July 16: Mortgage jobs; Wells’ expansion into real estate; non-bank servicer growth; RESPA & affiliate relationships

If your neighbors are like mine, and have expressed concern over your home-made housing surveys being left at their door steps, then the U.S. Census Bureau’s 2011 American Housing Survey (http://www.census.gov/prod/2013pubs/ahs11-1.pdf) may be for you! Did you know that homeowners in the U.S. paid a median price of $110,000 for their homes, an increase of 2.3 percent from the $107,500 reported in the 2009 survey? The median purchase price of homes constructed in the past four years was higher at $235,000, down 2.1 percent from the $240,000 reported for new construction in 2009? The profile provides information on the nation’s housing costs, mortgages and a variety of other physical and financial characteristics about housing in the U.S. The statistics come from the American Housing Survey, which is sponsored by the Department of Housing and Urban Development (HUD) and conducted by the U.S. Census Bureau, and is the most comprehensive housing survey in the United States. National data are collected every odd-numbered year and metropolitan area data are collected on a rotating basis.


Under the “Careers in Transition” label, military and mortgage professionals invited to join Stonegate Mortgage on Thursday, July 18th from 11am to 2pm EDT for a virtual career fair focusing on our military personal looking to make the transition into financial services and current mortgage personal who may be investigating new opportunities. As others eliminate positions and contract, Stonegate Mortgage Corporation is still expanding into new markets with a full portfolio of products. This is an opportunity to spend 10 minutes of your time to find out more about Stonegate Mortgage Corporation. To register and investigate; follow this link: https://www.brazenconnect.com/event/stonegate_july_18.


Legacy Mutual Mortgage, a retail lender headquartered in San Antonio, Texas, is searching for a Secondary Marketing Manager. Legacy Mutual’s purchase volume is currently at 80% of production, and has been since 2011. (Production volume for 2013 is forecast at $800 million.) The company has offices throughout Texas, along with Nashville, but the position is in San Antonio, and the ideal candidate is an experienced Secondary Manager with agency and whole loan/private investor experience. The initial focus will be to move forward with FNMA and GNMA applications and the selection of a subservicer. For further questions or to send a resume contact Don Kalbacher at DKalbacher@LegacyMutual.Com. (For more information on the company, visit http://legacymutual.com/.)


Love them or hate them, politics is a way of life for many. Here’s the latest on the combination of politics and the CFPB: http://mobile.bloomberg.com/news/2013-07-15/reid-mcconnell-nomination-clash-risks-senate-gridlock.html.


Wells Fargo is spending $6 billion to pick up a real estate operation in the UK from a German bank. Cash is king: http://www.bloomberg.com/news/2013-07-15/wells-fargo-profit-rises-as-lender-puts-brakes-on-costs.html.


Yesterday TheStreet observed that, “Mortgage servicers Ocwen Financial, Walter Investment Management, and Nationstar Mortgage Holdings, all saw their shares lifted Friday after JPMorgan Chase and Wells Fargo both indicated they plan to sell mortgage servicing rights (MSRs). While the mortgage servicers’ shares were mixed Monday morning, the statements from JPMorgan and Wells are good news longer term for the industry. Nonbank mortgage servicers have grown dramatically in recent years, but have been vulnerable to fears over dwindling supply. (The largest mortgage servicers) share of the servicing market has declined substantially over the past 12 months as non-banks have gobbled up MSRs and banks have actively reduced their presence in the market. Nonbank servicers own $1.4 trillion worth of MSRs, an increase of 69% over the past three months…Bank of America has been by far the most active seller of MSRs, though executives there indicated they are largely finished selling off those assets.” Dan Freed writes, “Planned capital rules make it more costly for banks to own MSRs. Nonetheless, Wells Fargo CFO Tim Sloan said during the bank’s second-quarter earnings call Friday that ‘prudent risk management’ is the main reason for ongoing MSR sales. ‘The primary driver for doing that is not because we feel like there is pressure as it relates to capital,’ he said.”


Speaking of housing, stocks, and analysts, I once asked my stockbroker what he invested in, and he replied, “Bonds.” It is nice every once and a while to come across an analyst who believes in what they say. It reminded me of a Bloomberg article from a couple weeks ago in which Heather Perlberg and John Gittelsohn write of one such analyst who left his job as head of housing strategy at Morgan Stanley to follow his own advice and invest in distressed homes to rent. He’s since become one of the largest landlords in Atlanta. The interesting and well composed article can be found here: http://www.bloomberg.com/news/2013-06-24/morgan-stanley-analyst-swaps-research-for-home-rebabs.html.


Everyone has complaints about something. Mortgage lenders are the target of plenty of complaints. As one reader noted, “This is a classic self-fulfilling prophecy. Because of the actions of the CFPB via adding tremendous layers of red-tape and paperwork (supposedly for the consumer’s protection) it has created the regulatory and paperwork Mount Everest out of what was once only a mountain. (Do any of us remember when it was only a mole-hill?) But I think we are missing the boat, what we need to do is help the consumer understand that most of their frustration stems from the actions of the CFPB and have them complain about that!” Mortgage issues top the ranks of consumer complaints – I guess we’re easy targets. Late last week the CFPB released a report showing that mortgage issues are the #1 compliant: from June 2011 through June 2013 it received 85,200 mortgage complaints (versus #2 36,300 credit card complaints). But don’t take my word for it: http://respanews.com/RN/ArticlesRN/Mortgage-issues-rank-at-the-top-of-consumer-compla-58451.aspx?utm_source=vwRNget&utm_medium=email&utm_campaign=RN_Fri_Enews.


The CFPB recently released its final list of rural and underserved counties for use in 2014. Several CFPB rules have provisions related to mortgage loans made by creditors that during the preceding year operated predominantly in “rural” or “underserved” counties or mortgage loans made in “rural” counties. In general, for purposes of these provisions, “rural” counties are defined annually by using the USDA Economic Research Service’s urban influence codes, and “underserved” counties are also defined annually by reference to data collected under the Home Mortgage Disclosure Act (HMDA). The agency recently posted its list of rural areas for 2014 which can be found here: http://files.consumerfinance.gov/f/201307_cfpb_final-list_2014-rural-or-underserved-counties.pdf.


I continue to be asked about this, so it bears a repeat. The CFPB recently published to guides (Small Entity Compliance Guides) for the Loan Originator Rule and the Mortgage Servicing Rules. The guides can be found on the CFPB’s website (http://files.consumerfinance.gov/f/201306_cfpb_compliance-guide_loan-originator-compensation-rule.pdf). The CFPB’s goal with these guides is to provide an overview of the rules in a plain language and FAQ format which makes the content more accessible and consumable for a broad array of industry constituents, especially smaller businesses with limited legal and compliance staff. Although the guides give an overview of the rules, they are not substitutes for the underlying rules. With these postings, compliance guides are now available for all of the new mortgage rules originally issued by the CFPB in January. These guides will be periodically updated as rule clarifications are finalized as part of CFPB’s ongoing commitment to supporting implementation of the new mortgage rules.


Recently the FHA asked Congress for statutory authority to force underperforming loan servicers to transfer the servicing of FHA-insured loans to other servicers. K&L Gates write, “FHA’s latest request came on June 4, 2013, when FHA Commissioner Carol Galante testified before the Senate Committee on Appropriations. In her written testimony she proposed that Congress provide legislative authority for FHA to require the transfer of servicing “when a servicer is at or below a servicer tier ranking score (TRS) of III, or when the Secretary deems the action necessary to protect the interests of the MMI [Mutual Mortgage Insurance] Fund.” Under these circumstances, FHA would like the power to “(1) transfer servicing from the current servicer to a specialty servicer designated by FHA; (2) require a servicer to enter into a sub-servicing arrangement with an entity identified by FHA; and/or (3) require a servicer to engage a third-party contractor to assist in some aspect of loss mitigation (e.g. borrower outreach).” This, however, is easier said than done. When the FHA suggested this course of action, they failed to mention the relationship between FHA and Ginnie Mae. Also, they failed to mention the impact that FHA authority to transfer servicing might have on Ginnie Mae.


It’s worth noting that, although the FHA insures certain pooled mortgage loans underlying Ginnie Mae securities, the agency is not a counter party to the servicing agreements. Traditionally, GNMA is the counter-party under the Guaranty Agreements pursuant to which GNMA guarantees the servicers payment obligations to security holders. Any congressional demands made my FHA will have consequences on the GNMA servicing rights, and if approved, any requirements to transfer servicing or appoint a sub-servicer presumably would have to be accomplished within the perimeters of GNMA guidelines. A complete and thorough write-up can be found at K&L Gates: http://www.consumerfinancialserviceswatch.com/2013/06/21/fha-seeks-statutory-authority-to-transfer-mortgage-servicing-rights/.


Lately, my thoughts have started to drift off to simpler times: when a mortgage was a “steal” at 15%, when the “hash tag” was known as the “pound sign”, and when HUD was responsible for RESPA. In 1983, after amendments made to RESPA, Affiliated Business Arrangements became legal under the act, and businesses structured in accordance with Section 8 of RESPA could make dividend or profit distributions to their owners that referred settlement service business without being in violation. HUD later released a Statement of Policy to require these relationships to be “bona fide providers of settlement services” and to protect against “sham” affiliated business arrangements designed to circumvent RESPA’s anti-kickback provisions. The ABA’s soon became a popular target for enforcement action. Between 2003 and July 2011 settlement service providers paid over $44 million to HUD and consumers to settle various infractions, and the providers agreed to subject their operation of future affiliated business arrangements to various criteria.


Enter the CFPB, who is currently tasked with RESPA enforcement. In a recent K&L Gates blog, Holly Bunting, writes on one such infraction and enforcement, “On May 17, 2013, the CFPB announced a consent order with Paul Taylor Homes Limited, Paul Taylor Corp., the general partner of the home builder, and Paul Taylor, the President of Paul Taylor Corp., for allegedly accepting fees in return for the referral of settlement service business to two affiliated mortgage companies partially owned by Paul Taylor.” In a settlement with the bureau, Mr. Taylor and his companies have agreed to (a) pay back $118,194.20 in total payments received as profit distributions and under the services agreement since March 2010, (b) refrain from engaging in settlement service business, other than the sale of homes, or maintaining an ownership interest in any entity that provides settlement services for a five-year period, and (c) to report and deliver a copy of the CFPB consent order to their board members, officers, employees.


The proverbial writing is on the wall, and many believe that the CFPB’s action against Taylor and subsequent agreement is an example of what is likely to come. More can be found through K&L Gates: http://www.klgates.com/cfpbs-respa-radar-pointed-at-affiliated-business-arrangements-06-17-2013/.


“Now and again I get the feeling, well if I don’t win, I’m a gonna break even.” Apologies to Tom Petty, but that is the way that Capital Markets folks, and LOs, might feel with this volatility. Rates are pretty much back to where they were a couple weeks ago, prior to the unemployment data. It always helps to remember the basic laws of supply and demand: there is still great demand for agency MBS (the Fed and hedge funds), but the supply has dropped markedly. Retail Sales were weak, which helped all fixed-income securities, and agency MBS prices were better by .250-.500 depending on coupon.


Rates are better in the early going today. For scheduled news, today we’ve had the Consumer Price Index (expected unchanged, it was +.5% for June, ex-food & energy +.2% – pretty strong). Later we’ll see the Industrial Production and Capacity Utilization figures, and a NAHB housing index is thought gently lower to 51. This might all pale in comparison to Bernanke’s Humphrey Hawkins testimony which is Wednesday and Thursday of this week. (We’ll also have Housing Starts and Building Permits tomorrow, along with the Fed’s Beige Book, Jobless Claims, the Philly Fed, and Leading Economic Indicators Thursday.) The 10-yr closed at a yield of 2.56% Monday and this morning we find it sitting around 2.53%, and MBS prices about .125 better.



Funny signs (part 2 of 3)


At a towing company:

“We don’t charge an arm and a leg. We want tows.”


On an electrician’s truck:

“Let us remove your shorts.”


In a non-smoking area:

“If we see smoke, we will assume you are on fire and take appropriate action.”


On a maternity room door:

“Push. Push. Push.”


On a taxidermist’s window:

“We really know our stuff.”


On a fence:

“Salesmen welcome! Dog food is expensive!”


At a car dealership:

“The best way to get back on your feet – miss a car payment.”


Outside a muffler shop:

“No appointment necessary. We hear you coming.”



Rob 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