Webinar About MSA News; Fifth Third settles; Caliber Under Investigation; LoanDepot IPO


Fifth Third admitted it improperly certified more than 1,400 mortgage loans it knew were defective as eligible for FHA, costing taxpayers millions. It’ll cost 53 $85 million big ‘uns. And Caliber is not only the subject of rumors (“Is it buying Stonegate?”) but instead received a phone call you never want to have: you’re under investigation by the New York Attorney General’s office.

Ballard Spahr spread the word that the CFPB announced that it is considering proposing rules that would prohibit consumer financial services companies from using class action waivers in consumer arbitration clauses. “The
CFPB has published an outline of its proposals in preparation for
convening a Small Business Review Panel to gather feedback from small
industry stakeholders. This is the first step in the process of a
potential rulemaking on this issue.  We have issued an E-alert on this important development which contains a link to the CFPB’s outline of its proposals.”

“In theory there is no difference between theory and practice. In practice there is.” Well, the CFPB weighed in on marketing service agreements,
and theory and practice seem a little closer. The bulletin highlights
risks of agreements violating the federal prohibition on mortgage
kickbacks. “…the CFPB has found that marketing services agreements carry legal and regulatory risk for lenders….”
That doesn’t mean they’re “against the law”, right? I am no attorney,
but maybe as long as you adhere to this: “The bulletin explains that
while marketing services agreements are usually framed as payments for
advertising or promotional services, in some cases the payments are
actually disguised compensation for referrals. Any agreement that
entails exchanging a thing of value for referrals of settlement service
business likely violates federal law, regardless of whether a marketing
services agreement is part of the transaction.”

Remember that many in the industry use “MSA” as a catch-all term. But compliance folks are quick to point out that there are MSAs, there are joint ventures, and there are desk rentals.
All of those have been a staple of some lenders, Realtors, and builders
for years. For others they represent an unfair playing field. HUD, when
it was in charge of RESPA, issued a June 2010 Interpretive Rule on the
subject that had been the guide until the CFPB handed down its Consent
Order for Lighthouse Title about a year ago. The Consent Order did not
outlaw MSAs but sent the industry into a tailspin and provided fodder
for plenty of attorneys to interpret their client’s business practices.
Several large lenders exited the market and that further heightened the
controversy involving these agreements that rely upon Section 8(c)(2)
for RESPA compliance.  In June the CFPB Director handed down his
decision in the PHH matter and asserted that Section 8(c)(2) is not an
exception to the Section 8 anti-kickback provisions in the Act.  Again,
the CFPB was careful not to claim that MSAs are per se illegal. Now the
industry has more clarity – we hope.

RESPRO writes, “What’s a settlement service provider to do? On Thursday, October 22 at 2PM the Real Estate Services Providers Council, Inc. (RESPRO) will sponsor a one hour webinar to address your questions and concerns about MSAs.  The webinar will be presented by noted RESPA authority Phil Schulman, partner in the Washington, D.C. office of KL Gates.  Marx Sterbcow
founder of Sterbcow Law Group will moderate our webinar. This
informative session will review the state of MSAs prior to and after the
Lighthouse and PHH Decision, as well as offer a list of MSA do’s and
don’ts for your consideration.”

Government interference? Elizabeth Warren is mad that
the government is selling distressed mortgages to hedge funds and
private equity firms and wants them sold to non-profit firms. She is of the opinion that hedge funds and private equity firms pursue foreclosure too quickly and
said “The heart of it is these loan sales need to come with strings
attached with basic outcomes for homeowners.” Some in the industry
think, sarcastically, that given her druthers she’d like to outlaw the
collection of any debt. But Ms. Warren is certainly smart enough to know
that these loan sales come with “strings attached”: servicers usually
cannot foreclose for at least a year and must hold the loans for a
period of several years. Just look how long it takes to foreclose in
many states!

On the other hand there are those that agree with Ms. Warren, as evidenced by this post
stating, “I agree with Senator Warren! HUD and the FHFA are nuts to
allow FHA, Fannie, and Freddie to auction their distressed loans at big
discounts to private equity firms and hedge funds.

Bordelon and John Berlau raise concerns about Sen. Elizabeth Warren’s
efforts to condemn the financial services industry. Robert Litan
resigned from his position at the Brookings Institution amid criticism
from Warren. Warren should face similar criticisms, Bordelon and Berlau
write. Berlau notes Warren’s support of the Department of Labor’s
fiduciary proposal. “Warren and the DOL bureaucrats, by contrast, argue
that disclosure has reached its limits due to what they regard as
Americans’ inherent intellectual limitations,” he writes. National Review

While we’re on government poking of financial services, the House of Representatives passed the Homebuyers Assistance Act (HR 3192), with its 4 month TRID grace period, by a vote 303 to 121.
Industry groups were quick to praise the event. For example, ALTA
released, “Tonight’s overwhelming bipartisan and veto-proof vote shows
that the House of Representatives recognizes the need for consumers to
continue to receive a positive and compliant real estate transaction…We
urge the Senate to pass this bill immediately so that our ALTA members
and the broader real estate members can focus on delivering quality
service to consumers when buying a home or refinancing a mortgage.
Without certainty, service providers are likely to close fewer
transactions to ensure compliance with TRID, which will delay
homeownership for consumers around the country,”

FDIC issued a list of banks recently evaluated for compliance with the
Community Reinvestment Act (CRA), which is intended to ensure banks meet
local credit needs, especially among low to moderate income households.
The list includes ratings that the FDIC assigned to institutions in
July of this year. The rankings from the evaluation for each bank can be
found here.

it all announced bank mergers and acquisitions continue, and will
continue until the cows come home. In California Pacific Premier Bank
($2.6B) will acquire Security Bank of California ($658mm) for about
$118.9mm in stock. In The Land of Lincoln Town And Country Bank ($515mm,
IL) will acquire Premier Bank of Jacksonville ($196mm, IL). Ameris Bank
($5.2B, GA) snuck across the border and will acquire The Jacksonville
Bank ($502mm, FL) for $96.6mm in cash (25%) and stock (75%) or about
1.44x tangible book. Park Sterling Bank ($2.4B, NC) will acquire First
Capital Bank ($616mm, VA) for about $82.5mm. CenterState Banks, Inc.
(Davenport, Florida) has agreed to acquire Community Bank of South
Florida, Inc. (Homestead, Florida). And West Plains Investors, Inc.
(Jacksonville, IL) has agreed to merge with Town and Country Financial
Corporation (Springfield, IL).

On the flip side only eight banks have been shut down this year – but two last week. In Washington the deposits of Hometown
National Bank, Longview, Washington were moved to Twin City Bank,
Longview, Washington. And the Bank of Georgia, Peachtree City, Georgia,
and became part of Fidelity Bank, Atlanta, Georgia.

In capital markets news, the Financial Industry Regulatory Authority has released its liquidity risk management directive for broker-dealer firms,
which includes reviews and stress tests, writes Richard Satran. “FINRA
is coming to town with liquidity stress tests no matter what size your
firm is,” said Julian Fisher, head of Crest Rider. “It’s not just the
province of the big boys in New York anymore. But smaller firms have
fewer resources to invest in technology and expertise to do what’s
required, and it can be incredibly costly.”

briefly at the bond markets, things were quiet Thursday, through
Jobless Claims, through Kevin McCarthy dropping out of the race for
Speaker of the House, through a solid 30-year bond auction, until the
release of the minutes from the September 16-17 FOMC meeting. They
showed that many members saw the economy on track to warrant a rate hike
later this year, and that the pause at the September meeting was “to
wait for additional information confirming that the economic outlook had
not deteriorated.” And then bonds sold off.

the only news of minor substance was the September Export Prices (-.7%)
and Import Prices (-.1%). We closed the 10-year at 2.11% Thursday and this morning we’re at 2.12% with agency MBS prices worse a shade. Don’t forget the bond markets are closed Monday!

Jobs and Announcements

In wholesale job news JMAC Lending,
a national wholesale lender offering conventional, government, and
cutting-edge jumbo/non-QM products, is seeking Account Executives
that have a proven track record of success in wholesale
and correspondent lending. “Applicants can expect industry leading
pricing, top of the line systems and an Operations staff fully equipped
to take production to the next level – our AEs fund an average of over
$6 million per month. The market is ripe and territories are open.  Make
the best career move you can make.  Interested candidates for
Southern California, Arizona, and Nevada can contact Sales Manager Colin Field. For all other territories, please contact Lilly Lefeber. Don’t let this incredible opportunity pass you by.”

On the retail side up over in Washington VITEK Mortgage Group is
looking for purchase-focused retail MLOs to “join our expanding Bellevue
Branch Office.  We love our MLOs and we take great care of them!  We’ve
been in business for more than 28 years, built to be nimble, and have a
sophisticated delivery system and support structure. Local leadership
and operations, as well as accessible decision-makers truly set us apart
from the competition! We are delegated with Fannie, Freddie, and
Ginnie, and have all the products you need in order to shine with your
clients. If you are serious about business, but still want to feel like
part of a family, we might be just the place for you! Contact George Charles for confidential consideration and check us out at VITEK.”

And if you’re interested in sales management in Hawai’i, HomeStreet
Bank, a top 20 lender with nearly 90 years of single family lending
expertise, is recruiting a Branch Operations Manager for its fulfillment
center in Honolulu. HomeStreet has been rapidly gaining market
share in Hawaii and this role is considered critical to support next
steps. While local candidates are encouraged, the hiring managers are
open to assisting relocation of an outstanding leader from the mainland
with a proven track record. The successful applicant will possess strong
competencies in pipeline management, processing oversight and a
passionate production affinity. The company is headquartered in Seattle
with regional branches throughout the western United States. HomeStreet Bank
is an Equal Opportunity/Affirmative Action Employer; minorities,
females, protected veterans and individuals with disabilities are
encouraged to apply. Please send your resume and a cover letter for confidential consideration to Senior Recruiter Holly Wirth.

Although it seems that the average age in this industry is 76, not everyone stays in forever. Utah’s Security National Financial Corporation
announced the year-end retirements of Mr. Lynn Beckstead, Jr.,
President, and Mr. Kenneth Parr, Chief Financial Officer. The Company
further announced, in conjunction with these retirements, the
appointments of Mr. Stephen Johnson as President and Mr. Jacob Banks as
Chief Financial Officer of SecurityNational Mortgage, effective January
1. Congrats to all involved!

Move over Stonegate, Nationstar, Ocwen, Walter…We will soon have another lender to follow in the stock market as LoanDepot has filed an IPO.

ZestFinance has received $150 million from investment-management group Fortress Investment Group.
The Hollywood financial tech firm, an online lender targeting sub-prime
borrowers, has developed a machine-learning software program that
assesses the risk of lending to sub-prime borrowers.
Previously, it had sold that software to financial institutions, but
now it aims to use its program to manage the risk around originating
loans to near-prime borrowers, the top slice of the sub-prime category.
ZestFinance’s software uses 70,000 nontraditional, often nonfinancial
factors to judge credit worthiness. “One of the things we look at is the
way you fill out an application,” said ZestFinance Chief Executive
Douglas Merrill. “If you are typing your name in on an application in
all upper cases you are slightly higher risk than someone who types in
all lower case or upper and lower case.” The company launched its
sub-prime loan Basix product this summer across 15 states.

And how about Radian’s sister company Clayton Holdings going out and buying ValuAmerica?

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