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

2017-12-20T17:34:15+00:00 November 9th, 2010|Categories: BlogTalkRadio Podcasts|Tags: , , , , , , , , , , , , |

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 [...]

BlogTalkRadio Podcast, June 28, 2010

2017-12-20T17:34:16+00:00 June 30th, 2010|Categories: BlogTalkRadio Podcasts|Tags: , , , , , , , , , , , , , , , , , , |

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 [...]

In the News – Is HVCC working? Pt. 2: Appraiser’s Point of View

2017-12-20T17:34:18+00:00 June 3rd, 2010|Categories: In The News, Uncategorized|Tags: , , , , , , , , , , , , , , , , , |

So overall, lenders seem to be content with HVCC.  That’s one out of four.  But how about appraisers? The popular method for lenders to comply with HVCC has been to contract with an appraisal management company (AMC) to handle the appraisal process (though some are managing the process internally).  In this arrangement, the appraisal order is placed with the AMC by a non-production person in the lender’s office, the order is assigned on a random basis to one of the appraisers in a pool, and if the appraiser accepts the order, the appraisal goes forward.  Sounds simple enough and workable, right?  Most appraisers I’ve talked to are somewhat ambivalent on the issue.   They’ve lost business from long term, cultivated, relationships but picked up business from others in the random assignment process.  There’s a middleman now (remember the AMC) and middlemen have to get paid.  We’ve all heard of AMCs demanding appraisers to accept a lower fee for reports to be on their panel.  A common refrain is less qualified appraisers that otherwise might not be able to get business on their own, gladly step in on these terms with the result being poorer quality appraisals.  So, appraisers have had to [...]

In the News – Is HVCC working? The Real Answer? Well, It Depends.

2017-12-20T17:34:18+00:00 May 27th, 2010|Categories: In The News, Uncategorized|Tags: , , , , , , , , , , , , , , , , |

The industry has had a year to operate within HVCC guidelines and the benefits of it pretty clearly depend on just whom you ask. May 1, 2009 marked the implementation of another regulation on the mortgage industry when Fannie Mae and Freddie Mac adopted the Home Valuation Code of Conduct (HVCC) as a result of an agreement between their regulator, the Federal Housing Finance Agency (FHFA), and the New York State Attorney General.  One of many initiatives aimed at improving loan quality in the wake of the subprime market meltdown (and we’re finding quality problems weren’t limited to the subprime market) HVCC’s intent was to ensure appraiser independence in the valuation process, thereby improving appraisal quality.  Doing so, it was reasoned, would better serve lenders because they would get more accurate valuations on which to base their loan decisions.  And borrowers as well would be protected from obligating themselves on loan amounts based on inflated property values. So is HVCC working?  Well, who are you asking?  Basically you have four different players in the origination process impacted by HVCC- the lender (and we’ll include Fannie and Freddie in this category to keep it simpler), the appraiser, the originator and the [...]

In The News: “Skin in the Game” – Risk Retention Amendment to Senate Bill 3217

2017-12-20T17:34:18+00:00 May 21st, 2010|Categories: In The News|Tags: , , , , , , , , , , , , , , , , , , , , , , , , , , |

Senate Bill 3217 Restoring American Financial Stability is working its way through the Senate and is expected to be passed in the coming weeks.  Certain provisions of this bill will have a significant impact on the mortgage industry. As you may recall, the Senate Bill 3217, as originally proposed, included a provision which would have required 5% of the risk on all loans originated be retained by the originator upon sale to investors.  The provision was not clear as to which entity or entities in the origination chain would be required to retain the risk.  It was not clear whether the risk that was to be retained would be an ownership interest in the loan or reserves supported by cash.   It was also not clear how long the originator would have been required to retain the risk.  The original provisions would have been devastating to the mortgage industry.  The 5% risk retention would have forced many mortgage originators from the business and would have driven mortgage rates much higher.  After significant industry efforts, this provision was amended last week. The amendment, as passed by the Senate, does very little to answer these questions, but what it does do is exempt [...]

BlogTalkRadio Podcast – May 3, 2010

2017-12-20T17:34:18+00:00 May 5th, 2010|Categories: BlogTalkRadio Podcasts|Tags: , , , , , , , , , , , , , , , , , , , , |

“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 [...]

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