellent opportunity to network with other industry professionals.”


Last but not least, the nationwide Mortgage Bankers Association (Tricia Migliazzo, VP of Membership: tmigliazzo@mba.org; http://www.mbaa.org/default.htm) supplies, “The center of gravity in the mortgage universe has certainly shifted toward Washington, DC with the passage of the Dodd Frank Act, the implementation of more than 4000 pages of new federal rules, and the creation of new federal supervision and examination agency for independent mortgage bankers. It’s more important than ever that community-based lenders be engaged with the MBA’s federal advocacy efforts to create one loud and powerful voice for housing finance issues. That said, the role of the states remains critically important. We continue to see state policy makers trying to piggy back on the federal rules, creating costs, confusion and compliance risks that fall most heavily on state chartered lenders. In addition, the state and local MBAs provide critically important of grassroots, boots-on-the-ground support for our federal advocacy efforts, providing invaluable support for our industry issues from companies and employees in the districts and home states of the Representatives and Senators. That is why MBA has spent the past two years strengthening our partnership with the state and local MBAs. We have redoubled our efforts to provide timely information and grassroots engagement opportunities to the states on federal issues.”


The MBA continued. “We have dedicated MBA significant staff resources to provide data, policy analysis and advocacy support to the state associations on the issues they are battling in state capitols across the country.  Most important, this partnership is being heard by policymakers and delivering wins for the industry. Some examples: Last fall, 17 state and local associations, working with the MBA, submitted letters to the 6 regulators working on the QRM rules urging that the QRM definition equal the QM, and we are winning that battle. In April 2013, more than 25 state and local associations came to Washington to lead their delegations on Capitol Hill as part of MBA’s National Advocacy Conference. In 2013, MBA worked with our state associations to secure adoption of the uniform state Safe Act test (UST) by 39 regulators in 37 states and territories. Last year, MBA worked with the state associations in 6 states to block or amend legislation that would have created state servicing standards that duplicated or conflicted with the new federal rules. We believe in this partnership and are committed to making it stronger.  We are strongest as an industry when every company joins and supports their employees’ participation in the local, state and national MBA.”


Testimonials for MBA membership:


“Our annual MBA Membership dues are the best investment we make every year.” (Dan Klinger, K. Hovnanian American Mortgage, LLC.)


“Through active member engagement, you can lend your expertise to MBA’s grassroots and national policy and legislative agendas to truly be the voice of the industry as the future of real estate finance in America is determined.” (Bill Cosgrove, CMB, 2014 MBA Chairman-Elect

President and CEO, Union National Mortgage Co.)


“We get an opportunity to actually meet with legislators, decision makers, and regulators. Those are the folks who are formulating what the future of our industry is going to look like.” (Chris George, CMG Financial.)



“I’ve had the opportunity to testify on Capitol Hill — and what it let me see was how well-respected MBA is on the Hill — and how we speak with one voice.” (Regina M. Lowrie, CMB, Vision Mortgage Capital.)


“New rules are complex, but they are not insurmountable to understand and implement. My company needs resources, education, and a voice in mortgage lending to operate in a compliant and profitable manner. That is why we are an active member of MBA.” (Fowler Williams, CMB, Crescent Mortgage Company.)


“We started five years ago — and five years later we’re five times the size. And a large part of that is due to the Mortgage Bankers Association.” (Philip DeFronzo, Norcom Mortgage.)


“For more than ten years we have participated in MBA’s peer-group benchmarking surveys. The information delivered to participants helps us recognize best practices, plan for the future and learn what others are doing to excel in the marketplace.” (David Motley, CMB, Colonial National Mortgage.)


Thanks everyone!



Sitting on the highway waiting to catch speeders, a state police officer saw a car puttering along at 22 M.P.H. He thinks to himself, that car is just as dangerous as a speeder. So, he turns his lights on and pulls the car over.

Approaching the car, he notices there are 5 old ladies, two at the front and 3 at the back, wide eyed and looking like ghosts.

The driver obviously confused said, “Officer, I don’t understand, I wasn’t doing over the speed limit! What seems to be the problem?”

“Ma’am,” the officer said, “you should know that driving slower than the speed limit can also be dangerous”.

“Slower than the speed limit? NO SIR! I was doing exactly 22 miles an hour”, the old woman said proudly.

The officer containing a chuckle explains that 22 was the route number, not the speed limit.

A bit embarrassed, the woman grinned, thanking the officer for pointing out her error. “Before I go Ma’am, I have to ask, is everyone OK? These women seem badly shaken and haven’t uttered a word all this time.”

“Oh! They will be alright in a minute, Officer – we just got off Route 142.”




(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