Page 31

heard on the street

continued from page 17

Fairway Independent Mortgage enters the  The term of the loan does not exceed 30 years, except as such term may be wholesale market continued from page 23

extended by the guaranteeing or insuring federal departments or agencies (i.e., high-cost areas), and  In the case of a reverse mortgage (except where an exemption applies, as indicated above), a reverse mortgage which meets the standards for a qualified mortgage. Points and fees Other than bona-fide third-party charges not retained by the mortgage originator, creditor, or an affiliate of the creditor or mortgage originator, total points and fees are those points and fees payable in connection with the loan.  Calculation: Points and fees exclude either of the amounts described in the following scenarios, but not both: • Scenario # 1: Up to and including two bona-fide discount points payable by the consumer in connection with the mortgage, but only if the interest rate from which the mortgage’s interest rate will be discounted does not exceed by more than one percentage point the average prime offer rate.18 • Scenario # 2: Unless two bona-fide discount points have been excluded under Scenario # 1, up to and including one bona-fide discount point payable by the consumer in connection with the mortgage, but only if the interest rate from which the mortgage’s interest rate will be discounted does not exceed by more than two percentage points the average prime offer rate.  Bona Fide Discount Points: Loan discount points which are knowingly paid by the consumer for the purpose of reducing, and which in fact result in a bona fide reduction of, the interest rate or time-price differential applicable to the mortgage.  Interest Rate Reduction: Scenario # 1 and Scenario # 2 (see above) do not apply to discount points used to purchase an interest rate reduction, unless the amount of the interest rate reduction purchased is reasonably consistent with established industry norms and practices for secondary mortgage market transactions.  Smaller Loans: For lenders that extend smaller loans to meet the requirements of the presumption, the Board will consider the potential impact of such rules on rural areas and other areas where home values are lower.

continued on page 26

Mortgage Builder and NYLX form pricing partnership Mortgage Builder Software, a provider of loan origination software (LOS) technology, has completed its integration with product eligibility and pricing (PPE) technology provider, NYLX, of Mt. Arlington, N.J. The partnership results in a new level of sophistication for price decisioning, allowing mortgage lenders to achieve the best possible pricing for loan products, benefiting consumers by obtaining the most

continued on page 29


The Mortgage Reform Act amends the Truth-in-Lending Act (TILA)19 by adding a new section entitled “Defense of Foreclosure.” Pursuant to this section of TILA, a consumer now may assert a defense of recoupment20 claim for violations when a creditor, assignee, or other holder of a residential mortgage loan or anyone acting on behalf of such creditor, assignee, or holder, initiates a judicial or non-judicial foreclosure of the residential mortgage loan, or any other action to collect the debt in connection with such loan. Areas that provide additional protection to consumers include “steering” violations and the failure to properly determine the borrower’s ability to repay. Also, a set off is now provided without regard for the time limit on a private action for damages.21 The amount of recoupment or set off is equal to the amount which the consumer would be entitled for damages for a valid claim brought in an original action against the creditor, plus the costs to the consumer of the action, including a reasonable attorney’s fee.22

Essent Guaranty Inc., a mortgage insurer founded to provide private capital to America’s housing finance system, has announced that its parent company, Essent Group Ltd., has secured an additional $100 million in capital commitments from new and current investors. The additional commitments raise Essent’s total equity commitments to $600 million. Essent Guaranty also announced substantial progress during the last quarter, including establishing active lender relationships, issuing mortgage insurance (MI) certificates, initiating Essent Online as its businessto-business Web portal, and achieving approval to issue mortgage insurance nationwide. “During 2009 and early 2010, the company focused on building our operating platform and obtaining the necessary regulatory and licensing approvals to open our doors for business at Essent Guaranty,” said Mark Casale, president and chief executive officer of Essent. “Since our announcement on February 18th that Fannie Mae and Freddie Mac approved Essent as a qualified mortgage insurer, we have turned our full attention to serving lender clients and homeowners. We have had an enormously productive



Defense to foreclosure

Essent Guaranty raises $100 million in additional capital and issues first MI policies 

 Balloon Loans: The term “qualified mortgage” includes a balloon loan: • Meeting all of the criteria for a qualified mortgage (see above); • For which the lender makes a determination that the consumer is able to make all scheduled payments, except the balloon payment, out of income or assets other than the collateral; • For which the underwriting is based on a payment schedule that fully amortizes the loan over a period of not more than 30 years and takes into account all applicable taxes, insurance, and assessments; and • That is extended by a lender which:  Operates predominantly in rural or underserved areas;  Together with all affiliates, has total annual residential mortgage loan originations that do not exceed a limit set by the Board;  Retains the balloon loans in portfolio; and  Meets any asset size threshold and any other criteria as the Board may establish, consistent with the purposes of this subtitle.

Fairway Independent Mortgage Corporation has announced that it is entering the wholesale market with select banks, credit unions and brokers. The company will build a national wholesale platform by leveraging its expertise in Federal Housing Administration (FHA), agency and USDA lending and the seasoned management and staff it has assembled. As a retail lender, Fairway Independent Mortgage currently provides mortgages directly to borrowers. By creating a wholesale channel, the company will be able to fund loans for customers of other banks, credit unions and mortgage brokers. It will fund third-party origination (TPO) business through several business lines including fulfillment, broker and correspondent. The move comes after a record year in loan originations for Fairway Independent Mortgage, which surpassed $3.4 billion in loan volume in 2009. While this will be Fairway’s first foray into the wholesale market, its senior management has a collective 150 years of experience in the wholesale mortgage industry. Fairway’s wholesale team is a blend of mortgage professionals that made up the successful third-party origination sales and operations teams of Union Federal Bank and MidAmerica Bank. “As the mortgage industry continues to rebound, we see a fantastic opportunity for us in the wholesale market, particularly with our strong focus on FHA lending, high-touch customer service and top-notch talent,” said Steve Jacobson, chief executive officer of Fairway Independent Mortgage. “Although our goals are modest, we believe we can bring the same successful culture, speed and quality of service to the wholesale space as FHA experts who are able to serve banks, credit unions and other loan originators. Entering the wholesale market is the right thing for us to do right now.” For more information, visit

favorable terms for their home financing transactions. Through NYLX and its LoanDecisions platform, Mortgage Builder users have seamless access to real-time pricing information available anywhere in the industry without ever leaving the Mortgage Builder platform. “This direct access allows our users the ability to give immediate alternatives to borrowers with complete confidence and accuracy,” says Keven Smith, chief executive officer and president of Mortgage Builder. “In addition to the speed of determining available programs and their prices, the lender is saved the time and effort often wasted on loans that have no chance of closing.” “NYLX integrations have helped our customers achieve a more cohesive technology environment,” says Howard Conyack, chief executive officer of NYLX. “As Buy Side and Sell-Side pricing is managed to optimize profit, our integrations ensure that we are returning accurate data to the database of record via our LoanDecisions application. Integrated tools and eligibility reasoning help to qualify borrowers earlier in the origination process, supporting close conversion.” For more information, visit or