Loan brokers of many different stripes have been contemplating suing the Federal Reserve over its loan officer compensation rule. And it appears that if the Fed doesn't start communicating a little better with the mortgage industry, the central bank may find itself in court some time next year. (Or not.) The situation is very fluid right now. The strange thing about the whole mess is the Fed's stubborn position of refusing to put any type of LO compensation guidance in print. The central bank's point man on the issue is senior attorney Paul Mondor, who used to work at the Mortgage Bankers Association. As National Mortgage News' Brian Collins reports
"There are no second acts in American lives." That quote comes from writer F. Scott Fitzgerald. (For all you Fox News viewers, Fitzgerald was a writer of literature.) Anyway, judging by all the former mortgage bankers and traders quietly re-entering the mortgage business, it would appear Fitzy was off the mark a bit. Late this past week, NMN broke the news that C-BASS founders Bruce Williams and Saul Sanders have formed a new company to purchase and securitize jumbo residential loans. If you know of any more new entrants to the jumbo space drop me a line at:
I'm also looking for additional information on whether the recent rise in rates has hurt your origination business. Send me an email at the same address…
Starting January 1, the Federal Trade Commission will ban advance fees paid by consumers to any firms engaged in loan modifications or mortgage assistance rescue services. Under the FTC rule, for-profit loan modification firms cannot collect fees until consumers have what the agency calls a "written and executed" agreement form the lender or servicer…
If you missed the recent story we published on Wells Fargo's letter regarding the 'qualified residential mortgage' test, don't feel bad. The issue isn't going away. In a letter to six different regulators, Wells' suggests the QRM definition should be "simple and balanced" and that such a mortgage would be one with a loan-to-value ratio of 70% or below. On the surface it appears that Wells may've lost its mind. As one MBS investor told me, "Nice try, Wells." But keep in mind a few things: Wells suggests this ratio as an "example" and argues in its Nov. 16 letter to FDIC, FHFA and others that if the QRM definition is too broad it will cause a problem where "loans may have undetected processing defects." It appears that the bank's logic is this: a narrow QRM definition will actually create a large segment of borrowers outside the safe category, thus increasing liquidity to this market. Huh? At least that's how I read it. But is Wells dreaming here? And it should come as no surprise that many in the industry believe the bank is upping its power grab on the mortgage banking business. I ask readers this: how many of the loans that you are funding have LTVs of 70% or lower?..
DATA POINT OF THE WEEK: Mortgage bankers on the move to the upside include U.S. Bank Home Mortgage, and Quicken Loans. Quicken grew production by a stunning 88% in the third quarter according to the new 3Q edition of the Quarterly Data Report, an NMN publication. U.S. Bank grew its wholesale production by 65%. To order the QDR send an email to:
WASHINGTON NEWS: Fannie Mae and Freddie Mac have once again delayed implementation of new mortgage and appraisal delivery requirements in the 'Uniform Mortgage Data Program', according to lender updates released late this past week. For the full story see Austin Kilgore's story on the NMN website at:
IN CASE YOU MISSED IT: Origination News columnist John McDermott recently turned 50. He writes the popular 'Loan Closer' column. I've known John for, well, 50 years. He grew up across the street from me in Long Island, not too far from Melville, the former subprime capital of the East Coast. (Howie Z, you're next.)
DATA ANNOUNCEMENT: As I noted a few paragraphs up the line, the new 3Q edition of the Quarterly Data Report is out! We also have 12 years of back issues. Many firms buy the QDR as a tool that aides them in making projections about the coming year. Site licenses also are available. Again, if you have questions drop an email to:
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SOMETHING TO THINK ABOUT: If Leland Brendsel had not been booted out of Freddie Mac earlier in the decade would the GSE have bought all those crummy non-prime mortgages and ABS? Leland was a conservative guy, and some veteran industry executives believe he would've passed, or at least been very, very choosy. Of course, we will never know.
THE LAST WORD: Happy Holidays to readers everywhere. I will be in next week, but may fade quickly. (And if you feel compelled to send me a gift, bourbon is always nice. (Just kidding.)) But a leak of confidential regulatory documents would always be welcome. Mail them in plain brown wrapping to: Paul Muolo/NMN; 4401 Wilson Blvd; 9th Floor; Arlington, VA 22203. All leaks will be kept confidential -
