June 21: HUD training; more reader comments; SEC & counter-party risk; Fed & TILA; PNC to become 5th largest bank?
Today we have, in the Northern Hemisphere, 5 hours and 14 minutes more
daylight
than the winter solstice six months ago. For the most part it is something
everyone
north of the equator can be happy about, unless you're on the west coast
working
New York bond market hours and going to bed 2 hours before the sun sets.
"A bus station is where a bus stops. A train station is where a train stops.
On
my desk, I have a work station." (But somehow the work goes on. For the next
twelve
business days, however, my access to e-mail will be sporadic, my ability to
send
out commentaries will be diminished, and I will be six hours ahead of New
York
in time zones. I have twelve knowledgeable "guest writers" of varying
mortgage backgrounds
who will be taking my place every day. So not only will you receive a
vacation from
my usual blather, but will receive a different take on the industry from
different
perspectives: production staff, compliance, risk management, and so forth. I
am
looking forward to being away for a bit on my bicycle, may or may not answer
e-mails,
and I hope that this all works out.)
Somehow a 22-year old buying a 57,000 square foot mansion is wrong. Maybe
not -
I just wish I'd returned her numerous phone calls to me over the last few
years...
IsThereRoomForMe?
[http://r20.rs6.net/tn.jsp?llr=zy6u9cdab&et=1106139129401&s=8721&e=001vXHfni
9V2RamRc86XKXz4giaTem-vdd5gPq8SQgFzcLUCVcZSYgzSokKWlPQizls4LNHxEayWlsAajnFK8
V9RJwVYb9e84Kyt_LkD7jlsMwCC1j0BRXE7ZcLTC8VdXpAM9RMRqf0ptQVGibdMkG1m1GQeGT5k5
FNuq3knVZ_s6gLVOJlzdwPQyhsaX0iN55dKydrVXSQuAg9VKVMGVkGthDsb_HuVQ76cKcz4IEz-S
O-EpfIr-Pn5Ek4y7API-57pxLIcCgcepwvKYYbhAtece3sxghGOKAcGoVEIRu2CnY=]
Anyone who remembers companies like Drexel Burnham, and knowing how
important it
is to assess counter-party risk, should note that the SEC is "on the case."
(DLJ
doesn't count - they were bought out by Credit Suisse about 10 years ago.)
Last
week the SEC issued proposed amendments to Rule 17a-5 in order to enhance
the auditing
and oversight of broker-dealers. The amendments would require them to file
new annual
reports on their compliance with rules relating to net capital and customer
protection,
and to file reports of their independent auditors regarding compliance with
those
rules and the internal control over such compliance. Comments on the
proposed amendments
are due within 60 days of publication in the Federal Register, and for a
list of
the proposed amendments go to CounterPartyRisk
[http://r20.rs6.net/tn.jsp?llr=zy6u9cdab&et=1106139129401&s=8721&e=001vXHfni
9V2RYTs8cahf1MGC62WVRKUfB0oYBA4lUCWIFAEJBtzBqIjEw42nCfG9FEWwLgcRXPrQO1IjfquI
k4iI4vlgIMd0U0yefit4UtOX_kVdV_8lOEUt21Mpfdw4Y4KMNAxYMJnhYkxA1-TbHqV7VUCoSMfS
Z6].
Some people's eyes glaze over when information is released like, "Federal
Reserve
Publishes Its Annual Adjustment to TILA and HOEPA Fee Based Triggers."
Others find
talk like, "Pursuant to TILA and Regulation Z, creditors must comply with
HOEPA's
requirements if the total points and fees payable by the consumer at or
before loan
consummation exceed the greater of $400 or 8 percent of the total loan
amount. TILA
and Regulation Z also require the $400 figure to be adjusted annually by
using the
Consumer Price Index as reported on June 1 of the preceding year" very
interesting.
Those are a) the folks we want in compliance departments, and b) folks that
should
peruse FederalReserve
[http://r20.rs6.net/tn.jsp?llr=zy6u9cdab&et=1106139129401&s=8721&e=001vXHfni
9V2Rak3wYF9aaItPa2fVPnRTPKJJE3eBYdjd3Pu16hjTRmgg3bVSDnZ6OGwsznzBel0bDiSLsdqs
WSBwWd_vKFT9H57H0ZrCMUSPCIYiaiYZN9LhBpXeLU0X2tCI-jocTdi48ekfEoaTwWxLS7f7b9VY
fxNhm1lkwfojZxNZdwQEZ7Cw==].
Last week it was Capital One and ING, this week it is PNC Financial Services
Group
offering to buy the U.S. retail operations of Royal Bank of Canada for $3.45
billion,
making it the fifth biggest among U.S. banks. PNC said that the transaction
will
bring its total to 2,870 branches. RBC Bank (USA), based in Raleigh, N.C.,
has
424 branches and about $25 billion of assets. PNC has also agreed to buy
certain
credit card assets of RBC Bank, (Georgia) National Association. RBC says
that it
will receive $165 million for the credit card assets.
A title company lawsuit is heading to the Supreme Court: a case against
First American
Title holding a minority interest in title insurance agencies that sell
First American
title policies. Denise Edwards sued First American Title, claiming an
illegal kickback
plan. Denise Edwards claimed First American violated provisions of the Real
Estate
Settlement Procedures Act of 1974 by buying a minority interest in title
agencies
and establishing an exclusive agency agreement with those agencies to sell
First
American's title insurance policies, and that these agreements were
exclusive in
nature and not in compliance with guidelines established under the
anti-kickback
provisions of RESPA.
Noteworthy reader comments continue: "I think I have to disagree with the
first
writer who said that 'stringent lending requirements,' are the old/new
normal. Hmmm.
Ok I recently sent in a full doc loan. Conditions included prove A&P is the
Atlantic
and Pacific Tea Company. This isn't the first one like this. I have numerous
brokers
calling me asking who will do a loan. Even with everyone delivering agency
product
it seems we are finally seeing some variations in the lending practices.
But, and
it's a big but, until we get movement in the MBS markets expect to see
continued
restraint. No one wants to have a buyback. And with the various bills being
considered,
the fact that anyone on the Hill still believes the regulators and rule
makers are
acting in the interest of the country and not a select few companies is
evidence
of a lack of understanding of what is transpiring." (Speaking of the
residential
MBS market, and securitizing loans, check out STRATMOR
[http://r20.rs6.net/tn.jsp?llr=zy6u9cdab&et=1106139129401&s=8721&e=001vXHfni
9V2Ram54gh3lHnoua2hN6FAWxniwKJXikzsrhTDmoiehg61gX45owKje7fV-52L8WDxZJ2qSztCS
sH8SNI_utaDaU7M6lTbG0ZQkwniDSMqCmHfg==]
for an article about the near-term news on non-agency securitization.)
On reverse mortgages: "Wells' reasoning for getting out of reverse is a bit
of 'inside
baseball' if you know what I mean. Lenders do not want to foreclose on
reverse mortgage
borrowers who do not pay their taxes and insurance. The PR would not be
pretty -
'Wells forecloses on little old lady who has a reverse mortgage.' What has
been
happening is that Wells and other reverse servicers were paying the taxes
and insurance
for the 5% or so of reverse borrowers who were delinquent. HUD has been
insisting
that lenders foreclose - it is a system practically designed to fail and to
cause
more problems for the servicers. I think Wells got tired of waiting for HUD
to create
a solution. (There's something novel - waiting a long time for HUD to act.)
Anyway,
what this means for MetLife and others in that sector is an opportunity. I
think
that Wells' move will get HUD off the dime."
"One of your readers wrote, 'There are four safety nets our society has now,
that
were not in existence in the early thirties: Social Security, Medicare,
Medicaid,
and Reverse Mortgages.' Really? Reverse mortgages are now one of the "four
safety
nets our society has?" In 2010, Medicare/Medicaid spent $800 billion.
Social Security
spent $700 billion. Reverse lending was roughly $10 billion. And not all
of the
$10 billion goes into the senior's pockets - some is being used to pay off
an existing
lien. The reader then says, "If you take away any one of the four programs
noted
above, and you will have seniors digging through the dumpsters. In 'The
Grapes of
Wrath,' Granny was in the Ford heading west, and not for the fun of it."
Grapes
of Wrath?! If reverse loans went away?! That's just funny. Reverse
mortgages
could disappear without so much as a whimper from seniors - but if
Medicaid/care
or SS disappeared - there would be a blue-hair revolt."
How does FEMA view a garage in a flood plain - is it "the lowest floor"?
Last week
the agency let underwriters know that, "An attached garage in a
single-family non-elevated
building is excluded for rating when there is no machinery or equipment
servicing
the building, even if the garage has no proper flood openings." And now its
manual
reads, "I. Lowest Floor Determination, A. Non-Elevated Buildings, the third
paragraph
is revised as follows: ''An attached garage floor elevation below the BFE
can be
excluded as the lowest floor for rating if the garage has no machinery or
equipment."
If you have any questions concerning this, write to a FEMA underwriter and
not to
me: iServiceUnderwriting@ostglobal.com
[mailto:iServiceUnderwriting@ostglobal.com].
HUD offers training, and we need to be reminded of that occasionally. The
National
Community Reinvestment Coalition (NCRC) is offering FREE HUD-funded housing
counseling
training around the nation. "Participants will learn how to identify fair
lending
abuses & mortgage fraud; prevent fraud & ensure access to equity for Older
Americans;
address discrimination with foreclosure prevention programs, & conduct a
full fair
lending file review. To obtain a certificate of completion participants must
attend
& complete the entire four-day training. Lodging & travel scholarships are
available."
There are sessions all over the nation - last week in St. Louis, later in
June in
New Orleans, July has Detroit & Milwaukee, August in Philly & San Diego,
etc. For
more information & to register for all of the training opportunities, visit
the
NCRC website at: http://www.ncrc.org/
[http://r20.rs6.net/tn.jsp?llr=zy6u9cdab&et=1106139129401&s=8721&e=001vXHfni
9V2RYmcwcHxiaCMSG3s3srk-EC34Z4Ec-BSSMbtF0kqlzPFxoknzCBnncyo7kxUxkgQiE89vJFIa
s8lkNwtMphcxjzxzH7eEsUMXU=]
or email: lmelgarejo@ncrc.org [mailto:lmelgarejo@ncrc.org]. FHA Loss
Mitigation
Program Training will come to Winter Park, Florida on Thursday: Register for
this
training at: https://eclass.hudtulsa.org/
[http://r20.rs6.net/tn.jsp?llr=zy6u9cdab&et=1106139129401&s=8721&e=001vXHfni
9V2RZ-99anTlxSlZFzqS5Sa7b83bZQYiMBluRowiljHhSVQ4QKKKbFJ1I1PwsLnVd4lavZd8qIZg
6wUlpwrOvJCnMVHyLlkA0yHi_3cmL-lRlryQ==].
I guess that it is a sign of the times that a growth industry is lenders
fighting
foreclosures. CompaniesHiringLoanModStaff
[http://r20.rs6.net/tn.jsp?llr=zy6u9cdab&et=1106139129401&s=8721&e=001vXHfni
9V2Rbc3KUjQlm0mj6zopNWGBMs-7tPZlL1WIYFFbjFCDytEB8bwRx1Gx0Dd1oK5j5WX8nS6GD6sa
1mTClyzA7Kw3Wl_H1XFYePPv2lT70waSnft-JYW5McZ7E4fbtFXOY28fh3d0LSM0Y15gkGOzvF3x
WH5N2DKw9LvP2dEkIT2q5ewiqv3x3VsRTCfAKHtowW8VyOQjo6BSB3RSN8pCrn29ZTrVem4X4nTj
5Rggs8C5yaSGmqzlEwPWLn]
Greece, this week's FOMC meeting, and looming quarter-end and end of QE2 are
all
working on the prices and volumes in the fixed-income markets. That being
said
yesterday was pretty quiet with the 10-yr ending at 2.96% after being lower
in the
morning. In fact, overall the market started off slightly better, MBS
price-wise,
then worsened somewhat, but not enough to warrant investors sending out
price updates.
And don't look for much more today, as it is another light weight session in
terms
of the data and events calendar. Existing Home Sales for May are released at
10AM
EST with a call of 4.8 million units, declining nearly 5% from 5.05 million
reported
in April. In very early going we find the 10-yr around 2.98% and MBS prices
nearly
unchanged.
(Watch for guest writer commentaries starting tomorrow, with occasional
overseas
input from me - see second paragraph.)
The Recession is really hitting everybody!
Yesterday I got a pre-declined credit card in the mail.
A stripper was killed when her audience showered her with rolls of pennies
while
she danced.
I saw a polygamist with only one wife.
If the bank returns your check marked "Insufficient Funds," you call them
and ask
if they meant you or them.
Angelina Jolie adopted a child from America.
My cousin had an exorcism but couldn't afford to pay for it, and they
re-possessed
her.
A truckload of Americans were caught sneaking into Mexico.
The Treasure Island casino in Las Vegas is now managed by Somali pirates.
Congress says they are looking into this Bernard Madoff scandal. So the guy
who
made $50 billion disappear is being investigated by the people who made $1.5
trillion
disappear!
If you're interested, visit my twice-a-month blog at the STRATMOR Group web
site
located at www.stratmorgroup.com
[http://r20.rs6.net/tn.jsp?llr=zy6u9cdab&et=1106139129401&s=8721&e=001vXHfni
9V2Ram54gh3lHnoua2hN6FAWxniwKJXikzsrhTDmoiehg61gX45owKje7fV-52L8WDxZJ2qSztCS
sH8SNI_utaDaU7M6lTbG0ZQkwniDSMqCmHfg==]
. The current blog takes a look at near-term news for non-agency securities,
such
as jumbo residential loans. If you have both the time and inclination make a
comment
on what I have written, or on other comments so that folks can learn what's
going
on out there from the other readers.
Rob
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