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A Showdown on Minimum Net Worth in Chicago?

OCT 19, 2012 3:41pm ET
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This weekend mortgage professionals from across the country will land in Chicago for the annual convention of the Mortgage Bankers Association. Although six or so major mortgages rules that could alter the industry are still up in the air, there is one issue that may not be on the radar screen: Minimum net worth requirements for Fannie Mae and Freddie Mac seller/servicers. The current floor is $2.5 million but there is increasing talk of that figure getting hiked (gradually) to $5 million. Will this change the face of mortgage banking as we know it? It all depends. Smart mortgage owners are hopefully squirreling away all the cash they’re earning in this hot market for a rainy day. If the rumors are true, they might need it…

We anticipate that the chiefs at Fannie, Freddie and even the Government National Mortgage Association may address the issue during the convention, so stay tuned…

SOMETHING WE’RE WORKING ON: A former First Franklin Financial Corp. executive is about to launch a new mortgage company. It will be based in Southern California. 

One mortgage loan officer noticed a spike in mortgage rates recently, which seems odd since everything tells us that rates should be headed lower, especially after Friday’s sell-off in the stock market. But here’s something to consider: a guarantee fee hike is coming so lenders are trying to unload in the secondary market as many loans as they can. One analyst suggested the selling drives prices down, which results in higher rates. Then again, thanks to sinking stock values, rates should be falling once again…

So, what’s up with Vericrest Financial these days? We understand they keep hiring. The shop is headed by industry veteran David Schneider who will be attending the MBA show. Any information? Drop me a line at Paul.Muolo@SourceMedia.com...

WASHINGTON NEWS No. 1: The Mortgage Forgiveness Debt Relief Act is set to expire at yearend and may present itself as a "fiscal cliff" of sorts to consumers who would have to pay taxes on debt forgiveness. The measure was passed in 2007 to aid struggling homeowners during the housing crisis. According to the Financial Services Roundtable, a homeowner who owes $300,000 on his mortgage and sells his house for $250,000 would owe taxes on the $50,000 balance that’s forgiven, because it would be considered income by the Internal Revenue Service

WASHINGTON NEWS No. 2: When the Consumer Financial Protection Bureau finalizes its qualified mortgage rule later this year the regulation will apply to all mortgage bankers and all loans—whether they are backed by the government or not. Recent reports that the bureau is moving toward crafting a QM rule that provides a legal “safe harbor” for prime loans with a maximum debt-to-income ratio of up to 43% has raised questions on how it will impact GSE and FHA lending programs. Both programs allow for slightly higher DTIs. (Reporting by NMN’s Brian Collins.)

MORTGAGE PEOPLE: ICON Residential, a wholesaler, named Sun Anthony senior vice president of service management. ICON was recently sold by its parent, Grand Bank.

TWITTER (MORTGAGE) NEWS: Watch my personal Twitter feed where I provide updates on breaking stories. Just visit Twitter and plug in my name.

MORTGAGE DATA: NMN recently published the 2Q edition of its exclusive Quarterly Data Report product. It includes the nation’s top 100 lenders and servicers and much more including wholesalers, subservicers and more. To order email Deatra.Todd@SourceMedia.com.  

COMPLAINTS? NEWS LEADS? Send them to Paul.Muolo@SourceMedia.com.

FINAL WORD No. 1: Garrett, McAuley & Co. will be holding its annual Client Appreciation Dinner’ in mid-November. It promises that some of the speakers include “the most successful” mortgage bankers in the nation.

FINAL WORD No. 2: Detroit Tigers in five.

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