Mar. 29: Retail jobs & lender expansion; Redwood Trust, Prosper news; Ohio’s take on minimum wage for sales personnel; CFPB webinar on TRID

Sweden, with its population of about 9.6 million about the same as Michigan, just adopted a law limiting mortgage loans to 105 years. Our 30-year fixed-rate mortgage has plenty of critics, but Sweden’s unlimited amortization developed as a strategy to cope with high property prices as a longer term means monthly payments are lower. But inheritors are left with repaying the balance of the mortgage, often by selling the home. The recent average mortgage term was around 140 years, and nearly one-third of mortgages issued in 2014 allowed borrowers to repay only interest. New mortgages will have a 105-year repayment limit as borrowers will be required to reimburse a minimum amount of the loan capital each year, after a five-year grace period on loans for new homes.


In personnel news Former NAMB Government Affairs Chair and Officer, Mike Anderson CRMS, has joined up with another former NAMB Government Affairs Chair and Officer, John H. P. Hudson CRMS at Mortgage Financial Services. Mike is coming on as the Southeast Regional Director and will be responsible for expanding the TX and LA footprint into MS, AL, GA, FL. Mortgage Financial Services promises growth by delivering the right balance of technology and touch and the right balance of work and family. Mortgage Producers, Brokers, and Branch Managers interested in growing with the “Home Loan Dream Team” should contact Mike or John above. MFS has been around since 2001 but since June of 2015 has grown from 12 employees to over 150 employees.


Congratulations to Robert Bordenet who joins Land Home Financial Services, Inc.’s Wholesale Division (LHFS) as their Central Region Wholesale Sales Director. Joining Robert are industry vets Steve D’Angelo and Karen Thompson, who’ll run LHFS’s freshly minted Regional Operations Center in Oak Brook, IL. Robert brings 20+ years of mortgage banking experience to LHFS, who was most recently ranked 13th nationally in volume by the Scotsman Guide. Since 1988, LHFS has specialized in purchase loans offering a 21-day close guarantee, is a FNMA, FHMLC and GNMA seller/servicer, and also offer Manufactured, USDA, Reverse and a complete non-QM product line. LHFS has a servicing portfolio of $5 Billion+ and was recently listed as a Top 100 Mortgage Company in America by Mortgage Executive Magazine. They are licensed in 49 states and the District of Columbia with four full-service regional operations centers located in Concord, CA, San Diego, CA, Denver, CO, and Oak Brook, IL. Multiple opportunities are available for qualified candidates – please contact Mark Sheridan for more information.


On the flip side of things, the president of Redwood Trust – Brett Nicholas – is leaving the company effective July 1. CFO Chris Abate will be promoted to the role of President upon Brett’s departure, and the company is in the process of identifying a successor CFO. Brett’s a good guy, and it nice to know that Redwood is expected to cushion the blow with a severance package rumored to be in the $4 million to $4.5 million range, expected to be accrued in the 1st quarter of 2016. His responsibilities included oversight of the company’s conforming mortgage business, which was based in Denver.


In January Redwood Trust announced that it was exiting the conforming conventional business. That, combined with the impact of the FHFA’s ruling on captive insurance company membership, and lack of jumbo securitization due to large banks being happy to sit on their jumbo and non-QM loans, has led to plenty of rumors about the role of the company in the industry going forward. Hopefully they are unfounded as several capital markets folks told me that, “Redwood has always been a good #2 outlet for our jumbo product after #1 Chase.” (And it sounds like Chase may be attempting to work on its operational quagmire which has existed for quite some time in actually purchasing loans.)


In state-specific news, aside from a $15 per hour minimum wage in California (bound to jack up the price of hamburgers and any other product touched by minimum wage workers, which unfortunately may impact certain demographics more than others), lenders with Ohio-based “outside” loan originators scored a victory. The Ohio Supreme Court ruled that outside sales people are still exempt from minimum wage requirements. Bricker & Eckler’s David Stein wrote in saying, “This case was closely watched because Ohio enacted a constitutional amendment in 2006 that provided protections to certain workers that go above and beyond the federal employment standards of the FLSA. The constitutional amendment was poorly worded and left doubt as to whether outside sales employees were or were not exempt from minimum wage standards. Enabling legislation incorporated the amendment but stated that the term ‘employee’ – and exclusions and exemptions from that term –  shall have the same meaning as that under the FLSA.


“In Haight v. Minchak¸ the Ohio Supreme Court held that to be entitled to a statutory minimum wage, the person must be an ‘employee’ as that term is defined by the FLSA. Accordingly, the exclusions and exemptions under the FLSA must also apply. Outside loan officers, who meet certain criteria, are generally exempt from the FLSA. Now, this fact is also clear under Ohio law. Because the plaintiffs sought to have outside sales people categorized as employees under the new state protection, their logic would have caused significant liability to banks, lenders and others, who have continued to treat outside originators as exempt.” Thank you David!


To determine home affordability across the nation, Zillow analyzed the median income and cost of living in different parts of the country. Zillow found that the median income for law enforcement workers, including bailiffs, correctional officers, detectives, parking enforcement workers and police officers in Jackson, Mississippi is $27,000 per year. In Santa Rosa, California, the average income for law enforcement workers is $96,000. Apart from the difference in income, mortgage affordability varies depending on the metro area. For example, households in San Francisco, Honolulu, San Jose and Los Angeles dedicate 35 percent of their income on a mortgage payment, whereas in Saginaw, Michigan, Amarillo, Texas and Augusta, Georgia, households tend to spend 14 percent of their income on a mortgage. Funeral workers in New York City can also afford a home up to $913,000, whereas those in the same line of work in Philadelphia can afford a home up to $158,000. To read more about Zillow’s article, click here.


We also had the Ohio House recently pass HB 134, a bill that would allow a quicker foreclosure process for vacant and abandoned properties. OMBA had been lobbying for the passage of the legislation as part of the “Inform the Capitol”, the annual lobby day for the association.


April begins Friday already, and here are a couple events of note to start the month:


Join the TPO division of Banc Home Loans and Arch MI as they host the second installment in a series of Tax Return Analysis Seminars. Taking place on April 7 in Irvine, CA, this free hands-on session will provide loan officers, underwriters, and processors with the opportunity to take their self-employed income analysis skill set to the next level. Topics for this intermediate level training session will include deductions & allowable add-backs, partnership & corporate returns, and agency guidelines relating to proper income analysis. Class size is limited, so RSVP. Don’t miss out on this great opportunity to expand your knowledge and become a more well-rounded professional.”


My cat Myrtle doesn’t quite grasp the ramifications of TRDI, but this may help. The CFPB staff will present an informational webinar on Tuesday, April 12 to address issues with the TILA/RESPA Integrated Disclosure (TRID) rule in connection with questions that have been raised since the rule took effect last October. The webinar is titled Know Before You Owe Mortgage Disclosure Rule – Post-Effective Date Questions and Guidance. Because few details have been released in connection with the presentation, topics could vary from general guidance to specific guidance on fact specific situations. The most recent informational webinar, held on March 1 and the first since the rule took effect, focused on construction to permanent loans. Bureau staff did note at the end of the last presentation that they have received many questions that were not addressed during the webinar, and those questions would impact future presentations.


If you’re near Colorado on April 13th you can check out the 25th Annual Rocky Mountain Mortgage Lenders Expo. It will be held at the Marriott Denver Tech Center.


The Great River Mortgage Bankers Conference (formerly Tri-State MBA) is a couple weeks away. Missouri mortgage folks were added to this conference – hence the name change. Now the States of Tennessee, Mississippi, Arkansas and Missouri are included in the conference! The event will be April 13-15 in Memphis – if you go please say hello!


Join Fannie Mae to review updated requirements for Fannie Mae’s Servicer Expense Reimbursement processing as incorporated into the Servicer Expense Reimbursement job aid posted on The webinar will highlight the consolidation of available expense reimbursement claim line item categories and subcategories in the Black Knight Financial Services LoanSphere Invoicing Application, and will also answer many of the most frequently asked questions. Please register here to take advantage of this opportunity.


Plaza Home Mortgage has posted its April training calendar. View the calendar and click a webinar topic for details.


Turning to the capital markets, since they reflect the demand for certain products and therefore the rates in the primary markets, Prosper Marketplace had some trouble last week selling its security which was backed by personal loans. Investors who bought into the offering did so only once yields were five percentage points higher than a comparable offering a year ago! The higher the yield, the lower the price that is settled upon, and higher yields also denote more perceived risk from a firm. Interestingly even junk bonds (defined by relatively much higher yields) have seem some calm, which would imply that investors see company-specific risk.


Prosper floated a $278 million offering and at least part of the loans grabbed buyers at only a 12.5 percent yield. The loans had been bought from Prosper and in turn sold by Citigroup. Middleman sellers such as Citi may see skittish investor demand as credit funds (traditionally, buyers) have been losing some of their appetite for this type of security backed by those loans. Bond investors seem to be saying that they do not think the personal loan business model is attractive as it might once have been.


In the markets there were a few things that came out yesterday that MBS traders noticed. First, the Personal Income and Spending report for February came in right around expectations. The Federal Reserve is looking for 2.0% year-over-year inflation as expressed by the core PCE Index. Following yesterday’s report, the index remains unchanged at 1.7% year-over-year. (The personal savings rate edged up to 5.4% from 5.3%.) But the $26 billion 2-year Treasury auction saw the lowest bid-to-cover ratio since October 2008. I guess no one wants to tie up their money for two years and only earn about .9%.


Today we’ll have the January Case-Shiller 20-city Index at 7AM Mountain Time and March Consumer Confidence at 8AM Mountain Time. We can also look forward to a $34 billion 5-yr note auction later today but most importantly a speech by Fed Chair Janet Yellen at 9:30 Mountain Time. We closed Monday with the 10-year yielding 1.87% and this morning it seems happy at 1.86% with agency MBS prices better slightly – perhaps a quiet day in the markets unless Yellen’s speech spooks the herd.



An old geezer became very bored in retirement and decided to open a medical clinic.

He put a sign up outside that said: “Dr. Geezer’s clinic. Get your treatment for $500, if not cured, get back $1,000.”

Doctor “Young,” who was positive that this old geezer didn’t know beans about medicine, thought this would be a great opportunity to get $1,000.

So he went to Dr. Geezer’s clinic.

Dr. Young: “Dr. Geezer, I have lost all taste in my mouth. Can you please help me ??”

Dr. Geezer: “Nurse, please bring medicine from box 22 and put 3 drops in Dr. Young’s mouth.”

Dr. Young: Aaagh!!!! — “This is gasoline!”

Dr. Geezer: “Congratulations! You’ve got your taste back. That will be $500.”

Dr. Young gets annoyed and goes back after a couple of days figuring to recover his money.

Dr. Young: “I have lost my memory. I cannot remember anything.”

Dr. Geezer: “Nurse, please bring medicine from box 22 and put 3 drops in the patient’s mouth.”

Dr. Young: “Oh, no you don’t – that is gasoline!”

Dr. Geezer: “Congratulations! You’ve got your memory back. That will be $500.”

Dr. Young (after having lost $1000) leaves angrily and comes back after several more days.

Dr. Young: “My eyesight has become weak – I can hardly see anything!!!!

Dr. Geezer: “Well, I don’t have any medicine for that so, here’s your $1000 back” and gives him a $10 bill.

Dr. Young: “But this is only $10!”

Dr. Geezer: “Congratulations! You got your vision back! That will be $500.”

Moral of the story — Just because you’re “Young” doesn’t mean that you can outsmart an “old Geezer”





(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