May 28, 2012: Minority numbers; CFPB expansion; investor/vendor updates; don’t forget why we have a holiday today

May 28, 2012: Minority numbers; CFPB expansion; investor/vendor updates; don’t forget why we have a holiday today Rob Chrisman

The world is a’ changin’, and who better to help us keep track of it but the U.S. Census Bureau. It turns out that 50.4% of our nation’s population younger than age 1 were minorities as of July 1, 2011. This is up from 49.5% from the 2010 Census taken April 1, 2010. A minority is anyone who is not single-race white and not Hispanic. The population younger than age 5 was 49.7% minority in 2011, up from 49% in 2010. There were 114 million minorities in 2011, or about 37% of the U.S. population. (In 2010, it stood at 36%) There were five “majority-minority” states or equivalents in 2011: Hawaii (77% minority), the District of Columbia (65%), California (60%), New Mexico (60%) and Texas (55%). No other state had a minority population greater than 46% of the total.

When I was in college, there were “The Big 8” accounting firms: Arthur Andersen, Arthur Young, Coopers & Lybrand, Ernst & Whinney, Deloitte, Haskins and Sells, KPMG (formed by merger of Peat Marwick International and KMG Group), Price Waterhouse, and Touche Ross. (That’s always a good trivia question when a bunch of liquored-up ex-yuppies get together.) There’s been another consolidation in accounting, with J.H. Cohn and Reznick Group, both top-20 accounting firms in the U.S., announcing plans to combine in September if things go as planned. The firms have a fair number of clients in the real estate and mortgage industries.) If it goes through, the new firm will become the 11th largest accounting firm in the country with more than 2,000 employees, 280 partners, 25 offices, and combined revenues of more than $450 million.

Not wanting to be left out of the headlines, way out west, in San Francisco, the CFPB is opening up a regional office to cover 17 states, headed up by Edwin Chow, Western Regional Director. On June 11th he will be discussing all the aspects of the CFPB – at least the ones he’s allowed to discuss – at the Sacramento meeting of CAMP (California Association of Mortgage Professionals). If you wonder where a division head of the CFPB comes from, Mr. Chow was a former deputy regional director with the OTS. The event goes from 10AM -12PM: “Find out what you need to know to stay in business in 2013.” For questions visit the CAMP website or contact John Kaempfer at jkaempfer@comstockmortgage.com.

(For anyone unclear as to what the CFPB is, the bureau will take over the regulation of consumer financial products and services – such as mortgages, debit and credit cards, and checking and savings accounts – from other federal regulators. It also will gain powers over certain nonbank entities that are largely unregulated, such as payday lenders, debt collectors, check cashers, credit-reporting agencies and private student-loan companies. Banks will continue to be regulated for safety and soundness by the Federal Reserve, Federal Deposit Insurance Corp. and the OCC. But any mortgage company who thinks that they can avoid a CFPB just because it doesn’t do enough volume could be in for a surprise.)

And yes, the lender/agency/investor news continues, and here are some recent changes. As always, it is best to read the actual bulletin, but this will give one a flavor for what is happening out there. In no particular order…

Stonegate Mortgage announced the addition of five Regional Sales Directors to its recently established Correspondent Financial Institutions channel. Susan Gladden (Great Lakes), Tony Nienas (North Central), Sean Marr (Southeast), Patrick Benoist (Midwest), and Wendy Mack Dumas (Atlantic) will be focused on banks and credit unions in their territories. (Stonegate services loans and acquires loans on a wholesale basis.)

A few brief Fifth Third HARP 2.0 updates that went into effect on May 14th: the maximum LTV for DU Refi Plus and HASP Open Access loans has been changed to 105%, while the CLTV and HCLTV are still unlimited.  Non-Fifth Third to Fifth Third loans are no longer permitted to transfer mortgage insurance, and loans already registered or locked before the May 14th deadline will continue with the previous pricing adjustments. The pricing adjustment for Fifth Third Agency Jumbo Fixed 30-year loans has been changed from -0.875 to -0.500. Streamline loans that are refinancing an FHA loan that was previously endorsed on or before May 31, 2009 will be subject to a revised Upfront Mortgage Insurance Premium (UFMIP) and Annual MIP.  The new UFMIP of .01% and the new Annual MIP of 55 basis points will affect loans with case numbers assigned on and after June 11, 2012.  Fifth Third cautions that case number requests for FHA loans over $625,000 received by June 4th will be handled as efficiently as possible, but that there’s no guarantee that they will be processed by the June 11th deadline. Fifth Third wholesale clients are reminded that the “transfer notice” from the previous lender needs be included in the loan submission in order to transfer an FHA case number; the original FHA case number should be included as well.  To transfer an FHA case number to another lending institution, the loan must be withdrawn or denied and the Fifth Third FHA case number transfer request cover sheet emailed to wholesale.fhacasenumberrequest@53.com. Flagstar has reduced the price adjustment on Fannie Mae Cooperative Property Program loans from -0.500 to -0.250, which went effect for loans locked on or after May 14th. When creating or updating a Quality Control or Police and Procedures plan, Flagstar clients are reminded that they need to include a verification process that will guarantee detection if the company or any of its officers or employees are restricted by a federal or state agency, e.g. being debarred or suspended under a Limited Denial of Participation action. There are a number of recent updates to the Flagstar Conventional Underwriting Guidelines, the first of which addresses material errors on credit reports that negatively affect the risk analysis of the AUS.  It is necessary in these circumstances to update the borrower’s credit and obtain new AUS findings.  The guide has also been updated to say that the number of mortgage inquiries a borrower has made will be considered and could result in a denial, applicable to both FHA and Conventional loans. Flagstar will not approve and/or purchase any loan with an unexpired right of redemption except in cases where the purchase agreement, title, and appraisal all list the same seller who is the original mortgagor; the title may show lis pendens notices from the mortgagee or bank, and the purchase contract may indicate a short sale. As of May 21, 2012, loans submitted to Flagstar through Freddie’s Loan Prospector will not be considered eligible to use the cash-out proceeds from the subject refinance transaction as reserves. Due to investor deliberations, Guild is suspending the USDA Streamline Program for loans that include financing of closing costs.  This doesn’t affect loans based on current principal balance and the guarantee fee. GMAC Correspondent clients should be aware that additional due diligence requirements apply if a borrower’s source of funds for the down payment is from a state in the Balkans, Belarus, the Cote d’Ivoire, Cuba, the Democratic Republic of the Congo, Iran, Iraq, Lebanon, Liberia, Libya, Myanmar, North Korea, Somalia, Sudan, Syria, or Zimbabwe.  If the source of the assets is from one of these sanctioned countries, the loan must be reviewed on a case by case basis to address potential OFAC violations (full details of the OFAC Sanctions Programs are listed on the Department of Treasury’s website: http://www.treasury.gov/resource-center/sanctions/Programs/Pages/Programs.aspx. Mountain West Financial notifies brokers that, because the California FHA is presently taking about three weeks to review loans that have been submitted to them, they should move from CHDAP loan approval to a PTF condition.  This is provided that all other PTD conditions are signed off and there is less than 1% difference between the income being used for qualifying and the income limits.  To ensure efficient processing, the document order form should clearly state the month for which the documents are being drawn.  Loans with documents that have been drawn in the current month are only permitted to carry over the 7th of the next month, and any loans that require a re-draw are subject to a fee.  MWF reminds brokers that CALFHA does not permit a non-purchasing spouse or other party to be listed on the Deed or Title; the title must be vested and remain in the purchasing borrower’s name only. And the minimum FICO score for all FHA and VA property flips has been changed to 640, which is effective immediately for all relevant MWF loans. The Citibank Ineligible Originator List has been updated and can be found in the elfno section of the Correspondent website (http://app.communications.citimortgage.com/e/er?s53&lid9&elq1cce85addd744585b70201ae3db40d1d). The Appraiser Monitor/Ineligible List is also updated quite frequently and can be found in the same section of the Correspondent site. Citi raises the issue of inconsistencies between the borrower’s address provided by a creditor from the borrower’s application and the address listed on the credit report.  Correspondent clients are reminded that they are required to review and resolve the discrepancies.  Both Address Discrepancy Alerts (where the address on the application is a variant of the address in the credit history) and Address Mismatch Alerts (where the address doesn’t show up on the credit report) must be addressed, and underwriters are encouraged to rely on supporting documentation rather than borrower explanations.

Instead of the usual joke, it is good to take a moment and remember why we observe this holiday. Memorial Day, originally called Decoration Day, is a day of remembrance for those who have died in our nation’s service – not for soldiers or veterans in general. While Waterloo N.Y. was officially declared the birthplace of Memorial Day by President Lyndon Johnson in May 1966, it’s difficult to prove conclusively, and seems to have originated in many places around the country. In the 1860’s small ceremonies were being held to honor those that died in the War Between the States, and in 1868 General Logan, national commander of the Grand Army of the Republic, issued a proclamation (“General Order No. 11”). Memorial Day was first observed on May 30 1868, when flowers were placed on the graves of Union and Confederate soldiers at Arlington National Cemetery. The first state to officially recognize the holiday was New York in 1873. By 1890 it was recognized by all of the northern states. The South refused to acknowledge the day, honoring their dead on separate days until after World War I (when the holiday changed from honoring just those who died fighting in the Civil War to honoring Americans who died fighting in any war) and it is now celebrated on the last Monday in May. (Several southern states use other days – 1/19, 4/26, 5/10, or 6/3 – as a separate day for honoring the Confederate war dead.)

Some people think the day is for honoring any and all dead, and not just those fallen in service to our country. Unfortunately traditional observance of Memorial Day has diminished over the years, and some seem more focused on having a day off. Please don’t forget its purpose.

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