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These
last few months, the main theme of our
newsletters has been vital Industry
Checks & Balances ... your
processor is probably the singular most
important individual involved in all of
the moving parts of mortgage
origination.
Her loyalty should not be to the
customer or the loan officer, but 100%
to her employer; with her allegiance to
the sanctity of the process.
No matter how you have your company
organized, this piece of the origination
routine, should not be compromised,
commissioned, or somehow thought of as a
lessor position in the organization. If
there comes a time to cut staff, this
should be the last one to go.
Improving the credibility of the
industry is YOUR job, not anyone else.
It all starts with a solid, reliable and
genuine borrower loan package, and
you avoiding those wholesaler lenders
who offer big commissions tied to
reckless lending standards for customer
approvals. It's NOT about all the
money you can make. If that's how
you were trained, get it out of your
head! It's that attitude that nearly
killed the golden goose.
Fed
Sees Subprime Revival in Tough Revision
of HOEPA Rules
A new era of subprime lending is set to
begin in the fourth quarter of 2009. The
Federal Reserve this past week finalized
its revision of rules for the subprime
market, with lenders winning few
concessions compared with what was
proposed in December. Fed Governor
Randall Kroszner said the revision of
sections of Regulation Z that implement
the Home Ownership and Equity
Protection.
Federal
court not persuaded by Unofficial HUD
opinion
Federal courts have haggled for years
over whether to grant deference to HUD's
RESPA Statements of Policy, which are
HUD's official interpretations of the
rule. But do administrative
interpretations of rules written by HUD
employees hold up in court? One federal
court has recently said no, finding that
a HUD employee's affidavit did not merit
court deference.
Sign
of The Times
MBA Chief Kempner Departing at
Year-end:
Mortgage Bankers Association president
Jonathan L. Kempner is resigning from
the trade group effective year-end,
sources close to the trade group told
National Mortgage News. An announcement
about his departure will be made later
in the afternoon on Tuesday. Washington
officials who have worked at MBA said
the group is losing members as the
nation's mortgage crisis worsens. It
also is having trouble leasing its new
office building, noted one former MBA
executive.
The
Ratings Report
An extensive 10-month examination of the
three major credit ratings agencies
uncovered significant weaknesses in
their practices and the need for
remedial action, the Securities and
Exchange Commission said last week.
Standard & Poor's Ratings Services
issued a recent statement indicating its
loss severity assumptions for
transactions issued in 2006 can likely
withstand our projected additional 10
percent home price decline. S&P
announced it lowered ratings on 77
classes of mortgage pass-through
certificates from 22 subprime
residential mortgage-backed securities
from various issuers as a result of the
collateral performance. S&P also
said that it lowered ratings on 118
classes from jumbo RMBS issued in 2005
and 2006 based on its opinion that
projected credit support is insufficient
to maintain the previous ratings.
Executive
Summary of New TILA Rule
Most provisions of the new Truth In
Lending Act rule announced by the
Federal Reserve Board become effective
on Oct. 1, 2009. The requirement to
establish an escrow account for property
taxes and insurance in connection with
higher-priced mortgage loans (a new
category of loans added by the rule) is
effective on April 1, 2010, (or Oct. 1,
2010, for higher-priced mortgage loans
that are manufactured home loans). The
board advises in the preamble to the new
rule that "nothing in this rule
should be construed or interpreted to be
a determination that acts or practices
restricted or prohibited under this rule
are, or are not, unfair or deceptive
before the effective date of this
rule." This appears to be an
attempt by the board to preclude claims
that certain existing practices
constitute unfair or deceptive practices
simply because the practices will be
prohibited by the new rule.
Investigator:
'Fraud for Housing' Still Fraud
Even though mortgage fraud for housing
"doesn't seem quite as
violent" as mortgage fraud for
profit, it has its own consequences,
according to a representative of the
Florida Office of Financial Regulation's
Bureau of Financial Investigations. Rui
Goncalves told attendees at the Florida
Association of Mortgage Brokers annual
convention in Kissimmee, Fla., that
fraud for housing is "more of a
temptation" because it is easy for
people to think they are trying to help
someone get into a home. But those who
participate might not realize the
consequences, even if the loan never
goes into default. For example, having
unqualified buyers in the market
competing for properties drives up
prices, and eventually there will be a
crash, Mr. Goncalves said. He called on
originators to strive for transparency
in their dealings and to ask questions
of their customers.
Biggest
Story Since YOU Been in the Biz!
Bush Signs Housing Bill
President Bush signed a landmark housing
bill to shore up the nation's housing
finance system in a closed meeting early
Wednesday morning, and he did not issue
a statement. The massive housing bill
includes the president's initiatives to
modernize the Federal Housing
Administration mortgage insurance
programs and strengthen regulation of
the housing government-sponsored
enterprises. However, President Bush
strongly opposed a provision in the bill
that provides cities with $3.9 billion
to buy up foreclosed properties.
Administration officials also resisted
the inclusion of a special FHA
refinancing program that is supposed to
help 400,000 struggling homeowners avoid
foreclosure. Senate Banking Committee
Chairman Christopher J. Dodd, D-Conn.,
met with top administration officials
Tuesday evening and pressed them to get
the FHA refi program up and running by
Oct. 1. It was a "constructive
meeting," a committee staffer said.
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