6.5.24 CFPB Registry; Visio Lending's Jeff Ball on DSCR; Risk-off Sentiment

Thanks to today's podcast sponsor, Visio Lending. Visio is the nation's premier lender for buy and hold investors with over 2.5 billion closed loans for single-family rental properties, including vacation rentals. Visio is fast, simple, and dependable when it comes to financing rental properties. They believe time is money, and strive to be upfront and consistent about their qualifications. Using a simple DSCR rather than a complicated NOI calculation, there are no tax returns or personal financial statements, and their pricing is set, so you always know your rate. Learn more, including about Visio’s top-notch broker program, at https://www.visiolending.com/. 

Transcript

I head to San Diego today, home to an estimated 300-500,000 roaming feral cats! Cat fans are quick to point out that the word “homeowner” has the word “meow” in it. (Try pronouncing it with the “meow” in there.) My cat Myrtle will never be herded, likes her privacy, and has never been a fan of the Consumer Finance Protection Bureau (although she has found some employees palatable). She especially seems displeased with what she views as, a CFPB power play combined with Big Brother tactics. (Details below.) Veering away from mortgages, but continuing with the Big Brother theme, Road & Track reports that California just passed a bill that will require cars to warn drivers whenever they drive more than 10 mph over the speed limit. The California Senate passed SB 961, which would require half of all new cars built or sold in the state to include passive speed limiters by 2029, and by 2032, that figure will rise to 100 percent. If it passes the Assembly and is signed into law, the new regulation will apply to all passenger vehicles. (Today’s podcast is found here, and this week’s are sponsored by Visio Lending. Visio is the nation's premier lender for buy and hold investors with over 2.5 billion closed loans for single-family rental properties, including vacation rentals. Hear an interview with Visio Lending’s Jeff Ball on the unique challenges in delivering an outstanding customer experience on non-QM loans.)

Software, products, and services for lenders and brokers

_________________________________________________

“Normally, I’d have to request a most recent pay stub from the borrower and wait for that to be sent over, but since she completed Truv, I just ordered a refresh report, made sure OT has been steady since I pre-approved her, and was able to finalize everything within a couple of minutes.” says Clark Jarstfer, Branch Manager at GVC Mortgage about a recent borrower. Truv’s digital income and employment solution will cut your closing time by 2-3 days and save you up to 80 percent with free re-verifications. Request a demo today!

Whether you are a broker ready to make a splash, a small to midsize lender eager to grow market share, or a large institution grappling with a loss of technology resources due to downsizing, Dragon9 Partners is your strategic ally, offering tailored solutions to help you navigate the ever-changing mortgage market. Dragon9 Partners is a global technology advisory and consulting firm with a team of business and technology executives with deep mortgage lending and servicing experience and a strong track record of delivering value-added solutions and successes to our customers. We understand how to align business needs with technological solutions and identify opportunities to improve your bottom line. We can help you build technical and call center infrastructures, integrate with any LOS ecosystem, establish front and back-office applications, address cybersecurity challenges, and be your technology partner, innovator, and supporter. Contact us here for a complimentary cybersecurity readiness assessment.

Covius’ HOA Services can help you satisfy a requirement of the VA’s new Servicing Purchase Program (VASP). This modification program requires servicers to identify outstanding HOA dues and assessments and include these in the payoff before offering the borrower a VASP Modification. Not sure which properties in your portfolio are subject to an HOA? If you are, do you know that all HOA fees and assessments are current? Covius’ HOA Services identify which properties belong to an HOA and, among those, where there are delinquencies, the fees, payment frequency, balance owed and all available documentation. Covius removes the uncertainty so you can begin offering assistance to borrowers immediately. In 1Q24 loans for the top 10 servicers of VA loans carried an average 90-day delinquency rate of 1.25 percent with the highest delinquency rate of 1.99 percent. Servicers must start offering VASP modifications by October 1st. Are you ready? Contact Jason Tufaro, VP of Business Development (407.232.5606) to learn more about your options.

National Homeownership month is a great time to ask, “Am I doing all I can to support my borrowers?” If you’re not connecting them with down payment assistance (DPA), the answer may be no. If DPA is something you’ve thought about, but not operationalized, now is the time. Down Payment Resource’s suite of software tools makes it easy to match borrowers with the more than 2,300+ programs in DPR’s database so you can qualify more customers and lower your declines, especially among LMI buyers. If you’re an Encompass user, even better. DPR’s integration with the Encompass® LOS by ICE Mortgage Technology uses loan app data to automatically match borrowers with programs and guides underwriters through requirements, including product overlays. To learn more, schedule a demo.

In a cyclical mortgage industry, now is an excellent time to prepare for the next phase. Investing in automated processes can help mortgage businesses improve efficiency and reduce costs. A bank partner like Western Alliance Bank’s Specialized Mortgage Services Group can also advise on how to increase efficiencies and optimize outcomes when business increases, without requiring a big accounting staff-up. A customized suite of treasury management solutions and automations can power back-office operations so mortgage professionals can focus on loan origination. How well-equipped is your mortgage company’s financial toolbox? Explore the full article for insights on navigating the evolving mortgage industry landscape. If you have any questions, contact Treasury Management specialist Chris Martin. Our bankers Mark Short, Nicole Avey, Jim Karr, Elizabeth Mix, Nick Richards and wholly owned subsidiary AmeriHome Mortgage are also on hand. Western Alliance Bank, Member FDIC.

Have you heard about the laws the FCC and the TCPA have implemented for the new A2P 10DLC requirements? Hopefully you have, because the fines for noncompliance are serious. ALL texting through mortgage CRMs falls under this federal law, it is imperative that you utilize texting legally and compliantly. What have your CRM providers done to help you navigate this challenging compliance landscape? Usherpa is pioneering the way on this front, making sure their texting platform was built to the letter of the law ensuring that their clients are not exposed and are utilizing texting legally. As a newly vetted Preferred Partner by The Mortgage Collaborative (TMC), Usherpa is hosting an informative webinar via TMC Connect about 10DLC compliance and regulations on June 20. This webinar is open to all mortgage professionals. Register today! Here’s a bonus Infographic to share with your team.

We recognize the rise of artificial intelligence (AI) and machine learning (ML) applications have changed the way providers in our industry do business and acquire their property data. That’s why we are highlighting First American Data & Analytics as an innovative industry leader leveraging these technologies. With more than 20 patents and continued investment into data extraction technology, the company compiles data rapidly and efficiently via property documents from Assessor and Recorder offices nationwide, bringing the largest and most comprehensive property and ownership dataset to the market. This means your business gets the most complete, current, and quality coverage from a single-source provider. Trust in First American Data & Analytics’ data to build your biggest ideas, run analysis against your own database, or even for property or homeowner research. The possibilities are endless: Learn more about First American’s data.

Correspondent & broker products

_________________________________________________

“eRESI Mortgage LLC is gearing up for a hot summer with many exciting updates to announce! We recently improved our LLPAs in several areas. Also, we're delighted to welcome Georgann DeGennaro to our business development team for the Northeast. Georgann brings her expertise and passion to help us better serve you. She is attending the MBA-NJ Regional Conference in Atlantic City this week and is ready to discuss how our correspondent platform can help grow your business. Additionally, we want to congratulate our SVP of Correspondent Lending, Lisa Schreiber, for being recognized as one of PROGRESS in Lending's 2024 Most Powerful Women in Fintech. It's a testament to our dedicated and knowledgeable team, which provides best-in-class client service and “next level” liquidity. Please reach out to your eRESI Representative or email sales@eresimortgage.com for more information.”

The Home Lending Correspondent team at U.S. Bank now offers Encompass Investor Connect™ powered by ICE Mortgage Technology®! Encompass lenders working with U.S. Bank will benefit from quicker loan delivery, higher first-pass rates, and faster purchases. Additionally, the Home Lending HFA team at U.S. Bank is pleased to announce the start of the migration of our housing finance agency partners and their participating lenders to our new technology platform - U.S. Bank HFA Lender Portal. The Lender Portal offers lenders and housing finance agencies features to simplify loan delivery and funding, including pipeline management, conditions management, document management, lender workflow, and access to user and training guides. These strategic expansions reinforce U.S. Bank’s dedication to comprehensive client solutions. To learn more, please contact a U.S. Bank account executive.

The CFPB’s Nonbank Registry

_________________________________________________

I grew up watching World War II movies where the Nazis were always asking for people’s papers, and groups of people were rounded up and shipped off, based on various “registries.” For “their own good,” and those around them, as I recall.

At first glance one might think that the CFPB’s latest move falls into this category, but… Maryland attorney J. Steven Lovejoy, Esq. sent a note addressing the new regulation creating the “Nonbank Registry” of state and federal enforcement orders.

“On June 3, 2024, the Consumer Financial Protection Bureau (‘CFPB’) issued a sweeping new regulation establishing a mandatory ‘Registry’ for non-bank financial service providers. This rule, (the ‘Rule’) which will become 12 C.F.R. Part 1092, applies to, among others, virtually all non-depository mortgage companies. It does not apply to individuals. This measure, which becomes effective September 16, 2024, requires all non-depository mortgage companies to register with the CFPB any regulatory enforcement orders naming the company as the defendant or respondent that involve violation of a federal consumer protection law, or a state consumer protection law, regulation, or order specified state-by-state in the Rule’s Appendix ‘A.’

“The registry requirement applies to any enforcement order, including consent orders, which were dated January 1, 2017, or thereafter. The Rule also requires a company-designated official to report annually to the CFPB the steps the company has taken to comply with each registered order. This requirement does not apply to a Memorandum of Understanding or an ‘Agreement’ unless the document constitutes an ‘order’ of the issuing agency.

“At first blush, this looks like yet another burdensome layer of bureaucratic reporting requirements. However, digging a little deeper yields a different result. Firstly, the list of state statutes in Appendix ‘A’ does not include mortgage licensing provisions. It is an exclusive list, so if an order does not specify a violation of any of the listed statutes or a federal consumer protection law, then it is not reportable to the CFPB under this Rule. I did a quick check on a few clients that I knew have received post-1/1/2017 enforcement orders. None of the orders I reviewed were based on violations of the laws listed in the Rule’s Appendix ‘A.’ Therefore they are not reportable.

“Secondly, The Rule provides that if an order is posted on NMLS (which, for mortgage companies is mandatory) there is only a one-time registry requirement. The company simply provides information to the CFPB (on a form presumably that will follow) sufficient to identify the company and the order as posted on NMLS. If the order is posted on NMLS, the company also need not file annual reports detailing implementation measures it has taken to comply with the order.

“Companies should consult with their counsel if any enforcement orders have been filed against them after 1/1/2017 to determine whether they are reportable under this new Rule.” Thank you!

The CFPB’s latest move prompted one veteran lender to send, “But the CFPB cannot say what is a Section 8 violation, they will not ban ‘teams’ as unlicensed brokers, and the list of non-enforced regulations is ramped. I have had 3-4 conversations with a mutual acquaintance at the Bureau, including one on teams. He stated, ‘You gave us more information than we were able to amass in 9 months in the past 15 minutes.’ Yet nothing has been done for 12 months. Heck, they still haven’t said if the HUD Letter 2022-22 was legal; that’s after HUD said they cleared with CFPB and CFPB said HUD only asked if they had to have MLO Licenses, and CFPB was looking at it as a Section 8 violation. That’s now 18 months old and becoming a major issue with the NAR changes.

“The CFPB lacks clear direction or enforcement of the current regulations. Worse, it will not fix the regulations that do not work. Look at QM, it has created the leading cause of mortgage fraud, no kidding.”

Capital Markets

_________________________________________________

Historically stocks are viewed as riskier than bonds. “Risk-off” sentiment continued yesterday, meaning money managers and investors bought fixed-income securities, driving bond prices higher and yields lower for the fourth consecutive day as weak employment data boosted odds of Federal Reserve easing in 2024. The latest JOLTS report showed job openings fell to 8.059 million in April from 8.355 million in March, the lowest reading since 2021.

The May jobs report on Friday, expected to show payroll employment growth under 200k for a second month in a row, is a more important data point than JOLTS, but that didn't stop bets that the Fed will be able to ease rates before year end from increasing yesterday. Odds are now above 50-50 of a rate cut in September. Keep in mind that we are in the quiet period ahead of the June FOMC meeting next week, so there won't be any “Fedspeak” this week for markets to digest.

Mortgage applications from MBA kicked off today’s economic calendar, decreasing 5.2 percent from one week earlier. We’ve also received ADP employment for May (+152k versus expectations of +180k, down from 192k previously). Later today brings the final May S&P Global services PMI, ISM services PMI for May, and the latest monetary policy decision from the Bank of Canada, where it expected to cut rates by 25 basis points to 4.75 percent. After the ADP employment data, which is always of questionable correlation with the government employment data, we have Agency MBS prices little changed from Tuesday’s close and the 10-year yielding 4.33 after closing yesterday at 4.34 percent; the 2-year is at 4.77.

As a butcher is shooing away a dog from his shop, he sees a $10 bill and a note in his mouth, reading, “5 lamb chops, please.” Amazed, he takes the money, puts a bag of chops in the dog’s mouth, and quickly closes the shop.

He follows the dog and watches him wait for a green light, look both ways, and trot across the road to a bus-stop. The dog checks the timetable and sits on the bench. When a bus arrives, he walks around to the front and looks at the number, then boards the bus. The butcher follows, dumbstruck.

As the bus travels out into the suburbs, the dog takes in the scenery. After a while he stands on his back paws to push the “stop” bell, then the butcher follows him off. The dog runs up to a house and drops his bag on the step. He goes back down the path, takes a big run, and throws himself, Whap!, against the door. He does this again and again. No answer. So, he jumps on a wall, walks around the garden, beats his head against a window, jumps off, and waits at the front door. A big guy opens it and starts cursing and shouting at the dog.

The butcher runs up and screams at the guy, “What the hell are you doing? This dog’s a genius!”

The owner responds, “Genius, my a$$… It’s the second time this week he’s forgotten his keys!”

Visit www.robchrisman.com for more information on our industry partners, access archived commentaries, or to subscribe to the Daily Mortgage News and Commentary. If you’re interested, visit my periodic blog at the STRATMOR Group web site. The current blog is titled, “Catastrophe and Climate Risk Is Only Increasing”. The Commentary’s podcast is live and at any place you obtain your podcasts (like Apple or Spotify).

qoɹ

(Market data provided in partnership with MBS Live. For free job postings and to view candidate resumes visit LenderNews. This newsletter is for sophisticated mortgage professionals only. There are no paid endorsements by me. For up-to-date mortgage news visit Mortgage News Daily. For archived commentaries, or to subscribe, go to www.robchrisman.com. Copyright 2024 Chrisman LLC. All rights reserved. Occasional paid job & product listings do appear. This report or any portion hereof may not be reprinted, sold, or redistributed without the written consent of Rob Chrisman.)