Have you ever heard of the AARMR? I know – as if this industry needs yet another acronym. Pronounced by those “in the know” as “armor,” it is the American Association of Residential Mortgage Regulators. If you have a hankering to spend time in Florida in August, the group is having its annual conference this week: http://aarmr.org/annual-conference. Critics would say that any sane organization would have its conference somewhere else in August, or some other month in Florida; proponents say the hotel rooms are cheap during this time of the year. Regardless, wouldn't it be nice for multi-state lenders to deal with one regulatory body instead of dozens? Perhaps this group will help that concept move forward.

In the last week or two the Consumer Finance Protection Bureau has been busy, cumulating with Friday's TRID proposals.

On July 25 the GAO released a report titled "Mortgage Servicing: Community Lenders Remain Active under New Rules, but CFPB Needs More Complete Plans for Reviewing Rules." At the request of the House Committee on Financial Services, the GAO report outlines and analyzes the effect of the CFPB's 2013 mortgage-servicing rules and the banking regulators' implementation of the Basel III framework on credit unions and community banks' (collectively, community lenders) mortgage servicing activities. Specifically, the GAO report examines (a) community lenders' participation in the mortgage servicing market, as well as the potential effect of the new mortgage servicing rules on them, (b) the potential impact that the Basel III framework could have on community lenders' decisions to hold or sell Mortgage Servicing Rights (MSR), and (c) regulators' processes for estimating the impact of the new regulations. Law firm BuckleySandler did a nice write-up: read more here. 

A few days before that the CFPB and the Federal Reserve released proposed rules detailing the method for adjusting the dollar thresholds in Reg. Z (TILA) and Reg. M (Consumer Leasing Act) for exempt consumer credit and lease transactions.

And the CFPB, the Federal Reserve, and the OCC released a proposal on "Method to Adjust Threshold for Exempting Small Loans from Special Appraisal Requirements." The Dodd-Frank Act amended TILA to establish special appraisal requirements for higher-priced mortgage loans (HPMLs). To implement these requirements, the OCC, NCUA, CFPB, Federal Reserve, FDIC, and FHFA issued final rules that became effective on January 18, 2014. BuckleySandler also did a write-up about it here. 

But what has garnered the most attention in recent days is the Consumer Finance Protection Bureau issuing a proposed rule with a request for public comment containing both substantive amendments and technical corrections to the "final"TILA-RESPA Integrated Disclosure (TRID) rule that became effective on October 3, 2015. In a press release the CFPB advised that the Proposed Amendments are "intended to formalize guidance in the rule, and provide greater clarity and certainty." Comments are due on or before October 18. Here's your chance to comment - don't grouse about it afterward! But it isn't a light read: the amendment is 293 thrilling pages to the TILA-RESPA Integrated Disclosure rule.

The CFPB is proposing that the final rule based on the proposal would be effective 120 days after publication in the Federal Register, but is expressly requesting comment on the timeframe to implement the Proposed Amendments. The proposed changes are based on previous informal guidance that are meant to provide "potential discrete solutions to specific implementation challenges." Among these challenges addressed are establishing tolerances for total payments (and how they relate to finance charges), expand the reach of the partial exemption rule, clarification on coop classifications (as real property which varies by state laws), and the sharing of disclosures with the various parties within the origination process.

There are four proposed amendments that attracted the most attention. The first would create a tolerance for the total of payment calculation. Before the Know Before You Owe mortgage disclosure rule, the total of payments disclosure was determined using the finance charge as part of the calculation. TRID changed the total of payments calculation so that it did not make specific use of the finance charge. The Bureau is now proposing to include tolerance provisions for the total of payments that parallel existing tolerances for the finance charge and disclosures affected by the finance charge. This change would make the treatment of the total of payments disclosure consistent with what it was prior to the Know Before You Owe mortgage disclosure rule.

It seems that this would provide creditors with greater flexibility to use the Closing Disclosure to reset tolerances. (TRID rules dictate that only the Loan Estimate may be used to reset tolerances, subject to a narrow exception that permits a creditor to use a Closing Disclosure to reset tolerances when the creditor would not have sufficient time after learning of a change to be able to issue a new Loan Estimate and also satisfy the pre-consummation waiting period requirements under the TRID rule.) The CFPB proposes to expand the exception to include both (1) the current situation that is based on the timeframe between when a creditor learns of a change requiring revised disclosures and the consummation of the loan, and (2) any situation in which a CD has already been issued.

The second would exclude recording fees and transfer taxes from the one percent fee limit that applies to the TRID rule exemption for down payment assistance and similar subordinate lien loans often made by housing finance agencies, non-profits, and similar entities. TRID gave a partial exemption from disclosure requirements to certain housing assistance loans originated primarily by housing finance agencies. The Bureau's proposed update would promote housing assistance lending by clarifying that recording fees and transfer taxes may be charged in connection with those transactions without losing eligibility for the partial exemption, and would exclude recording fees and transfer taxes from the exemption's limits on costs. In theory this would result in more housing assistance loans qualifying for the partial exemption.

The third amends the scope of the TRID rule to cover units in a cooperative, whether or not they are considered real property. Folks in New York ought to like that one. With a cooperative, a buyer becomes a shareholder in a corporation that owns the property and is then entitled to exclusive use of a housing unit in the property. Currently, the rule only covers transactions secured by real property, as defined under state law. Co-ops are sometimes treated as personal property under state law and sometimes as real property. By including all cooperatives in the rule, the Bureau would simplify compliance.

And the fourth clarifies how a creditor may provide separate Closing Disclosures to the consumer and the seller through the removal of information that raises privacy concerns. TRID requires creditors to provide certain mortgage disclosures to the consumer. The Bureau has received many questions about sharing the disclosures provided to consumers with third parties to the transaction, including the seller and real estate brokers. "The Bureau understands that it is usual, accepted, and appropriate for creditors and settlement agents to provide a closing disclosure to consumers, sellers, and their real estate brokers or other agents. The Bureau is proposing additional commentary to clarify how a creditor may provide separate disclosure forms to the consumer and the seller."

Lending legal eagles focused on certain items. These include the addition of construction loan guidance (page 35 of the pdf file), affiliate charges, the calculating cash to close table, decimal places and rounding, escrow account disclosures, escrow cancellation notices, the treatment of gift funds, the written list of service providers, the distinction between model forms and sample forms, principal reductions, the summaries of transactions table, the total interest percentage calculation, and informational updates to the Loan Estimate.

Rates? No one is complaining. On Friday fixed-income prices rallied, and thus rates dropped, after Q2 GDP growth was lower than most forecasts. Mortgage-backed securities tagged along for the ride. The 2^nd quarter GDP report runs counter to the theory that Q1 weakness is a normal fixture of this recovery and represents a lot of residual seasonality. We also had the Employment Cost Index increasing by 0.6%, in line with expectations and the prior quarter's reading. The Chicago Fed's Purchasing Managers' Index fell to 55.8 in July from 56.8 in June - a shade better than expected.

Yet San Francisco Fed President Williams (a non-FOMC voter) said after the poor GDP report that he is not worried that the U.S. economy will fall into recession. He said that research shows that expansions are typically killed by big shocks. Williams went on to say that the U.S. economy "is doing well," and that core inflation is close to the Fed's 2% objective. He still expects U.S. GDP growth around 2% for 2016, and that "there is definitely a data stream that could come through in the next couple of months that I would think would be supportive of two rate increases." Many would disagree.

We're in the dog days of summer but there sure is a lot of economic news this week. Today we start with some non-market moving news at 9AM CDT: June Construction Spending and July ISM Index. Tomorrow we'll see June's Personal Income & Personal Spending/Consumption, along with PCE Prices.

On Hump Day are the MBA's app numbers for last week, and then a few things that can move rates: July's ADP Employment Change and ISM Services number. Thursday in the U.S. we have the July Challenger Job Cuts, Initial Jobless Claims, and June Factory Orders, all following the Bank of England's monetary policy decision. Friday is the big day for U.S. news: July's employment numbers (unemployment rate, nonfarm payroll, and hourly earnings), along with the June Trade Balance.

For numbers the 10-year closed at 1.46% on Friday. In the early going this morning, for no particular reason, it has moved up to 1.49% with current coupon agency MBS prices worse about .125 from Friday's close.

Jobs and Announcements

In job news national retail lender Supreme Lending is searching for a VP of Capital Markets. This leadership position works directly with the executive team, overseeing investor relations, warehouse relationships, daily pricing, managing the lock desk, hedging and the securitization of sale of loans. The ideal candidate will have 15 years of experience in Secondary Marketing & Capital Markets. The position is based at Supreme's corporate headquarters in Dallas, Texas. Supreme is a FNMA & FHLMC seller/servicer, GNMA I & II issuer, and jumbo and non-QM lender licensed in all 50 states. The company has a reputation as a fast-growing industry leader ranking annually among the top lenders nationwide in Scotsman Guide and Mortgage Executive Magazine. Please send inquiries to the attention of Stephen Knebel, Senior Corporate Recruiter.

And for companies looking for a sub-servicer, The Money Source is excited to announce the build-out of a sub-servicing platform centered around its core value of "Rock Solid Service." The Money Source has steadily met and exceeded its strategic and operational goals for the sub-servicing build-out, and expects to start onboarding clients in Q4 2016. The Money Source utilizes its proprietary cutting edge technology SIME (Servicing Intelligence Managed Easily) to create a best in class sub-servicing experience while giving full visibility to lenders. SIME takes vendor management and sub-servicing oversight to new levels. The Money Source is a national lender with offices in Melville, NY; Walnut Creek and Santa Ana, CA; Meriden, CT; Tempe, and Phoenix, AZ. In 2016 alone, the company has hired more than 300 employees and now maintains over 110,000 square feet of office space. To learn more about how you can benefit from a sub-servicer who truly believes in best in class service please contact EVP of Servicing, Rick Smith.

The second book in a series for mortgage professionals is now available and will prove useful for new people to the industry as well as seasoned veterans. "Becoming the Successful Mortgage Broker" by Jason C. Myers offers "in-depth information for someone getting started and proven successful sales tips for more experienced loan officers. The format of the book allows you to look at tips you can use to better your business as well as commentary on the current market and useful information for mortgage consultants." The book can be found on Amazon by clicking the link above.