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This Week from Broker Magazine

Getting Certified

By Brad Finkelstein

One of the goals that newly installed National Association of Mortgage Brokers president Marc Savitt has is to increase the number of members of the organization who are certified. It is a goal that a number of his predecessors, including immediate past president George Hanzimanolis, have also sought.

Currently the group offers three levels of certification, starting with the general mortgage associate, followed up the ladder by the certified residential mortgage specialist and at the top is the certified mortgage consultant.

At the recent NAMB convention in Indianapolis, Mr. Hanzimanolis noted there are now 1,000 certified members, with another 1,000 ready to take the exam.

Read on...

Quality Time

Like millions of other people I wanted to go and see The Dark Knight this last weekend. My middle son and his crew went to an early matinee and barely managed to get seats. I made the mistake of going in the evening and, despite purchasing our tickets online, still had trouble getting a seat. The first three showings were sold out so we ended up going at 10:30, a late start to an almost three hour film. There was a sort of hall monitor sorting people into lines outside the theater, then again inside. Inside the actual screening room were ushers with walkie-talkies making sure that every seat was filled and directing people back and forth between the three (!) rooms all showing The Dark Knight at 10:30. There was so much excitement and hype that it was hard to believe we were there for just a movie and not a coronation or something. Could this film live up to our expectations?

Boomer Box

Outside it is still light, the white-nights effect of the nearing equinox, but inside Don Hill's in Manhattan it is as dark as the hour after midnight, bar-tan dark, sunglasses-at-night dark. Dark enough to start the rock music, even though the early Seinfeld rerun is still playing.

An e-mail has alerted me to a rare New York City gig by Nazz, a hero-band of my youth now reformed in the Classic Rock Redux era. I am hoping that the new Nazz, with only one original member, can come close enough to its original mix of garage-band thump, Beach Boys-like harmonies, and world-class ballads to make it worth the trip to the bar, a stone's throw from the Holland Tunnel.

In from the street at the appointed hour sweeps Stewkey, the lead singer of Nazz, who gets on the stage and briskly dons a tuxedo jacket, and the four-piece (plus singer) band quickly declares independence from its decades-old ancestor by jumping into a new original I think is called "Godzilla."

Smorgasbord

Each week Georgiana Lee compiles a list of ten intriguing events going on around the country. Is one of them taking place in your town? There is only one way to find out...

Read on...

News Recap

House Passes Landmark Housing Bill
The House has passed a landmark housing bill that includes a financial backstop for Fannie Mae and Freddie Mac by a 272-152 vote, and the measure now goes to the Senate, where a few Republican stalwarts might delay final passage for a few days. The bill increases Fannie's and Freddie's line of credit at the U.S. Treasury and authorizes the Treasury secretary for the first time to purchase stock in the two government-sponsored enterprises, if necessary. The bill also strengthens regulation of Fannie and Freddie, and passage of the bill should make it easier for the mortgage giants to raise additional capital, according to James Lockhart, director of the Office of Federal Housing Enterprise Oversight. Freddie has pledged to raise $5.5 billion in additional capital. "We are hopeful passage will help them do that quicker," Mr. Lockhart told Bloomberg TV. Once the bill is signed by President Bush, Mr. Lockhart will become the chief regulator for Fannie, Freddie, and the Federal Home Loan Banks. The massive housing bill also updates the Federal Housing Administration mortgage insurance programs and creates an FHA refinancing program to help 400,000 homeowners avoid foreclosure. The foreclosure rescue program will begin Oct. 1. Tax provisions in the bill provide a $7,500 tax credit for first-time homebuyers.

2nd-Lien Provision Added to Housing Bill
Second lien holders could benefit from permitting the refinancing of struggling homeowners under a special Federal Housing Administration foreclosure rescue program contained in a massive housing bill the House passed on Wednesday by a 272-152 vote. A provision added during final negotiations on the bill will allow second lien holders to share in a portion of future appreciation on the property. However, they have to agree to the restructuring and refinancing of the existing first mortgages, which would extinguish any second or subordinated liens. The provision was probably added to the bill so the special FHA refinancing program can help more troubled borrowers with piggyback loans. As previously reported, the bill bans seller-funded downpayment assistance on FHA loans and places a 12-month moratorium on the charging of risk-based mortgage insurance premiums by the FHA. Those provisions go into effect Oct. 1, 2008, according to a copy of the bill released on Tuesday. The bill (H.R. 3221) also raises the minimum downpayment requirement on FHA single-family loans from 3% to 3.5%.

Report: Most B&C Loans Went to Nonminorities
The majority of subprime loans originated in 2006 were made to non-Hispanic whites and upper-income borrowers, according to ComplianceTech, an Arlington, Va.-based provider of technology and business intelligence. The report concluded that a disproportionate share of loans to minorities and low-income borrowers were subprime loans, but that non-Hispanic whites received 56.2% of the more than 1.9 million subprime loans originated in 2006. Upper-income borrowers got 39.4%, while only 7.6% went to low-income borrowers. Maurice Jourdain-Earl, co-founder and managing director of ComplianceTech, said the problem with portraying the foreclosure crisis as a minority and low-income issue is that it affects the development of possible solutions. "There could be a tendency to write off the subprime lending debacle as a type of affirmative action gone bad," he said. "We must acknowledge that the foreclosure crisis affects broader and more demographically diverse segments of society. This politically responsible approach will likely change the tone, climate, and context of how solutions are crafted." The company can be found online at http://www.compliancetech.com.

Int'l Poll: Home Prices to Rise Within 5 Years
An online poll of homeowners in the United States and five European countries found that most believe the value of their home, while not rising this year, will increase within five years. The online Financial Times/Harris Poll found 54% of U.S. respondents joining the majority of respondents from Germany, France, Italy, and Spain in saying that the price of their home will be the same one year from now. Slightly more respondents from Great Britain, 43% vs. 42%, said their home value would remain the same than said it would decline. As for the future, 68% of American homeowners joined 64% of Italian, 57% of Spanish, and 56% of British homeowners who believe their property will increase in value within five years. But 48% of German homeowners said they expect their property value to remain the same. Most respondents were not worried about losing their homes if they could not make their mortgage or rent payments: France, 67%; Germany 62%; U.S., 61%; and Great Britain and Italy, each 55%. In Spain, however, 39% were not concerned, compared with 33% who were somewhat concerned.

SigniaDocs Unveils Lender Protection Service
SigniaDocs, a Houston-based provider of electronic mortgage services, has announced a new service aimed at protecting lenders against claims of improper disclosure processes. The service, called eSign eNsure, enforces compliant disclosure and closing practices by warranting the good-faith estimate, the truth-in-lending statement, and annual percentage rate calculations via the creation of electronic date-and-time stamps in key disclosure areas, signifying borrower understanding and acceptance of the loan conditions. Developed in collaboration with Shanks Darby PC, a Houston-based law firm specializing in commercial and residential real estate law, eSign eNsure creates a legal representation and warranty around electronic loan document disclosures. "Electronic initials can be placed anywhere on the document that you want to direct the borrower's attention," said Tim Anderson, president of SigniaDocs. "You can require electronic initialing in those areas of the documents where you want to show electronic evidence of borrower proof of understanding and intent." The company can be found online at http://www.signiadocs.com.

Wachovia Suffers Huge Loss, Exits Wholesale
Wachovia Corp., the nation's 14th-largest wholesale originator, revealed Tuesday morning that it will exit that channel and shed thousands of mortgage-related jobs. The move was announced in tandem with an earnings report showing a stunning $8.86 billion loss in the second quarter. Overall, the Charlotte, N.C.-based Wachovia will shed 6,350 jobs. It said 1,000 mortgage workers will be "redeployed" to help Wachovia customers refinance "Pick-a-Pay" loans, a product the bank became heavily involved in when it bought World Savings of Oakland, Calif., two years ago. Wachovia blamed the huge losses on writedowns on its "commercial, corporate lending, and investment banking subsegments." Wachovia's investment banking arm was a huge player in the market for mortgage collateralized debt obligations.

GSE, FHA Loan Limit Slated at $625K?
House and Senate negotiators have reached an agreement on loan limits, and it appears that the maximum amount for Fannie Mae, Freddie Mac, and Federal Housing Administration loans will be $625,000, according to knowledgeable sources. Negotiations on a massive housing bill are getting down to the nitty-gritty, with the House of Representatives scheduled to vote on the legislation this Wednesday. In markets where housing prices exceed the $417,000 conforming loan limit, the maximum loan amount of Fannie/Freddie loans would be determined by multiplying the median home price by 115%, up to a maximum of $625,000, sources say. The same holds true for FHA loans, except that the multiplier kicks in at $271,050, or 65% of the conforming loan limit. If the median home price is $300,000, the maximum FHA loan amount in that area would be $345,000 ($300,000 x 115%). House Financial Services Committee Chairman Barney Frank, D-Mass., told The Washington Post that the House has agreed to accept Senate provisions that ban seller-funded downpayment assistance on FHA loans and impose a 12-month moratorium on the charging of risk-based premiums by the FHA.

CBO: 50%+ Chance of Treasury GSE Infusion
The Congressional Budget Office estimates that there is a greater than 50% chance the Treasury Department will need to invest in Fannie Mae or Freddie Mac, which could add up to $25 billion to the federal budget during fiscal years 2009 and 2010. The Treasury is asking Congress to pass emergency legislation that would allow it to invest in Fannie Mae and Freddie Mac securities if necessary. Such investment authority would end in 2010. The CBO notes that if legislation is passed, "private markets might be sufficiently reassured to provide the [government-sponsored enterprises] with adequate capital to continue operations without any infusion of funds from Treasury." The CBO unveiled its estimates in a letter to Rep. John Spratt, D-S.C., chairman of the House Budget Committee.

BoA 'Committed' to Countrywide's TPOs
Bank of America confirmed Monday that it is committed to maintaining the wholesale and correspondent platforms of Countrywide Financial Corp., which it purchased on July 1. According to the Quarterly Data Report, the Calabasas, Calif.-based Countrywide was the nation's largest correspondent lender and second-largest wholesaler in the first quarter, with production volumes of $31 billion and $9 billion, respectively. In a presentation released along with its second-quarter earnings, the Charlotte, N.C.-based BoA noted that the Countrywide mortgage franchise would discontinue the origination of certain types of nonconforming loans, including payment-option adjustable-rate mortgages. It reported that Countrywide will "significantly curtail" its use of low-documentation loans. Countrywide is no longer funding subprime loans of any type. In the first quarter, Countrywide's subprime servicing portfolio had a delinquency rate of 33%.

Savvis Joins Forces With Ellie Mae
Savvis Inc., a provider of IT infrastructure services based in the St. Louis area, has announced an agreement with mortgage industry software provider Ellie Mae, Pleasanton, Calif. Under the agreement, Ellie Mae will relocate and consolidate its U.S.-based information technology infrastructure into two Savvis data centers in Santa Clara, Calif., and Chicago. This will enable Ellie Mae to deploy its Web-based business services, including its Encompass Mortgage Management Solution, with greater efficiency and at a lower cost, Savvis said. "Savvis' global IT services platform has allowed us to consolidate and simplify our infrastructure by providing us with a streamlined and unified environment that not only synchronizes data more efficiently, but also offers a more consistent operation," said Jonathan Corr, chief strategy officer of Ellie Mae. The companies can be found online at http://www.savvis.net and http://www.elliemae.com.

Lawmakers Urge RESPA Rule Withdrawal
The Department of Housing and Urban Development should withdraw its RESPA proposal and work with the Federal Reserve Board in developing "more simplified mortgage and real estate settlement cost disclosure forms," according to a "dear colleague" letter being circulated in the House. Reps. Ruben Hinojosa, D-Texas, and Judy Biggert, R-Ill., are leading the effort to get Housing Secretary Steve Preston to abandon HUD's proposed Real Estate Settlement Procedures Act rule. The two House Financial Services Committee members are urging fellow members of Congress to sign a letter that petitions HUD to immediately commence a joint rulemaking process with the Fed, which is working on improving Truth in Lending Act disclosures for mortgage borrowers. "It is critically important for consumers that any revision to RESPA achieve the following goals: simplify, clarify and reduce the cost of mortgage and real estate settlement processes," the letter to the HUD secretary says. However, HUD's RESPA proposal does not meet those goals, according to Reps. Hinojosa and Biggert. "We are profoundly concerned that HUD's proposed RESPA rule will hinder rather than help the recovery of the housing market." Over a dozen banking, mortgage, and settlement provider trade groups will be lobbying lawmakers to sign the letter.

California AG Adds to Countrywide Charges
California Attorney General Edmund G. "Jerry" Brown is charging Countrywide Financial Corp. with paying excessive fees to mortgage brokers and "aiding and abetting" brokers to breach their fiduciary duty to California borrowers, according to an amended complaint. In a June 25 complaint, the California AG sued Countrywide and its former chairman Angelo Mozilo and former president David Sambol for allegedly using deceptive practices to "push" borrowers into payment-option adjustable-rate mortgages and expensive hybrid ARMs. Now the AG is bringing additional charges that Countrywide rewarded its loan officers and brokers to mislead and steer borrowers into mortgages they could not afford or understand. Countrywide paid brokers 6 points in origination fees, rebates, and yield-spread premiums for delivering 2/28 ARMs with the highest interest rate. "This level of compensation was well in excess of the industry norm," the complaint says. Countrywide also pushed originations of option ARMs because they were highly profitable. The company had a gross profit margin of 4% on those loans and reported the negative amortization on option ARMs it owned as income. "The negative amortization 'income' earned by Countrywide totaled $1.2 billion by the end of 2007," the complaint says. As of April, 21% of Countrywide-owned mortgages were in some form of delinquency or foreclosure. Bank of America recently acquired the Calabasas, Calif.-based Countrywide, which can be found on the Web at http://www.countrywide.com.

Falk: Licensing Dream 'Almost a Reality'
The mortgage broker industry has long sought licensing of all originators, no matter who they work for, and "that dream is almost a reality," said Joe Falk, past president of the National Association of Mortgage Brokers. Mr. Falk, who is also past president of the Florida Association of Mortgage Brokers, was speaking at that group's annual convention in Kissimmee, Fla. He was referring to the housing bill being considered in conference committee by Congress. In his presentation, Mr. Falk also spoke of the Federal Reserve Board and its recently released "ground-breaking rulemaking" for the subprime industry, which for the first time contains a regulatory definition of a subprime loan. The Fed is now a source "of great activism," he said, and in coming months will be issuing new rules on Regulation Z. The NAMB can be found on the Web at http://www.namb.org.

5 Florida Brokers Aim for Legislature
The Florida State Legislature has no mortgage brokers as members, but five members of the Florida Association of Mortgage Brokers hope to change that with their candidacies. Four of the five candidates spoke at the group's annual convention in Kissimmee, Fla. Nancy Detert, who had been term-limited out of the state House of Representatives and ran second in a Republican primary for an open seat in Congress, is seeking election to the state Senate. She proposed using state affordable housing trust fund money as a soft second mortgage to help "work force people" qualify for a mortgage. The other four broker candidates are seeking seats in the state House, including D. Ritch Workman, the current FAMB president. Mr. Workman said he is running as a small businessman who is fed up with intrusions into business by federal and state legislators and regulators. The other candidates are Debbie Mayfield, Rafael Perez, and Terry Lynn Sanchez.

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