Lending Trends; Arizona Law Impacts Builders; Jaw-Dropping List of Rules & Regs Governing Lenders

News

Bank of America might have to pony up yet another $13 billion to settle
more residential mortgage-backed security claims? No wonder the lending
industry continues to face an uphill battle in overcoming what the
government and public thinks of it. Of course, these headlines concern industry practices from years ago…

Turning to the present, one of the nation’s premiere mortgage companies, Gold Star Mortgage Financial Group, is interested in speaking with the industry’s finest Loan Originators and Branch Managers. 
Headquartered in Ann Arbor, MI and expanding from coast-to-coast, Gold
Star has become one of the fastest growing companies and top 50 lenders
in the nation. Founded in 2000 and currently operating in 21 states,
Gold Star’s commitment to relationship-based customer service, cutting
edge technology and a superior operations infrastructure fuels its
stability and success. Gold Star
has been recognized as an Inc. 500/5000 company, and most recently by
Mortgage Technology Magazine as one of the nation’s Top Tech-Savvy
Lenders. Very simply, Gold Star realizes what top industry leaders are
seeking.  To learn more, contact Shawn Sirko at ssirko@goldstarfinancial. com.

And Catalyst Lending Inc., a Colorado-based retail mortgage banker, continues to grow. 
Catalyst Lending is pleased to announce the additions of Noel McGarvey
and Linda Grimes to the management team. Noel has joined as Senior Vice
President of Operations responsible for processing, underwriting,
closing, funding and post-closing. Noel will oversee the development and
integration of operations staff in support of Catalyst Lending’s
aggressive expansion.  Linda has joined as Product Development Manager,
overseeing the identification, rollout and maintenance of an expanding
list of investors and products. Catalyst Lending is aggressively pursuing growth opportunities in multiple markets, including loan officers, branches and organizations. Interested parties should contact Shawn Watts, EVP, at swmwatts@catalystlending. net.  Catalyst Lending is also looking to fill key positions including qualified DE/VA/USDA underwriters, closers and processors. 
Catalyst offers competitive salaries and benefits and working remotely
is an option currently supported and available for discussion. 
Confidential resumes may be submitted to Noel McGarvey at nmcgarvey@catalystlending. net.

“Rob,
have you ever seen a list of the alphabet soup of rules and regulations
that a bank or lender has to comply with in today’s lending
environment?”
Let me start by saying a) that I am no compliance person, and b) every
time I make a list, someone or something is excluded. But here is the
reason why talented compliance people are in such high demand: HUD’s
Reg. X (RESPA), Reg. Z (Truth in Lending), Fair Lending Reg. B (ECOA),
Reg AA (Unfair, Deceptive, and Abusive Acts Practices – UDAAP,
Reg. N (Mortgage Acts and Practices – Advertising), Home Owners
Protection Act (HOPA), Reg. C (home Mortgage Disclosure Act – HMDA),
Fair Credit Reporting (FCRA), Fair Accurate Credit Transactions
Act (FACTA), Reg CC (Expedited Funds Availability), Servicemembers Civil
Relief Act (SCRA), Flood Disaster Protection Act, CAN-SPAM Act, Reg. P
(Privacy of Consumer Financial Information – Right to Privacy,
Gramm-Leach-Bliley Act), Reg. BB (Community Reinvestment Act (CRA),
Secure and Fair Mortgage Enforcement (SAFE Act – CFPB Reg. G),
Electronic Signatures in Global and National Commerce (E-SIGN Act), Reg.
E (Electronic Funds Transfer), Reg. O (Credit to Insiders), Reg. DO
(Truth in Savings – TIS), Reg. D (Reserve Requirements), Reg. GG
(Internet Gambling), and Reg. M (Consumer Leasing).

Some
of these apply only to banks that take deposits, such as E and CC, but
in dealing with “consumer affairs”, these are a great starting point for
assessing your company’s risk areas. Each one has its own set of exams
and key areas affected, along with legal, regulatory, reputational, and
complexity risk. And many are monitored by different agencies or
regulatory bodies inside the government. And it does not, of course,
include all the state specific rules and regulations with which lenders
grapple every day. And after typing these, it made me realize that I will never be able to have a grasp of all this.

Speaking
of which, let’s catch up on a little state-level news. Lenders doing
business in more than one state have to stay abreast of all these
changes – I can’t imagine how some do it, and deal with the conflicts
between Federal and state regulations.

Utah recently modified its provisions relating to exempted transactions under the State Consumer Credit Code and exemptions under the Financial Institution Mortgage Financing Regulation Act.
An Exempt Transaction is: a type of securities transaction where a
business does not need to file registrations with any regulatory bodies,
provided the number of securities involved is relatively minor compared
to the scope of the issuer’s operations and that no new securities are
being issued. These revisions are effective on May 12, 2014.

Washington‘s legislature has passed House Bill 2723 which amends the Foreclosure Fairness Act.
The state’s Foreclosure Fairness Act encourages homeowners to utilize
housing counseling, facilitate communication between homeowners and
beneficiaries in an effort to avoid foreclosure whenever possible and to
provide guidance where foreclosure mediation has been recommended. The
recent amendments are effective June 12, 2014.

Delaware has adopted the proposed regulation changes that had been published in the February 2014 edition of the Delaware Register of Regulations.
The main changes occur to chapters 21 and 22 of Title 5 of the Delaware
Code, relating specifically to the operating regulations, reporting
rules, recordkeeping and disclosure requirements, and fee schedules for
mortgage loan brokers and licensed lenders.  The effective date of the amended regulations started on April 11, 2014.

Iowa‘s House File 2324
amends various provisions, including those relating to residential real
estate loan charges, monetary limits specified in the consumer credit
code, loan charge limits for one or two family homes occupied by the
borrower, debt collectors, and the sale of title insurance. The rule
changes become effective on July 1, 2014.

Arizona has a new law that allows some home builders to be sued by lenders for deficiency.

Turing to things arguably more educational, and instructive, earlier this week Richey May released its 2013 Fourth Quarter Trend Report for independent mortgage bankers. To no great surprise, the report shows that production,
refi and purchase volume decreased in Q4 2013, and that lenders
responded by accepting borrowers with slightly lower FICO scores. (Approximately
1/3 of 29 firms included in the numbers that had not previously
extended credit to borrowers with scores under 600, began to do so
during the 4th quarter of 2013.) Interested parties can find the report
through Richey May Co.
“Richey May quarterly trend reports, which are created using Richey May
Select, highlight key performance indicators, such as overall volume
and volume by transaction type, margins, operating costs, labor output,
and more. These reports are provided free of charge to all Richey May
Select subscribers.” The company also issues an annual salary report;
independent mortgage bankers interested in providing confidential
information used in Richey May Select’s analysis may contact Trevor
Reinhart at Trevor@RicheyMay. com.

In its monthly call update on Monday, AEI’s International Center on Housing Risk will be taking a look at whether or not QM regulation has a discernable effect on residential lending.
The institution provides research, commentary, and new tools for
measuring risk in housing and mortgage markets. (“The recent financial
crisis, and the resulting devastation for millions of families, largely
stemmed from a failure to understand the build-up of risk in these
markets.”) Its monthly update of the National Mortgage Risk Index and
State Mortgage Risk Indices will be held Monday, April 28, from
10-10:30AM EDT (4-4:30AM Hawaii Time). Please RSVP to Emily Rapp at emily.rapp@aei. org
today to receive the call-in information. “This month’s NMRI update
shows nearly a quarter of all purchase loans in March had a
debt-to-income ratio greater than the QM limit of 43%, little changed
from the share in Q4:2013.  For the FHA’s purchase loans, more than 40% have a debt-to-income ratio exceeding the QM limit.  These high DTI loans are risky, with a stressed default rate nearly double that for all loans regardless of DTI.”

The Corporation for American Banking, a subsidiary of the ABA,
announced that its endorsed lending programs saved participating member
banks over $32m in 2013, which, for approximately 1,200 banks, works
out to more than $46,655 each.  The
programs offer special terms on Secondary Market sales, risk mitigation
and compliance tools, management resources, portfolio analytics,
quality control, and lending technology and have been used to produce
over $280bn in production since 2001.

Guild Mortgage
is opening a new branch in Omaha. (I guess that is better than opening
an old branch in Omaha.) The new addition will be the first Guild branch
in the state of Nebraska as part of its planned expansion into the
Midwest.

Novation Companies, Inc. recently announced that its subsidiary, StreetLinks, LLC, has been sold to Assurant, Inc.
for $60 million in cash, plus a potential earn-out payment of up to $12
million post-closing based on StreetLinks future performance. Novation
owned approximately 88% of StreetLinks and receives a corresponding
share of the sales proceeds. The sale was unanimously approved by
Novation’s board of directors. StreetLinks provides banks and mortgage
lenders with full service appraisal management services and appraisal
management software. Novation will utilize the proceeds from the sale to
increase its investment in its cloud-based communications software
subsidiary, CorvisaCloud, LLC, and for general corporate purposes.

Through all this, the
fixed-income markets just are not doing much, which is fine with
capital markets staffs and lock desk employees across the nation.
The usual folks are buying agency MBS and the usual folks are selling –
but just not as much as in the past. So either the agencies are
continuing to purchase a larger portion of loans from lenders, or
volumes are down industry-wide. Or both. The NYFRB reported net
purchases of about $2 billion a day for the holiday-shortened week
ending April 23, which was in line with the prior two weeks. (It will be
interesting to watch the supply demand of agency MBS in May when
Fed buying drops to $1.8 billion a day – and supply is expected to
increase. The two may cross in July.)

We
did see some kind of flight to safety bid associated with
Russia/Ukraine yesterday, but this was offset by better-than-expected
Durable Goods news – but that is always volatile. There is not much news
today, aside from second-tier final April Consumer Sentiment (expected
to increase slightly). Ahead of that in the early going the 10-yr.’s
yield, which closed Thursday at 2.69%, is now around 2.67% and MBS
prices are better a shade.

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