The Fed reports home ownership among families with a head of household younger than 40 years old have fallen from about 50% from 2005 to 42% today. And home ownership among families with a head of household age 41 years old to 61 years old has declined to 72% versus about 77% over the same period. Of course at some level home ownership is tied having a job and Gallup indicates the following percentage of these generational groups in the workforce: 32% Millennials (born 1980-1994), 32% Gen X (1965-1979) and 33% Baby Boomers (1946-1964).

Friday's commentary had a note on the Chase settlement. Philip R. Stein, an attorney with Bilzin Sumberg Baena Price & Axelrod LLP, counters with, "Beyond the fact that objections in these types of cases are supposed to come from parties with a stake in the securitized trusts (i.e., people who invested money in the trusts), I see no good whatsoever coming from a correspondent lender or broker's objection to the Chase settlement.  Nor do I see what practical and appropriate grounds there are on which to object (saying "I don't want Chase to sue me later" or "I don't think Chase has a right to sue me later" is almost certainly not going to stop the settlement, in my view).  My opinion is that the very last thing we would want here is for the judge in an ongoing Chase lawsuit to which your company is not even a party -- a judge who is motivated to get the case settled -- to be put in a position in which this court can specifically rule that Chase does have a right to possibly sue your company (the specific objecting party) someday!  That would not help you in a later lawsuit, I assure you.  You compromise no defenses by letting Chase enter a settlement that has everything to do with investors' complaints about the overall quality of the entire set of loans in a voluminous trust of mortgage-backed securities, and nothing to do with the quality of your company's particular loan or loans that happen to have been included in the slicing and dicing of a huge number of loans comprising the trust."

Regarding recent potential changes coming from Fannie & Freddie, Dave Stevens, president of the MBA, wrote to me saying, "I read with amazement the comments from a reader Saturday taking issue with the steps made by FHFA director Watt to responsibly expand credit marginally for the purchase market. To be clear, MBA did not support this effort to 'please our members'. We supported, and I support, these efforts because these are responsible moves for housing. Down payments are the single biggest barrier to homeownership but it is not, by itself, an indicator of ability to repay a mortgage. The move to bring back the 97% LTV will come with higher premiums for mortgage insurance, more scrutinized underwriting requirements, and will only raise the maximum LTV by 2% for the GSEs from 95% to 97%. Any allusion that this is returning to the kinds of antics that led to the housing bubble is simply ridiculous. QM eliminates no-doc, neg am, balloon, extended term, shorter term arms, IOs, and more. Every loan must meet the ability to repay standard. Just because the Director and the team at FHFA, as well as the MBA, realize that many Americans do not have the luxury of wealthy parents to provide a gift, or excess income beyond the fixed expenses of rental costs (which are rising), consumer debt, child care, and more to save up for a down payment as easily as others, does not mean they should miss out on what could be the lowest interest rates we will experience in our lifetime. The future buyers will be younger and heavily dominated by minority applicants in this country. Responsibly letting qualified buyers take advantage of this market by expanding LTVs by 2% is exactly the right thing to do and will help these homebuyers but will also help the economy. Each new home built adds 3 jobs in this country and over $100k in economic stimulus, per the NAHB. The comments of this reader may come from someone with far more privilege at a time when responsible modification to the extreme pendulum swing to the conservative end of credit availability is due."

Speaking of things impacting the entire lending industry, a couple weeks ago representatives of several independent state professional appraiser organizations met to discuss issues affecting their membership. The network is comprised of 16 State Organizations and members include leaders from each participating state organization. The purpose of this network is to improve and elevate appraisal profession. Each State Organization has specific topics that they focus on, sharing data with one another and support each other on state and national issues. This network includes independent state level members who research and present positions that have been assessed and approved by each state level organization signing correspondence. This was an historic meeting because participants, who never met face-to-face before, had collaborated and know of no other similar national initiative, their goal is to develop representation from all 50 states and better their profession.

The CFPB issued a final rule to allow financial institutions (including certain nonbanks within the CFPB's jurisdiction) that limit their consumer data-sharing and meet other requirements to post their annual privacy notices online rather than delivering them individually. The final rule amends Regulation P (12 CFR part 1016) and will become effective upon publication in the Federal Register. The final rule amends §1016.9(c) of Regulation P by adding subsection (c)(2) to provide an alternative method for delivering annual privacy notices. As summarized in the preamble to the final rule (pages 65-66), a financial institution may use the alternative delivery method if it does not disclose the customer's nonpublic personal information to nonaffiliated third parties in a way that triggers the consumer's opt-out rights under the Gramm-Leach-Bliley Act (GLBA). Here's a good write up from Black Mann & Graham LLP.

Put another way, financial institutions that meet specified requirements will be permitted by the CFPB to provide annual privacy notices to their customers using an alternative online delivery method, namely they can post their annual privacy notice on their website. The GLBA annual privacy notice requirement was 1 of 9 potential opportunities for streamlining regulations.

The CFPB finalized amendments to its mortgage rules to include changes to help nonprofit organizations continue to lend to underserved populations. The CFPB has provided an alternative definition of a small servicer applicable to 501(c)(3) nonprofit organizations so they can consolidate their servicing activities while maintaining their exemption from certain servicing rules. Nonprofit organizations, such as Habitat for Humanity, can continue to provide interest-free, forgivable loans, known as "soft seconds" without regard to the 200-mortgage loan limit. The CFPB has also finalized changes to the ATR rule to if a lender discovers after a loan has closed that it exceeded the 3% cap on points and fees, there are certain circumstance where the lender may be able to pay a refund of the excess amount with interest to the consumer, to have the loan still be considered a Qualified Mortgage. The refund would have to occur within 210 days after the loan is made. For those interested, the CFPB's final rule is available here.

As a reminder, the CFPB issued a proposed rule to amend the TILA-RESPA Integrated Disclosures Rule. The first proposed amendment is to modify the timing requirement for revised disclosures when the consumer locks a rate after initial disclosures are provided.  The CFPB is proposing that creditors must provide a revised disclosure no later than the next business day after the date the rate is locked. The second proposed amendment is to allow language relating to new construction loans to be incorporated on the Loan Estimate. The CFPB is also proposing an amendment to § 1026.36(g)(2)(ii) of Regulation Z to add the NMLS Unique Identifier on the integrated disclosures.

Yes, the CFPB has come out with changes to the 2013 Mortgage Rule under TILA. The amendments include refunding a consumer within 210 after consummation the amount of points and fees that exceeded the 3% threshold. In doing so, the loan would still be considered a Qualified Mortgage. The rule only allows a cure for loans consummated on or after the rules effective date and on or before the expiration date of January 10, 2021. The lender must also pay interest on the points and fees overage until payment is made to the consumers.

The final rule also established an alternative definition of small servicer to include a nonprofit that services 5,000 or fewer mortgages, including any loan services on behalf of associated nonprofit entities, for which the servicer or an associated nonprofit is the creditor. The final rule also amends the nonprofit lender exemption from ATR provisions where subordinate lien loans for down payment assistance and other purposes that are forgivable and meet certain conditions would not count towards the 200 annual loan limit.

Flipping over to the markets, the yield on the 10-year ended Friday at 2.27% - certainly higher than the 1.8-something% we saw for a day or two a couple weeks back. But it is definitely lower than the range rates have been in for much of the year. Meanwhile, successful LOs and companies go about their business, knowing where rates are but not basing their entire business model on them.

We have a big news week ahead of us. Today we have Pending Home Sales. Tomorrow is the volatile Durable Goods number for September (one aircraft or washing machine order can throw things off) as well as the S&P Case Shiller numbers from back in August and Consumer Confidence. Wednesday is the MBA's application numbers and the end of the FOMC meeting - don't look for any change to short-term rates. Thursday is our old friend weekly Jobless Claims but also GDP. And on Halloween we'll see, besides finding out what the shipping department decided to dress up as, the Employment Cost Index, Personal Income and Consumption, a series of PCE (Personal Consumption Expenditure) numbers, the Chicago Purchasing Manager's Survey, and the Univ. of Michigan Confidence figure. In the early going we're roughly unchanged at 2.27% as are agency MBS prices.

Jobs and Announcements

For jobs, voted Top 50 Mortgage Company to Work For by Mortgage Executive Magazine, Premier Nationwide Lending continues to see growth in retail and wholesale channels. "As a producer-centric organization, we continually seek out the best support staff to help us do what we do best, make our mortgage professionals look good to their consumers and referral partners. It is no mistake that 74% of the $9 billion+ funded over the last few years has been purchase business. That being said, Premier Nationwide Lending is currently looking for DE/SAR/LAPP Underwriters in the state of Louisiana and experienced Processors in the Dallas/Fort Worth, TX Area. For more information about these opportunities as well as open sales positions in its 23 approved states please email John H. P. Hudson. All inquiries are confidential.

On the services side of things, are your compliance efforts up to snuff? "Traditional compliance programs are no longer adequate in today's regulatory environment. In order to satisfy the expectations of regulators, institutions must now have a robust and well-documented Compliance Management System (CMS) that can be adapted quickly to satisfy necessary control components. Richey May's compliance team can work with you to assess the quality of your institution's CMS and can provide recommendations for strengthening and enhancing policies and procedures." For more information please contact Kurt Blohm.

American Pacific Mortgage is hosting its biannual 2014 Fall Sales Summit ("OWN THE DAY") in Sacramento, CA on Monday November 3rd at the Hyatt Regency Hotel!  Since the company's inception in 1996 where a small group of Branch Managers collaborated around a conference table, the Summits have grown to an attendance of approximately 750 Branch Managers, Originators and Guests amongst three regional venues. This year's events are planned to deliver valuable insight and inspiration, with an impressive lineup of guest speakers. The Sacramento Summit speakers include industry experts, best-selling author Kevin Hall, as well as an inspirational message from top athlete, Ronnie Lott formerly with the SF 49ers! The Summits are an incredible opportunity to hear from APM's CEO, Kurt Reisig, President, Bill Lowman, and EVP of National Production, Leif Boyd, as they share insight on what's next for APM. See why over 350 originators have joined American Pacific Mortgage over the last 12 months and register TODAY for APM's "OWN THE DAY" Summit by simply emailing Mike Haden.