Attempts at Relief and Reform

How Can Anyone Keep Up?

Posted on Tuesday, December 28, 2010

"If we don't change direction soon, we'll end up where we're going." That sentiment
> seems to sum up how many compliance-focused folks in mortgage banking feel right
> now, as it seems the regulations present an ever-changing landscape.
> Starting next Monday, for states that have transitioned to the NMLS, originators
> will need to provide their NMLS Loan Originator ID (the loan officer signing the
> 1003) and Loan Originator Company ID (associated with the broker) numbers. Wells
> Fargo's wholesale channel, for example, reminds brokers that "Company Originator
> ID Company Originator ID must match the broker's name. Use your Main Company ID,
> and not the branch ID. The Loan Originator ID must match the Loan Officer's name
> on the 1003 and be associated with the Main Company (broker's name). Loan Originator
> ID must be established in the property state. 1003 information must match the information
> entered into the Broker's First website. 1003 cannot be dated earlier than the date
> of the approved license."
> Late last week the Federal Reserve Board approved a new interim rule amending Regulation
> Z, which implements the Truth in Lending Act (TILA) and which clarifies a previous
> interim rule issued in September. The September regulations focus on implementing
> provisions of the Mortgage Disclosure Improvement Act (MDIA), which amended TILA
> to require mortgage lenders to disclose examples of how a loan's interest rate
> or payments can change, and kick in at the end of January. Starting then, "lenders'
> cost disclosures must include a payment summary in the form of a table stating the
> initial rate and corresponding periodic payment and, for adjustable rate loans,
> the maximum rate and payment that can occur during the first five years as well
> as a "worst case" example showing the maximum rate and payment possible over the
> life of the loan. The new interim rule clarifies that creditors' disclosures should
> reflect the first rate adjustment for a 5/1 adjustable rate mortgage, and should
> show the earliest date the consumer's interest rate can change rather than the
> due date for making the first payment under the new rate for interest-only loans.
> The rule also clarifies which mortgage transactions are covered by the special disclosure
> requirements for loans that allow minimum payments that cause the loan balance to
> increase"
Starting Saturday we have new Fair Credit Reporting Risk-Based Pricing Regulations.
> Wholesalers are notifying brokers of the changes. For example, Provident Funding
> sent its broker clients word that "Provident Funding is required to issue a risk-based
> pricing notice to a loan applicant who is offered less favorable terms than the
> most favorable terms available. Beginning with loans with an underwriting approval
> date on or after December 22, 2010 for which a FICO-based price adjustment applies,
> Provident Funding will send a Risk Based Pricing Notice to each unique mailing address
> on a loan application...The Risk Based Pricing Notice will first be triggered upon
> initial underwriting approval (i.e. when a loan first reaches status 60 - Approved)
> of a loan for which a FICO-based price adjustment applies, regardless of whether
> the loan is floating or locked...A waiting period of 1 rescission day will be required
> from the date the disclosure is delivered to the earliest signing date for the loan.
> Provident Funding recommends use of the e-mail delivery method for loan disclosures
> to reduce delivery times and waiting periods."
> AmTrust, soon to be NYCB Mortgage Company, spread the word to its clients that "Effective
> for loans with an Initial AU submission on or after January 1st, 2011, the Credit
> Score Disclosure that is provided to borrowers must comply with the requirements
> set forth in Sections 609 (f) and 615 (h) of the Fair Credit Reporting Act. The
> new rule requires, amongst other things, that a distribution of credit scores be
> presented in a bar graph or a clear and readily understandable statement informing
> the consumer how his or her credit score compares to the scores of other consumers."
> Fannie announced a set of pricing changes that will certainly echo through smaller
> investors, if they haven't already. Fannie made changes to the loan level pricing
> adjustments (LLPA's), changing LLPA's for most mortgage loans with LTV ratios at
> or above 70.01%. "An LLPA will now be charged for mortgage loans with LTV ratios
> at or below 65% and CLTV ratios between 80.01 to 95%. The CLTV ratio range for loans
> that have LTV ratios greater than 65% and less than or equal to 75% and CLTV ratios
> less than 95% has been adjusted. In addition, the LLPAs have changed for the remaining
> LTV and CLTV ranges (with the exception of CLTV ratios above 95%). LLPAs will remain
> unchanged for DU Refi Plus and Refi Plus mortgage loans. Fifth Third correspondents now have a minimum loan amount for Investment properties,
> pegged at $100,000.
> Starting Saturday Nationstar Mortgage will require a copy of the Risk-Based Pricing
> Disclosure that was provided to each borrower listed on the 1003 loan application
> prior to issuing a clear-to-close approval. Brokers may contact their Credit Service
> providers for more information on the disclosure.
> Symphony Technology Group, a private equity firm focused on investing in software
> and technology enabled services companies, acquired First Advantage from CoreLogic
> for $265 million in an all cash transaction. First Advantage is a global provider
> of technology-enabled outsourcing and analytic solutions for the human capital and
> legal markets.
> Mortgage Services III responded to the FHA's recently issued "Special Edition Statement"
> and will extend the deadlines noted in Mortgagee Letter 2010-20. "FHA 'Loan Correspondents'
> with case assignments issued in 2010 now have until 3-31-2011 to close/disburse
> those FHA loans, provided that MSI has fully approved (credit profile/AUS and FHA
> appraisal) by 12-30-2010. MSI customers who currently enjoy an 'Authorized Agency'
> relationship may proceed transacting their FHA production with MSI as they have
> heretofore until 6-30-2011. FHA has announced a new deadline of 7-1-2011, for 'Principals'
> to obtain their "Unconditional Direct Endorsement" approval."
> There are some folks out there who believe that GE has not made the best mortgage-related
> business decisions. For example, back in 2006 one of GE Capital's programs in Mexico
> was the "Mexican Dream Mortgage": Mexican retirement properties would be sold to
> US citizens who had their eye on retiring. The program was set up under GE Money's
> WMC Mortgage Corp. division, but as the subprime-housing market began to implode
> GE sold off its WMC division and recorded a $1 billion loss. Things didn't improve
> for them since it also had to deal with problems in its commercial real-estate and
> European mortgages divisions during the past two years.
> Most recently, as in late last week, Spain's Grupo Santander agreed to purchase
> a $2 billion mortgage portfolio of Mexican real-estate assets from General Electric
> Co.'s finance division for $162 million plus the assumption of debt. Grupo Financiero
> Santander Mexico is slated to acquire all of GE's consumer-mortgage business in
> Mexico, including its $2 billion consumer-mortgage portfolio as GE tries to exit
> non-strategic businesses. One doesn't need a calculator to notice those terms,
> and this makes Santander #2 in providing mortgages in Mexico.
> Way back on Thursday MBS prices finished the shortened day worse between .250-.375.
> MBS prices are worse again this morning between .125-.250, based on China raising
> its rates (to head off inflation) and the fact that New York is suffering a bout
> of inclement weather - and we all know how hard it is to come to work after a 3-day
> weekend. It is a light week for news. Tomorrow we have the S&P/Case-Shiller indices,
> along with Consumer Confidence. Thursday we have Jobless Claims and the Chicago
> Purchasing Manager's numbers. The Treasury is scheduled to auction $35 billion of
> 2-yr notes today, $35 billion of 5-yr notes tomorrow, and $29 billion of 7-yr notes
> on Wednesday.

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