White House aware of issues over investment properties

The federal government is well aware that mortgage lenders and industry stakeholders are frustrated by the 7% cap on second homes and investment properties that was implemented as part of a broader series of amendments to Fannie Mae and Freddie Mac‘s Preferred Stock Purchase Agreements.

In a conversation with Mortgage Bankers Association President Bob Broeksmit last week, Bharat Ramamurti, deputy director of the National Economic Council, acknowledged the issue, which was designed to provide more liquidity to the GSEs.

“We recognize that the issues that you raised about second homes and so on, is a shorter-term issue,” Ramamurti said. “All I can say on that is we are aware of it, we will continue to engage with it and work on it, and are happy to talk to you and your members about it going forward, and have discussions with FHFA going forward. But we don’t have any new news to report on that.”

Lenders and the MBA have opined that the 7% PSPA cap has caused disruptions, particularly since a key provision requires a 52-week look-back. Compliance will be difficult given that the market is producing north of 7% of those products, Broeksmith said in his conversation with Ramamurti during the MBA’s spring conference last week. Those products are “very profitable for the GSEs given the loan-level price adjustments on them. They actually create more capital, which of course, is Director Calabria’s priority for them. Yet, Treasury and FHFA have not given Fannie and Freddie the flexibility they need to get to those 7% levels more gradually, say by the end of 2021.”

Broeksmit added: “The issue is time-sensitive since May GSE deliveries are affected and there are massive run-ups in price add-ons to second homes and investment properties in response to this policy.”

FHFA Director Mark Calabria last week told MBA members that, although the agency is looking to introduce additional PSPA amendments, they’ll have to manage for the time being.

“I obviously wish that we were in a better capital position and had a stronger Fannie and Freddie that could support more of the market, and that’s our objective” Calabria said. “The reality is there will be some short-run pinch, if you will, on the market, while we try to build a stronger Fannie and Freddie that can support the market. I do want to clarify because I think there’s often some misperceptions out there, and to say, the PSPA are lines of credit, Fannie and Freddie cannot legally knowingly take risk against PSPAs. That would be like if Wells [Fargo] said, ‘Well, we’ve got deposit insurance so who cares.’”

The MBA has sought clarity on the PSPAs and the 7% cap on second homes and investment properties. In a letter written in March, the MBA outlined four specific areas of concern:

1. Reports that the GSEs may be implementing limits on a per-lender basis rather than across their aggregate books of business, which “represents an overly conservative method of achieving compliance,” according to the MBA.

2. Disproportionate challenges for some lenders — especially smaller lenders — to meet lender-level requirements set by the GSEs, due to their footprints in certain geographic markets or their lack of access to non-enterprise outlets for these loans.

3. Reports that the GSEs are requiring some lenders to adjust loan deliveries as early as April. The MBA noted these loans are already locked and that lenders “cannot reasonably alter their delivery mixes on such short notice.”

4. Inconsistencies in the requirements being communicated to different lenders, which raises concerns about equitable treatment of lenders of varying sizes, charters, or business models.

In addition, the MBA also warned that cash window limits under the PSPA amendments could have unintended consequences for borrowers, lenders, investors, and Fannie and Freddie. The revised PSPAs require that beginning Jan. 1, 2022, the GSEs shall “not acquire for cash consideration from any single seller…during any period comprising four calendar quarters, Single-Family Mortgage Loans with an unpaid principal balance in excess of $1.5 billion.”

The MBA letter states that this requirement will force up to several dozen lenders to curtail their use of the GSEs’ cash windows, which will in turn force the lenders to increase their use of mortgage-backed security swaps, sales of loans to correspondent aggregators, or shifting of their business mix to other loan products.

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Source: HousingWire Magazine

CFPB looking at Mr. Cooper after withdrawal errors

On Tuesday, the Consumer Financial Protection Bureau (CFPB) announced it was looking into a situation with mortgage servicer Mr. Cooper after the company made unauthorized withdrawals from borrower accounts over the weekend due to a vendor error.

“The CFPB is taking immediate action to understand and resolve the situation that has affected hundreds of thousands of consumers,” said CFPB acting director Dave Uejio. “The CFPB will use all appropriate tools at our disposal to help ensure harmed consumers receive relief. Consumers affected by the incident should monitor their accounts and may contact Mr. Cooper directly.”

On Monday Mr. Cooper announced that due to a payment processing issue, unauthorized mortgage payments were taken from a number of borrower’s accounts on Saturday, April 24. The company pointed to an error in its electronic payments vendor as the source of the incorrect transactions, with some payments being posted the same day, while others did not process until Monday.

In a public alert, Mr. Cooper said that because the issue occurred on Saturday, some transactions sat through the weekend, however, it expects the majority of customers’ account statuses to be up to date by Tuesday at the latest.

According to the alert, all inaccurate charges are being corrected, and any impacted customers will not be responsible for any fees or other negative financial impact they may have caused. The company said that they are currently working with borrowers to reimburse them if any form of fee does occur from the withdrawals.

“We value the trust our customers place in us, and we sincerely apologize to those impacted. We take the processing of these transactions very seriously, and we will continue to work with the payments vendor to understand the root cause and ensure this issue does not happen again,” Mr. Cooper said in the alert.

The mortgage servicer reiterated that this was not the result of a hacking and no borrower bank accounts or accounts within Mr. Cooper’s system were compromised. 

Mr. Cooper did not disclose specifically which banks they were working with to reverse the incorrect charges, however, several heated borrowers took to social media after discovering the unauthorized withdrawals with the majority pointing to issues with JP Morgan Chase.

Several users on both Reddit and Twitter said they witnessed multiple payments were removed from their accounts that left them some of them thousands of dollars in the negative. One Reddit user said five payments were removed from his account on Saturday, totaling a whopping $10,000 in one go. Another user mentioned how they had made a lump sump payment on their previous bill that totaled $25,000, and reported that total (which was three of their regular payments) was pulled again on the weekend.

In December, Mr. Cooper settled with the CFPB for allegedly committing illegal foreclosures from Jan. 2012 to Jan. 2016 when the company operated under the title Nationstar. Mr. Cooper agreed to refund $90 million to the 115,000 customers affected and pay a civil penalty of more than $6.5 million.

The same day that settlement was released, the Justice Department announced separate settlements over servicing errors with Mr. Cooper alongside U.S. Bank and PNC Bank.

In all, the Justice Department said the three lenders didn’t comply with federal bankruptcy procedures, which affected a total of 76,000 accounts beginning in 2011. The settlement stipulates that Mr. Cooper – again Nationstar at the time – will pay affected borrowers more than $40 million.

The post CFPB looking at Mr. Cooper after withdrawal errors appeared first on HousingWire.

Source: HousingWire Magazine

It’s official: QM rule compliance delayed until October 2022

The Consumer Financial Protection Bureau formally delayed the mandatory compliance date of the General Qualified Mortgage final rule – better known as the QM rule – from July 1, 2021 to October 1, 2022 on Tuesday. This follows the bureau’s notice of proposed rulemaking on the issue on March 4.

“So many consumers have been hit hard by the pandemic and the economic downturn, and we want to ensure that responsible, affordable mortgages remain available,” said CFPB Acting Director Dave Uejio. “As the mortgage market navigates an uncertain and challenging time, extending the date by which lenders must comply with the CFPB’s new General QM definition will help provide options and flexibility for both lenders and borrowers.”

The bureau just issued its final rulings on QM in December, establishing a pricing threshold that effectively replaced the debt-to-income limit of 43% with a price-based approach that gives lenders relief for loans capped at 150 basis points above the prime rate. Today’s action means that lenders have more time to offer QM loans based on the homeowners’ DTI, and more time to use the GSE Patch, which provides QM status to loans that are eligible for sale to Fannie Mae or Freddie Mac.

The bureau did note that “The availability of the GSE Patch after July 1, 2021 may be limited by recent revisions to the Preferred Stock Purchase Agreements entered into by the Department of the Treasury and the Federal Housing Finance Agency.

In Lender Letters issued on April 8, Fannie Mae and Freddie Mac confirmed that loans purchased by the GSEs with application dates on and after July 1 must meet the QM standards set forth in December. The directive laid out in their amended Preferred Stock Purchase Agreements with the Treasury Department forbid Fannie and Freddie from buying QM loans under the GSE Patch.


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Several prominent trade groups expressed their concern about delaying the QM rule during the short comment period offered by the CFPB.

The Housing Policy Council sent a letter to the CFPB on March 30 expressing its opposition to delaying the implementation of the Final QM Rule. The HPC letter outlined why it opposes delaying the implementation of the Final QM Rule, including:

  • The 2020 General QM Rule resulted from an extensive and disciplined rulemaking process that reflects the thorough analysis and public input required under the Administrative Procedure Act;
  • The Bureau has not provided a sufficient rationale for delaying implementation, given the more expansive access to credit provided under the 2020 General QM Rule relative to the 2013 QM Rule;
  • The benefits of implementing the 2020 General QM Rule outweigh the benefits of delaying expiration of the 2013 QM Rule, as evidenced by the Bureau’s data and analysis; and
  • Delayed expiration of the 2013 QM Rule, in order to facilitate reconsideration of the 2020 General QM Rule, is not in the public interest.

The trade organization’s letter states: “We also are concerned that the Proposed Rule’s real purpose is to set the stage for the Bureau to reopen the 2020 General QM Rule. We firmly believe that reopening the 2020 General QM Rule would not be in the public interest.”

David Stevens, former CEO of the Mortgage Bankers Association who also served as senior vice president of single family at Freddie Mac, executive vice president at Wells Fargo Home Mortgage, president and COO of the Long and Foster Realty Companies, assistant secretary of Housing and FHA Commissioner, wrote a scathing opinion piece outlining his opposition to the move.

“This act poses serious risk to mortgage finance and brings potential downstream legal risk to the industry. With the mandatory date on hold, it leaves open the opportunity to re-litigate the work that has taken over two years to date. The Bureau will have more options to tinker with the General QM rule — without starting the whole process over again with an ANPR.”

The post It’s official: QM rule compliance delayed until October 2022 appeared first on HousingWire.

Source: HousingWire Magazine

What it takes to become a top subservicer

How did TMS Subservicing become one of the nation’s Top 10 subservicers? After years as an originator, the company took everything it learned and spent most of the last decade working to improve the servicing experience for all involved.

TMS started by focusing on improving the little things, which then led to the company achieving some impressive statistics including:

  • 90% first call resolution
  • Under 5% abandonment rate
  • 98% customer satisfaction
  • 500,000+ borrowers

Of course, those are just the numbers. The real story is how TMS Subservicing got there. TMS doesn’t want people waiting around on the phone, and it recognizes that resolving issues quickly is not only good for its business, it’s good for yours as well. This is why the subservicer assigns each lender with a single point of contact. If you have an issue it’s handled quickly by someone you know. After leaving originations behind, TMS Subservicing has been totally focused on subservicing, knows what makes you and your customers happy, as well as what makes your portfolio perform.

The mantra at TMS Subservicing has always been to help “Grow Happiness.” So they came up with innovative tools, like the powerful, simple-to-use servicing portal, SIME (Serving Intelligence Made Easy), that gives full transparency and 100% access into your portfolio. They ensure customer calls are picked up quickly (within 90 seconds and often much less), and it’s why you’ll talk to a person live to answer questions and resolve issues to keep abandonment rates low.

First in First Call Resolution

To get to the right answers quickly for lenders and customers, TMS Subservicing has put a lot of thought and work into first-call resolution. Research shows that resolving issues on the first call is the single best thing lenders can do to improve customer service. To that end, its customer care team receives more that 220+ hours of training. The subservicer refers to each member of its call center as CAREologists because of the incredible care they deliver on each and every call. This has resulted in TMS consistently delivering 90% first call resolution, including a 12-month average of 89% and 91% in March 2021.

Be in the Know

To do your job at optimal levels, you need critical information to act on customer matters, and you need it now.

SIME allows you to proactively monitor borrower payment trends and help them stay current. It also helps you look for refinance opportunities, lower your delinquencies and maximize your revenue. In many ways, the award-winning SIME portal makes it easy to manageyour portfolio by allowing you to view customizable dashboards and hundreds of reports 24/7, access loan level detail or the raw data at the click of a button and listen to customer-call recordings on-demand.

“Servicing is the beginning of sales cycle two. We wanted a subservicer that would allow us to stay proactive and in front of our customers,” said Eddy Perez, CEO of EPM. “With SIME technology, it’s easy. There was no other subservicer than TMS Subservicing that put us in the game of sales cycle two.”

Putting Servicer back into Subservicing

TMS Subservicing has Freddie, Fannie, Ginnie, Fitch Rating, FNMA Star, conventional loans, FHA loans, VA loans and more. And the company delivers it all with exceptional service, as is evidenced in its most recent customer satisfaction rating of 98%. Click here to find out more about partnering with TMS Subservicing.

The post What it takes to become a top subservicer appeared first on HousingWire.

Source: HousingWire Magazine

This isn’t a housing bubble — and that’s the problem

HW+ housing bubble

Last year, during the throes of COVID-19, I expended many words arguing that the U.S. economy would be OK despite the dark period we were in. We just needed patience. We aren’t in a housing bubble. Today we are enjoying the most remarkable comeback of the U.S. economy, which almost no one saw coming. The America is Back Economic Model and the 10-year yield should share the Oscar for best performance.

Favorable demographics have been a significant contributor to our rapid economic rebound, especially in the housing market. The U.S. economy was plugging along nicely before COVID-19, and the housing market was doing even better. The month before COVID-19 became a known entity in our country, demand for housing started to break out. Once COVID hit in earnest, many predicted that housing would crash.

Demand did take a pause — but that was brief. Inventory levels stayed stable, housing demand picked up after five weeks and mortgage rates went lower. Housing is a necessity — it’s not optional. Because of this, if we have the demographics for home buying, then we will have stable replacement demand. The only factor that changes this in a big way is if mortgage rates get too high. Since 1996, it’s been very rare to have existing home sales fall below 4 million in a month.

When you have the best housing demographic patch ever in history and the lowest mortgage rates in history, with housing tenure at 10 years, then we have to start worrying about home-price growth. All those factors are in play, and home prices are growing too fast. This was my main concern in the years 2020-2024, and that is being played out currently. Today the Case-Shiller index showed 12% home-price growth. For me, it’s always about real home-price growth, and this price index, as you can see, has gone parabolic now.

This is a big reason why recently on Bloomberg, I talked about how this is the most unhealthy housing market in a long time.

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The post This isn’t a housing bubble — and that’s the problem appeared first on HousingWire.

Source: HousingWire Magazine

Atlas, DivcoWest prepare $1B single-family rental venture

Another partnership of asset management giants has announced a major investment in single-family rental homes.

Atlas Real Estate and DivcoWest declared last week that they will spend $1 billion “acquiring and renovating homes in high-growth states including Colorado, Arizona, Idaho, Nevada, and Utah,” according to a press release. The companies entered into a joint venture that puts $250 million of equity into single-family rental homes.

The move aligns with the current portfolio of Atlas Real Estate, a Denver-based company that reports managing more than 4,200 housing units in the aforementioned Mountain states. But for DivcoWest the single-family rental markets represents a shift from the San Francisco company’s general focus on office, retail, industrial, and multifamily spaces.

The joint venture announcement comes one month after homebuilding giant Lennar Corporation unveiled a new business, Upward America Venture, that plans to spend $4 billion on new single-family homes, fueled by a $1.25 billion equity infusion from investors including Centerbridge and Allianz Real Estate.

Also, less than a year ago JPMorgan Chase pledged $625 million to American Homes 4 Rent for construction of 2,500 single-family rentals in the Southeast and West.

These company’s plans to build or refurbish, and then rent single-family homes comes amid a sharply imbalanced housing market in which supply is not meeting demand. The record sales numbers of last fall have now been eclipsed by a story of free falling inventory. Total homes sales have been down in the U.S. for the last two months, according to the National Association of Realtors.

But while demand for single-family homes is greater than ever, a historic shortage in lumber is ratcheting up homebuilding prices.

Atlas’s CEO Tony Julianelle said in a statement that, “The joint venture will function to increase the inventory of single-family rentals in Atlas managed markets,” and will help “meet the supply demands by providing high quality housing.”

The post Atlas, DivcoWest prepare $1B single-family rental venture appeared first on HousingWire.

Source: HousingWire Magazine

Wells Fargo faces shareholder pushback over executive pay

Source: American Banker

Broker lawsuit targets UWM’s ultimatum

HW+ gavel

The controversial ultimatum United Wholesale Mortgage (UWM) issued to brokers in March constituted a violation of the Sherman Act and a series of anti-competition laws in the state of Florida, a St. Augustine-based mortgage broker alleges in a new lawsuit that seeks class-action status.

Dan O’Kavage, president and founder of the O’Kavage Group, is the lead plaintiff in a lawsuit that claims UWM’s gambit was anticompetitive and illegal.

“I am fighting back against UWM because my freedom and independence, the reason my clients choose to work with me, has been stripped away,” O’Kavage said in a statement. “If I didn’t want to operate in an independent fashion, I would work on the retail side of the industry and work in-shop for one of the major lenders. That was never something I considered nor wanted to do. I like being local. I like supporting my neighbors and community. UWM is stripping my freedom to be the best loan officer for my clients.”

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The post Broker lawsuit targets UWM’s ultimatum appeared first on HousingWire.

Source: HousingWire Magazine

Appraisal modernization: What is going on with the forms?

Here it is: another article about appraisal modernization. Many are tired of hearing about how the appraisal industry needs to change and progress. But it’s true, and change is necessary. (Where would our Internet-provider world be if it hadn’t evolved beyond 9600 baud modems to gigabit fiber-optic service?)

The FHFA RFI responses to appraisal modernization are a treasure trove of insight into ideas and options for modernization from a wide variety of respondents. In many of those reviewed, there is a strong desire to keep appraisals and appraisers as key components of the mortgage lending process. A desire to see the collateral analysis and valuation process evolve, modernize, and move forward—whatever term you prefer. There are many good ideas for updating and modernizing that keep the appraiser involved, though the appraiser’s role may look different. Because Freddie and Fannie are such a large share of the market, their appraisal guidelines—forms and methods—become the de facto industry standards for residential mortgage lending.

Additionally, we’ve seen recent updates from Fannie and Freddie on their effort to redesign UAD and update the “forms.” The GSEs have been working to gather feedback on their proposed ideas and approach to appraisal reporting formats from various industry stakeholders for the past couple of years. The current notion is to adjust how an appraiser reports their value opinion with accompanying salient information—moving from a standardized form to a standard yet dynamic format that will adjust to the property’s characteristics being appraised. This approach would eliminate the need for property-specific forms and the need to cram multiple data points into a single field on a form, as we do with today’s UAD. These changes are beneficial from a simplicity and flexibility perspective. 

To paint an example of what this might look like, an appraisal form software provider would provide data input screens for the subject property address and certain property characteristics, such as single-unit or two-unit, owner-occupied or tenant-occupied, fee or leasehold ownership, and so forth. Based on these classifications, additional information would be input. For a single-unit home, HOA information or project amenities would not be needed. For a four-unit, the data fields included would expand to address information for all units, rental information and other building attributes important to multi-unit properties vs. single unit. When all required data input fields are completed, the data file is delivered to the lenders, same as it is today, and the data fields are formatted and presented in a manner that a “form” is printable or can be turned into a PDF so that the appraisal can be viewed.

The GSEs are pushing out a timeline that indicates the design and planning for this new approach will be  completed this year. The industry begins the mammoth task of rebuilding its systems, technology, processes, and product to support this new approach in 2022/2023. The changes will impact just about everything and everyone in the collateral valuation space.

As this effort’s scale and breadth are coming into focus, many are asking FHFA and GSEs to clarify and justify the  associated costs. There are numerous comments in the FHFA RFI responses, from significant entities including the MBA and ABA, asking FHFA to provide more insight into the value of the proposed changes. There is some concern that the changes will be beneficial primarily to the GSEs, with the cost and impacts borne by the lenders with minimal direct benefit. Forms providers, collateral management technology providers, automated appraisal review tools, AMCs, lenders workflow systems, and loan origination systems, to name a few, will be impacted significantly; not to mention the people, training, and process changes that will also be needed. This change is akin to pulling all of the wiring and plumbing out of your house and replacing—no small task.

As this effort by the joint GSE group is still in process, there are no finalized requirements or new data standard to build to at this juncture. It is business as usual for at least another year, likely longer. So, at this point, exactly what this new world looks like is speculation. Additionally, we have yet to see if the FHFA provides any additional direction to the GSEs based on the extensive feedback collected in the RFI. 

No doubt, investment in modernization is needed in the appraisal process. A measured, incremental, iterative approach minimizing impacts to all stakeholders seems prudent. At CoreLogic, we remain closely involved with all participants in this process and stay ready to support the needs of our appraiser, lender, and AMC clients as they help consumers find, buy and protect their homes.

The post Appraisal modernization: What is going on with the forms? appeared first on HousingWire.

Source: HousingWire Magazine

Citi says Revlon accountability review found no need for clawbacks

Source: American Banker