I still don’t know what I’m wearing to the living room on New Year’s Eve. Heck, I may not even go. Wouldn’t it be nice to be on a cruise? Ever heard of the SS Warrimoo? Me neither until a few trivia-loving readers sent me emails saying that the ship reportedly once navigated to a point that simultaneously spanned two different hemispheres, two centuries, two days, two months, two years, and two seasons. If true, that’s neat. But documentation is lacking, as was the precise navigation 120 years ago. On the other hand, there’s plenty of documentation about demographics as 72 million millennials are snapping up houses right and left. And in a year when some were focused on the yield on the U.S. risk-free 10-year Treasury note ranging from 1.94 percent down to 0.31 percent, others were focused on regulations, since regulators have plenty of documentation about companies not adhering to lending rules. More below.

Employment and Business Opportunity

A well–capitalized mortgage organization who is looking to acquire a mortgage lender with an active Fannie Mae seller/servicer, preferably located in Mid-West or East Coast. If you are interested, please email mortinvest15@gmail.com. All inquiries will remain confidential.

“Everyone is looking forward to starting fresh in 2021. For many, a new year brings sentiments of hope and healing. For others, it’s a time to begin a new career journey; and we hope you’ll start your search with Citizens! Our mortgage colleagues are a huge part of what makes us special. You can be part of that. Choosing to join our mortgage team means you would have a comprehensive benefits package that includes health benefits, generous time off, 401(k) options, as well as a robust educational assistance program. But that’s not all. We also offer countless opportunities for professional growth. If you’re planning to make a career change, apply now at jobs@citizensbank.com. From all of us at Citizens, we wish you a happy and healthy New Year.”

“Caliber Home Loans is passionate about helping people reach their dreams of home ownership. We’re always looking for new ways to educate homebuyers and others in the mortgage industry. So, we’ve developed two podcasts: ‘The Home Connection’ and ‘Homeownership Heroes.’ Both are right for homeowners, Realtors, lending professionals and everyone in between, presented in an easy-to-understand format. ‘The Home Connection’ covers mortgage industry trends and marketing strategies for lending professionals. It streams every other Monday on Apple, Google, and Spotify. ‘Homeownership Heroes’ covers military benefits and VA loans and is on the National Mortgage Professional TV Network every Wednesday. It also streams on Apple, YouTube, and Facebook. Caliber Home Loans is an innovative company, and we’re hiring right now. Visit our website today to view open opportunities. To be immediately considered for Operations or Sales positions, email Jonathan Stanley or Brian Miller respectively.”

NEXA Mortgage is hiring experienced self-producing MLOs. If you are not experiencing a clear to close in 15 days or less and 47% PIWs, then you simply must look to NEXA. NEXA Mortgage has a "Revenue Share" program where it shares revenues for growth with LOs. It is a residual “passive” income. NEXA gave out $509,737 in October, bringing the YTD total to $2.9M. That income will continue into retirement. Learn for yourself during the "Why NEXA" demonstration held every Thursday at 11am MST (Yes, even New Year’s Eve). Just login here and click on the "Why NEXA" link. The CEO and Founder, Mike Kortas, will be on hand to answer all questions and talk about our 7 non-negotiables. Want info sooner? Contact Michael Neill (480-643-9161).  

Broker and Lender Products and Services

Register for the NYMBA’s highly informative webinar, Strategies to Achieve Maximum Revenue and Benefits of Delivering Loans Mandatory, on Wednesday, January 6, at 12:00 PM ET. Join seasoned capital market experts for an informative session on Best Efforts versus Mandatory loan delivery. Attendees will discover the fundamentals of locked pipeline interest risk and hedging, gain valuable insight about the economic and operational benefits of selling Mandatory, and learn how to efficiently manage risk, counterparty relationships and more to realize full revenue potential. This webinar event is a must for operations managers, secondary market managers, CFOs, and CEOs. Register now!.

Attention retail loan originators! As we wrap up a very strong year of business, now could be the ideal time to open your own mortgage business. Submit your application for AIME Spark's small business grant! To help fund Spark’s grant program, Homepoint contributed the first $1 million to establish more minority-owned and women-owned mortgage brokerages throughout the country. Applications for Spark are open now through January 31. For more information on Spark's programs and to submit an application, visit the AIME Spark website.

Compliance: Keep Your Eye on the CFPB

The recent CFPB consent order addressed widespread failures in Seterus’s handling and processing of struggling homeowners’ applications for loss mitigation options, which are alternatives to foreclosure made available through their servicer. The consent order requires Kyanite to pay $4,932,525 in total redress to approximately 11,866 of the consumers to whom Seterus sent a defective acknowledgment notice. The consent order also imposes a $500,000 civil money penalty and includes injunctive relief that would apply in the event Kyanite engages in mortgage servicing.

Remember that earlier in December the CFPB alleged that Nationstar, aka Mr. Cooper, violated multiple Federal consumer financial laws, causing substantial harm to the borrowers whose mortgage loans it serviced, including distressed homeowners.

As you know, the Supreme Court ruled against a single individual running an independent Federal Agency, i.e., CFPB and FHFA. Some are wondering, however, why there are no discussions of enforcing the SCOTUS Ruling. Here we are, several months later, with the same structure and major regulatory/policy changes still being discussed. One observer wrote to me pointing out that, “The U.S. Constitution lays out three branches of government, yet it appears that we now have four branches as the powerless Congress and the inattentive White House now have to bow down to the newly appointed 4th branch: Regulators. Wasn’t there something in U.S. history about a revolution because of taxation without representation?”

Lenders Compliance Group Chairman and Managing Director, Jonathon Foxx, set forth basic procedures to follow after the CFPB issued consent orders to two companies that involve direct advertising issues, caused by pre-screening on VA loans in particular. The Bureau performed a sweep of investigations of multiple mortgage companies that use deceptive mailers to advertise VA-guaranteed mortgages through direct-mail campaigns targeted primarily at the United States military service members and veterans. The Bureau issued consent orders against Sovereign Lending Group and Prime Choice Funding for several reasons including mailing advertisements that contained false or misleading statements or lacked required disclosures. (Sovereign is a California company that is licensed as a mortgage broker or lender in 44 states and the District of Columbia. Prime Choice, also headquartered in California, is licensed in 35 states and the District of Columbia. Both companies offer VA loans.)

Both Sovereign and Prime Choice advertise their VA loans primarily through direct mail sent to military members and their families, and sent consumers hundreds of thousands of mailers for VA-guaranteed mortgages that violated the Consumer Financial Protection Act's (CFPA) prohibition against deceptive acts and practices, the Mortgage Acts and Practices - Advertising Rule ("MAP Rule"), and Regulation Z by, among other things, misrepresented the credit terms of the advertised mortgage, misleadingly described an adjustable-rate mortgage as having a "fixed" rate, falsely stated that the consumer had been prequalified for the advertised mortgage, created the false impression that the company was affiliated with the government, used the name of the consumer's current lender in a misleading way, and failed to include multiple disclosures required by Regulation Z.

The other company allegedly sent consumers millions of mailers for VA-guaranteed mortgages that contained false, misleading, and inaccurate statements or that lacked required disclosures, causing violations similar to those made by the other company. Retaining a firm like Lenders Compliance Group for such support should be part of your prescreening review process, as one, single error in prescreened marketing can cost considerable financial and regulatory risk. Here is the full post with recommendations.

Earlier in 2020 the Consumer Financial Protection Bureau accused two mortgage companies of obtaining consumer reports under false pretenses and assisting several student loan debt-relief companies charging illegal advance fees and deceiving customers. And last month it announced a settlement with a non-bank Illinois-based debt collector that specializes in collecting debt on behalf of telecommunications companies and furnishes information to Consumer Reporting Agencies (CRAs) to address alleged violations of the federal Fair Credit Reporting Act (FCRA), according to a press release from the CFPB. The CFPB claimed that Afni, Inc. furnished information to CRAs that it knew or had reasonable cause to believe was inaccurate, failed to report to CRAs an appropriate date of first delinquency on some accounts, failed to conduct reasonable investigations of disputes made by consumers to them and to CRAs about furnished information, and failed to conduct investigations of disputes in a timely manner.

Harken back to LO compensation. Community Home Lenders Association (CHLA) has laid out detailed recommendations on how to provide targeted flexibility with respect to loan originator compensation rules in three circumstances which would benefit consumers and lenders without opening loopholes that would allow steering. The three circumstances tracked those identified in an industry letter: When a Loan Originator Makes an Error, Housing Finance Authority (HFA) loans, and Matching a Competitor's Offer for a Borrower the LO Has Worked With the Borrower.

The most important change would allow a mortgage loan originator to reduce their compensation in order to facilitate the lender matching a competing offer. The limited circumstances CHLA is proposing are when the LO had first provided a loan offer and spent some time assisting that borrower. Then at the last minute the borrower obtains a better rate quote from a competitor as part of rate shopping, which the CFPB has encouraged. Currently an LO may not reduce compensation, which makes it harder to match such an offer, allowing the loan originator to make the loan and maintain the client relationship that the loan originator may have invested significant time and effort in.

Secondly, the CHLA letter also explains why lenders should be able to hold their loan originators financially accountable when the LO makes an error by reducing their compensation "by the costs associated" with that error.

Finally, the CHLA letter explains that the LO Comp rule is discouraging the use of low-down payment loans done by state Housing Finance Agencies (HFAs). As the HFA trade group, the National Council of State Housing Agencies (NCSHA), explained, "The inability to reduce loan originator compensation . . . under the [LO Comp] rule harms consumers by reducing the availability of these vital programs."

In all three circumstances, the CHLA letter explains how fixing this problem would help consumers and would not create financial incentives to steer borrowers to higher priced loans.

Capital Markets

During and near holidays, two things can happen. First, liquidity in the MBS market dries up, and a little news can cause a lot of volatility, especially if inexperienced traders are manning the trade desks. Or the markets slow down and barely budge. We are seeing the latter this week. Heading into 2021, global risk appetite is supported by hope for recovery through ongoing fiscal and central bank help, along with increased vaccination of the population. Fixed income securities, which include most MBS and Treasuries, ended Wednesday mixed without much movement either way and the MBS basis once again closed tighter on no major news. Pending Home Sales decreased by 2.6% in November, worse than expected, while the Chicago PMI increased in December when it was expected to decrease.

2020 closes out with a light economic calendar today. For those not on vacation, we have seen initial jobless claims for the week ending December 26 (787k, down 19k from the prior week and better than expected) and continued claims for the week ending December 19 (5.2 million, better than forecast). Later this morning, Freddie Mac releases its Primary Mortgage Market Survey for the week ending December 31. Last week the 30-year fixed mortgage rate hit a new low of 2.66%. Today sees an early close ahead of tomorrow’s full close for New Year’s Day. We are underway with Agency MBS prices little changed from Wednesday and the 10-year yielding .93 after closing yesterday at 0.94 percent. 

Remember, at 12:01 on Jan 1, for the first time ever, hindsight will be 2020.