State-Level Lending Changes; Video on Mortgage Servicing; Ugly Zombie House Legislation; Compensation Survey

News

Here’s
the riddle of the day. What is “165”? Answer: it is the number of
business days until August 1, when the RESPA-TILA rules go into place.
If a lender is relying on vendors to save the day for them, or notify
their Realtor clients of the changes, they’re making a mistake. Get
going! (Another riddle is, “What is 69”?  It is the
number of business days until the next Federal holiday – the longest
stretch of the year. So I hope you took yesterday off!)

All of these companies employ underwriters, and according
to the most recent STRATMOR Compensation Connection survey, 90% of
underwriters receive incentive compensation in addition to a base
salary. That incentive, however, made up less than 10% of overall compensation. How does your compensation compare to your peers? Participate
in STRATMOR’s annual compensation survey to gain valuable insights on
not only Underwriter compensation but for key positions across all
departments.
“STRATMOR is happy to introduce a new survey this year, the Production
Support survey. This will cover positions in Post Closing, Compliance,
Lock Desk, and more. We are also introducing updates to the original
modules, Retail Sales, TPO Sales, Consumer Direct Sales, Fulfillment,
and Executive Management based on participant feedback. Join us for this
exciting new year of Compensation Connection. For full details, visit
the 2015 STRATMOR Compensation Connection Survey website or email compconnection@stratmorgroup. com.”

Speaking of money, hey, if
community banks don’t have enough capital and profits to pay for the
regulatory environment, what makes them think that non-depository
mortgage banks do?
This article
points out the reason why so many banks are merging or being bought by
other banks. And regulators need to remember those costs are passed on
to consumers. Are we having fun yet? Things slowed down temporarily in
bank merger acquisition news. In Florida Sunshine Bank (such a
dreary name – $223mm) will acquire Community Southern Bank ($246mm) for
about $31mm in cash or roughly 1.4x tangible book. In Nebraska Premier
Bank ($141mm) will acquire Farmers Bank and Trust Co. ($51mm). Live
Oak Banking Co. ($565mm, NC) will acquire independence Trust Co. ($4mm,
TN). Wilshire Bank ($3.9B, CA) will acquire certain assets and
operations of the mortgage lending division of Bank of Manhattan
($496mm, CA).

But all is not unicorns and rainbows. Bank Mutual ($2.3B, WI) will close 7 retail branch offices to improve efficiency and reduce expenses.
And last Friday Capitol City Bank Trust Company, Atlanta,
Georgia, was closed by the Georgia Department of Banking Finance,
which worked through the FDIC to find First-Citizens Bank Trust
Company, Raleigh, North Carolina, to assume all of the deposits. The
bank controlled by the Auto Club Insurance Association, Auto Club Trust,
FSB ($75mm, MI), has called off a proposed acquisition of American
Midwest Bank ($469mm, IL) after it reportedly became obvious regulators
were not going to approve the transaction.

Recent changes to the Maryland procedures for owner-occupied residential property took effect on February 1st.
As a result from the amended provisions under COMAR 09.02.12, there
will now be Notice of Intent to Foreclose forms that relate to the new
regulations regarding the foreclosure referral timeframe. There have
also been changes to the foreclosure mediation instructions concerning
pre-mediation document production, revisions to the foreclosure
mediation checklist and the adoption of a line for mortgage servicer on
the mediation request form.

Massachusetts
has recently updated its own Truth in Lending regulation so that it
aligns with recent Federal Regulation Z updates. States are allowed to
adopt their own Truth in Lending regulation as long as it is comparable
to Regulation Z and properly enforced. Massachusetts regulation allows
for greater Truth in Lending protections for consumers, including areas
of recession and high cost mortgage loans. For example, in
Massachusetts, failure to provide to the consumer the right to rescind
notice prolongs the recession period to four years and the consumer is
allowed to maintain an interest in the property during this time period,
whereas, the Federal Regulation Z extends the recession period to three
years. Massachusetts High Cost Mortgage Loans rule is also more
restrictive than the Federal Regulation Z requirements.

New York implemented new regulations regarding forced-place insurance on February 6th,
as a result of the New York State Department of Financial Services
having found that current practices relating to forced-placed practices
were inadequate and questionable. The adopted regulation will mandate
borrower notification before the issuance of force-placed insurance. The
notice must be delivered or placed in the mail at least 45 days prior
to assessment of any force-placed insurance charges. Another 15 day
period that begins on the day the notice was delivered or placed in the
mail will be required in order to permit the borrower to provide
evidence of acceptable insurance. It’s also required that a separate
document, provided with the written notice, discloses that an insurance,
insurance provider, affiliate or other third party is staffing the
mortgage servicer’s telephones, if that is the case. If evidence is
provided that the borrower has appropriate hazard insurance in place,
the insurer, insurance producer or affiliate must remove the
forced-placed insurance and deliver a refund for overlapping coverage
within 15 days of receipt of evidence of coverage. The new regulation
also mandates minimum loss ratios and rate filing requirements.
Force-placed insurance premium rates can be filed with an acceptable
loss ratio of at least 62%. On an annual basis and no later than April 1st,
an insurer must submit a yearly statement to include actual loss ratio,
earned premium, itemized expenses, paid losses, loss reserves, cash
reserves and incurred but not reported losses. Within 30 days of
submitting the annual statement, an insurer is required to refile its
force-placed insurance premium rates for any policy that had a tangible
loss ratio of less than 40% for the preceding calendar year. Click here for more information about the regulation.

There continue to be books focused on parts of the industry. For example, Jeff Jensen has released a book titled, “What a Hoot! Let’s Recruit!”
Jeff has had 30+ years’ experience in the recruiting arena from
President/CEO of his own placement companies and the last 20+ years in
mortgage business management. “Avoid bad hires, concentrate on best
hires: if you are looking to benefit from the growth in business in 2015
this new book can assist you in capturing your share of the top talent
to get you there.” Persisting proof that many in our industry are
literate!

Citigroup Inc., Goldman Sachs, and UBS AG agreed to pay $235 million in cash to settle U.S. litigation
accusing them of concealing the risks of mortgage securities sold by
the former Residential Capital LLC before the global financial crisis.
By the way, the Department of Justice announced the five largest US mortgage servicers will have to pay $123mm to settle claims of unlawful foreclosures against military service members as well as their families.

What’s a zombie house? Lenders could be in for a rude awakening if new legislation passes requiring them to maintain deserted houses, or allows borrowers to stay in a house until ordered out be a judge.

Dave
Stevens, president of the MBA, notes, “Many investors, like FHA, have
property preservation requirements but the reality is that many states,
especially judicial states like New York, have long foreclosure
timelines that delay the process sometimes long after the owner has
abandoned the property. Passing legislation without the balance of
understanding the states own role in impacting the condition and value
of the properties due to their own policies could simply add additional
expense to prospective homebuyers as lenders add this into their all in
pricing. It would simply become a contingent liability and added into
the rates and costs for a mortgage. Once all reasonable loss mitigation
efforts have failed, getting homes destined for foreclosure through the
process and back on the market quickly is the safest way to protect the
vacant or abandoned property impact.”

The
CFPB is reportedly concerned that reverse mortgages are confusing to
consumers, so the agency is looking into ways to improve transparency
and clarity around the product. The
CFPB found that there are only 628,000 outstanding reverse mortgages or
about 1% of the total amount of traditional mortgages.

While we’re talking about everyone’s agency darlings, the Federal Deposit Insurance Corporation (FDIC) announced the release of the third in a series of three new technical assistance videos
developed to assist bank employees in meeting regulatory requirements.
These videos address compliance with certain mortgage rules issued by
the CFPB. (The first video, released in November, covered the Ability to
Repay and Qualified Mortgage Rule. The second video, released last
month, covered the Loan Officer Compensation Rule.) This video covers the Mortgage Servicing Rules.
The three technical assistance videos are intended for compliance
officers and staff responsible for ensuring the bank’s mortgage lending
and servicing operations comply with CFPB rules.

Regarding
rates, yes, they’ve crept back up – but it is hard to argue with 30-yr
mortgages below 4%. Our rates are mostly moved by what happens overseas,
yet it is good to know the scheduled news out this week here in the
States. Today we will have the Empire Manufacturing survey and NAHB
Housing Market Index, tomorrow is the Housing Starts and Building
Permits duo along with the Producer Price Index (PPI) and the Industrial
Production and Capacity Utilization twins. We will also have the U.S.
Fed releasing the Minutes from Jan. 27-28 FOMC Meeting. Thursday will
have the usual Initial Jobless Claims but after that is the Philly Fed
numbers along with Leading Economic Indicators.

And for those who watch rates we closed the 10-yr Friday at 2.04% and this morning we’re sitting around 2.03% with agency MBS prices better by .125.

 

Jobs and Announcements

On the production channel front, Freedom Mortgage’s growth will continue into 2015 and it has been streamlining all aspects of the wholesale business. “Changes
made to file flow, communication and customer service has been
pleasantly received by our business partners giving Freedom a market
advantage. If you are a broker, bank, or credit union who wants to
partner with a company positioned for continued growth then look to
Freedom for that opportunity. AE positions are also available in Chicago, St Louis, Michigan and Texas as well as other area’s in the Central States. If you are interested please contact Don DiLucchio. AEs with a banking or credit union portfolio are also encouraged to inquire.”

Greg Frost is looking for a few more Branch Partners. “Yes,
it’s the same Greg Frost who was the mortgage industry’s first billion
dollar Loan Originator and current popular motivational sales
trainer. Greg’s organization currently has Branch Partners in New
Mexico, Arizona, California, Colorado, Texas, South Dakota, Illinois,
Iowa and Mississippi. If you’re operating in one of these states, and
would like to investigate his very profitable Branch Partner business
model, just click here
to schedule a confidential conversation with Greg. Imagine working with
and being mentored by one of the industry’s’ most prolific mortgage
professionals. Click Here now.”

Out in California Alpine Mortgage Planning (AMP), a division of Pinnacle Capital Mortgage Corporation,
continues to expand and is proud to announce the opening of its fourth
Southern California branch in Newport Beach, CA. “Serving the Orange
County area with top producing mortgage advisors and in-house
operations; including loan set-up, processing, document drawing and
marketing. AMP is a progressive retail direct mortgage bank lender
with the capacity to also broker loans. AMP continues to grow,
propelled by repeat and referral business driven by clients who
appreciate the company’s wide range of products and responsive client
care. The Newport
Beach office is continuing to grow and looking for high motivated
mortgage advisors and production assistants to join its team.” All inquiries can be directed to John J. Reed.

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