These last few months, the main theme of our newsletters has been vital Industry Checks & Balances ... your processor is probably the singular most important individual involved in all of the moving parts of mortgage origination.
Her loyalty should not be to the customer or the loan officer, but 100% to her employer; with her allegiance to the sanctity of the process.
No matter how you have your company organized, this piece of the origination routine, should not be compromised, commissioned, or somehow thought of as a lessor position in the organization. If there comes a time to cut staff, this should be the last one to go.
Improving the credibility of the industry is YOUR job, not anyone else. It all startes with a solid, reliable and genuine borrower loan package, and you avoiding those wholesaler lenders who offer big commissions tied to reckless lending standards for customer approvals. It's NOT about all the money you can make. If that's how you were trained, get it out of your head! It's that attitude that nearly killed the golden goose.
Fed Sees Subprime Revival in Tough Revision of HOEPA Rules
A new era of subprime lending is set to begin in the fourth quarter of 2009. The Federal Reserve this past week finalized its revision of rules for the subprime market, with lenders winning few concessions compared with what was proposed in December. Fed Governor Randall Kroszner said the revision of sections of Regulation Z that implement the Home Ownership and Equity Protection.
Federal court not persuaded by Unofficial HUD opinion
Federal courts have haggled for years over whether to grant deference to HUD's RESPA Statements of Policy, which are HUD's official interpretations of the rule. But do administrative interpretations of rules written by HUD employees hold up in court? One federal court has recently said no, finding that a HUD employee's affidavit did not merit court deference.
Sign of The Times
MBA Chief Kempner Departing at Year-end:
Mortgage Bankers Association president Jonathan L. Kempner is resigning from the trade group effective year-end, sources close to the trade group told National Mortgage News. An announcement about his departure will be made later in the afternoon on Tuesday. Washington officials who have worked at MBA said the group is losing members as the nation's mortgage crisis worsens. It also is having trouble leasing its new office building, noted one former MBA executive.
The Ratings Report
An extensive 10-month examination of the three major credit ratings agencies uncovered significant weaknesses in their practices and the need for remedial action, the Securities and Exchange Commission said last week. Standard & Poor's Ratings Services issued a recent statement indicating its loss severity assumptions for transactions issued in 2006 can likely withstand our projected additional 10 percent home price decline. S&P announced it lowered ratings on 77 classes of mortgage pass-through certificates from 22 subprime residential mortgage-backed securities from various issuers as a result of the collateral performance. S&P also said that it lowered ratings on 118 classes from jumbo RMBS issued in 2005 and 2006 based on its opinion that projected credit support is insufficient to maintain the previous ratings.
Executive Summary of New TILA Rule
Most provisions of the new Truth In Lending Act rule announced by the Federal Reserve Board become effective on Oct. 1, 2009. The requirement to establish an escrow account for property taxes and insurance in connection with higher-priced mortgage loans (a new category of loans added by the rule) is effective on April 1, 2010, (or Oct. 1, 2010, for higher-priced mortgage loans that are manufactured home loans). The board advises in the preamble to the new rule that "nothing in this rule should be construed or interpreted to be a determination that acts or practices restricted or prohibited under this rule are, or are not, unfair or deceptive before the effective date of this rule." This appears to be an attempt by the board to preclude claims that certain existing practices constitute unfair or deceptive practices simply because the practices will be prohibited by the new rule.
Investigator: 'Fraud for Housing' Still Fraud
Even though mortgage fraud for housing "doesn't seem quite as violent" as mortgage fraud for profit, it has its own consequences, according to a representative of the Florida Office of Financial Regulation's Bureau of Financial Investigations. Rui Goncalves told attendees at the Florida Association of Mortgage Brokers annual convention in Kissimmee, Fla., that fraud for housing is "more of a temptation" because it is easy for people to think they are trying to help someone get into a home. But those who participate might not realize the consequences, even if the loan never goes into default. For example, having unqualified buyers in the market competing for properties drives up prices, and eventually there will be a crash, Mr. Goncalves said. He called on originators to strive for transparency in their dealings and to ask questions of their customers.
Biggest Story Since YOU Been in the Biz!
Bush Signs Housing Bill
President Bush signed a landmark housing bill to shore up the nation's housing finance system in a closed meeting early Wednesday morning, and he did not issue a statement. The massive housing bill includes the president's initiatives to modernize the Federal Housing Administration mortgage insurance programs and strengthen regulation of the housing government-sponsored enterprises. However, President Bush strongly opposed a provision in the bill that provides cities with $3.9 billion to buy up foreclosed properties. Administration officials also resisted the inclusion of a special FHA refinancing program that is supposed to help 400,000 struggling homeowners avoid foreclosure. Senate Banking Committee Chairman Christopher J. Dodd, D-Conn., met with top administration officials Tuesday evening and pressed them to get the FHA refi program up and running by Oct. 1. It was a "constructive meeting," a committee staffer said.
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