Restoring American Financial Stability Act of 2010 Archives

In The News: Loan Officer Compensation and Senate Bill 3217

JoeFarr 2017-12-20T17:34:18+00:00 May 21st, 2010|Categories: In The News|Tags: BlogTalkRadio, Community Mortgage Banking Project, financial reform bill, Glen Corso, Joe Farr, John Courson, loan broker compensation, loan officer compensation, loan officers, loan originators, lock/float, locking systems, Lykken-on-Lending, MBSQuoteline, mortgage backed securities, Mortgage Bankers Association, mortgage brokers, mortgage industry, mortgage loans, mortgage prices, mortgage rates, rate sheet, Regulation Z, Restoring American Financial Stability Act of 2010, secondary market, Senate bill S3217, Texas Mortgage Bankers, yield spread premium|

It is being reported that Senate Bill 3217 Restoring American Financial Stability will soon pass out of the Senate. There are many things in this bill which will effect the mortgage industry. In an earlier blog post I discussed the likely impact of the "Skin in the Game" provisions of this bill. In this post, I will discuss the provisions in this bill which will restrict Loan Officer compensation. Glen Corso, Executive Director of The Community Mortgage Banking Project, discussed on the BlogTalkRadio/Lykken-on-Lending show on Monday that the amendment to Senate Bill 3217 which, among other things, prohibits loan originators from receiving compensation based on the terms of the loan. He explained that the amendment was introduced late Tuesday evening May 11th and was passed on Wednesday morning May 12th, giving himself and other industry advocates no chance to weigh in on the amendment. The intent of the amendment is to remove any incentive for an originator to charge more in origination fees to a borrower or to give a borrower a higher mortgage rate than the basic rate and price as established by his or her origination company. So this amendment essentially prohibits companies from paying loan officers a [...]

In The News: “Skin in the Game” – Risk Retention Amendment to Senate Bill 3217

JoeFarr 2017-12-20T17:34:18+00:00 May 21st, 2010|Categories: In The News|Tags: Fannie Mae, FHA, financial reform bill, FNMA, Freddie Mac, interest rates, investors, Joe Farr, jumbo loans, loan originators, LTVs, MBSQuoteline, mortgage industry, mortgage market, mortgage originators, mortgage prices, mortgage rates, new mortgage loan programs, pick-a-pay loans, Qualifying Mortgage Loans, Restoring American Financial Stability Act of 2010, risk retention, risk retention amendment, Senate bill S3217, U.S. House of Representatives, U.S. Senate, VA loans|

Senate Bill 3217 Restoring American Financial Stability is working its way through the Senate and is expected to be passed in the coming weeks. Certain provisions of this bill will have a significant impact on the mortgage industry. As you may recall, the Senate Bill 3217, as originally proposed, included a provision which would have required 5% of the risk on all loans originated be retained by the originator upon sale to investors. The provision was not clear as to which entity or entities in the origination chain would be required to retain the risk. It was not clear whether the risk that was to be retained would be an ownership interest in the loan or reserves supported by cash. It was also not clear how long the originator would have been required to retain the risk. The original provisions would have been devastating to the mortgage industry. The 5% risk retention would have forced many mortgage originators from the business and would have driven mortgage rates much higher. After significant industry efforts, this provision was amended last week. The amendment, as passed by the Senate, does very little to answer these questions, but what it does do is exempt [...]

BlogTalkRadio Podcast – May 17, 2010

JoeFarr 2017-12-20T17:34:18+00:00 May 20th, 2010|Categories: BlogTalkRadio Podcasts|Tags: BlogTalkRadio, Community Mortgage Banking Project, David Lykken, financial reform bill, Glen Corso, investors, Joe Farr, loan officer compensation, loan officer compensation amendment, loan originators, Lykken-on-Lending, MBSQuoteline, mortgage backed securities, mortgage banking industry, mortgage industry, mortgage loans, mortgage market, mortgage originators, mortgage prices, podcast, Qualified Mortgage Loans, Restoring American Financial Stability Act of 2010, risk retention, risk retention amendment, risk retention requirement, secondary market, Senate bill S3217, yield spread premium|

Senate Bill 3217 Restoring American Financial Stability was the focus of discussion on the show Monday, particularly two recently passed amendments which are of great interest to the mortgage banking industry. The amendments deal with risk retention and loan officer compensation. One is good for the industry and the other is not. Glen Corso, Executive Director of The Community Mortgage Banking Project, joined the show to bring a first hand understanding of the amendments and their status. The amendment that is good for the mortgage industry deals with the risk retention provisions of the original bill. The original bill would have required mortgage originators to retain “skin in the game. It would have required originators to retain 5% of the risk on all the loans they originated and sold to investors. The amendment exempts from the 5% risk retention requirement certain mortgage loans which meet the definition of Qualified Mortgage Loans. Since 90% or more of today’s loans will meet the definition of Qualified Mortgage Loan, the amendment significantly reduces the number of loans on which originators will be required to retain risk. The amendment that is not good for the mortgage industry restricts how loan originators are to be [...]

BlogTalkRadio Podcast – May 3, 2010

JoeFarr 2017-12-20T17:34:18+00:00 May 5th, 2010|Categories: BlogTalkRadio Podcasts|Tags: BlogTalkRadio, Community Mortgage Banking Project, David Lykken, Fannie Mae, FHLMC, FNMA, Freddie Mac, Ginnie Mae, Glen Corso, GNMA, loan buyback, Lykken-on-Lending, MBS, MBSQuoteline, mortgage backed securities, mortgage bankers, mortgage industry, mortgage rates, mortgage risk, Restoring American Financial Stability Act of 2010, Senate bill S3217|

“Skin in the game. Most mortgage bankers, especially those who have experienced a loan buyback, feel like they have some. If Senate bill S3217, Restoring American Financial Stability Act, is passed in its current form mortgage bankers will learn what “skin in the game means to the current Administration. This bill calls for mortgage bankers to retain the risk on 5% of the loans they originate. The language in the bill is not clear, but some have suggested that retaining risk means funding a reserve with cash. Lets do some math. If a mortgage company is really efficient, it might earn 1% on the loans it originates and sells. If they are required to hold 5% as a risk reserve, it will not take long for mortgage bankers to originate themselves into bankruptcy. Who would participate in this business? Glen Corso, Managing Director of Community Mortgage Banking Project, joined the show today to discuss his efforts to lobby the Senate to add an amendment to the “skin in the game provision of S3217. The amendment would exclude “well underwritten loans from the risk retention requirement. Think Ginnie, Fannie, or Freddie loans. They cannot be defined that way because we may [...]

BlogTalkRadio Podcast – Apr 5, 2010

JoeFarr 2017-12-20T17:34:19+00:00 April 22nd, 2010|Categories: BlogTalkRadio Podcasts|Tags: best efforts strategy, BlogTalkRadio, Community Mortgage Banking Project, David Lykken, Fed, Federal Reserve, Glen Corso, ISM Services Index, Lykken-on-Lending, mandatory delivery strategy, MBS, MBS Purchase Program, MBSQuoteline, mortgage prices, National Association of Realtors, nonfarm payrolls, Pending Home Sales Number, Restoring American Financial Stability Act of 2010, Rob Katz, Tom Million, Treasury, Treasury Auction|

MBS prices are lower this morning after a stronger than expected ISM Services Index was announced at 8:30 a.m. et and then at 10:00 a.m. et a much better than expected Pending Home Sales number was released. This followed a week last week that saw MBS prices fall by about 1%. Last week included the end of the Fed’s MBS purchase program, but the end of the program cannot be the sole blame for the drop in MBS prices. Treasury prices fell as well and stocks improved. Generally, the economic announcements during the week, including the Nonfarm Payrolls, were better than expected increasing the need to build in yield to cover longer term inflation. The spread in yields for 10 yr Treasuries versus mortgage-backed securities did widen but only by 15 to 20 basis points. The focus of the mortgage industry regarding pending legislative and regulatory issues is now placed squarely on the Senate Finance Committee’s passage of the Restoring American Financial Stability Act. This Act contains many provisions which if passed will impact mortgage companies, but possibly none as significantly as a provision which will require mortgage originators and/or security issuers to retain 5% of the risk of the [...]

BlogTalkRadio Podcast – Mar 29, 2010

JoeFarr 2017-12-20T17:34:19+00:00 April 22nd, 2010|Categories: BlogTalkRadio Podcasts|Tags: BlogTalkRadio, David Lykken, Delmar DataTrac, Durable Orders, Health Care, Health Care Reform Bill, HMDA, inflation, interest rates, investors, Joe Farr, loan originators, Lykken-on-Lending, market, MBS, MBS market, MBSQuoteline, mortgage backed securities, mortgage market, mortgage prices, podcast, Restoring American Financial Stability Act of 2010, Rob Katz, secondary market, Treasury, Treasury Auction, unemployment|

MBS prices were volatile last week and fell about half a point during the week. Most of the push for MBS prices lower came from weak Treasury auctions. On Wednesday the 5 Yr Treasury Note received lower than usual demand, especially from foreign investors, and the yield required from the bidders was higher than the previous trading range. The weakness in the Treasury auction spilled over to the MBS market. The economic data released during the week was mixed with Durable Orders better than expected and the housing data was a little weaker than expected. All of the focus in Congress now that Health Care has passed seems to be with the Restoring American Financial Stability Act of 2010. This proposed law will have sweeping changes for the mortgage industry, if passed. It includes the creation of a new regulator for consumer protection, retention of 5% of the risk on loans originated and then sold, and increased HMDA reporting requirements, among other things. This 1300 page bill seems to be on a fast track. Discussion continued on the risks and benefits of converting a mortgage company’s operations from a best efforts delivery of loans originated to a mandatory delivery. The [...]