Below is a collection of articles, news, and announcements associated with our industry.

Posts Tagged ‘Community Mortgage Banking Project’

Blog Talk Radio Show Summary January 24, 2011: Increasing Net Worth Requirements

Monday, January 31st, 2011

You are an investor and you have money to invest.  Do you invest it in the mortgage industry?  Those of us who have been here and who have been beat up over the last few years would probably think twice about doing so.  We might think about all the rule changes and all the regulations and all the buy backs.  We might convince ourselves this is not the right place to invest our money.  But there is a lot of money out there that thinks the mortgage industry is a good place to be invested.  Let’s consider some of the positives that they see.  Margins are high, competition is shrinking, good service is rewarded, loan quality has never been better, and collateral values will unlikely fall further.  Increasing net worth requirements over the coming months will drive even more competitors from the industry.  Those who are left in the industry will be worthy competitors, but they will be honest competitors.  As many independent mortgage bankers realize the need to raise new capital they will begin to talk to the investment and will consider giving away substantial percentages of their company to raise the capital.  Before they do so, they might want to look at the people sitting around them, their loan originators, as a source of new capital.  With the new LO comp rules about to take effect,  LOs might find a little ownership interest in their employer as just the thing to take the sting out of the new LO compensation rules. 

Click PLAY to listen to the podcast of this week’s BlogTalkRadio/Lykken on Lending with Dave Lykken and MBSQuoteline‘s Joe Farr:

Listen to internet radio with David Lykken on Blog Talk Radio

MBSQuoteline supplies the essential market information necessary for effective decision making by Originators when assisting borrowers during the loan origination process, and for secondary marketing departments while managing pipelines. For additional information or to sign up for a free 2-week trial subscription, visit www.MBSQuoteline.com or call (800) 627-1107.

Tune in every Monday at 1:00pm(et)  for up-to-the-minute information on interest rates, loan programs and “hot” industry news related to the mortgage industry. Dial: (646) 716-4972 or log in at: www.blogtalkradio.com/lykken-on-lending

 

 

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Blog Talk Radio Show Summary November 8, 2010: Election’s Effect on Mortgage Industry

Tuesday, November 9th, 2010

Glen Corso, Managing Director of The Community Mortgage Banking Project, joined the show today and offered his “inside the beltway” insights on the effects the change of control in the U.S. House of Representatives may have on the mortgage industry.  According to Glen, the single biggest effect will come from Barney Frank no longer being the Chairman of the House Financial Services Committee.  Barney has been such a significant influence over mortgage related legislation that without him in the Chairman position, future legislation will likely be less hands-on.  Glen said to expect some technical corrections to the Dodd-Frank Bill.  The corrections may be a little more than technical corrections, but far short of wholesale changes the Republicans would like.  He expects little to be done about Fannie Mae and Freddie Mac now that the Republicans control the House.  The two parties are very far apart in their belief about the proper course of action for Fannie and Freddie and without Democratic control of both the House and the Senate neither party is likely to succeed in pushing their plan.  Glen reminded everyone that funds have already been committed to Fannie and Freddie to replenish their capital as losses continue to roll through and Republicans will have a very difficult time stopping future funding of Fannie and Freddie.  This should provide some comfort to the industry that liquidity from Fannie and Freddie to support mortgage originations will continue for at least the next couple of years.

Click PLAY to listen to the podcast of this week’s BlogTalkRadio/Lykken on Lending with Dave Lykken and MBSQuoteline’s Joe Farr:

Listen to internet radio with David Lykken on Blog Talk Radio

MBSQuoteline supplies the essential market information necessary for effective decision making by Originators when assisting borrowers during the loan origination process, and for secondary marketing departments while managing pipelines. For additional information or to sign up for a free 2-week trial subscription, visit www.MBSQuoteline.com or call (800) 627-1107.

Tune in every Monday at 1:00pm(et)  for up-to-the-minute information on interest rates, loan programs and “hot” industry news related to the mortgage industry. Dial: (646) 716-4972 or log in at: www.blogtalkradio.com/lykken-on-lending

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BlogTalkRadio Summary July 12, 2010: Q&A on Mortgage Issues in DFA (Dodd-Frank Act)

Wednesday, July 14th, 2010

Glen Corso, Executive Director of  The Community Mortgage Banking Project, joined the BlogTalkRadio/Lykken on Lending show again today and was kind enough to answer a series of questions from the hosts about the content of the Dodd-Frank Act (DFA).  Glen has lobbied on behalf of the industry as this bill progressed through the legislative process.  The DFA is expected to pass the Senate soon and will then be signed by the President.  It has several provisions which, when implemented, will have a significant impact on the mortgage industry.  Its implementation is many months down the road, but its content needs to be understood to the extent possible.  Many of the provisions in the DFA will not be fully understood until regulators have finalized the Bill’s implementation rules.

Click on the attachment to read through an extensive Q & A on these topics.

Click PLAY to listen to the podcast of this week’s BlogTalkRadio/Lykken on Lending with Dave Lykken and MBSQuoteline’s Joe Farr:

Listen to internet radio with David Lykken on Blog Talk Radio

MBSQuoteline supplies the essential market information necessary for effective decision making by Originators when assisting borrowers during the loan origination process, and for secondary marketing departments while managing pipelines. For additional information or to sign up for a free 2-week trial subscription, visit www.MBSQuoteline.com or call (800) 627-1107.

Tune in every Monday at 1:00pm(et)  for up-to-the-minute information on interest rates, loan programs and “hot” industry news related to the mortgage industry. Dial: (646) 716-4972 or log in at: www.blogtalkradio.com/lykken-on-lending

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BlogTalkRadio Podcast, June 28, 2010

Wednesday, June 30th, 2010

Mortgage companies and mortgage originators will be significantly affected by what Congress does in the final Financial Reform bill.  The bill made it through the House and Senate Conference Committee last Friday.   Glen Corso, Executive Director of the Community Mortgage Banking Project, returned to the show today to describe what the bill now looks like.  He focused on the two provision directly affecting the mortgage industry: Risk Retention and Loan Officer Compensation.

The current Risk Retention provision actually improved in the conference committee.  There is still a requirement for originators to retain 5% of the risk on the loans they originate and sell.  This would be devastating for the industry, except for the fact they the bill exempts almost all of the loans being made today.  The bill says that the requirement to retain risk does not apply to government guaranteed loans (FHA, VA, and USDA) and all other loans “well underwritten”.  Well underwritten loans are loans that are fully documented and have reasonable ratios, are not negative amortization loans or loans with large payment adjustments possible.  Most Fannie and Freddie qualifying loans would meet this definition.  Glen believes the bill will allow an allocation of the retained risk between the various parties in the origination chain.

The  Loan Officer Compensation provision did not change in the conference.  It will prohibit originators from being paid commission based on the terms of a loan.  In addition, it prohibits a borrower from being charged origination fees while on the same loan the originator receives compensation from an investor.  This provision will likely eliminate priced in overage and some yield spread premium.  It will not prohibit an originator from benefiting from overage resulting from market price improvements subsequent to the time the rate and points are quoted to the borrower.

It was nice to hear that Glen does not believe that either of these provisions will be effective for 18 to 20 months.  The conference committee bill must still be passed by the House and the Senate and signed by the President before it is final.

Click PLAY to listen to the podcast of this week’s BlogTalkRadio/Lykken on Lending with Dave Lykken and MBSQuoteline’s Joe Farr :

Listen to internet radio with David Lykken on Blog Talk Radio

MBSQuoteline supplies the essential market information necessary for effective decision making by Originators when assisting borrowers during the loan origination process, and for secondary marketing departments while managing pipelines. For additional information or to sign up for a free 2-week trial subscription, visit www.MBSQuoteline.com or call (800) 627-1107.

Tune in every Monday at 1:00pm(et)  for up-to-the-minute information on interest rates, loan programs and “hot” industry news related to the mortgage industry. Dial: (646) 716-4972 or log in at: www.blogtalkradio.com/lykken-on-lending

There will not be a BlogTalkRadio Lykken on Lending program next Monday, July 5 in observance of U.S. Independence Day.

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BlogTalkRadio Podcast – June 21, 2010

Wednesday, June 23rd, 2010

Wouldn’t it be nice if Congress would extend the “close-by” deadline for those trying to get the Homebuyer Tax Credit?  Sure it would. Wouldn’t it be even nicer if they did it now, June 21st,  before we all break our backs trying to get the thousands of  transactions closed by June 30th?  Any anxiety out there right now?

Glen Corso, Executive Director of The Community Mortgage Banking Project and an industry advocate, brought to the BlogTalkRadio show today an up to the minute status report on HR 4213, the bill being considered by the Senate which, if passed, will extend the “close-by” deadline to qualify to receive the Homebuyer Tax Credit from June 30th to September 30th.  According to Glen, there is very little controversy on whether or not to extend the deadline. Most are in favor of it.  The rest of the bill, though, includes significant controversy and because of it, might not pass any time soon.  As a result, this is not a time to relax.  Push to close all the purchase loans that you can before the existing June 30th deadline.

Glen also provided a shocking update from the House and Senate Conference Committee working on the compromise language to be included in the Financial Reform bill.  This is the bill which includes, among many other things, a requirement for mortgage originators to retain risk on 5% of the loans they originate and sell to investors.  The House version of the bill included no carve outs from its requirement.  The Senate version carved out from its requirement loans which were “well underwritten”.  The Senate carve out – as defined in the bill and  if implemented – would exempt most of the loans being made today from the 5% risk retention requirement.  It has been anticipated that in the Conference Committee, the Senate version of the risk retention provision would survive.  Glen surprised us when he told us that earlier in the morning the House conferees pushed for a carve out, but of only government guaranteed loans.  Government guaranteed loans included FHA, VA, and Rural Development loans, but not Fannie Mae and Freddie Mac type loans.  Lets hope the Senators win this negotiation.

Click PLAY to listen to the podcast of this week’s BlogTalkRadio/Lykken on Lending with Dave Lykken and MBSQuoteline’s Joe Farr :

Listen to internet radio with David Lykken on Blog Talk Radio

MBSQuoteline supplies the essential market information necessary for effective decision making by Originators when assisting borrowers during the loan origination process, and for secondary marketing departments while managing pipelines. For additional information or to sign up for a free 2-week trial subscription, visit www.MBSQuoteline.com or call (800) 627-1107.

Tune in every Monday at 1:00pm(et)  for up-to-the-minute information on interest rates, loan programs and “hot” industry news related to the mortgage industry. Dial: (646) 716-4972 or log in at: www.blogtalkradio.com/lykken-on-lending

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In The News: Loan Officer Compensation and Senate Bill 3217

Friday, May 21st, 2010

It is being reported that Senate Bill 3217 Restoring American Financial Stability will soon pass out of the Senate.  There are many things in this bill which will effect the mortgage industry.  In an earlier blog post I discussed the likely impact of the “Skin in the Game” provisions of this bill.  In this post, I will discuss the provisions in this bill which will restrict Loan Officer compensation.

Glen Corso, Executive Director of The Community Mortgage Banking Project, discussed on the BlogTalkRadio/Lykken-on-Lending show on Monday that the amendment to Senate Bill 3217 which, among other things, prohibits loan originators from receiving compensation based on the terms of the loan.  He explained that the amendment was introduced late Tuesday evening May 11th and was passed on Wednesday morning May 12th, giving himself and other industry advocates no chance to weigh in on the amendment.  The intent of the amendment is to remove any incentive for an originator to charge more in origination fees to a borrower or to give a borrower a higher mortgage rate than the basic rate and price as established by his or her origination company.  So this amendment essentially prohibits companies from paying loan officers a portion of any overage and prohibits wholesale lenders from paying brokers more yield spread premium for a higher rate on a loan.

Ironically, as Glen reported,  the amendment also prohibits a company from paying an originator less commission based on the terms of the loan.  This means that an originator may no longer be able to give up part of his or her commission to get a deal.  This certainly seems like it might be  an unintended consequence, but apparently not.  Those promoting the amendment in the Senate understood that this practice, this consumer benefit, may end.

The concept of restricting overage and yield spread premiums is not new.  The proposed changes to Reg Z, which were announced over six months ago, include similar prohibitions.  The House version of a financial reform bill also contains prohibitions on paying originators based on the terms of the loan.   John Courson, President & CEO of the Mortgage Bankers Association, told the Texas Mortgage Bankers on Tuesday that in his opinion we are likely in a “brave new world” as it relates to compensating loan originators.  He does not see much chance to change the loan officer and loan broker compensation provisions of this act before it is passed into law.

On a positive note, this same amendment includes a provision which may offset some of the pain from prohibiting overage.  The amendment says that compensation to a lender from the sale of a loan in the secondary market is allowed.  This is obviously a good thing, but what it may also do is allow a lender to share gains from intraday market movement with an originator.  I know most large lenders will not do this, but some small lenders may.  Don’t think of the extra money as overage.  Think of it as benefit from intraday market movement.  If you quote the rate sheet price in the morning and the borrower agrees to it there is no overage.  But, if before you lock it with the investor in the afternoon prices have improved you have extra money.  This is not overage.  It is market movement.  MBSQuoteline is great at helping you capture improved prices due to intraday market movement.  It is also great at documenting this should the payment ever be challenged.

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MBSQuoteline supplies the essential market information necessary for effective decision making by Originators when assisting borrowers during the loan origination process, and for secondary marketing departments while managing pipelines. For additional information or to sign up for a free 2-week trial subscription, visit www.MBSQuoteline.com or call (800) 627-1107.

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BlogTalkRadio Podcast – May 17, 2010

Thursday, May 20th, 2010

Senate Bill 3217 Restoring American Financial Stability was the focus of discussion on the show Monday, particularly two recently passed amendments which are of great interest to the mortgage banking industry.  The amendments deal with risk retention and loan officer compensation.  One is good for the industry and the other is not.  Glen Corso, Executive Director of The Community Mortgage Banking Project, joined the show to bring a first hand understanding of the amendments and their status.

The amendment that is good for the mortgage industry deals with the risk retention provisions of the original  bill.  The original bill would have required mortgage originators to retain “skin in the game”.  It would have required originators to retain 5% of the risk on all the loans they originated and sold to investors.  The amendment exempts from the 5% risk retention requirement certain mortgage loans which meet the definition of Qualified Mortgage Loans.  Since 90% or more of today’s loans will meet the definition of Qualified Mortgage Loan, the amendment significantly reduces the number of loans on which originators will be required to retain risk.

The amendment that is not good for the mortgage industry restricts how loan originators are to be compensated.  Glen Corso explained that this amendment was introduced Tuesday evening last week and passed on Wednesday morning, giving Glen and other industry advocates little time to discuss its drawbacks with Senators.  The amendment restricts paying commission based on the terms of the loan, which likely means no overage or yield spread premium.

The Senate Bill is not yet law.  It must first be passed by the full Senate and then go through a reconciliation with the House version of a  financial reform bill before it will be final.

We will discuss the risk retention amendment and the loan officer compensation amendment in further detail in separate posts later this week.

Click PLAY to listen to the podcast of this week’s BlogTalkRadio/Lykken on Lending with Dave Lykken and MBSQuoteline’s Joe Farr :

MBSQuoteline supplies the essential market information necessary for effective decision making by Originators when assisting borrowers during the loan origination process, and for secondary marketing departments while managing pipelines. For additional information or to sign up for a free 2-week trial subscription, visit www.MBSQuoteline.com or call (800) 627-1107.

Tune in every Monday at 1:00pm(et)  for up-to-the-minute information on interest rates, loan programs and “hot” industry news related to the mortgage industry. Dial: (646) 716-4972 or log in at: www.blogtalkradio.com/lykken-on-lending

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BlogTalkRadio Podcast – May 3, 2010

Wednesday, May 5th, 2010

“Skin in the game.”  Most mortgage bankers, especially those who have experienced a loan buyback, feel like they have some.  If Senate bill S3217, Restoring American Financial Stability Act, is passed in its current form mortgage bankers will learn what “skin in the game” means to the current Administration.  This bill calls for mortgage bankers to retain the risk on 5% of the loans they originate.  The language in the bill is not clear, but some have suggested that retaining risk means funding a reserve with cash.  Lets do some math.  If a mortgage company is really efficient, it might earn 1% on the loans it originates and sells.  If they are required to hold 5% as a risk reserve, it will not take long for mortgage bankers to originate themselves into bankruptcy.  Who would participate in this business?

Glen Corso, Managing Director of Community Mortgage Banking Project, joined the show today to discuss his efforts to lobby the Senate to add an amendment to the “skin in the game” provision of S3217.  The amendment would exclude “well underwritten” loans from the risk retention requirement.  Think Ginnie, Fannie, or Freddie loans.  They cannot be defined that way because we may not have a Fannie or a Freddie loan much longer.  Under Glen’s amendment loans that are fully documented, supported by an appraisal, reasonable ratios, no negative amortization, limits on ARM adjustments, etc. would be excluded from this risk retention requirement.

Glen reported that a couple of studies, one by the Mortgage Bankers Association and the other by Chase, estimated that the consequences of this provision of S3217 passing in its current form would be the loss of 50,000 mortgage banking jobs and mortgage rates rising by 300 basis points.  Are either of these acceptable? To anybody?   Even Congressmen out to punish the mortgage industry cannot see these as acceptable.

Debate on S3217 will likely continue for a couple more weeks.  Now is the time for anyone interested in seeing a vibrant mortgage industry to contact their Senators to let them know that the “skin in the game” provision in S3217 needs to be amended.  Consumers need mortgage rates to stay low and they need the mortgage bankers to assist them through the home buying process.

Click PLAY to listen to the podcast of this week’s BlogTalkRadio/Lykken on Lending with Dave Lykken and MBSQuoteline’s Joe Farr :

MBSQuoteline supplies the essential market information necessary for effective decision making by Originators when assisting borrowers during the loan origination process, and for secondary marketing departments while managing pipelines. For additional information or to sign up for a free 2-week trial subscription, visit www.MBSQuoteline.com or call 800-627-1107.

Tune in every Monday at 1:00pm(et)  for up-to-the-minute information on interest rates, loan programs and “hot” industry news related to the mortgage industry. Dial: (646) 716-4972 or log in at: www.blogtalkradio.com/lykken-on-lending

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BlogTalkRadio Podcast – Apr 12, 2010

Thursday, April 22nd, 2010

MBS prices are up nicely this morning, up 9/32nds.  No economic data was released this morning.  The Dow is also up.  It is above 11,000 for the first time in 18 months.

Last week was a great week for the mortgage market.  MBS prices improved about 24/32nds during the week.  Most of the improvement followed a very strong 10 yr Treasury auction.  Strong demand and foreign participation fueled a rally in Treasury prices, which spilled over to MBS prices.  Also kind to MBS prices during the week were the minutes from the 3/16 Fed meeting.  The minutes showed that the Fed was nearly unanimous in their belief that Fed funds rates need to stay very low for an extended time and that inflation was not a concern.   Next week will be full of significant economic announcements.  On Wednesday both CPI and Retail Sales for March will be released and on Thursday Industrial Production will be released.

Glen Corso, Executive Director of the Community Mortgage Banking Project, joined the show to discuss further the need to voice concerns about the 5% risk retention provisions in the current Financial Reform bill before the Senate.  Glen described that passage of the bill with this provision in its current form will be detrimental to community mortgage bankers and their customers.  Glen proposed a revision to the bill to exempt from the retention provisions soundly underwritten loans.  The Bill is expected to be voted on by the full Senate in late April and Glen encouraged all the listeners to contact their Senators.

Andy Schell, a CPA and a CMB, joined the show to discuss the importance of quality loan level accounting systems and reports.  Too many mortgage bankers have no way of knowing which of their loans make them money and which cost them money.

Click PLAY to listen to the podcast of this week’s BlogTalkRadio/Lykken on Lending with Dave Lykken and MBSQuoteline’s Joe Farr :

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BlogTalkRadio Podcast – Apr 5, 2010

Thursday, April 22nd, 2010

MBS prices are lower this morning after a stronger than expected ISM Services Index was announced at 8:30 a.m. et and then at 10:00 a.m. et a much better than expected Pending Home Sales number was released.  This followed a week last week that saw MBS prices fall by about 1%.  Last week included the end of the Fed’s MBS purchase program, but the end of the program cannot be the sole blame for the drop in MBS prices.  Treasury prices fell as well and stocks improved.  Generally, the economic announcements during the week, including the Nonfarm Payrolls, were better than expected increasing the need to build in yield to cover longer term inflation.  The spread in yields for 10 yr Treasuries versus mortgage-backed securities did widen but only by 15 to 20 basis points.

The focus of the mortgage industry regarding pending legislative and regulatory issues is now placed squarely on the Senate Finance Committee’s passage of the Restoring American Financial Stability Act.  This Act contains many provisions which if passed will impact mortgage companies, but possibly none as significantly as a provision which will require mortgage originators and/or security issuers to retain 5% of the risk of the loans they originate and sell.  Special guest Glen Corso, Managing Director of the Community Mortgage Banking Project, explained the vague nature of many of the risk retention provisions of the Act  and the substantial degree to which regulatory decisions will dictate how its provisions are interpreted.  The retention of risk as included in the Act will substantially change the mortgage industry.

Guests Tom Millon and Rob Katz joined the show to finish the discussion on the risks of implementing a mandatory delivery strategy versus a best efforts strategy.  Experienced professionals and accurate, timely data were identified as essential elements of a successful conversion.

Click PLAY to listen to the podcast of this week’s BlogTalkRadio/Lykken on Lending with Dave Lykken and MBSQuoteline’s Joe Farr :

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