- Количество слайдов: 35
Welcome to Today’s Web Seminar! December 3, 2013 2: 00 PM ET Hosted by:
Moderator: Mark Fogarty Editorial Director, National Mortgage News Mark Fogarty has been associated with the mortgage publications, which include National Mortgage News, Origination News, Mortgage Servicing News, Mortgage Technology, and related websites, since 1984. He also chairs Source. Media’s wide array of industry conferences and webinars. He was the news director of the team that won the George Polk Award for Financial Journalism in 1988.
PRESENTER: Julie Manson SVP - Risk Management Plaza Home Mortgage, Inc. Julie has oversight of the organization's compliance, quality control, licensing and internal auditing activities. Before joining Plaza in 2009, Ms. Manson held the position of Executive Vice President, Lending Division for Home Saving of America and Senior Vice President Lending Operations and Credit Policy for SCME Mortgage Bankers. In these positions Ms. Manson was responsible for business strategy, credit policy, managing operations, compliance and policy development. Ms. Manson is a member of the Mortgage Bankers Association Regulatory Compliance Committee. Julie has been in the industry for 30+ years and holds a DE (Direct Endorsement) designation with HUD.
PRESENTER: Jason Roth SVP and co-founder Compliance. Ease is a leading provider of automated compliance and risk management solutions for the residential mortgage lending industry. In this role, he leads design and manages development of the company’s product suite. Mr. Roth is an entrepreneurial executive who draws upon strong Computer Science and Software Engineering experience as well as a pragmatic approach to management to design and deliver efficient and innovative enterprise products to the financial services industry. Mr. Roth has more than 10 years of experience in the mortgage lending and financial services software industry, with technical expertise spanning design and development of application software, expert systems, and Web services platform technologies. Mr. Roth’s prior experience includes work on Adobe Acrobat and PDF document technology development teams at Adobe Systems, Incorporated. He is the named inventor on two U. S. patents and was included in October Research’s “Top 40 under 40 in the Mortgage Industry”.
PRESENTER: Faith Schwartz SVP, Government Solutions Core. Logic Faith is responsible for managing the Core. Logic government business, while providing policy maker education and though leadership. Prior to Core. Logic, she was an executive director at the HOPE NOW Alliance, a non-profit coalition created in 2007 to bring together, servicers, lenders, investors, Federal Reserve Banks and government-sponsored enterprises (GSEs) to help homeowners in distress stay in their homes. Faith is a former member of the Federal Reserve Consumer Advisory Committee and currently also sits on the boards of the Core. Logic Academic Research Council, the Structured Finance Industry Group (SFIG), and HOPE Loan. Port, which provides a communication loan workout vehicle for borrowers, counselors, and investors. Faith was recently highlighted by the MBA as one of the 20 Distinguished Industry Women and in 2012, was selected as one of Housing Wire’s Women of Influence.
PRESENTER: Scott Samlin Partner-Financial Services & Products Group Alston & Bird, LLP Scott is the former executive director and compliance counsel for the residential mortgage and lending businesses at Morgan Stanley, where he helped oversee the operations of Morgan’s whole loan trading desk and its affiliated mortgage loan servicer, Saxon. Prior to this, he was the executive vice president, general counsel and chief compliance officer for EMC Mortgage, Bear Stearns’ primary mortgage loan conduit and servicer. Earlier in his career, Mr. Samlin held several senior in-house positions at large corporations, including vice president and assistant general counsel at Superior Bank FSB; vice president, senior staff attorney and compliance officer at Carteret Federal Savings Bank; and assistant counsel at the New York State Banking Department.
POLLING QUESTION #1
Julie Manson SVP - Risk Management Plaza Home Mortgage, Inc. December 3 rd, 2013
q Operational/Compliance Risks • Miscalculation of income, assets or obligations • Unsupported income calculations/not using 2106 expenses • Omitted liabilities with no support • Alimony/child support/property settlements and contingent liabilities not documented • Missing documentation • Judgmental underwriting authority • Miscalculation of points and fees • Bona Fide Discount; MI Premiums • Reconciliation of the final HUD-1 • Affiliate identification
q. Systems Support/Training/Tools • QM Testing • Points and Fees • Affiliated companies • Par Rate • Bona Fide Discount • APR Calculations • Paid To/Paid By • Disclosures • Counseling Agencies • Appraisal/Valuation Products Delivery
q. Decisions, Decisions • Offer non-QM Loans? • Retail, Wholesale, Mini Correspondent, Correspondent • Fulfillment; Bona Fide Warehouse Lines • Wholesale Compensation Agreements • Lender Paid vs. Borrower Paid • RESPA Cures • Decision on Higher Priced Mortgages • Rebuttable Presumption
q. Keys to Success? • Detailed policies and procedures • Continuous training, monitoring, testing • Budget for Defects • Loan loss reserves • Robust Technology • Analytics/Feedback Loop
q. What does 2014 hold? • Loan Limits reduced in 2014? • Prepare to offer Jumbo loans • Know Before You Owe (August 2015) • Systems mapping and testing • NAMB: “how to disclose lender-paid compensation? ” • Regulatory Scrutiny • Federal • State
Quantifying the Impact of Dodd-Frank & QM Jason Roth, SVP & Co-founder Compliance. Ease
• Our Dodd-Frank impact study - background – New rules are clear, eventual impact is not – Lack of real data available – Goal: Confirm areas of highest impact • Methodology – Analyze trends in loan fees / rates – Construct “model” of current lending – Subject current lending to new rules
• Results: QM – No safe harbor for more than 1 in 5 loans – More than half due to fees over 3% threshold – Over threshold by average of $1, 500 – Rest due to high APRs (QM without safe harbor)
• Results: High-cost mortgage – Nearly 3% of loans would be “high-cost” – Nearly always due to fees – Overages on average more than $1, 000
• What stands out? – Confirms fees are the biggest risk to safe harbor – Estimated overages are not trivial – Market will need to shift • Where might we see changes? – Private mortgage insurance – Use of discount points / higher rates – Scrutiny of small fee variations
Faith Schwartz SVP, Government Solutions Core. Logic The opinions shared in this presentation are those of the author and not necessarily those of Core. Logic © 2013 Core. Logic, Inc. All rights reserved. Private & Confidential
Source: Consumer Financial Protection Bureau © 2013 Core. Logic, Inc. All rights reserved. Private & Confidential
© 2013 Core. Logic, Inc. All rights reserved. Private & Confidential
Source: Core. Logic © 2013 Core. Logic, Inc. All rights reserved. Private & Confidential
• • QM – What We Know and Do Not Know Substantial Government role in mortgage markets and GSEs/FHA have temporary and permanent exemptions for underwriting. QM – GSE temporary exemption for seven years or until broader reform; FHA – QM alternative definition. QRM Rulemaking is still outstanding – proposed as broadest definition that aligns with the CFPB QM definition – – – • Government Share v. Private Label Securitization – – – • G-fees increased twice by 10 bps each time in 2012. De. Marco recently announced FHFA was committed to increase in the “near term. ” Conforming loan limits are traditionally reviewed by FHFA in November. De. Marco has publicly stated there will be at least a 6 month implementation timeline Have all of the Rep and Warrant issues been adequately addressed? Is the private label securitization plumbing ready? What is the current incentive to do anything beyond balance sheet and Government channel (FHA/VA/GSEs/USDA)? What is the quantifiable litigations risk of QM v. Non-QM? – • Could cause increased pricing issues as it is difficult to distinguish between QM “safe harbor” v. rebuttable presumption of non-QM. Costs of non-QM (rebuttable presumption) and proposed non-QRM capital requirements may be different, but priced directionally the same. The proposed alternative (QM Plus) overlays a 30% down payment and other credit factors that would significantly narrow the number of loans falling under QRM. Proposed for comment for feedback as an alternative. Currently there is no ability to co-mingle pools of QRM/QM – this has received a number of comments What impact will state consumer protection overlays have? There a lot of other things going on – TILA – RESPA and E-Closing; HMDA; Rep and Warrant Risk; Forced Placed Insurance; GSE Reform (? ) © 2013 Core. Logic, Inc. All rights reserved. Private & Confidential
Current HMDA Reporting Dodd-Frank Additions (Section 1094) Loan Level Application loan number and date Universal loan ID (optional) Loan type, purpose and amount Total Points and Fees Calculation Action taken on the application and date Presence of Neg. Am HOEPA flag Length of intro rate period Lien Status (first, subordinate, unsecured) Duration of prepayment penalties Rate spread on higher-priced mortgage Rate spread (against benchmark TBD) Term to maturity Property Location by MSA, state and census tract Parcel ID (optional) Type Property value Originator: Filed by lender Channel (Retail v. Broker) Loan originator ID number (optional) Borrower/Applicant Race, ethnicity Age Gender Credit Score Annual Income Other Info: Owner occupancy, request for preapproval, reason for denial That the CFPB considers appropriate © 2013 Core. Logic, Inc. All rights reserved. Private & Confidential
Final Considerations Beyond QM • Final QRM – where will it come out? • GSE Reform – New leadership? – Conforming Loan Limits – G-fees – Common Securitization Platform (CSP) • • E-Closing TILA-RESPA HMDA Rep + Warrant Risk State overlays of Consumer Protections Over QM © 2013 Core. Logic, Inc. All rights reserved. Private & Confidential
Data Disclosure The Database: Data pulled from Core. Logic Loan Level Mortgage Analytics (LLMA) contributed servicing data. The dataset covers 85 percent of the Prime market and 71 percent of the Sub. Prime (including active). For the sake of these analysis’ “Overall Loan Count” for 2012 is defined as approximately 1. 8 mm loans. Loans with missing parameters, such as Debt to Income (DTI), FICO and Loan-to-Value (LTV) were removed from the sample. Roughly 50 percent has been removed, but analysis was done to ensure that the data was not skewed by removals (proportion of refinances; high LTV loans; low FICO; etc. ) Considerations & Assumptions: QM analysis is done for the ‘General QM’ definition and does not take into consideration any of the exemptions. The analysis does not account for the three percent points and fees threshold. Core. Logic has provided multiple cuts to allow for analysis with or without refinance programs that do not require full documentation and will fall beyond the bounds of QM upon the effective date. The user can determine what percentage of the no to low doc refinances would be approved when documentation is required in the post-QM world. Also, some of these programs are temporary refinance programs and this should be taken into consideration when assessing a future normalized market. HARP is scheduled to expire on Dec. 31, 2015. Data provided on slide two includes owner occupied and non-owner occupied. Universe includes all channels of origination (Balance Sheet, PLS, GSE, VA, FHA, USDA). The data series comes from Jan. 2012 to Dec. 2012. Readers should account for the underwriting standards and size of the credit box post-2008. © 2013 Core. Logic, Inc. All rights reserved. Private & Confidential
Additional Research (QM/QRM) ATR/QM Standards: Foundation for a Sound Housing Market QRM and Risk Retention Standards: Foundation for a Sound Housing Market © 2013 Core. Logic, Inc. All rights reserved. Private & Confidential
Top Five Issues Presented by the QM Final Rule and Some Solutions to Consider Scott D. Samlin, Partner Alston & Bird LLP
• Do you need to prove the borrower’s ability to repay (“ATR”) on all loans and not just QM/ATR? – See attached Underwriting Factors comparison chart
• Are jumbo loans able to be submitted to Fannie Mae’s Desktop Underwriter (“DU”) or Freddie Mac’s Loan Prospector (“LP”) and approved? – If so, will such loans fall within the QM GSE exemption even though they cannot be purchased by the GSE’s due to the loan amount? – FN 50 in the July 24 FR Release
• Residual Income – when is it germane and how do you calculate? • VA Underwriting Guidelines are considered by many to be the best widely available residual income tool already in use – but as the CFPB admits, outdated and very limited. – New York example: $800 per month delineated; same amount for Manhattan as Buffalo.
• QM documentation – what will investors and other secondary market participants require? – – – – Reps and Warrants Rating Agency Credit Enhancement Third Party Insurance or Certification GSE Approval Borrower Affidavit Fannie Mae 1003 (Uniform Loan Application) Addendum Preclose Scripting
• Points and Fees Issues – Will interest rates rise due to the 3% fee cap; will lenders be concerned about making HPMLs? • Fair Lending Issues – Unequivocal Interagency Guidance? – “Do not anticipate”. . . “Absent other factors” – No HUD participation – Fair Housing Act – All QM “may” be a legitimate business need existing business model already all QM?
Q&A Session Questions? ?
For More Information Contact: Julie Manson julie. manson@plazahomemortgage. com SVP - Risk Management, Plaza Home Mortgage, Inc. Jason Roth J. Roth@complianceease. com SVP and co-founder, Compliance. Ease Faith Schwartz fschwartz@corelogic. com , SVP, Government Solutions Core. Logic Scott Samlin Scott. Samlin@alston. com Partner-Financial Services & Products Group, Alston & Bird, LLP