Portfolio ARM; Market Intelligence, VOE Tools; Bank of England & RESPA; CFPB Ruling Interview

Greetings from the Arch MI meeting room space! Heard in the hallways here at the MBA’s Secondary conference in Manhattan: “Our loan officers are telling their clients, ‘Yeah, the best time to buy a house was five years ago. The second-best time is… now.’” People’s memories are short, no one writes about how our industry helped millions of people during the pandemic, and the mainstream press is always looking for sensationalism. The latest example is “zombie mortgages”: 2nd mortgages taken out during 2008-2010 and that haven’t been paid. And we’re to blame? UWM’s DPA program, purportedly tied to Freddie, has garnered some interest. There’s another saying: the stock market is not the economy. But last week the Dow Jones Industrial Average closed above 40,000 for the first time in history. Apparently, investors have confidence the Federal Reserve will get inflation under control without throwing the country into a recession. Should we attribute this to the policies advanced by President Joe Biden and Secretary of the Treasury Janet Yellen? Some will. On an annualized basis, during the Trump Administration the Dow rose 11.8 percent, Barack Obama (+12.1 percent) and Bill Clinton (+15.9 percent). (Found here, this week’s podcasts are Sponsored by Truv. Truv lets applicants verify income, employment, assets, insurance, and switch direct deposits. Unlock the power of open finance, with Truv. Today’s features an interview with attorney Jay Beitel on the Supreme Court finding the funding of the CFPB constitutional.)

Lender and Broker Software, Products, and Services

“The first ever pizza delivery took place in 1889, when famous pizza chef Raffaele Esposito treated Italy’s King Umberto and Queen Margherita to a legendary slice. Now, almost 15 percent of all restaurant meals eaten in the U.S. are delivered. Evaluating gig income from sources such as DoorDash, Postmates, Uber and Lyft are imperative to qualifying more applicants. Argyle provides direct-source verification of income and employment (VOIE) covering 90 percent of the U.S. workforce, including more than 25 of the largest #gigeconomy employers. Lenders can trust they are getting the most complete data possible at verification, accounting for all income a borrower has at their disposal. Discover all the gig workers Argyle covers today.”

Want to know how to pick up an extra partner deal a month? With MMI’s cutting-edge mortgage transaction data feeding into Bonzo’s next-gen SMS and email automation platform, the path to unlocking an extra agent deal or two will be clear. Discover the three steps you can take to win in today’s market with MMI and Bonzo in their latest playbook. MMI and Bonzo users employ this set of simple strategies that any producer can follow. Easily find the right agents to talk to, seamlessly create targeted SMS and email campaigns, reach out at the relevant moment, and do it all without spending half your day on your laptop. Take a minute to see how it’s done. Download the playbook here and find out what you’ve been missing without the dynamic duo of MMI and Bonzo in your life.

Webinar: Surprise: First-time home buyers are on the rise. Here’s how to earn their business. Interest rates and housing inventory haven’t been hospitable for first-time buyers. Despite challenges, this segment made a notable jump in Q1 2024. What drove first-time buyers onto the property ladder, and how can lenders win their business? In this webinar, presented by Maxwell in partnership with HousingWire on May 29 at 1 p.m. CT, we’ll dig into Maxwell’s exclusive data to better understand today’s first-time buyers and explore how to cater to this valuable segment. Click here to save your seat (and if you can’t make the live event, you can still register for the on-demand recording!).

Broker and Correspondent Products

“NexBank Wholesale & Correspondent now offers 1- and 3-year Portfolio ARMs and $2,500 VLIP credit on HomeReady and Home Possible. Why partner with NexBank? Competitive pricing and products, and a streamlined experience: NexBank makes it easy for you to do business, has pricing that gives you the competitive edge, and offers a wide variety of products – Agency, FHA and VA, plus competitive portfolio Jumbo and Non-QM. We offer low-down payment and expanded financing options, HomeReady Home Possible $2,500 credit to use towards a down payment or closing costs for qualified borrowers. Wholesale Lender since 2008: Highly experienced and dedicated team understands the challenges that clients face and opportunities that help you succeed. 100 percent dedicated to Wholesale Lending: NexBank doesn’t compete with our clients for retail originations or refinancing business. We’re solely focused on building long-term relationships with our TPO clients and helping them grow their businesses. Contact us. Member FDIC. Equal Housing Lender. NMLS672886.”

The Bank of England, Veterans, RESPA, FCRA, and HMDA

Lenders and vendors should always find penalties educational. (Though some liken the situation to a herd of zebras in Africa watching one of their own be pulled down by lions.)

The Federal Deposit Insurance Corporation (FDIC) announces a settlement with Bank of England, England, Arkansas, for violations of Section 5 of the Federal Trade Commission Act (Section 5), the Real Estate Settlement Procedures Act (RESPA), the Fair Credit Reporting Act (FCRA), and the Home Mortgage Disclosure Act (HMDA). The bank has stipulated to the issuance of an Order to Pay Civil Money Penalty (CMP) in the amount of $1.5 million. (Type in “Bank of England.”)

In addition, nine former employees of the Bank of England have stipulated to individual enforcement actions. Based on the FDIC’s findings, the bank made $1.9 million in remediation to over 900 harmed consumers.

“’Veterans and their families who were deceived into refinancing their VA loans were overcharged and did not receive the loan products promised, resulting in significant consumer harm,’ said FDIC Division of Depositor and Consumer Protection Director Mark Pearce. ‘This announcement demonstrates FDIC’s commitment to ensuring consumers are treated fairly, and that those responsible, including the bank and individuals employed by the bank, are held accountable for their illegal actions.’

“Section 5 prohibits banks from engaging in unfair or deceptive acts or practices. The FDIC determined that the bank, through one of its loan production offices (LPOs), violated Section 5 by misrepresenting to consumers that they would be able to skip multiple loan payments when refinancing a Department of Veterans Affairs (VA) mortgage loan. The FDIC also determined that loan officers’ or LPO’s misrepresented to consumers their relationship with the VA.

“Section 8(a) of RESPA prohibits giving or accepting a thing of value in exchange for the referral of settlement service business. RESPA was enacted to enable consumers to better understand the home purchase and settlement process and, where possible, to reduce settlement costs. The FDIC determined the bank entered into certain co-marketing arrangements and marketing service agreements in which the bank and real estate brokers agreed to market their services together using online platforms. Further, the bank also entered into desk rental agreements whereby the bank rented space from realtors and entered into agreements with online/digital platforms for lead generation.

“These arrangements and agreements resulted in the payment of fees by the bank to real estate brokers and online/digital platforms for their referrals of mortgage loan business, in violation of REPSA. Lastly, the FDIC determined the bank brokered certain reverse mortgage loans where broker fees made to the bank constituted things of value provided in return for loan referrals in violation of RESPA Section 8.

“The FDIC also determined that the bank failed to provide consumers with firm offers of credit and required disclosures as required by the FCRA, and the bank failed to report accurate data on its 2021 loan application register in violation of HMDA.

“In addition to the settlement with the bank, the FDIC also announces settlements with nine former employees of one of the bank’s LPOs for violations of Section 5 associated with deceptive and unfair practices involving VA refinance loans by: (1) luring consumers to apply for mortgage loans with low, unavailable loan prices that would not be honored and then subsequently increasing the price before closing the loan; (2) misrepresenting that consumers could skip two months of their mortgage payments; and (3) misrepresenting the LPO’s affiliation with the VA. These nine settlements include, but are not limited to, the following: Ryan Qarana, Assistant Branch Manager: Stipulated to a Prohibition Order and Order to Pay CMP in the amount of $100,000 for violations of Section 5 and engaging or participating in unsafe or unsound practices; Jasmine Jonna, Sales Manager: Stipulated to a Prohibition Order and Order to Pay CMP in the amount of $12,000 for violations of Section 5 and engaging in unsafe or unsound practices; Zack Jabro, Branch Manager: Stipulated to an Order to Pay CMP in the amount of $110,000 for engaging in unsafe and unsound practices.

“In addition to the CMP, the FDIC issued a Consent Order that requires the bank to take affirmative steps to ensure a Compliance Management System that effectively identifies, addresses, monitors, and controls consumer protection.”

Any questions about adhering to regulations? Talk to an attorney.

Capital Markets

In the ongoing battle against inflation, recent data has shown signs of progress but also lingering challenges for the Federal Reserve. Despite efforts to curb inflationary pressures through higher borrowing costs, reaching the Fed’s 2 percent inflation target remains elusive. A slight easing in the core consumer price index in April provided some relief, along with stagnant retail sales indicating cautious consumer behavior.

Yet, interest rate cuts are likely delayed due to persistent inflation surprises, particularly in service prices and fuel costs driven by global tensions. The Fed at its most recent meeting announced a slowdown in the reduction of its balance sheet, a move signaling a shift towards less restrictive monetary policy. However, inflationary expectations remain a concern, with Fed Chair Jerome Powell noting the surprise uptick in inflation and signaling a stance of maintaining current interest rates rather than raising them.

Outside of consumer and producer price inflation stats, there were plenty of non-inflationary economic releases last week that continue to help shape the overall economic narrative. Housing starts were disappointing, reflecting the impact of rising mortgage rates on buyer sentiment and construction activity. Despite a surge in multifamily developments, single-family starts declined, exacerbating worries about inventory. Unit labor costs suggested inflationary pressures from the job market are easing. Industrial production remained flat, with manufacturing output declining, indicating a slowdown in economic activity. Retail sales reflected slower GDP growth projections for 2024. Put it all together and the economic outlook remains uncertain, with inflationary pressures and monetary policy adjustments shaping future prospects.

This week’s calendar contains much less first tier economic data than last week with updates on Fed surveys, flash S&P Global PMIs, housing-related data, durable goods orders, and Michigan sentiment before the early close ahead of the Memorial Day weekend. The minutes from the April 30/May 1 FOMC meeting will also be released on Wednesday. Regarding MBS, Class D 48-hours is today. And speaking of today, the calendar is all about Fed speakers without any economic releases of note. We begin the week with Agency MBS prices unchanged from Friday, the 10-year yielding 4.41 after closing last week at 4.42 percent, and the 2-year at 4.82 percent.

Employment

A 49-state licensed mortgage lender with a large servicing and strong capital base is seeking to expand retail footprint by partnering with large production teams or regional mortgage banks interested in a capital partnership. The goal of the relationship is to leverage back-office mortgage functions (e.g., secondary, technology, compliance, operations, and licensing) to provide you with long-term production growth opportunities. By partnering with us, you can utilize our mature systems to add loan officers and scale your operations across the US. If you are a strong retail loan origination team feeling constrained by layers of management, or an independent mortgage lender looking for new options for your team, we offer a compelling alternative to standard “branch” offerings. Confidential and serious inquiries can email Anjelica Nixt.

Movement Mortgage is dedicated to serving the veteran community! The Top 10 purchase lender will host its first-ever VA Summit on June 5, exclusively available to Movement loan officers. The event will feature keynote speakers, panels of expert VA home loan focused LOs, and more. Attendees will gain firsthand knowledge and insights into serving the veteran community. In addition to the VA Summit, Movement continues to support veterans in other ways as well, including through GraceWorks grants. These grants address the basic needs of veterans, from medical care to mental health initiatives. Most recently, the company has given grants to vital organizations like the EOD Warrior Foundation and Home Base. For more information on Movement’s VA initiatives, please visit movementmilitary.com.

(Hey, if you know someone who’s out of work, Ginnie Mae is hiring. Also, resumes can be posted for free at www.lendernews.com and employers can view them for a nominal charge for several months.)

U.S. Bank announced that John Hummel has been appointed to lead the East Market for Retail Home Lending. Hummel previously led the correspondent and Housing Finance Agency (HFA) business at U.S. Bank, a top 10 mortgage loan originator by volume. John will lead a team of 750 sales managers and mortgage loan originators that have grown the region to produce $7 billion in originations. Congratulations!