Tag: Independent Mortgage Bankers

mortgage-predictions-lenders-jack-of-all-trades
Mortgage Industry Trends

More Predictions for the Future of Mortgage Lenders

Michael Vitali / September 14, 2016

Some now believe that independent mortgage lenders cannot survive strictly by originating mortgage loans. They believe such lenders need to expand their business lines to include other financial products desired and needed by consumers. (Survival) For years, large Banks have moved in and out of mortgage lending depending on rates and risks, developing and offering other financial products and services…

Continue Reading→

Banxit-FHA-Mortgage-independent-mortgage-banker
Mortgage Industry Trends

Another “Exit” Provides Opportunity

Michael Vitali / June 30, 2016

While Britain’s exit from the European Union is all the talk, the exit of the big banks from FHA lending offers an increased opportunity for Independent Mortgage Lenders and smaller Community Banks. “Banxit” has left the FHA-insured mortgage financing mainly in the hands of the independents. With the turmoil over the UK’s move, it seems that mortgage rates in the…

Continue Reading→

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…

Continue Reading→

Ginnie-Mae-Hurdles
Mortgage Compliance

One More Hurdle for Mortgage Lenders

Michael Vitali / September 25, 2015

As if the housing crash, more regulations, increased agency scrutiny and CFPB oversight didn’t create enough challenges for Independent Mortgage Bankers, along comes potential new Ginnie Mae increased cash and liquidity requirements (Ginnie Requirements). With Independent Mortgage Bankers taking a lead role as issuers of Ginnie securities, along comes a concern that such lenders may not have the financial capacity…

Continue Reading→

Cheaters Never Win
Mortgage Compliance

Don’t Cheat Yourself

Michael Vitali / April 14, 2015

This one is short and to the point. There are other laws governing mortgage lender’s activity besides the much talked about and referenced TILA and RESPA. Under the SAFE Act, loan originators working for independent mortgage lenders (non-banks) must be licensed and also must complete a certain number of hours each year in continuing education. States in which the Loan…

Continue Reading→