Overloading the borrower with "CYA" closing documents is a big concern of lenders and regulators alike. Over the weekend I received this note from Steve Sherwood, president of Alerus Mortgage: "A wise attorney, when asked if the client should read all of the closing documents said, 'If you make all of your payments on time there is nothing in the documents that can hurt you. If you don't make your payments on time, there is nothing in the documents that can help you'." Well said.

Hamilton Group Funding is seeking a VP, Regional Manager to develop the Midwest market. HGF is a 10 year old well-capitalized, independent mortgage banker currently operating in 15 states. The location is flexible. This opportunity would allow the Regional Manager to grow their own group of retail branches and loan officers. "Hamilton Group Funding is a fast growing and financially stable firm, giving branch managers and originators the ability to tailor business to the local needs of each market. HGF's experienced operations team supports their branches with consistent 24-48 hour turn times in underwriting and closing, all within a paperless environment." Hamilton offers full benefits, including 401K. Confidential inquires: mark.korell@hgfloans. com, or ross.bennett@hgfloans. com.

Stearns Correspondent Lending continues its growth with additions to the Western Division Sales group. Sean Claypool and Brandon Medhurst have joined the organization to facilitate servicing mortgage bankers with its mandatory, best effort and MSR offering. They join Kelley Johnson to round out a top flight sales force in the West. For more information on becoming a correspondent, or for job opportunities, please visit this page.

And Wyndham Capital Mortgage, Inc. is seeking a senior manager to oversee all production in its underwriting and processing departments. Wyndham is a Charlotte, NC based Direct-to-Consumer mortgage banker with $1.75B originated in 2013 (50/50 purchase/refinance mix). The ideal person will have recently managed the Processing and Underwriting departments for a mortgage banker selling direct to Fannie and other large correspondent investors. "The company is looking for an individual to come in and put their personal stamp on these two departments in order to increase production and efficiency." A solid understanding of managing people, pushing heavy production and top knowledge of FNMA guidelines are a must. Base compensation is in the $100k+ range and the company is willing to go higher based on the candidate's experience. Relocation package is available to the right candidate. Please forward resume and cover letter to Ann Finnegan at ann.finnegan@wyndhamcapital. com.

Let's face it: lenders who ignore compliance are doomed in the long run. Here's a recent quick note provided by the Mortgage Bankers Association of the Carolinas regarding 1099 compensation to branch managers, written by Ari Karen of Offit Kurman and C 3 C Compliance Solutions. "Many lenders still have relationships with branch managers where, in addition to normal W2 compensation, they pay managers money via 1099 for various expenses.  This is particularly true where the manager owns the building or equipment in question.  Of course, there are also scenarios where managers perform outside tasks for the branch, such as marketing, etc. and receive 1099 compensation related thereto. Lenders should be aware that 1099 payments have become a focus for auditors due to the concern that it could be a vehicle for the payment of compensation that is no longer permissible under Dodd Frank. Indeed, both federal and state regulators are paying close attention to such payments attempting to ascertain their legitimacy and basis. Of course, given the mandate to report improper tax practices to the IRS, such payments are likely to be scrutinized from that perspective as well."

The note continued: "To be clear, all expenses should be paid directly by the lender whenever possible, thus minimizing the need for reimbursements.  In those cases where the manager owns the property, a fair market value for the rent must be ascertained based upon a comparative analysis and the 1099 payment should be limited to the fair market range for the property in question.  Beyond that, generally speaking, no additional services or compensation should be payable outside the manager's responsibility for the company.  In other words, whatever services are performed by the manager should be considered part of their job and the compensation for such services paid as part of their employment related wages. Commonly, managers want to receive money via 1099 for tax reasons and write-offs.  Unfortunately, with the increased regulation and scrutiny, the risks from a banking compliance perspective - both for the lender and the manager - have simply become too great.  As such, lenders should reexamine such practices and discontinue them when necessary." Thanks MBAC!

Servicing continues to be in the news. Last week, of course, the New York Department of Financial Services (DFS) Superintendent Ben Lawsky sent a letter to Ocwen as part of its ongoing examination of the company's relationships with affiliates. Specifically, Lawsky's letter asks for additional information regarding OCN's relationship with Altisource and its subsidiary, Hubzu. As the letter states: "One particularly troubling issue is the relationship between Ocwen and Altisource Portfolio's subsidiary, Hubzu, which Ocwen uses as its principal online auction site for the sale of its borrowers' homes facing foreclosure, as well as investor-owned properties following foreclosure... Hubzu appears to be charging auction fees on Ocwen-serviced properties that are up to three times the fees charged to non-Ocwen customers." The letter requested responses to eight sets of questions by April 28. It has become clear that the DFS' primary concern is regarding OCN's affiliate relationships as opposed to the on-boarding of large MSR transfers. Please see page 3 of this document for Compass Point's cool "map" of OCN and its affiliated companies.

(Speaking of Altisource, it announced an increase of $100 million to its existing Credit Suisse credit facility to $200 million. This brings total borrowing capacity across its facilities to $850 million. Assuming full drawdown of the company's available borrowing capacity, leverage would total 0.6x (debt/equity) based on the company's $1.3 billion equity base.)

Recently I've seen more MSR tapes come across my desk; I'm more than happy to pass along package characteristics, and even though we do not have access to final bid prices, its value can be derived implicitly by those managing loan servicing portfolios. The following are all packages I have seen trading the last two weeks of April. MIAC is the exclusive rep for a national seller, and is offering a $180.0M FNMA, FHLMC and GNMA mortgage servicing portfolio, with full representations and warranties for the loans in the package. The pool characteristics, with bids due April 30^th, is:  $267,217 Average Loan Size, 97.64% Fixed rate loans and 2.36% ARM loans, 65.58% FNMA_A/A , 23.51% FHLMC Gold, and 10.91% GNMAII loans, WAC of 4.502%, Weighted average delinquency rate of 0.44%,  WaLA of 2 months, 100% retail, 100% full doc, with a geographic concentration in California. Interactive Mortgage Advisors, LLC is offering $5-10 million per month in Arizona Fannie Mae co-issue mortgage servicing rights. Potential buyers are asked to submit bids (which were due April 24^th) in the form of a pricing matrix, which will allow the Seller to sell loans direct to Fannie Mae and simultaneously sell the servicing under a monthly co-issue structure. The packages are 100% retail originations, with an average loan balance of $219k, with a WaFICO of 750.

I am in Chicago and Virginia this week, but if you're in Northern California in early May, the Silicon Valley Chapter of CAMP is holding its annual Mini Fair on Friday, May 9^th and the group is looking for a great turnout. "In addition to having a full house of mortgage sponsors and exhibitors, we are going to have two fabulous panel discussions. The morning session will address current compliance and regulatory issues. The afternoon session is going to include a panel of local technology specialists who are going to discuss how the mortgage practitioner can improve their digital marketing activities." 

Secure Settlements told clients that it has enhanced its Closing Guard agent vetting program to encompass the verification and certification of agent internal controls.  This new feature helps lenders meet CFPB requirements that vendors have appropriate data privacy and security and consumer protection policies internally. SSI will be releasing on June 1st "QuickCheck Professional", which will provide a detailed and automated background risk assessment report on any third party vendor required by a lender to be screened for risk.  The report will cover appraisers, brokers, 203K consultants, financial planners, credit counselors, real estate agents, property managers, sub-servicers, collection agencies, REO companies and virtually anyone with whom a lender is sharing any business and consumer information. All data is verified and evaluated by risk analysts to provide the highest accuracy. 

First American Title sent a note to its title agents and clients warning them of phishing scams. (First American, by the way, reported results late last week; revenues were down 12% from a year ago).

Fannie Mae has clarified several requirements for lending in small towns and rural areas, including allowing small lenders to be "excepted" under AIR when they are not sufficiently staffed to have a distinct separation between production and quality assurance functions, provided that they can demonstrate documented safeguards and processes to separate their collateral evaluation processes from origination processes.  With regard to appraisals, appraisers of properties in towns with few sales may travel greater distances to appraise comparable properties or use older transactions if they provide a thorough narrative that covers current market conditions and available market data along with the analysis of the subject property.  Adjustments may also exceed the usual 15% net and 25% limits on variations from the comparable sales price.

PHH Mortgage has weighed in on conventional underwriting guidelines regarding tax returns. The guidelines concerning the requirement for signed copies of Federal tax returns have been amended to provide an alternative to the signed copies. When tax returns are required, one of the following must be provided: Copies of the original tax returns filed with the IRS, including all schedules, signed by the borrower; or Transcripts of the federal tax returns. In some cases, tax transcripts may not include all schedules or other detailed information required to determine qualifying income. In those cases, complete copies of the federal tax returns must be obtained from the borrower. Each return must be signed by the borrower unless a completed and signed IRS Form 4506-T for each required year is provided.

We can't even have a definitive measure of the whether or not the housing market is doing well or not. Last week the markets were focused on poor home sales, but noticed that the prices had gone sky high. Yesterday we learned from NAR that contracts to purchase previously owned U.S. homes climbed in March by the most in almost three years, showing residential real estate was starting to stabilize entering the spring selling season. Pending Home Sales were up 3.4%, the first gain in nine months.

To be frank, there was no earth shattering news Monday to move the markets, and it decided to sell off slightly rather than rally slightly. It happens, right? Today the markets will have a little more to chew on: 8AM CST's February S&P/Case-Shiller Home Price Index, which is expected a bit lower, and 9AM CST's April Consumer Confidence numbers. For numbers, we saw a 2.68% yield on the benchmark 10-yr T-note at close on Monday, and in the early going it is now 2.72% and agency MBS prices are worse about .125