June 2: Reader’s letters on diversity, Ginnie Mae’s actions, and the role of the LO

“Rob, remember the movie ‘Trading Places’ about insider knowledge and trading staring Eddie Murphy, Dan Ackroyd, and Jamie Lee Curtis? With President Trump tweeting out a seemingly “in the know” message before yesterday’s employment data, is this a concern?” You bet it is, but I am not going to weigh in on the President’s actions or tweets. If you want to read more, here’s a decent article.

TRID – still making news

The Compliance Department employees at Primary Residential Mortgage attended a funeral this past Thursday. Not just any funeral, but a funeral for the passing of the TRID “black hole”. “The black hole has lived long and prospered” said Burton Embry, Executive Vice President & Chief Compliance Officer at PRMI. “We are grateful to Mick Mulvaney, Director of the CFPB/BCFP for finally putting the black hole out of its misery. It has terrorized lenders and consumers alike and has delayed closings and cost lenders a lot of money” Embry stated. “We are hoping that the CFPB/BCFP has not made a grave mistake here” said Hollie Wyllie, Director of Compliance at PRMI. The funeral was closed casket and was attended by 43 people.

The life of the loan officer

What is the public seeing from loan officers these days? Things have really quieted down as MLOs seek to rebuild the industry’s reputation one loan at a time. We are reminded, however, that everyone has a different idea of what their reputation should be after this article hit about “peddling mortgages to the poor.” The same loan officer created a video, turning heads, talking about an “exclusive, $0 money down FHA product.” The LOs employer, American Financial Network, Inc., issued its own release to clear the Bloomberg article’s blatant errors and to discuss the FHA program.

The subject of loan officer compensation prompted several emails this week. From New Mexico Jason Pike wrote, “Rob, this week you mentioned LO comp several times. You are setting the tone since you believe, or the executives who depend on you believe, LO comp is the issue. The problem with our industry is one or two large lenders, with large marketing budgets, have brain washed the consumer thinking a loan is as easy as renting a car. The consumer believes it’s just a commodity. I have never in my 34 years been shopped as much as I have than in the last 12 months. The consumer uses the power of my pre-approval letter to get their offer accepted, as well as my solid advice on product and know how. They use my time on weekends and after hours for advice, then I get shafted by the consumer to save $600 on Monday morning for on-line lenders or credit unions. Meanwhile, some executives and managers above get off their yachts and still get a paycheck.

Good, experienced LOs are worth their weight in gold. The good loan officers work hard to get the phone to ring and drive in the business. The good loan officer advises the customer and insures a timely closing. The good loan officers look out for their company. Yes, the first lender who drops the ball to lower LO comp will set the tone, and then every lender will have the excuse, just like layoffs.”

Ginnie drama

Attorney Steven Lovejoy with Shumaker Williams sent, “This week Ginnie Mae issued an ‘All Participants Bulletin 18-04’ in which it stated that on and after June 1, 2018, a VA-insured refinance loan sought to be securitized would be ineligible for GNMA guaranty unless it meets the following criterion:

“The Note date of the refinance loan must be on or after the later of: The date that is 210 days after the date on which the first payment was made on the mortgage being refinanced, and

The date on which 6 full monthly payments have been made on the mortgage being refinanced.”

“On December 27, 2017, Ginnie Mae issued “All Participants Bulletin 17-06” in which it stated that on and after April 1, 2018, VA-insured refinance loans sought to be securitized would be ineligible for GNMA guaranty unless it meets the following criterion:

“The borrower made at least six consecutive monthly payments on the loan being refinanced, referred to hereinafter as the Initial Loan, beginning with the payment made on the first due date; and, the first payment due date of the refinance loan occurs no earlier than 210 days after the first payment due date of the Initial Loan.

“The 2018 APM is derived from the provisions of Section 309(c) of the Economic Growth, Regulatory Relief, and Consumer Protection Act of 2018 (the “EGRRCPA”), which is the amendment to the Dodd-Frank Act recently signed into law by President Trump. The 2018 APM expands the waiting period for a VA streamline refinance as follows: the 2017 APM calculates the waiting period from the date the first payment on the Initial Loan is due until the date the first payment on the refinance is due. The 2018 APM (and the EGRRCPA) calculate the waiting period from the date the first payment on the initial loan is “made” and the date of the Note (or the closing date) of the refinance loan. Therefore, the new rule expands the waiting period by at least one month and the odd days remaining in the month in which the refinance closes.

For example (non-leap year), under the old rule: Initial loan 1st payment is due January 1. Refinance can be closed anytime in June because the first payment under the refinanced loan is not due until August 1 (212 days later). Under the new rule: Initial 1st payment is made (presumably on time) on January 1. Refinance cannot be closed until July 29 (210 days later).

“Aside from the uncertainty of when the initial payment was made, (2018 APM) as opposed to when it was due, (2017 APM) the problem is not with that change but, rather, with the timing of the effective date of change. The 2018 APM would deny the guaranty to any loan complying with the old rule but made in violation of the new rule. APM 18-04, however, requires denial of the guaranty to take effect on June 1, 2018, two days after its issuance, and a mere 8 days after the EGRRCPA became law. There are potentially thousands of closed VA refinance transactions that have already been securitized and certified for guaranty which while made in compliance with the old Rule are not in compliance with the new Rule because the new Rule did not exist at the time the loans were made. APM 18-04 even acknowledges this with the statement:

“Ginnie Mae understands that some issuers have already certified pools and loan packages for June 2018 issuances, which may contain loans that do not meet the seasoning requirements implemented by the [EGRRCPA] Act and reflected on this memorandum. Ginnie Mae’s Office of Issuer and Portfolio Management (“OIPM”) will be contacting any impacted issuers ahead of the June 1st issuance date to provide additional guidance on curing any pools or loan packages that have become defective as a result of the recently enacted statutory prohibition.”

“Initial reports coming back are that the ‘Guidance’ offered by the OIPM is: repurchase/remove from the pool any loan that does not comply with the new Rule.

“Lenders and other originators around the country have relied on GNMA’s 2017 APM in implementing their loan policies. It certainly seems to us unconstitutional to change the rules abruptly, make them immediately effective and apply them on a retroactively to loans made in compliance with the law in effect when they were originated, in a manner that will wreak economic havoc on the industry. How does this government action comport with the concept of “fair warning?” There were similar knotty problems with the original Dodd-Frank Act and HUD issued clarifying regulations to make sense of the situation and ensure basic fair treatment of industry members. This situation cries out for a similar resolution. If this section of EGRRCPA does not contain a specific effective date could not one be reasonably implied to cure an untenable situation. Alternatively, GNMA could approve a program of re-closing loans such that the note rate is outside the 210-day tolerance threshold.

“I would refer those reading this and GNMA to the D.C. Circuit Court of Appeals statements in the celebrated recent CFPB v PHH case:

“‘…[C]hange becomes a problem – a fatal one – when the Government decides to turn around and retroactively apply that new interpretation to proscribe conduct that occurred before the new interpretation was issued.’”

Steve wrapped up with, “A fundamental principle in our legal system is that laws which regulate persons or entities must give fair notice of conduct that is forbidden or required. When a government agency officially and expressly tells you that you are legally allowed to do something, but later tells you “just kidding” and enforces the law retroactively against you and sanctions you for actions you took in reliance on the government’s assurances, that amounts to a serious due process violation. The rule of law constrains the governors as well as the governed.


Marcia Griffin, President/Founder of HomeFreeUSA, sent over a note suggesting a solution to the mortgage industry’s diversity problem. “In recent years, there has been a rallying cry to increase diversity in the mortgage industry. Thanks to an innovative new program, mortgage leaders have a tangible way to turn that goal into a reality.

“The mortgage industry touches the lives of many homebuyers if they are fortunate enough to get approved and closed. Unfortunately, many people of color miss the opportunity of homeownership and many who were homeowners lost their homes during the housing crisis.

“Likewise, the mortgage industry often speaks about the need for improving diversity but struggles with finding, hiring and retaining people of color. Historically mortgage roles are filled predominately by white males who share opportunities with people they know. Unfortunately, many young people of color know very little about the industry. They lack the relationships and access to decision makers and feel that only a select few will be considered.

“Making matters worse, mortgage professionals have limited time, staff or resources to identify and cultivate new relationships with organizations and schools that offer handpicked diverse candidates for employment.

“The Center for Financial Advancement™ (CFA), launched in September 2017, is bridging the gap between the mortgage industry and minority communities. The CFA empowers students at Historically Black Colleges and Universities (HBCUs) to successfully make and multiply money through financial management and careers in real estate finance.

“The program selects quality students and introduces them to mortgage partners for hiring and internships. It provides an understanding of credit, savings, student loans and debt, and prepares students for homeownership after graduation, and teaches students how to ‘be in demand’ in corporate America. It introduces homeownership to faculty, family and surrounding communities, and makes mortgage recruiting easier, more productive and less time-consuming.”

“The Center for Financial Advancement is a not a place. The Center is a financial and homeownership empowerment movement launched in partnership with Wells Fargo, the Mortgage Bankers Association, Bank of America, Quicken Loans and SWBC Mortgage. The CFA provides life skills and real estate finance to students in a manner to which they relate.

After being introduced to the Center for Financial Advancement, CFA students will be interning with the MBA, Quicken, Bank of America and HomeFree-USA.

“But equally as important, students will be better prepared to succeed financially in their adult lives. ‘Everybody wants to at one point be comfortable and have the ability to buy their own house and use their money the way they want to, but of course at the same time we all want to be smart and responsible about it,’ said Tanya Torres, a senior political science major and president of the Student Government Association at Fisk. ‘Thanks to the CFA, Fisk students are well on their way to doing that.’” (HomeFree-USA is a leading HUD-approved homeownership development, foreclosure intervention and financial coaching organization. Its founder and president, Marcia Griffin, is a leading proponent of homeownership as a means to increasing black wealth.)

(Warning: rated R for sexual content.)

A Texas couple, both well into their 80s, goes to a sex therapist’s office. The doctor asks, “What can I do for you?”

The man says, “Will you watch us ‘make whoopee’?”

The doctor raises both eyebrows, but he is so amazed that such an elderly couple is asking for sexual advice that he agrees.

When the couple finishes, the doctor says, “There’s absolutely nothing wrong with the way you have ‘interaction’.”

He thanks them for coming, wishes them good luck, charges them $50, and says goodbye.

The next week, the same couple returns and asks the sex therapist to watch again. The therapist is a bit puzzled but agrees. This happens several weeks in a row: The couple makes an appointment, has sex with no problems, pays the therapist, and leaves.

Finally, after three months of this routine, the doctor says, “I’m sorry, but I have to ask…Just what are you folks trying to find out?”

The man says, “We’re not trying to find out anything. She’s married, so we can’t go to her house. I’m married, so we can’t go to my house. The Holiday Inn charges $98. and the Hilton charges $139. We do it here for $50, and best of all, Medicare pays $43 of it, so our co-pay is only $7.”

Visit www.robchrisman.com for more information on our industry partners, access archived commentaries, or to subscribe to the Daily Mortgage News and Commentary. If you’re interested, visit my periodic blog at the STRATMOR Group web site. The current blog is, “The Plight of the Small Independent Lender.” If you have both the time and inclination, make a comment on what I have written, or on other comments so that folks can learn what’s going on out there from the other readers.


(Market data provided in partnership with MBS Live. For free job postings and to view candidate resumes visit LenderNews. Currently there are over 300 mortgage professionals looking for operations, secondary and management roles. For up-to-date mortgage news visit Mortgage News Daily. For archived commentaries, or to subscribe, go to www.robchrisman.com. Copyright 2018 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