Hedging, Wholesale, Correspondent, Compliance Products; Pay Attention to the CFPB

Taylor Swift sang of a “Cruel Summer” and vendors and lenders hope that it isn’t. “If you ever get cold, stand in the corner of a room for a while. They’re normally 90 degrees.” Much of the U.S. is anything but cold. Today, depending on where you are on the globe, is the Summer Solstice, has to do with the tilt of the Earth’s axis and the Tropic of Cancer, an imaginary line circling the globe which marks the most northerly latitude where the sun can be directly overhead. Here in Hawai’i, in terms of daylight, the difference between summer and winter solstices is only about 2 ½ hours (versus 7 ½ hours in Seattle or 6 hours in Boston; nearly 0 at the equator). The U.S. Federal Reserve is not timeless like the seasons, but when it publishes something, people snap to. In this case, “Comparing mortgage rates that borrowers obtain to rates that lenders could offer for the same loan, the authors find that many homeowners significantly overpay for their mortgage, with overpayment varying across borrower types and with market interest rates.” Today’s podcast is found here, and this week’s is sponsored by Quontic whose mission is to help creditworthy borrowers obtain home loans and give them the “yes” they’ve been waiting for. Hear an Interview with Quontic’s James Hooper on innovative mortgage loan programs created to be adaptive to customers’ unique circumstances, reducing paperwork in the process.

Software, Products, and Services for Lenders and Brokers

PlainsCapital Bank National Warehouse Lending, a subsidiary of Hilltop Holdings (NYSE: HTH), offers funding for multiple mortgage products and programs with little to no additional requirements. FNMA HomeStyle, FHA 203K Full, Limited, and USDA Rural Housing renovation loans. Mortgage Revenue Bond and DPA loans with extended dwell times. Sub Limits for lower FICO scores, manufactured homes, renovation, construction and other unique mortgage products and programs. With over 30 years’ experience and a well-capitalized diversified financial holding company we provide our customers with confidence to meet their loan funding needs. If you are interested in learning more about PlainsCapital Bank National Warehouse Lending please contact Deric Barnett, (469)955-6786.

Compliance Experts Report on Q2 2024 Mortgage Compliance Outlook in this 2-Part Webinar Series! ACES Quality Management’s EVP of Compliance, Mandy Phillips and Ballard Spahr’s Richard J. Andreano share their expert knowledge on the hot topics of mortgage compliance. Topics covered in both webinars include: Supreme Court update and Townstone; FTC banning of non-compete agreements; CFPB view of UDAAP abusive prong; Fair lending update; “Junk Fees” is the new “Predatory”; What may CFPB be thinking?; FDIC RESPA section 8 focus on mortgage brokering; FHA proposed enhancements to 203(k) rehabilitation loans; Trigger leads bills; CFPB nonbank registries for contract provisions and certain agency and court orders. Download the webinar.

ICE experts were recently featured in MBA Newslink discussing the FHA’s new Payment Supplement ahead of its mandatory implementation on January 1, 2025. The supplement helps FHA borrowers in loss mitigation, and its adoption will have implications for the future of servicing. Learn how the Payment Supplement program works, what it is (and just as importantly, what it isn’t), and how servicers can start preparing now to support a successful implementation.

Correspondent and Wholesale Offerings

“Newrez Correspondent is pleased to announce that for the second consecutive year, Newrez has garnered all four of the company’s eligible Military Friendly® awards. We are the only mortgage lender and servicer to secure all four awards this year. “Our commitment to the military community is deeply ingrained in our company’s culture, and we are honored to receive recognition across all four Military Friendly® categories,” said Baron Silverstein, president of Newrez. “We deeply appreciate the sacrifices made by our servicemembers and their families. It’s an honor to know we are and will continue to lead the pack in our workplace and our communities.” In addition, Newrez Correspondent would like to thank the more than 1000 lenders that are currently approved where more than 80% are active on a monthly basis. This is a testament that our lenders know we are a Trusted and Valued Partner. Contact us here to learn more.”

“Remaining committed to sustainable growth, Citi Correspondent Lending continues to build momentum this year within the Agency space. We’ve recently experienced historic highs in Agency production and a significant driver of that success is our Mandatory Desk. Our Mandatory offering includes a robust set of CRA premiums and an AOT commitment option among other features that sellers can leverage to drive higher returns. Interested in learning more? Reach out to your Citi Account Executive or complete our Prospective Correspondent Questionnaire. We can’t wait to tell you all about the opportunities Citi offers!”

“Calling all past AFR fans (and foes)! We’re back, cooler than a penguin with a snow cone. Welcome to the new AFR Wholesale! We aren’t the same shop you once knew; we’re delivering a completely different service and experience. We’ve redeveloped our processes and brought in world-class team members who are all hyper-focused on ensuring the best customer experience possible. If you haven’t tried AFR in a while, now is the perfect time. We’re on an exciting journey to great places, and we want to take this ride together. We’ve ditched the old ways for an epic client experience. With faster turn times, smoother processes, and a rapid response team, we’re ready for any escalations. Hop on board and see the remarkable changes for yourself! For more information, contact us, call 1-800-375-6071, or visit us here. (Avoid if extreme happiness scares you).”

Don’t Mess With The CFPB

The Consumer Financial Protection Bureau (CFPB) ordered a reverse mortgage servicing operation to stop illegal activities that harmed older homeowners and caused them to fear losing their homes. The CFPB found that the customer service operation of Sutherland Global, its subsidiaries Sutherland Government Solutions and Sutherland Mortgage Services, and NOVAD Management Consulting had inadequate resources and staffing to handle as many as 150,000 borrowers. This caused systematic failures to respond to thousands of homeowner requests for assistance, and caused financial harm to borrowers, including losing out on home sales and paying unnecessary costs. The order permanently bans Sutherland Global, Sutherland Government Solutions, and NOVAD from engaging in reverse mortgage activities, imposes strict compliance requirements on future reverse mortgage activities of Sutherland Mortgage Services, requires the Sutherland companies to pay $11.5 million in redress to affected consumers, and requires all companies to pay a civil penalty of approximately $5 million, which will be deposited in the CFPB’s victims relief fund.

That was on the heels of the CFPB filing an order to resolve its lawsuit against James R. Carnes and Melissa C. Carnes for fraudulent transfers to avoid paying restitution and penalties. In April 2023, the CFPB sued James and Melissa Carnes for hiding money, through multiple fraudulent transfers over two years, in an effort to avoid paying more than $40 million owed by James Carnes. The stipulated judgment and order, if entered by the court, would require James and Melissa Carnes to pay $7 million to the CFPB.

“James and Melissa Carnes concocted a scheme to hide money to avoid paying victims of an illegal lending scam,” said CFPB Director Rohit Chopra. “The CFPB’s action today makes clear that the agency will not allow lawbreaking companies and individuals to escape the consequences of their misdeeds.”

James Carnes was the chief executive officer of Delaware-based Integrity Advance, a short-term, online lender. James Carnes and Melissa Carnes reside in Mission Hills, Kansas, which is also the principal place of administration of their revocable trusts.

The CFPB previously sued Integrity Advance and James Carnes in 2015 for lying to consumers about the cost of short-term loans. They also withdrew money from borrowers’ accounts despite not having permission from consumers to do so. The CFPB’s lawsuit resulted in an agency order requiring Integrity Advance and James Carnes to pay $38 million to make harmed consumers whole. The order also required Integrity Advance to pay a civil money penalty of $7.5 million and James Carnes to pay a civil money penalty of $5 million.

In the fraudulent transfer action filed in April 2023, the CFPB alleged that James Carnes and Melissa Carnes transferred funds to hinder, delay, or defraud the CFPB, in violation of the Federal Debt Collection Procedures Act. Between 2013 and 2015, James Carnes fraudulently transferred $12.3 million to his wife through a series of revocable trusts. James Carnes was co-trustee of the trusts, so he could access their funds for personal and business use.

The CFPB has the authority to bring actions under the Federal Debt Collection Procedures Act against defendants who engage in fraudulent transfers to avoid paying a debt owed to the CFPB.

The order, if entered by the court, would require James and Melissa Carnes to pay $7 million of an imposed $12.3 million judgment, with the remaining amount suspended due to demonstrated inability to pay more. The payment will be applied toward satisfying James Carnes’ existing $43 million judgment, which includes consumer redress and civil money penalties. The CFPB will continue its efforts to collect the remaining amount of the $43 million judgment. Read the proposed stipulated judgment and order.

Capital Markets

Navigating the complexities of mortgage pipeline hedging requires a deep understanding of crucial financial concepts. MCT’s new whitepaper, Duration and Convexity in Mortgage Pipeline Hedging, authored by Ben Itkin, Managing Director and Head of Sales at MCT, provides a comprehensive guide to mastering these principles. Using mathematical examples, the whitepaper explains key concepts related to duration, convexity, and the interplay between various market dynamics. Mr. Itkin then shows how these principles may help secondary market professionals reduce their hedge transactional costs by leveraging a cross-hedging strategy. Other topics include understanding convexity in relation to duration and explaining the difference between hedging with TBAs or treasuries. Download the whitepaper today or join MCT’s newsletter to receive MCT’s most recent educational content.

Markets return today to a very active calendar that began overnight with monetary policy decisions from the SNB, Norges Bank, and BoE. In terms of the economic news, domestically we have received the Q1 current account balance, initial jobless claims, Philly Fed figures for June. Later today brings housing starts and building permits for May, Freddie Mac’s Primary Mortgage Market Survey, a $21 billion Treasury auction of reopened 5-year TIPS, and remarks from three Fed speakers. We begin Thursday with Agency MBS prices about unchanged worse a few ticks (32nds) from Tuesday’s close and the 10-year yielding 4.25 after closing Tuesday at 4.22 percent.

Jobs

A mid-size, Midwest lender is looking for Account Executives to join its growing team. The full-service lender operates across the country in over 40 states, has a robust product suite, and open territory offering a wealth of opportunity for new team members. If you are a seasoned mortgage Account Executive, or if you have a background in the industry and are interested in breaking in to the Wholesale Sales space, please submit your confidential resume to Chrisman LLC’s Anjelica Nixt for forwarding.

“Looking for an opportunity to lead a team of Account Executives? Carrington Wholesale is seeking a dynamic and engaging Regional Sales Executive to lead our Western Region and be based in our Anaheim, CA. office. You will coach and mentor our current seasoned team of Account Executives, spanning across 13 states, while fostering strategic broker relationships and driving sales in a supportive and innovative environment. You’ll primarily be responsible for promoting Carrington’s Non-Agency/Non-QM loan programs in addition to our Government, Conventional and 2nd Mortgages. The ability to recruit and build the team strategically out of our Anaheim facility is paramount. We offer competitive pay, comprehensive benefits and abundant opportunities for growth. If you’re interested, please contact Sam Bjelac, SVP Third Party Originations, or Jeff Massotti, Director, National Sales.”

Remember: job seekers can post their resumes for free on www.lendernews.com where employers can view them for several months for a nominal charge.