Live from WAMP’s Annual Award Luncheon: VIBE

I'm going to do my best to blog "live" from WAMP's Annual Award's Luncheon at SeaTac.  I all ready lost my first post…so this may be a little etchy.  I will be updating this post throughout the day.   The room consists of half brokers and half correspondents (based on a show of hands).  It's truly great to see this gathering of mortgage professionals who care about their profession.

Deb Bortner of DFI just finished addressing the Mortgage Call Report which will be required of all licensees.  She added that DFI is obtaining software that will allow them to have access to every loan originated if the mortgage company uses a compatible LOS.  Currently Encompass is ready and Calyx and Byte should be ready by spring.   They will use this data to determine who they feel requires a more indepth review.

Regarding credit reports being pulled on licensed mortgage originators.  Deb Bortner says they're "looking for deadbeats".   Transunion is the credit vendor being used and will not allow DFI to share a copy of the report with the LO.  If the LO's credit score is higher (specific score not mentioned), they will not review the entire report.  Otherwise, credit reports are being reviewed for "general financial fitness and honesty".   If a LO has $100,000 in liens or judgements, they will not be allowed to have a license.  DFI is essentially making underwriting decisions reviewing Licensed Washington State Loan Originators as to who is qualified or no longer qualified to originate mortgages based on their credit report.

Deb Bortner strongly recommends that LO's who are required to be licensed (LO's who work for banks or credit unions are not licensed) – DON'T DELAY!  Your renewal and/or license may not be processed in time if you wait too long.

Loan Originator Compensation with Patrick Palmer with Pinnacle Capital and Gary Szymanski with Flagstar Bank.  "What we think we know…."

After April 1, 2011, mortgage originators can only be paid by the borrower or the lender — no blending of the two.  This means that mortgages can only be priced with points or without points: if a borrower wanted a loan priced with a half point, they will not be able to.  

For example, based on the scenario below, the borrower would not be allowed to have the rate of 4.125% since compensation would be coming from the them and the lender.   It doesn't matter that the loan originator would be compensated the same with every scenario.

  • 4.00% priced with 1 point paid by the borrower with zero rebate from the lender.
  • 4.125% priced 0.5% point paid by the borrower with 0.5 pts paid by the lender.
  • 4.25% priced with 0 points paid by the borrower with 0 points paid by lender

The presenters are showing that there is confusion and different opinions on how compensation for LO's will be next spring.  

Brian Chappelle with Potomac Partners in Washington D.C. has examples of compensation.

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The Good Faith Estimate – Present and Future with Andrew Fay, HUD Supervisory Investigative Coordinator and David Friend, HUD Compliance Coordinator via Skype.  (Laura Gipe was not able to participate).  

What HUD's looking for:

Required uses of affiliates – should not be in block 3.  Looking for affiliated business disclosure form.

A credit union rep refused to give Andrew Fay of HUD a GFE unless he paid $100 for underwriting and credit report!  (Obviously not knowing who they were dealing with!) Only a credit report can be charged for GFE.   You must give a GFE on a refi if requested (and 6 points of info provided) - you cannot use "not knowing the address" as a reason to now issue.

When re-issuing a Good Faith Estimate you must make sure you have the "changed circumstance" well documented–especially if it's borrower requested.

Q: Why must we include excise tax and owners title insurance on the GFE?

A: The GFE is a form that is intended to be uniform across the country.  Some states have different laws, regulations regarding excise/transfer tax.  If exclusively assessed to the seller, then some states exempt.   There is no exemption allowed for non-disclosure of the owners policy even if there's a contractual agreement that the seller pays.

Q:  Why have a disclosure document not have a signature line on the GFE?

A:  Because it binding of the LO, not the borrower.   Andrew suggests that borrowers can sign the GFE but you cannot add additional lines–they can sign the top above their names on page 1.   David says additional disclosure form signed by borrower to prove receipt is acceptable.

More answers…and tidbits.

The GFE must detail all fees that are charged to the borrower, even if the lender is paying them.   

The HUD-1 is no longer a disbursement document.  HUD says it's intended to be a disclosure document. 

An in-house appraisal goes in Block 1 and an outside appraisal is to be disclosed in Block 3 of the Good Faith Estimate…"sometimes a LO may wind up having to eat an appraisal fee" ($500 approx)… "they may want to disclose the appraisal fee in both blocks 1 and 3 but then risk looking not so competitive with their GFE".

Dodd Frank Act passed in July transfers the RESPA function over to the new bureau next July.  The statute specially requires the GFE, RESPA and TILA forms must be combined into one document (how many pages??) by July 2012.

Property taxes are not shown on the GFE because HUD feels that the new GFE was intended to only show fees charged by the lender in association with the loan (that conflicts with excise tax and the owners policy IMO)…HUD states that the property taxes are the buyers responsibility with or without the mortgage loan.

If a HUD examiner finds that a "changed circumstance" is not valid or lacks documentation, the GFE that was issued with invalid changed circumstances will be "tossed out".   Documentation is key.

Under the RESPA regulation, the LO is also bound by the TERMS of the loan–not just the terms! (Section 5 of RESPA).   A mortgage originator issued a GFE based on a 30 year fixed rate when it should have been prepared for a 5/1 ARM.  The mortgage company is now holding that mortgage a 30 year fixed with a rate for a 5/1 ARM due to the mis-disclosure.   HUD says the LO checked "no" on all boxes stating as the the loan being fixed and at settlement/closing, received an ARM Note. 

If you issue a GFE with a TBD address, receipt of an address (or once a property is identified) does not constitute a "changed circumstance" where fees may be adjusted for the actual property.  (This is why LO's WILL NOT issue a GFE on a "preapproval" until there is a property identified.

If a LO has to use a different lender after a GFE is issued, they're still bound by the GFE–it's not a "changed circumstance".

Deb Bortner of DFI asks HUD regarding getting the SAFE rules out.   Will HUD issue them or will it be sent to CFFB?  Reply is "We can't answer…that's another department in HUD".

GFE's must be re-issed at the time of lock–this is a qualified "changed circumstance".

Andrew Fay says that there is nothing wrong with issuing multiple GFEs showing different scenarios…the borrower can chose which GFE they prefer.

HUD encourages you to sign up for their RESPA Roundup Newsletter by emailing hsg-respa@hud.gov

Note:  I had to leave after HUD's presentation so this wraps up my "live" post.  Thanks for reading!

Get Out and VOTE

Vote Today's Election Day…and there is a lot of very important issues on the ballot as well as the race for Senator between Murray and Rossi.   My personal belief is that folks who don't exercise their American right and vote shouldn't complain about conditions later. 

Please read up on the issues, do your home work and do not rely on the nasty informericals and robo-calls.   What ever you do, please vote!

Ballots need to be postmarked by November 2, 2010.  If you prefer to not pay $0.44 for postage and you're in King County, you can drop your ballot off at these locations

Mortgage Master Service Corporation is OPEN on Columbus Day

Columbus Day is this Monday, October 11, 2010.   Most banks are closed but Mortgage Master Service Corporation will be open for business.  We will not be able to fund loans however we CAN lock in new rates and process your refinance or purchase transactions.

Both King County and Snohomish County's recorders offices are open.  However Pierce County's recorders office is closed.   Hat tip: The Talon Group.

Bank of America Stays Committed to Correspondent Lenders

Today Bank of America announced that it's existing wholesale lending.

"Bank of America  Home Loans will exit the first mortgage wholesale channel to focus more operational resources toward fulfillment capacity for it's…retail channel…. Bank of America will also devote additional resources toward enhancing its leadership positions in correspondent and warehouse lending…" 

My employer, Mortgage Master Service Corporation, IS a correspondent lender.  And we work with Bank of America as well as Chase (who elected not to terminate their relationship with mortgage brokers a while ago).

Why is this happening to mortgage brokers?  The "why" is debatable and not so simple.  I'm sure that loans originated by correspondent lenders tend to perform better than those by mortgage brokers as a whole.   Correspondents have far more liability (aka "skin in the game") than a broker when originating a mortgage as they have the potential for buybacks down the road or a loan not being purchased by the lender, leaving the loan in their line of credit.   

But…even though I'm technically not a mortgage broker, I find this occassion sad.  There are many outstanding mortgage brokers who have originated stellar loans which have benefited banks.  Wholesale Bank Reps have called on mortgage brokers for years explaining their program guidelines with the hopes of gaining more business for the bank.   After the mortgage broker originates the loan and it closes with that bank, they do their best to retain that client.

By the way, I believe the last "subprime" presentation in our office was by Countrywide (now Bank of America)…oh I wish I had my Livescribe pen back then…I would be able to share my old notes.

Email Issues

Hopefully this is resolved… I'm just home from a quick visit to Spokane and it looks like both of my primary email accounts rhonda (at) mortgageporter (dot) com and rhonda (at) rhondaporter (dot) com went down this morning.   I'm not receiving anything.

I am receiving email at mortgageporter (at) gmail (dot) com so if you need to reach me by email–please use this account or give me a call.

I will update this post once this has been fixed.

UPDATE ~ Sunday, Sept 26 at 10:13 am:  Just received a response via Twitter from Network Solutions.  Many of their clients are experiencing email issues and they are working on this issue as fast as they can.

UPDATE ~ Monday, Sept 27:  Knock on wood–it looks like everything is operating as it should again.  I apologize for any inconvenience.

Mortgage Master Service Corporation is closed for the holiday

Mortgage Master Service Corporation is  closed today in observance of Independence Day.  Our main office in Kent will reopen for business as usual on the morning of Tuesday, July 6, 2010.

The markets are closed today too so I won't be posting mortgage rates today.

Happy Independence Day

One thing I loved about living on North Lake in the West Hill area of Auburn (boarderline Federal Way) is the neighborhood parade they would do on the Fourth of July.

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Mortgage Master Service Corporation will be closed tomorrow in observance of this American holiday and will reopen for business as usual on Tuesday, July 6, 2010.

I hope you have a wonderful, safe and sane Independence Day.

Happy Father’s Day

Dad I think I'm telling my Dad a secret or perhaps, wishing him a Happy Father's Day.  Or perhaps I'm whispering "It's Janette's birthday!" 

I believe this photo was taken at my Grandmother's home in the Renton Highlands…and that my sisters are both wearing my hanad-me-downs.  We all loved dressing up.  This photo must have been celebrating Father's Day or Dad's birthday.

Happy Fathers Day to all the Dads and a very Happy Birthday to my baby Sister, Janette (pictured in the pink dress).