Archive for September, 2010
At the Mortgage Bankers Association Quality Assurance and Residential Underwriting Conference, firms are bringing new and innovative ideas on how to improve upon quality assurance. But they can all agree one thing: consistency is key.
Representatives from Fannie Mae and Freddie Mac discussed new ways the GSEs plan to correlate and make their systems uniform. The newest thing they are trying to tackle is a standard set of definitions to accompany an appraisal. They are trying to answer the question – What is quality?
In a survey of 272,000 appraisers, Fannie Mae found that 44% of them judged a property's quality simply by looking at the exterior of the house. In a different survey of 1.4 million appraisers, 63.7% thought their property was of average quality. But Robert Murphy, senior business manager of credit policies and controls at Fannie Mae, showed a list of 23 possible and distinct definitions that fall in that category, including 'average minus deficiencies' and 'average_no.'
“For example, if a house is beat up and every house in the neighborhood is beat up, I want to know that. Not that the property is average,” Murphy said.
He said because appraisals are the most common and recognized way to value a property, baseline ratings must be consistent. Having an absolute definition to a rating, he said, would bring the personal valuation of an appraisal together with the neutrality of an [automated valuation model] evaluation.
Fannie Mae stressed the importance of consistency on Tuesday when it hosted a private summit for quality control vendors. Tommy Duncan, executive vice president and owner of Quality Mortgage Services, attended the meeting and said he was exceptionally proud of Fannie Mae for shedding light on the issue.
"This initiative is bringing unity of efforts and industry standardization," he said.
Earlier this year, the GSEs announced plans to develop a Uniform Appraisal Dataset, a Uniform Collateral Data Portal and a Uniform Loan Delivery Database.
The UAD will standardize appraisal forms and how data is reported for both GSEs. When the system launches next year, it will apply to the uniform residential appraisal report; the individual condominium unit appraisal report; the exterior-only inspection individual condominium; unit appraisal report; and the exterior-only inspection residental appraisal report.
Fannie and Freddie will use the UCDP to receive information from an appraiser before the loan application is received and to share information between the two. Comprehensive details on the systems will be available in December.
Write to Christine Ricciardi.
A U.S. program to prevent mortgage foreclosures approved about 9 percent fewer applications for permanent payment reductions in August from a month earlier, the Treasury Department said.
A total of 33,342 delinquent borrowers qualified for the changes, which cut payments by a median of more than $500, the Treasury said today in a monthly report on the Home Affordable Modification Program. A total of 468,058 borrowers are paying reduced amounts under the program, while 663,538 have had trial reductions canceled, the report showed.
Almost 60 percent of people who got permanent modifications had suffered a loss of income.
Forcing banks to hold more capital will not prevent future financial crises, according to leading financial sector trade body the Association for Financial Markets in Europe.
Launching its report on the financial crisis, the Association for Financial Markets in Europe (AFME), said that better regulation was the key to preventing a repeat and not harsher capital requirements.
The AFME membership includes many of the world's largest financial institutions, such as Barclays and HSBC, and its report comes less than two weeks after a meeting of the world's top central bankers and regulators agreed on a new set of capital rules for banks at a meeting in the Swiss city of Basel.
The report rebuts many of the main concepts of the incoming Basel III rules, suggesting that attempts to target regulation against "systemically important" financial institutions will fail.
The Basel III bank capital requirements proposed earlier this month threaten to eviscerate the supply of eligible investments for tax-free money market funds — an industry already struggling with a severe supply shortage.
Bankers and analysts have argued that the proposed capital requirements would make it more expensive for banks to guarantee municipal debt.
In a research report this week, Chris Mauro, head of municipal strategy at RBC Capital Markets, estimated the requirements, if phased in, would add 100 basis points to banks’ cost of writing letters of credit and standby bond purchase agreements guaranteeing floating-rate debt issued by triple-A rated municipal governments — and presumably more for lower-rated governments.
A real estate agent, presumed murdered, was found dead inside a vacant home near Kent, Ohio, early Tuesday. His death follows another agent who was found murdered on Monday in Youngstown, Ohio.
The wife of Cutler Realty agent Andrew VonStein, 51, notified the sheriff shortly before 4 a.m. that her husband was missing. She also called the car's OnStar service, which in turn called the car, but did not get a response, according to news reports. Tracking the vehicle through the OnStar GPS system, deputies found the car in the driveway of the vacant home.
In Youngstown where the owner of Essence Realty was discovered on the kitchen floor in a burning home on Monday, police are treating the death of 67-year-old Vivian Martin as a homicide. She had gone there to meet a client. It was originally thought that the home burned due to a gas explosion, but WFMJ-TV reported that the gas to the vacant home was shut off and thus not the cause.
First the Wall Street Journal and now NPR, is following the news originally broke by HousingWire that a "Robo signer" is partially responsible for GMAC's foreclosure woes…
Jacob Goldstein reports:
How did a middle manager at GMAC Mortgage sign off on 10,000 foreclosures a month? He didn't read the paperwork like he was supposed to.
The company (part of Ally Financial, a Planet Money sponsor) recently halted evictions in dozens of states, after news of the robo-signer came to light, NPR reports.
The case — which could allow thousands of homeowners to challenge their evictions — has triggered other reports this week of sloppy foreclosure practices.
In the upcoming October issue of HousingWire magazine, our tech guy Rick Grant gets deep into the usefulness of social media in the mortgage space.
It's a must read for those who feel they aren't capitalizing on the 101 ways to Facebook your business into success.
It's no surprise, considering Forbes reports that 54 percent of small and mid-sized businesses are using Facebook, LinkedIn, Twitter to promote their business. That's double the number in December 2009. Social media just bleeds success, as Forbes is also reporting that Steven Zuckerberg is now worth more than Steve Jobs.
As for HousingWire — guilty as charged. We even kicked around joining up to foursquare.
Right now we're content with our kicking Twitter feeds, but don't think that social media is not without pitfalls for mortgage finance companies.
But check out a recent warning from Washington advisory fim Patton Boggs:
"It is critical that mortgage lending companies, in particular, proceed with caution," according to a weekly alert from the law firm. "Social media is widely considered a form of advertising, triggering various state and federal disclosure requirements."
So, twittering away your day could end a mortgage originator in hot water? How so?
Reg Z, in implementing the Truth in Lending Act, requires certain disclosures and provides various limitations with respect to lending advertisements.
The example Patton Boggs gives is:
As I mentioned in my column yesterday, as well as the week before, running things through compliance personnel is of utmost importance. Now that Dodd-Frank is coming into effect, mortgage finance needs to give the appearance of hygienic operations and even energetic Facebook poking may go from push to shove.
Patton Boggs also warns of state-by-state regulations, but we'll wrap with some more examples…
Jacob Gaffney is the editor of HousingWire.
Write to him.
Posted in Commentary | No Comments »