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: Loan Officer Compensation and Senate Bill 3217

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

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 [...]

BlogTalkRadio Podcast – May 17, 2010

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

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 [...]