Mar. 25: Retail jobs & VA Boot Camp; ARM update; TRID & construction lending; primer on negative interest rates

The legal morass that residential lending finds itself in continues. The latest comes from the ghost of Lehman Brothers continuing to haunt small institutions around the United States – like this small bank in Wisconsin – thanks to Scott F. for passing this along. In other news, Credit Suisse has agreed to pay more than $29 million to settle a lawsuit with the National Credit Union Administration. Supposedly CS sold toxic mortgage-backed securities to credit unions that later failed. NCUA has recovered more than $2.5 billion from banks through lawsuits it began filing in 2011. And out in California jury has awarded Mount Olympus Mortgage Co $23 million in damages from Guaranteed Rate and a former loan officer for conspiring to steal hundreds of loan files and confidential customer information.


For California wholesale opportunities iApprove Lending is searching for sales managers & AEs. The ideal AE candidate is someone who has good broker and credit union relationships and does not want to be restricted to a small territory. “Your talent will be recognized, not neglected. We value the opportunities in being tight-knit and nimble, and employing people who want to make a difference in the organization.” iApprove Lending has been around for over ten years and is a delegated, self-insured HUD approved lender that has both Direct Wholesale and Retail Mortgage channels. Licensed in seven states, the company is offering brokers standard product but also has relationships with portfolio lenders for certain products. Confidential inquiries and resumes should be submitted to Tee Nguyen (714.775.5353).


For something a little different, national lender Envoy Mortgage has rolled out its VA Boot Camp – an internal training and certification program designed to make as many of its associates as possible experts in VA lending programs. VA Boot Camp has been met with great enthusiasm with over 300 associates completing the training in its first six weeks of operation. Because of this success Envoy is developing versions of VA Boot Camp modules to be made available to real estate professionals and service providers throughout the country in the interest of promoting homeownership among the nation’s veterans. “Envoy employs many veterans, and we have learned that a surprising number of our 22 million former service members are unaware of how their veteran benefits can improve their lives. It is our mission to change that, and VA Boot Camp Certification has given us a great start” said Envoy CEO Pat Walden, a veteran himself. For more information e-mail Matt Kovach, VP of Special Projects.


Like mortgage companies, banks continue to merge, acquire other companies, and change branch structure. In the last week we’ve learned that First Savings Bank of Hegewisch ($610mm, IL) will acquire Lake Federal Bank, FSB ($66mm, IN). In Massachusetts Rockland Trust Co ($7.2B) will acquire Bank of Cape Cod ($261mm) for about $30.7mm in stock. Umpqua Bank ($23B, OR) will consolidate 26 branches/stores as the bank adjusts to changing customer behavior around increased usage of online and mobile banking services. Reliance Bank ($168mm, AL) will acquire 4 AL branches and 1 NC loan production office from SouthBank ($65mm, AL).


Adjustable rate mortgages aren’t against the law – yet – but volumes certainly haven’t done much, percentage-wise or volume-wise, in recent years.


A while back Andrew Kalotay proposed a “ratchet mortgage,” which is essentially an ARM with a rate that can only reset downward. Ed Pinto outlined a “wealth building home loan” that features shorter amortization—fifteen or twenty years—than most U.S. mortgages. Howell Jackson discussed embedding call options in mortgage contracts that would allow an interested party (such as the government) to buy a mortgage from the holder under specific circumstances (for instance, during a financial crisis) at a predetermined price. Andrew Caplin focused on shared-equity finance, in which a third party (such as a private equity firm) provides some of the equity for a home purchase, and in turn shares the risk (or gain) when house prices change.


Franklin American Mortgage Company announced the release of its Non-Conforming Jumbo ARM program. The product offers 5/1 and 7/1 LIBOR ARMs.


TRID-specific news and changes continues to come through – nearly six months after it was instituted.


On Tuesday, March 1 at 2 p.m. EDT, the Federal Reserve hosted a webinar on the Know Before You Owe mortgage disclosure rule.  A link to this webinar is now available on the Bureau’s website. The session, presented by the Bureau, addressed specific questions from industry pertaining to construction lending.


Flagstar’s recent TRID system enhancements include users’ ability to choose a closing date two days earlier provided that all borrowers required to receive the CD have electronically consented.  This is available for all new requests and is not available on loans where the request has previously been submitted. Once all applicable borrowers have electronically consented the Earliest Closing Date available in the Disclosure Management module will reflect the new Earliest Closing Date.  In addition, The Disclosure Management module has now been updated for originators to input the non-obligated borrower(s) information including their email address. This will allow for the non-obligated borrower(s) to electronically consent earlier in the process.  Please note a social security number is required for any non-obligated borrower requesting to receive documents electronically.


DocMagic announced the development of an extensive set of new reps and warrants for its calculations, documents and data, which provides peace of mind to lenders when it comes to compliance with the TRID rule. With DocMagic’s TRID-ready systems and now the Premium Compliance Guarantee, it has implemented a solution that mitigates lender risk of non-compliance.  With the Premium Compliance Guarantee, the Loan Estimate and Closing Disclosure are guaranteed to be accurate and complete. The offering is backed by a $5 million dollar guarantee (up to $50,000 per loan) with a 36-month claim filing period.  Beginning February 15, 2016, all new customers will automatically receive the new premium rep and warrant offering. Existing customers will be given the opportunity to protect their future loan files for an additional nominal fee.


Powered by NYCB’s proprietary eSign technology, the Signing Room vision now expands beyond our industry-leading eSign Closings to the convenient electronic acknowledgement of the LE and CD with more e-documents to come. For Clients: Signing Room Client Roadmap [WSL: 1266] A great summary of key Signing Room details you need to know. For Borrowers/Other Signers: Welcome to the Signing Room [WSL: 1265] Provide this flyer to Borrowers/Other Signers to prepare them for the Signing Room experience. Online Consumer Tutorial – Easily demonstrate the Signing Room procedures to your Borrowers/Signers. This tutorial is also available from


I remember the days following 9/11 when originators had loans in their pipelines which were technically on hold for funding due to certain characteristics contained in the credit package. This made for interesting conversations around secondary marketing desks on how to hedge and commit such files. But what about when foreign money wants to purchase real estate with cash? Or, foreign originated money aside, what about individuals who wish to purchase through LLC’s? In a recent Bloomberg article they discuss such an area of concern for the current administration, they write, “President Barack Obama’s administration, citing concern about the origin of funds used for all-cash purchases of luxury real estate, said it is stepping up scrutiny of transactions in New York City and Miami. The Financial Crimes Enforcement Network said on Wednesday that it will temporarily require title insurance companies to identify individuals behind companies that pay cash for high-end residential real estate in Manhattan and Miami-Dade County.” FinCen, a unit of the U.S. Treasury Department, is concerned that real estate purchases without bank financing “may be conducted by individuals attempting to hide their assets and identity by purchasing residential properties through limited liability companies or other opaque structures.” Maybe someone should tell these people intentionally hiding taxable assets from the United States is frowned upon.


I recently wrote about European negative interest rates, and received an email asking why anyone would pay a bank to hold their money in deposit? The quick answer: you probably wouldn’t….but institutions might under the right circumstances. If the average American has $4,400 in their checking account they would probably withdraw it and store it under their mattress, or burry it in their backyard ala Tony Soprano; however, large banks and money managers who control billions of dollars don’t have that option. Why? For one there would be a cost associated with storing that much money (maybe even more than the implied 20bps in negative interest banks would charge you), and secondly, banks and money managers aren’t necessarily in the business of holding cash, but rather are in the business of moving cash. That’s a good thing too, if you believe the classic economic concept of the circular flow of money. Economies are normally unproductive when cash sits on the side lines (see: current U.S. economy as example). Negative interest rates are an attempt to spur investments.


Central bankers are stress testing mortgages again and not liking what they find. Before you start trying to find your resume on your computer, I should mention the central banker in question is the PBOC (the People’s Bank of China) which called officials from the nation’s biggest commercial lenders to a meeting in the southern city of Shenzhen to stress a close adherence to rules on mortgage lending. Bloomberg writes, “The People’s Bank of China told lenders not to compete excessively on mortgages, said the people, who asked not to be identified as they aren’t authorized to speak publicly. Banks were also requested to step up their scrutiny on the source of borrowers’ down payments, the people said.” This sounds uniquely familiar, but I can’t place it’s context….”Chinese authorities are mulling plans to impose rules ending the practice of home buyers taking out loans to cover down-payments, people familiar with the matter said last week.” Where did I hear that before? “Central bank Deputy Governor Pan Gongsheng said on Saturday loans from developers, real estate agents and peer-to-peer lenders have raised home buyers’ leverage, undermined the effectiveness of macro policies and increased risks to the financial system and property markets.” Again, that seems oddly familiar.


Down Tuesday, up Wednesday, down Thursday… the bond market and rates have seen some minor fluctuations right up to the early close yesterday. Declining global equities and oil prices were not enough to keep U.S. Treasuries in positive territory yesterday. The economic data for the U.S. was bad too as the durable goods orders data for February caused downward revisions to Q1 GDP growth estimates. Durable goods orders fell 2.8% in February, slightly less than estimates, but January’s change was revised down to +4.2% from the initial reading of +4.9% and excluding transportation orders were down 1.0% in February and were said to have increased 1.2% in January versus 1.8% before. New orders for nondefense capital goods excluding aircraft — a proxy for business investment — declined 1.8%.


The bond markets are closed today for the Good Friday holiday, so any rate sheets produced will have the usual conservative approach.



Lawyers should never ask a Georgia grandma a question if they aren’t prepared for the answer.

In a trial, a Southern small-town prosecuting attorney called his first witness, a grandmotherly, elderly woman to the stand.

He approached her and asked, “Mrs. Jones, do you know me?”

She responded, “Why, yes, I do know you, Mr. Williams. I’ve known you since you were a boy, and frankly, you’ve been a big disappointment to me. You lie, you cheat on your wife, and you manipulate people and talk about them behind their backs. You think you’re a big shot when you haven’t the brains to realize you’ll never amount to anything more than a two-bit paper pusher. Yes, I know you.”

The lawyer was stunned.

Not knowing what else to do, he pointed across the room and asked, “Mrs. Jones, do you know the defense attorney?”

She again replied, “Why yes, I do. I’ve known Mr. Bradley since he was a youngster, too. He’s lazy, bigoted, and he has a drinking problem. He can’t build a normal relationship with anyone, and his law practice is one of the worst in the entire state. Not to mention he cheated on his wife with three different women. One of them was your wife. Yes, I know him.”

The defense attorney nearly died.

The judge asked both counselors to approach the bench and, in a very quiet voice, said, “If either of you idiots asks her if she knows me, I’ll send you both to the electric chair.”





(Copyright 2016 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