Mortgage Musings and Industry Updates

I had the good fortune and honor of joining the CAMP team at the NAMB conference earlier this week in Washington, DC. NAMB put together an impressive group of speakers for the conference. I will give highlights from three of the main speakers below…
Dear Broker Banker Readers:

It was Mondor on Monday:

Paul Mondor, Senior Attorney, Federal Reserve Board, addressed the room on the topic of Regulations on Originator Compensation in 2010. Mr. Mondor tried to assure the NAMB attendees that it was not the intent of the Federal Reserve Board to ban YSP, describing this as the #1 misconception of the proposed reform. He said there were, in his mind, three types of YSP:

1.       Premium paid for above par pricing
2.       Portion of YSP that can go to LO
3.       Type of YSP that LO has control over and is based on terms and conditions of the loan

He stated the board would like to do away with the third type of YSP. He further stated “terms and conditions” of the loan “may” or “may not” include the loan amount. The “flat fee” compensation model would be based on agreements between loan originators and their employers or lending sources, in the case of brokers. Mr. Mondor cited examples of things that could influence compensation in the proposal. They were:

1.       Loan Volume
2.       Geographic Differences
3.       Competition

He acknowledged that the board received over 4,000 comments during the comment phase and they were reviewing them all.

Tuesday was “The Commish”:

FHA Commission, David Stevens gave the keynote speech during lunch Tuesday.  He was upbeat and gave assurances that he understands wholesale/broker lending and told the attendees that no policies were designed to be eradicate wholesale. He said he felt the broker channel would return to a more robust level. He acknowledged that HUD will be making changes to the FHA program for soundness reasons. But he explained all changes will be screened by three filters:

1.       Impact on Housing
2.       Impact on core mission to serve the underserved
3.       Changes to get capital reserve ratio back in line

He talked on counterparty risk management and mentioned TBW and Lendamerica of examples of companies that competed on credit and failed.

He confirmed that an announcement on the elimination of the Mini-Eagle was very imminent, leading me to think it would be Monday, March 1st. He said he had HUD permission to say from the podium,

“Don’t spend thousands on your financial audit, until you see the announcement.”

This was a direct reversal from Vicki Bott’s instruction to mini-eagles to get re-certified, which she told attendees on Monday from the podium. Ms. Bott is Commissioner Steven’s deputy.  In any event, we can all certainly wait until next Monday.

On the topic of the SAFE Act, Commissioner Stevens, gave us a great idea for a new slogan. He said,
“If you can’t pass the licensing test, go work for a bank!”

I think it would make a good slogan for CAMP. Tee-shirts anyone?

On the issue of the Fed pulling back on buying MBS, the Commissioner said it will be the first test of just how sick the market actually is. If private capital comes in, it is obviously a good sign. If prices rose by .25 to .375, it would indicate some market viability and would be tolerable in his mind. More than that and the government would need to step back in which he said it would. “We need to instill confidence in global investors. Cleaning up our industry, and demonstrating quality is how we do that.”

Ivy Jackson, Director, Office of RESPA addressed our GFE woes:

Ivy acknowledged that there were different methodologies being used in the marketplace for completing the GFE, primarily with regard to the treatment of YSP. She said HUD was hosting a meeting with the biggest industry players to gain some uniformity in methodology and get everyone on the same page with this new disclosure. It appears this has happened, because we are seeing several announcements indicating methodology adoptions in line with the three big banks this week. >

She also made it very clear that fees paid by the seller would have to be disclosed on the GFE unless there was a state law prohibiting the seller from paying it, regardless if it is “customary” for the seller to pay that fee in a particular geographic area. She made the point, that there is no way to document or know what is customary, short of a law or code requiring it. We have seen several large investor announcements this week echoing her words. So, disclose, disclose, disclose.

Wednesday, the Happy CAMPers took to Capitol Hill:

As the contingency from California rolled toward “The Hill” in our shuttle, we dubbed ourselves, “The Happy Campers”.  Hey, a positive attitude always helps! We divided into groups to hit as many legislators as possible. Our message was that we embraced the changes that required a higher level of professionalism in our industry. That we were seasoned professionals that stood ready to assist constituents into homes for the first time or back into homes if they were one of the unfortunates being displaced by the housing crisis. We advocated on being able to retain the use of YSP on behalf of the consumer to assist with closing costs. We also shared concerns over HVCC and other issues. It was a very good day and we could see that our efforts were worthwhile. If you have never been to Washington, DC, I highly recommend you go and drop in on your representatives.

We, at Pinnacle Capital Mortgage, stand ready to support you in 2010 whether as your wholesale lender or banking partner. The best business model that works for you is the one that works for us!

Terri Buckman
VP, Wholesale Lending  & Affiliate Branching
Pinnacle Capital Mortgage
PCM Affiliates
Knowledge On Loan (My personal website)
Cell 925.822.5931
My Blog solely represents my own personal opinions and commentary and does not represent the opinions of any corporate entity or other individual. The intent of this blog is to start conversation on topical mortgage issues. This is not advice and should not be acted on accordingly. Further, this information is intended for mortgage professionals only and is not intended for consumers



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