CFPB-MSA
Mortgage Compliance

CFPB Offers Guidance On MSAs

Michael Vitali / October 8, 2015

Well, not really. The CFPB issued a long-awaited bulletin today (CFPB Bulletin 2015-05) labeled as their guidance on the use of Marketing Services Agreements (MSAs). The only real guidance that I could determine from reading the bulletin is not to be in an MSA arrangements. If you are, you do so at your own peril. The bulletin highlighted several enforcement…

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TRID-Arrived
Mortgage Industry Trends

The ABC’s of MSA’s

Michael Vitali / October 7, 2015

Now that TRID has arrived, with QM and ATR in the rear view mirror, the CFPB may start looking around for other areas of intended consumer protections. One which has recently come to light is MSA’s – Mortgage Services Agreements. Richard Cordray, CFPB’s Director, has made it pretty clear that he does not like these type arrangements as they may…

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Happy-Birthday-TRID
Mortgage Compliance

Happy Birthday TRID

Michael Vitali / October 5, 2015

Well, it’s finally here. Like it or not, TRID is born and for new loan applications taken, as of Saturday (10/3), lenders are required to follow the new rules. Mortgage lending may never be the same. Everybody sing and everybody dance… For the past 18 months, lenders have been primping and prepping to be ready for the roll out of…

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Freddie-Mac-Policy-Changes
Mortgage Compliance

Freddie Mac Underwriting Policy Changes

Gerry Glavey / October 2, 2015

September & October 2015 will go down as an important period of time for the implementation of many substantial credit and compliance policy & procedural changes for the mortgage lending industry. Many of our past LoanLogics Blogs have focused on the roll-out of FHA’s 4000.1 Handbook and the numerous policy changes that became effective for transactions obtaining their FHA case…

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A couple of days ago, I wrote about some unintended consequences of the increase in government regulation on mortgage lenders. Recently, more and more banks are quickly moving away from FHA lending because of what they believe to be increased risk. Increased risk from the type of borrower involved, from the new Dodd-Frank rules and from FHA certification requirements. JPMorgan has just about eliminated all FHA lending (FHA Exodus). Other main banks are following suit. Wells Fargo recently announced they have increased the minimum credit score for FHA insured loans from 600 up to 640. In the world of credit scores, this is a big jump. This is not good for first time and low to moderate income homebuyers. This means that it may adversely affect all borrowers up the chain. This could stymie the so called “housing recovery.” But wait…it appears the Independent (non-bank) Mortgage Lenders are picking up the slack. At least for now, Independents have increased their share of the FHA lending. In doing so, they have also increased their share of the risks. What do the Banks see that the Independents do not? The risks are virtually the same; same Dodd-Frank rules, same FHA certification requirements, and the same borrowers. So, why do the Independents tread where others fear to go? Why do Independent Lenders believe they will succeed? Maybe, it’s that great entrepreneurial spirit which has always been a driving force behind the Independents’ success. Or, is it that here lies some low hanging fruit left behind by the Banks’ exodus? Either way, Independents need to be very careful when doing this lending. The rules have changed and the stakes are high. Problems, defects and/or rule violations may lead to severe penalties levied by CFPB, FHA and/or DOJ. This is serious business. If a lender is found to have violated FHA lending and insurance requirements, the lender may not only be fined but may also lose the privilege to originate FHA loans. That can be devastating to a lender that had modified its plans to increase their FHA business. All the more reason you must focus on “QUALITY.” This is the key word. Not just volume, but the origination of loans that will stand the test of time (and of course, a CFPB audit). Unfortunately heretofore quality has been overlooked in the interest of volume and profit. No more can lenders afford to manufacture poor, defect-laden loans. This will be their death knell. It may sound a little dramatic - but it’s true. Investing the money and time to train staff, implement systems and review loans to ensure quality and compliance will pay a lender huge dividends. Opportunity now exists for Independent Lenders to increase their FHA business. They can also make inroads with customers, being consumers, realtors and builders, to also get a crack at more conventional business. They must be compelled that any business is done the right way to ensure quality, compliance and loan performance. I don’t know if the Banks’ strategy to exit FHA lending is the right move, but I do know it presents some good opportunities with increased challenges for Independent Lenders. How they originate these loans and meet these challenges will determine their success. Trash or treasure; it’s all up to you.
Mortgage Compliance

Is One Man’s Trash – Another Man’s Treasure?

Michael Vitali / October 2, 2015

A couple of days ago, I wrote about some unintended consequences of the increase in government regulation on mortgage lenders. Recently, more and more banks are quickly moving away from FHA lending because of what they believe to be increased risk.  Increased risk from the type of borrower involved, from the new Dodd-Frank rules and from FHA certification requirements. JPMorgan…

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False-Claims-Act
Mortgage Industry Trends

Whistleblower Earns 5.15 Million

Michael Vitali / September 30, 2015

A recent settlement was made between the Department of Justice and Walter Investment to the tune of $29.6 million under a False Claims Act action. The whistleblower who brought the violations to the attention of the DOJ was paid $5.15 million as his share of this recovery (FCA Settlement). Nice pay day! This is important for two reasons; 1) in…

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