the mortgage battlefield The industry will grapple with regulatory uncertainty
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The coming 2012 elections could be a tumultuous time for the mortgage industry. Not surprisingly, the mortgage and banking industries are likely to be the subject of much critique and demagoguery during the campaign. With Fannie Mae and Freddie Mac potentially seeking billions more in support from taxpayers, and consumer sentiment so negative toward banks and Wall Street, expect regulatory agencies to come down hard on the financial services industry as part of a populist effort to attract votes. Throughout the year, it will seem as though our industry is in a constant struggle to demonstrate our value to the country. We will have to participate in the debate over the role of government in mortgage finance. We will have to engage in the effort to adopt new regulations that are part of the Dodd-Frank legislation. According to Tom Donatacci, executive vice president of Clayton Holdings, “Among the major unanswered questions regarding DoddFrank: What’s a qualified mortgage? How much ‘skin in the game’ will be required of the issuer and seller? How will the conflicts-of-interest provisions impact securitization and various parties’ ability to buy and sell securities? What is the future role of the rating agencies?” New regulations are certainly coming, but their scope and impact are very much up in the air.
New industry leaders will emerge
JANUARY 2012 ILLINOIS
MORTGAGE PROFESSIONAL MAGAZINE
NationalMortgageProfessional.com
With the challenges of the last few
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years forcing hundreds of thousands of 2007-era employees, thousands of small businesses and dozens of large firms out of the mortgage industry, it is somewhat surprising that some brave souls would invest their time and resources to develop, grow and improve the industry in 2012. But that is exactly what I see when I survey they the mortgage landscape. I see: Entrepreneurs and business professionals battling to build a sustainable industry; New and better technology that makes our tasks easier and the loans originated of higher quality; New originators committed to consumer-engagement and education; and Investors eager to bring safe, reliable returns to their clients. The “new” mortgage industry is emerging with leaders who are focused on efficiency, accountability, and sound ethical behavior. That sounds like a great industry to be part of! The year 2012 will not present a return to the industry of the past, but it will represent a real foundation for a successful future. I, for one, cannot wait for 2012 to unfold, so let the battles begin! John Walsh is president of Milford, Conn.-based Total Mortgage Services. John founded Total Mortgage Services in 1997 with a customer-centric approach and a mission of responsible lending. He may be reached by e-mail at JWalsh@TotalMortgage.com or visit TotalMortgage.com.
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compliant. The platform may also run the appraisal through UCDP’s known requirements before it is submitted, providing alerts on any “hard stops” that might prevent the loan from processing for GSE review. Why is this important? Because it allows lenders to identify and handle problems before the GSEs get involved to assist in maintaining a positive seller/servicer relationship. Benefit #3: Advanced valuation management platforms also create significant improvements in vendor management processes by instantly identifying marginal performers and re-directing assignments to the best performing vendors to save time and
money and ultimately increase customer satisfaction. The Dec. 1, 2011 deadline for ULDD compliance is now past, and the final March 19, 2012 deadline for full UCDP compliance is swiftly approaching. It’s not too late for lenders to take a critical look at what they can manually process through the online portal versus the automated efficiency and additional benefits in data uniformity that can be realized with a valuation management solution. David Rasmussen is senior vice president of operations at Veros Real Estate Solutions. For more information, call (714) 415-6300 or visit Veros.com.
nmp news flash
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its Single Family loan holdings. The misleading disclosures were made as Fannie Mae’s executives were seeking to increase the company’s market share through increased purchases of subprime and Alt-A loans, and gave false comfort to investors about the extent of Fannie Mae’s exposure to high-risk loans, the SEC alleged. In the complaint against the former Freddie Mac executives, the SEC alleged that they and Freddie Mac led investors to believe that the firm used a broad definition of subprime loans and was disclosing all of its Single-Family subprime loan exposure. Syron and Cook reinforced the misleading perception when they each publicly proclaimed that the Single Family business had “basically no sub-prime exposure.” Unbeknown to investors, as of December 31, 2006, Freddie Mac’s Single Family business was exposed to approximately $141 billion of loans internally referred to as “subprime” or “sub-prime like,” accounting for 10 percent of the portfolio, and grew to approximately $244 billion, or 14 percent of the portfolio, as of June 30, 2008.
FHA Grants Year-Long Extension of Anti-Flipping Regulations Carol Galante, A c t i n g Commissioner of the Federal Housing Administration (FHA), has announced that the FHA will extend its temporary waiver of the anti-flipping regulations in 2012 through Dec. 31, 2012. The extension was granted in an effort to continue stabilizing home values and improve conditions in communities with high foreclosure activity. With certain exceptions, FHA regulations prohibit insuring a mortgage on a home owned by the seller for less than 90 days. In 2010, FHA temporarily waived this regulation through Jan. 31, 2011, and later extended that waiver through the remainder of 2011. The new extension will permit buyers to continue to use FHA-insured financing to purchase U.S. Department of Housing & Urban Development (HUD)owned properties, real estate-owned (REO) properties, or properties resold through private sales. It will allow homes to resell as quickly as possible, helping to stabilize real estate prices and to revitalize neighborhoods and communities. “This extension is intended to accelerate the resale of foreclosed properties in neighborhoods struggling to overcome the possible effects of abandonment and blight,” said Galante. “FHA remains a critical source of mortgage financing and stability and we must make every effort that to promote recovery in every responsible way we can.” The extension is effective through
Dec. 31, unless otherwise extended or withdrawn by the FHA. All other terms of the existing Waiver will remain the same. The Waiver contains strict conditions and guidelines to prevent the predatory practice of property flipping, in which properties are quickly resold at inflated prices to unsuspecting borrowers. The Waiver continues to be limited to sales meeting the following conditions: All transactions must be armslength, with no identity of interest between the buyer and seller or other parties participating in the sales transaction. In cases in which the sales price of the property is 20 percent or more above the seller’s acquisition cost, the Waiver will only apply if the lender meets specific conditions and documents the justification for the increase in value. The Waiver is limited to forward mortgages, and does not apply to the Home Equity Conversion Mortgage (HECM) for purchase program.
MBA Announces the Completion of MISMO Transition The Mortgage Bankers Association (MBA) has announced that it has completed the transition, announced in September, and will resume support for the Mortgage Industry Standards Maintenance Organization Inc. (MISMO). With the successful transition, MISMO will now focus efforts on regulatory implementation and advocating for broader adoption of data standards throughout the industry. “MBA supports greater efficiency and lower costs throughout the industry by advocating for broad adoption of industry consensus standards developed by MISMO. We are actively engaging both regulators and industry in this effort,” said MBA President and CEO David H. Stevens. “MBA will also provide educational opportunities aimed at helping industry and government better understand and implement MISMO standards. Standardization and transparency are critical to the return of investor confidence and liquidity in the mortgage marketplace, and MISMO has a crucial role to play. I would recommend that MBA members become MISMO subscribers in order to help guide this effort.” To assist with these efforts, MBA has hired Cindy Bojokles as its new director of industry standards. In this role, Bojokles is responsible for supporting and advancing the activities of MISMO. Bojokles will work closely with industry executives to increase the standards available to the industry. Bojokles will also help government agencies understand the benefits of adopting the voluntary consensus standards developed by MISMO.