Stearns’ Anti-steering Form for Brokers; FHA and Condos; Mass of Servicing Rules


Welcome to the first business day since the autumn equinox. This is the
day when the tilt of the earth’s rotational axis is perfectly perpendicular to
the sun, meaning that the sun is shining directly at the earth’s equator while
the earth rotates. Twice a year, on this day, everywhere on earth the amount of
daytime is equally as long as the night. And it had nothing to do with the
housing crisis.

So did investors owning more than 4 rental properties cause the downfall
of the housing market? Most will say “no” and in fact LO’s have numerous
stories of “professional” investors who were/are very good credit
risks and know how to manage single family rentals. And given their return on
cash in the bank, most investors want to own houses.
At the other extreme, large private equity players are behind Waypoint Real
Estate Group LLC and Colony American Homes, both of which are actively
buying up thousands of foreclosed homes and then renting them out. Waypoint
already owns 2,200 homes so far (on its way to a goal of 11,000) and Colony has
3,600 homes (going to 10,000).

And lenders continue to expand and look for talent. I have been retained by a
Northern California-based retail mortgage bank, with offices in multiple
states, that is seeking a Processing Manager. The ideal candidate should be
knowledgeable in all aspects of conventional, FHA VA guides as well as DU
LP.  Duties will include training and guidance to all processors
throughout the company. The person must have good communication skills, and
prepared to work for a retail lender with an estimated 2012 volume of $2
billion.  Interested candidates should send their confidential resume to
me at rchrisman@robchrisman .com.

And a different large California mortgage banker is seeking a Regional VP of
Retail Sales to oversee the expansion of its corporate retail sales
division and regional branch offices in the San Diego area.  The company
is committed to its steady expansion – I will attest to that. “Reaching
out to consumers nationwide the company has grown to be an industry leader in
both the purchase and refinance markets for FHA, VA, Conventional, HARP2
Jumbo Loans.” The company is originating approximately $300 million a
month. With confidentiality in mind, interested parties should send their
resume to me at rchrisman@robchrisman .com.

And I may see some BofA folks applying. Mortgage lenders are watching
their costs go up every day as they add compliance, vendor management, legal,
and risk management staff. But cost-cutting is still occurring, perhaps most
notably at Bank of America. By the end of this year 16,000 jobs will be eliminated,
bringing BofA’s payroll down to 260,000 employees
per a story in the WSJ.
And it isn’t alone, as Citi, Goldman Sachs, Morgan Stanley and many financial
firms in Europe are trimming employee overhead. And BofA has indeed been taking
care of business, closing 163 branches and opening up only 6, settling some
major lawsuits related to its mortgage troubles, selling at least 46 non-core
assets since February 2010, and peeling off large blocks of servicing to
waiting buyers like Nationstar (dubbed by many as “Wells Fargo Lite”
given their recent hiring of Wells’ employees.) And apparently the market likes
it: BofA’s stock is up 65% this year.

Europe: check. QE 3: check. But wait – there is nothing like a looming
cliff to focus one’s attention. Here’s a little more of an in-depth piece on
the current situation – in the top right of www.stratmorgroup .com.

The Federal Register is the “daily journal of the United States
Government.” Last week the CFPB published the servicing rules that
could impact every loan servicer in the U.S.
The rules, far too lengthy and
complex for this simple commentary, involve documentation, transfers,
force-placed insurance, loss mitigation, and on and on and on. Any company who
relies on their in-house staff to service loans (versus hiring a subservicer)
had better make sure they know what is happening out there. But here is the
link to the Federal Register with the proposed servicing rules
, care of
Dodd Frank.
There are a total of nine new categories of proposed requirements. Three arise
out of provisions added by the Dodd-Frank Act to the Truth in Lending Act
(“TILA”), and, therefore, are proposed to reside in TILA’s
implementing regulation, Regulation Z, 12 C.F.R. Part 1026 (“Reg.
Z”). The remaining six arise from Dodd-Frank amendments to the Real Estate
Settlement Procedures Act (“RESPA”); those six are proposed to reside
in RESPA’s implementing regulation, Regulation X, 12 C.F.R. Part 1024
(“Reg. X”). Comments are due by October 9, and at this point the CFPB
appears to intend to finalize all of the Proposed Rules by January 21, 2013.

Speaking of the CFPB, it has formed a Community Bank Advisory Council
that will provide the agency with feedback on policy development, research and
rulemaking. The Council will hold its first public meeting on October 10th.

the mortgage task force formed by President Barack Obama to probe misconduct
that contributed to the financial crisis? It will soon take legal action, per
Co-chair New York Attorney General Eric Schneiderman. He would not say whether
cases would be brought against individuals or financial institutions or whether
criminal charges would be filed. But he said his office would take action and
that he expected his federal counterparts on the task force to do so as well.
(And folks wonder why residential lenders are stowing away those profits…
more and more go to pay legal fees for this type of thing, with the costs
eventually borne by future borrowers, of course.) The Residential
Mortgage-Backed Securities Working Group was formed in January to probe the
pooling and sale of risky mortgages in the run-up to the 2008 financial crisis.
Obama said he was creating the group to “hold accountable those who broke
the law” and “help turn the page on an era of recklessness.” The
task force includes
the Justice Department (DOJ), the Securities and Exchange
Commission (SEC), the Department of Housing and Urban Development (HUD), and
the Internal Revenue Service (IRS). Talk about a phone call you wouldn’t want
to receive on a Friday afternoon!

I am asked often enough about the latest on FHA and condos, that this
bears a repeat. Go here
and click on the “12-18” letter. Most view the rules as making it easier for
large numbers of condo associations to seek certification by FHA. The
certification process is intended to provide the FHA with important information
on the development’s legal, physical and financial status, thus making it
easier to approve the project and thus the FHA financing of individual loans.

vendor, investor, agency, and lender updates have been a deluge in September
. As always,
it is best to read the actual bulletin, and “good luck” if you’re looking for
less documentation, lower net worth, or easier processing.

today Stearns Lending will require a newly created Anti-Steering Loan Options
Disclosure form be completed on all Lender Paid Wholesale channel loan
. The current form as well as versions generated from third party
applications such as Calyx Point and Encompass will no longer be accepted. A
copy of the new anti-steering form is available on the Stearns Wholesale
Website in an editable PDF format. “The newly created Anti-Steering Loan
Options Disclosure must be completed as follows: The form must be completed in
its entirety. There may be no blank fields. “Not Applicable” or
“N/A” is not an option. The form must be signed and dated by the
broker loan originator and all borrowers that will appear on the promissory
note. The form must be completed as early in the loan process as possible — as
soon as the originator has sufficient information to complete the disclosure.
In no case may it be dated later than one day prior to document signing. The
form must indicate if the transaction is a fixed or a variable rate. If a
transaction starts off as a fixed rate and later changes to a variable rate,
then a new anti-steering form must be obtained. Conversely, if a transaction
changes from variable to fixed, a new anti-steering from must be obtained. All
three options must be completed – (1) loan with the lowest interest rate, (2)
loan with the lowest interest rate without negative amortization, prepayment
penalty, interest only etc. and (3) Loan with the lowest dollar amount for
origination points or fees and discount points. Using the same rate and fees
for all three options, though previously permitted, is no longer acceptable. In
other words, it is very unlikely that the borrower will qualify for only one
loan option. The form must be accurate. That is, the loan Option 1 (lowest
interest rate) must actually reflect the lowest interest rate. Loan Option 3
(lowest points and fees) must actually reflect the loan option with the lowest
points and fees. Electronic signatures are not permitted.”

Real estate brokerage and technology provider ZipRealty has entered
into a strategic alliance with Charlotte-based New American Mortgage. 
ZipRealty company-owned offices in 20 markets across the US will now be staffed
by New American Mortgage loan officers, who will provide mortgage counsel
directly to homebuyers.

FEMA has announced that disaster aid is available in numerous counties
throughout Mississippi and Louisiana for those affected by Hurricane
Isaac.  For the most recent list of eligible counties, see FEMA’s blog at, updated constantly.

Freddie Mac has expanded its policy on condo project reviews to state
that established project reviews no longer require recorded declarations,
by-laws, and amendments.  The guidelines on mixed-use projects have been
relaxed as well.

The Freddie Mac Alt 95 program has been suspended with immediate effect. 
The Alt program’s value lay primarily in its flexibility regarding the source
of funds for down payments, closing costs, and prepaid expenses, but as most
Freddie loan programs now make similar allowances, Alt has been deemed

Fannie Mae has expanded the offerings of, which
provides homeowners facing foreclosure with educational resources.  The
site now includes information on renting, buying, and refinancing a home in
addition to the existing foreclosure prevention information.  The Loan
Lookup tool has also been integrated into the site, which will allow homeowners
to see potential options for their foreclosure situation, receive
recommendations on next steps, and make appointments with the Fannie Mae
Mortgage Help Center.

Under Fannie’s Special Relief Measures policy, servicers are allowed to suspend
or reduce mortgage payments for up to 90 days within federally declared
disaster areas.  The policy also allows for loss mitigation flexibilities,
including an additional three months of forbearance, loan modification, and
other custom solutions.  These are determined on a case-by-case basis once
the impact of the disaster has been fully assessed by the servicer.

Fannie has revised the Special Investor Reporting requirements section of the
Servicing Guide to include guidance on reporting foreclosures for modified
loans with principal forbearance.  When completing
a Loan Activity Report, servicers should designate these loans accordingly. In
addition, servicing responsibility for HomeSaver Advance notes has been
transferred to three third-party servicers, who have notified all affected

On to the markets! For overnight news we had some EU Banking Union
disagreement/delay, a possible Greece funding shortfall, a drop in Chinese
retailer and Manu confidence, some weak economic news from Germany, and Mideast
tensions still rising. All of this tends to help our rates. The risk-free 10-yr
T-note closed the week at 1.76%. The link between Treasury and mortgage
rates has been all over the chart in recent weeks
, although it is still
correlated. In fact, Friday agency prices improved by over .250 relative to Treasuries
due to the buying from the Fed, money managers, and banks. And “specified pools”
are leading the way as lenders look for a little pick up by selling blocks of
loans with certain loan amount, credit score, or LTV characteristics. As one
trader wrote, “pools with no call protection will become harder to trade while
generic bonds will simply be ignored.”

Yes, overnight rates will  be near 0% for years to come, and the Fed
will be buying twice as many agency MBS as lenders produce for many months. But
it still makes some sense to pay attention to the economic news, and we have a
lot crammed into this week starting tomorrow. We’ll have more news on housing
(Case-Shiller and FHFA Housing Price Index) and Consumer Confidence tomorrow.
Wednesday is more housing-related news (mortgage apps and New Home Sales), and
Thursday will be Initial Jobless Claims, Durable Goods, GDP, and more housing
news (Pending Home Sales). Friday finishes up with Personal Income and Spending,
the University of Michigan numbers, Chicago PMI, and PCE Prices. The 10-yr
is down to 1.71% and MBS prices are better.

Here’s a quick one to start the week.
Men socialize by insulting each other, but they really don’t mean it.
Women socialize by complimenting each other, but they really don’t mean it

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