As the San Diego MBA conference wraps up, one is reminded that many lenders are having fine years and some can't believe their good fortune. Others might say that the tone is "cautiously optimistic." Certainly many of the folks I spoke to are still concerned with the regulatory environment, the changes TRID implementation has brought and what unintended consequences will start to pop up as we move forward, but lending as continued as we all knew it would. Yes, a couple of vendors have had some major issues, in spite of plenty of lead time - Richard Cordray specifically mentioned vendors in his speech Monday. And folks can't stop talking about great the Monday night Freedom Mortgage event was: lenders have every right to feel good about themselves and the jobs they're doing and that event was welcomed.

Much of the talk at the conference revolved around the weight of regulations being passed directly from lenders directly to the consumers. Few question the need for higher standards and regulations, but practically everyone has a negative opinion of the methodology used by the CFPB. As a reminder, earlier this month the CFPB announced that it is considering two rulemaking proposals that would severely limit the use of pre-dispute arbitration clauses in consumer financial service contacts. Ignoring the well-documented problems and abuses associated with class action litigation, the Bureau has concluded that because class actions effect a greater aggregate transfer of wealth from alleged "wrongdoers" to plaintiffs' class action lawyers and plaintiff classes than does arbitration, it is in the public interest and for the benefit of consumers to eliminate arbitration clauses that would limit its use. The Bureau has also concluded, as it must under the Dodd-Frank Act, that imposing such limitations by regulation would be consistent with its recent Report to Congress.

I heard from dozens of lenders at the MBA conference that they were closing post-TRID loans. NAR is saying they expect TRID to delay closings by up to 15 days. There will undoubtedly be a learning curve for the industry. TRID is the biggest change to the industry since the implementation of Dodd-Frank. CFPB claims they will use discretion in not going after lenders who make mistakes but are making a good-faith effort to work within the rules. 

And lenders are making moves. For example, due to impending CFPB regulations and requirements, Ditech Financial LLC temporarily discontinued purchasing Single-Close Construction loans effective immediately. Ditech will continue to review and purchase closed loans locked prior to September 22, 2015.

Kinecta FCU has posted new rate lock policies in support of the TILA-RESPA Integrated Disclosures (TRID) rule. Kinecta only offers 20, 30, 45, and 60 day lock commitments.

And don't forget the CFPB's take on last month's Executive Order. According to Ballard Spahr's CFPB Monitor, the executive order does nothing more than already substantiate current CFPB practices, as the bureau already employs behavioral economists. Barbara Mishkin writes, "The CFPB has already hired behavioral economists and appointed behavioral economists to its Academic Research Council....The Executive Order also directs agencies to "improve how information is presented to consumers, borrowers, program beneficiaries, and other individuals, whether as directly conveyed by the agency or in setting standards for the presentation of information, by considering how the content, format, timing, and medium by which information conveyed affects comprehension and action by individuals as appropriate." 

One of the many tenants of Econ 1A, and economists in general, is that "consumers behave rationally"....this of course does not apply to anyone watching QVC at 3am, any Skymall purchases made at 36,000 feet, or procrastinating husbands on Christmas Eve (guilty, guilty, AND, guilty). So what happens when consumers behave irrationally? Well just ask a behavioral economists, who don't quite view the world in black and white. They would argue that consumers are not rational decision makers at all, and are instead, susceptible to consumption habits which are not in their best interest.

I bring this up due in large part to an executive order issued by President Obama on September 15th, which encourages the use of "behavioral science" at the federal departmental level. It says: "Executive departments and agencies are encouraged to: (i) identify policies, programs, and operations where applying behavioral science insights may yield substantial improvements in public welfare, program outcomes, and program cost effectiveness; (ii) develop strategies for applying behavioral science insights to programs and, where possible, rigorously test and evaluate the impact of these insights; (iii) recruit behavioral science experts to join the Federal Government as necessary to achieve the goals of this directive; and (iv) strengthen agency relationships with the research community to better use empirical findings from the behavioral sciences."

Top government officials & advisors such as Michael Stegman are tasked with helping the Administration with walking the tightrope between over and under regulation. There is little disagreement that the industry brought this upon itself, and it welcomes oversight and an improved borrower experience coupled with borrower protections. Yet as the costs continue to mount, and the methodology of regulators seeming to compete and outdo each other continues to drive lenders away from lending, one must question the trend. At what point does the shift of the discussion from "too big to fail" to "too small to comply" really help the consumer? How does the lack of objective rules now alleviate the fears of huge penalties later?

Many industry regulations have been implemented to "help the consumer" but often times, these regulations place greater burden on the industry, creating stricter standards that negatively impact borrowers and their ability to obtain home loan financing. Where a borrower lives pays an important role in determining access to credit, along with a borrower's credit score and loan amount sought. Zillow analyzed the relationship between borrower protection laws and mortgage credit access and found that a quote in one state can take as much as a 13 percent hit or receive a 15 percent boost, depending upon state regulations. A borrower with a FICO score between 640 and 719 gives a borrower 95 percent better odds of being quoted than a borrower with a score below 640. With a credit score in the range of 720 to 850 odds of being quoted reach 147 percent. Being a first time borrower reduces the odds by 10 percent and having been foreclosed on reduces a borrowers odds by 33 percent. Borrowers requesting loans greater than the conforming loan limit would also have a 50 percent lower chance of receiving a quote from a lender. A borrower living in a state with a judicial foreclosure process will have a 13 percent less chance of receiving a quote, but if a borrower lives in a state that allows recourse, a borrower's odds increases by 15 percent.

Speaking of settlement rules, don't forget that a while back the Officer of the Comptroller of the Currency (OCC) published the Revised Comptroller's Handbook Booklet and Rescissions. The revised handbook replaces the "Real Estate Loans" booklet that was issued in March of 1990. The booklet encompasses national bank and federal savings association statutes and regulations, guidance, and examination procedures and provides relevant guidance to examiners on assessing the quantity of risk associated with residential real estate lending. The booklet should be used a summary of current laws and regulations and includes amendments to Regulation X and Regulation Z.

On Tuesday rates decided to go up a little instead of go down. I know - a very technical explanation - but there just isn't much going on out there, and there is no scheduled news today to change that. Yesterday's housing starts and building permits data for September showed that the housing market has been unaffected by the financial market volatility in August. U.S. housing starts rose 6.5% in September to 1.207 million from an upwardly-revised 1.132 million in August. That was the second time in 2015 that total new housing starts topped 1.2 million and the first time two months have exceeded that level in one year since 2007

Today we've had the MBA Mortgage Index for the week ending 10/17 (+12% overall, purchases +16% and refis +9%). That's about it! For numbers we closed out the 10-year at 2.07% and this morning we're at 2.05% but agency MBS prices are strong and are better by .125.


Jobs and Announcements

In jobs news a well-known lender is looking for LOs and branch managers, especially in Kansas City MO, Dallas TX, and Lake Oswego OR, Denver CO, and Phoenix AZ markets. "How many times have you had to deny a file due to your current employer's credit score minimum? How many Approve/Eligible files have you not funded because there was an overlay that made the loan ineligible? How many files have you not ran DU or LP on because the score was below your company minimum? There is a dynamic mortgage lender that sells direct to Fannie, Freddie, and has Ginnie approval that can alleviate this pain. How would you like to be able to fund your loans with a company that can fund loans within the credit score parameters set forth by the GSEs? With this lender, your universe of borrowers will open up and you will be able to close more loans with the same amount of effort and referral partners as you currently have." Resumes of interested parties can contact me directly so I can forward your information.

In wholesale news, if you followed the news coming out of the NAMB National last weekend then you've already heard that REMN Wholesale is now licensed in Massachusetts, making them a true nationwide lender. "In addition to its commitment to same day turn times, REMN has management teams on both coasts and in strategic territories across the country, helping to ensure a superior broker experience no matter where the customer is located. Along with their ongoing educational efforts surrounding TRID, REMN Wholesale is one of the nationwide leaders in renovation lending, an area they're anticipating will continue to grow in 2016. To help support its growth in New England REMN is looking for a few experienced account executives specifically to handle customers in Massachusetts. Any AE's who share REMN's commitment to an exceptional broker experience should send their resumes directly to Steve Gilbert, REMN's regional sale manager.

A mortgage technology leader is seeking an experienced candidate to fill the role of Senior IT Director in either the downtown San Francisco headquarters or DC Metro Area office. Compass Analytics is a leading provider of mortgage analytics and services to mortgage bankers, traders, and banks and other finance companies in the mortgage industry. While rooted in the mortgage industry, Compass is an exciting fusion of technology and finance, and the successful Senior IT Director will be able to capitalize on this dynamic and be a proven leader responsible for shaping the technological direction of the company. This role will focus on creating and implementing strategic and innovative plans to enhance IT operations, and the ideal candidate will display entrepreneurial ideas as well as the ability to evaluate and suggest enhancements to in-place processes. Qualified candidates will have broad experience with high-availability operations, Citrix, VM Ware, MS SQL and SSAE-16 and security audits. Candidates should e-mail Marketing Manager Sarah Slagle with their resume.

First California Mortgage Company is looking for a VP, Compliance Manager.  The Company has Retail, Wholesale and Consumer Direct channels and is both a FNMA & FHLMC Seller/Servicer, GNMA I&II Issuer, and jumbo and non-QM lender across the United States.

The VP position directs and oversees the Compliance functions of First California Mortgage to ensure the organization's policies and procedures, licensing needs, and Federal/State regulations are known and adhered to, track laws and regulations that might affect the organization's policies, and prepare compliance reports to present to management. The ideal candidate will have 3-5 years of current experience in the mortgage banking industry with regulatory compliance experience and have working knowledge of investor guidelines, compliance rules and state and federal regulations related to the mortgage industry, extensive knowledge of mortgage banking, loan programs requirements, including guarantee, security instruments, disclosures and legal requirements. The position can be located in Northern California, Dallas, Arizona, or Colorado; salary commensurate with experience. Please send inquires & resumes to Director of HR Shannon Thomson.

In personnel moves Citizens Bank announced the appointment of Chris Nard as President of Mortgage. And at Ellie Mae Piper Neal Beveridge has joined up as vice president of government and strategic relations. Beveridge will focus on growing and managing Ellie Mae's relationships with government agencies and other regulatory bodies, as part of the business development and corporate strategy team.