July 20: Yes, there are changes in the industry; state-level news, including hubbub in New York

The thing about not actually working for a company is that I can spout off about whatever I want. So when I hear opinions about Fannie’s gfee on cash transactions being so much better than the gfee for securities, or opinions about Freddie Mac’s cash adjustors (that the industry had little warning, and that they are not subject to the Relief Refinance Mortgage delivery fee cap and it is a challenge since the adjustor is based on note rate – a very different approach), or rumors of “large players” being under-hedged into the sell-off and cutting back or closing entirely, I can put them in the commentary without fear of being fired. But I rarely put rumors in.


But I can say that when I see unusual numbers of employees of certain companies changing their e-mails from “JohnSmith@WCSLending.com” to “JohnSmith99@gmail.com” or “JaneDoe@360Mortgage.com” to “JaneDoe@hotmail.com” (two entirely made up examples, with companies selected at random!), it certainly seems that some structural changes are taking place in the industry. And especially with inflated values of existing operations up for sale coming back down from the stratospheric levels of 2012, it could be an interesting second half of 2013. Just sayin’ that I’m seeing them…


It is nearly impossible to keep track of all the national and state-level industry changes out there. But here are a few at the state level that some might find interesting:


For New York, see the Cole Taylor announcement below on APR which sums things up nicely, and more on this Monday – it is not pretty.


Hawaii, proud of its macadamia nuts, amended Chapter 667 by adding a provision intended to govern the postponement or cancellation of a public sale subsequent to foreclosure proceedings. Under this new provision, the notice of cancellation or postponement must be announced by the court appointed commissioner at the date, time, and place of the last scheduled public sale. Also, notice must be given to the mortgagor, borrower, foreclosing mortgagee, and any prior or junior creditors who have a recorded lien on the mortgaged property.


Florida, besides loving manatees, recently modified provisions regarding mortgage broker licensing in House Bill 665. The legislation becomes effective on October 1, 2013. House Bill 665 authorizes, rather than requires, the Office of Financial Regulation, to deny a mortgage broker or mortgage lender license application if the applicant previously had a mortgage broker or mortgage lender license revoked.


Nevada, which spends hundreds of millions per resident on road improvements, has revised provisions regarding its foreclosure mediation program, effective October 1, 2013. New regulations require a trustee to send information about the Foreclosure Mediation Program to the homeowner concurrently with, but separately from, the copy of the notice of default and election to sell. In addition, a homeowner will be automatically enrolled in the Foreclosure Mediation Program unless they waive mediation, or fail to pay their share of the established fee.


Rhode Island has recently adopted new rules and regulations pertaining to the privacy of consumer financial information. This regulation governs the treatment of all nonpublic financial information about individuals, claimants and beneficiaries of products or services by all insurance licensees of the Rhode Island Department of Business Regulation. Among other things, the regulation requires a licensee to provide notice to individuals about privacy policy and practices.


North Carolina amended definition of marital property to include entireties property will come into effect. The General Assembly added to the definition that all real property creating a tenancy by the entirety acquired after the date of marriage and before separation will be considered marital property. The state also amended its definition of divisible property to consider fluctuations in marital debt as passive increases or decreases in marital debt under the laws of equitable distribution. Prior to the amendment, the definition of divisible property included increases and decreases to marital debt, with no regard as to their extent or degree. Both provisions are set to take effect on October 1, 2013.


Texas, which I believe is still barely part of the Union, barely, has recently made a number of amendments to state regulations ranging from those involving judicial foreclosure proceedings to spousal maintenance agreements. All of these amendments will become effective on September 1, 2013; further reading can be found at Bankers Advisory Compliance Monitor.


Oklahoma, where the wind comes rushing down the plains, recently adopted several provisions that incorporate federal changes to Regulation Z for purposes of maintaining Oklahoma’s exemption from federal enforcement of the consumer credit disclosure provisions of the Truth in Lending Act and Regulation Z. The legislation implements enhanced mortgage disclosure requirements which were incorporated into the Uniform Consumer Credit Code by House Bill 2742. The new disclosure provisions become effective on July 1st of this year; details can be found here.


Oregon, where you should never break the speed limit, recently amended exemption provisions for certain entities & MLO licensing. The Legislative Assembly recently passed Enrolled House Bill 2856, making changes to the licensing requirements for mortgage loan originators found in ORS 86A.203. The amendments add an exemption from licensing requirements for an individual who, as seller within a twelve month period, negotiates no more than three residential mortgage loans that are not secured by the individual’s residence………as well as amending and adding provisions to ORS 86.705 to 86.795 regarding foreclosures on residential trust deeds. A beneficiary in these transactions must now request a resolution conference with the grantor before the beneficiary or the trustee files a notice of default or brings suit.


New Mexico, home of some great food, amended its Uniform Commercial Code and Public Records Laws to clarify the applicability of the Electronic Fund Transfer Act to remittance transfers. A remittance transfer is defined to include certain electronic money transfers from the United States to recipients abroad. This amendment states that the Electronic Fund Transfer Fund Act applies to a fund transfer which is classified as a remittance transfer.


Kansas – are you listening Toto? – recently revised provisions regarding mortgage interest rate restrictions. State Senate Bill 52 was recently passed to increase the maximum annual interest rate, from its previous limitation of no more than 1.5 percentage points, to no more than 3.5 percentage points above the specified monthly floating cap set by the Federal Home Loan Mortgaging Corporation.


New Hampshire amended provisions regarding Registry of Deed documents. The amendments will take effect on August 27, 2013. The bill requires that the registry of deeds remove all social security numbers, armed forces service numbers, credit card numbers, and deposit account numbers on documents that are made available on the internet that a register discovers in the ordinary course of business.


Louisiana’s (will New Orleans ever fully recover?) newly added provisions concerning leases and residential lessee’s right to notification of a foreclosure action come into effect (August 1st, 2013) for all lessors in residential leases, even those leasing property subject to a federally-related mortgage loan or receiving housing subsidies, vouchers, or assistance pursuant Section 8 of the US Housing Act of 1937. Louisiana added the provisions to reduce confusion between lessors and lessees when there is a forced sale of a rented residential dwelling. More information can be found here.


Pennsylvania (happy it is not Ohio) recently modified several provisions regarding mortgage loans in House Bill 1124. The legislation becomes effective on August 31, 2013, and provides new definitions for administrative mortgage functions, as well as, adding to the existing law as persons not required to obtain licenses in order to conduct mortgage loan business.


How about a couple lender, agency, and investor updates?


One Cole Taylor rep (I do not believe this necessarily reflects the views of the company) spread the word to clients that, “Last week, we were made aware of a law in NY State’s banking regulations, that sets limits on how high an APR can increase from origination date. We implemented a hard stop in our disclosure system, on 6/25/13, to find the affected loans. Unfortunately, we have found a number of loans in our pipeline are affected. Many of you have received notification of these affected loans. I would like to address the issue with several comments. Our legal counsel has told us that the NY State Banking Department is very aware of this issue, and is working to enact legislation that would retroactively eliminate the problem back to 6/1/13. The Deputy Superintendent of Banks has this ability to do this without the legislature meeting. Although we can’t guarantee when this will happen, we believe it may happen as early as next week. If it does, the problem goes away. We realize that not all of your lenders are reviewing their loans for the Sub Prime test. All I can say is that this is their choice. Our choice is to be proactive, and make sure we don’t close loans that are technically subprime. Closing a loan that is subprime, and not disclosing it accordingly, is catastrophic. It potentially makes that loan 100% forgivable, and the borrower could end up not having to pay the mortgage back. We are not willing to take that chance.”


The memo went on: “If you have loans that are not in the final stages, and not close to closing, you have the option to continue to work on conditions, but wait for legislation to be enacted. If you have loans that are ready/needing to close, you can try to reduce rate/fees, and create a valid change of circumstance, so the loan can be re-measured for subprime. As rates have dropped a little in the last week, it may not take much to get the loan out of the subprime category. To work on each individual loan, you would contact client services, and ask to be transferred to the registration group. As an FYI, the majority of affected loans are FHA. The primary cause is the life time MIP that HUD now requires. That in combination with the large increase in interest rates last month, appear to be the primary reasons we are having the subprime issues. Visit our new Facebook page by clicking on this link: www.facebook.com/willieworksforyou”.


The commentary recently mentioned ARM changes from major investors. I was reminded that Freddie Hybrid WAC ARMS phased out 5/2/5 cap structures as of 7/1/2013.  Freddie now only allows 2/2/5 and 2/2/6 cap structures on their 5/1 Hybrid WAC ARMs. This is not optional as it will not allow securitization under the old 5/2/5 structure as Freddie has always done in the past.


The jumbo market continues to gain momentum and health.  Denver-based Titan Capital Solutions recently announced some changes to its product arsenal. Titan released its new 10/1 ARM and raised its maximum loan amount to $2.5M and maximum cash out to $300,000. It lowered its minimum FICO requirements to 700 on owner occupied transactions. Titan also redefined rate/term guidelines by shortening the seasoning requirement for the payoff of subordinating financing to six months which means refinance transactions can now qualify for rate/term when paying off non-purchase money subordinate liens that are at least 6 months old.  If the subordinate financing is a HELOC, there can be no equity withdrawals for the past six months.  Regarding construction to permanent financing, Titan will base the LTV off of the current appraised value.  Titan also hired mortgage veteran Mike Eberl (mike.eberl@titancapitalsolutions.com) to handle sales in the Central US. (Titan is relatively new, so for more information on Titan’s offering, go to www.titancapitalsolutions.com or contact Joel Veenstra, Executive Vice President at joel.veenstra@titancapitalsolutions.com.)




There was a group of women at a seminar on “How to live in a loving relationship with your husband.” The women were asked, “How many of you love your husbands?” All the women raised their hands.

Then they were asked, “When was the last time you told your husband you loved him?” Some women answered today, some yesterday, some didn’t remember. The women were then told to take their phones and send the following text: “I love you, sweetheart.” Then the women were told to exchange phones and read the responding text messages. Here are some of the replies:

1.    Who is this? 2.   Eh, mother of my children, are you sick? 3.   I love you too. 4.   What now?  Did you crash the car again? 5.   I don’t understand what you mean? 6.   What did you do now? 7.   ?!? 8.   Don’t beat about the bush, just tell me how much you need? 9.   Am I dreaming? 10. If you don’t tell me who this message is actually for, someone will die. 11. I thought we agreed we would not to drink during the day.  12. Your mother is coming to stay, isn’t she??




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