Posted in Phoenix – Tucson Market  |  Posted on 02-02-2012  |  Written by Metrostudy News

Unless Cordray’s appointment is ultimately found to be unlawful and an injunction issued against the CFPB’s exercise of its new powers, the Bureau will now be able to implement its full range of authority under the Dodd-Frank Act, including the ability to regulate non-bank financial institutions and to issue rules dealing with unfair, deceptive, and abusive acts and practices.  Without a Director, the CFPB was limited to using those powers inherited from existing banking regulators.  While MBA supports the goal of stronger consumer protection through a unified regulator, a fully empowered CFPB presents a number of new challenges for our industry.

You should be aware that, despite the politics involved, MBA has taken steps to establish a positive working relationship with the CFPB’s leadership, including my own personal outreach to Mr. Cordray.  We will continue our efforts – including direct MBA member engagement — to help ensure that the CFPB understands issues important to our industry and crafts appropriate policies.

At the same time, MBA continues to support the need for important structural changes to the CFPB, namely that the Director’s position be replaced by a five-person Commission, that the CFBP be subject to the normal congressional appropriations process, that CFPB rules be subject to review by the Office of Management and Budget (OMB), and that votes to overturn CFPB decisions by the Financial Stability Oversight Council (FSOC) take a simple majority rather than a 2/3 vote.  In short, the CFPB’s influence on the financial services sector will be unprecedented, and MBA will continue to urge that appropriate institutional checks and balances be in place to ensure that the CFPB’s authority is used wisely and judiciously.

More than ever, I believe it is critical that any new regulatory policies impacting mortgage finance are sound and well-reasoned.  MBA will be working with our members and other industry and consumer groups to make sure our voice continues to be heard in the coming CFPB policy debates.

This message, including any attachments, contains confidential information intended for a specific individual and purpose, and is protected by law.  If you are not the intended recipient, you should delete this message and you are hereby notified that any disclosure, copying, or distribution of this message, or the taking of any action based on it is strictly prohibited.
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Investing in communities
David H. Stevens
President and Chief Executive Officer
Mortgage Bankers Association
1717 Rhode Island Avenue, N.W., Suite 400
Washington, DC 20036
Phone: (202) 557-2701
Fax: (202) 289-3943
dstevens@mortgagebankers.org
www.mortgagebankers.org

 Mr. Edward DeMarco
Acting Director
Federal Housing Finance Agency
1700 G Street, NW, 4th Floor
Washington, DC 20552

Submission to: Servicing_Comp_Public_Comments@FHFA.gov

The undersigned thank the Federal Housing Finance Agency (FHFA) for the opportunity to comment on its “Alternative Mortgage Servicing Discussion Paper,” released on September 27, 2011.  The world of servicing has undergone unprecedented stress over the course of the economic downturn.  We therefore appreciate the interest of FHFA and other regulators in ensuring that we collectively work to improve service to borrowers, reduce financial risk to servicers, ensure flexibility for guarantors to better manage non-performing loans, promote market liquidity and enhance opportunities for competition in the origination as well as servicing markets.

 However, we believe that any change to the current servicing compensation model is unnecessary to accomplish these goals.  The current system has served the market well for decades and still remains a viable option, even in these tumultuous times.  Furthermore, any consideration of changing mortgage servicing compensation is premature in light of the ongoing process of developing national servicing standards, in addition to the constantly changing regulatory environment due to the implementation of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank).

 While we do not endorse a change to the current servicing compensation model, we do recognize that there is a feeling amongst the regulators that there is a need for change.  If FHFA feels strongly that making fundamental changes to the servicing fee structure is necessary, of the options presented in the September 27^th discussion paper, we urge FHFA to adopt the cash reserve model.  Of the two proposals presented, it is the only one which truly meets FHFA’s stated objective while ensuring minimal disruptions to the market.

The Cash Reserve Proposal, originally introduced by MBA and the Clearinghouse, establishes a minimum “normal servicing fee” and proposes the creation of a reserve account which servicers can use to conduct catastrophic nonperforming loan servicing.  The reserve would be built up over time by placing a small portion of the mortgage cash flow (e.g., 3 bps) into a custodial reserve account, tied to a particular vintage of loans.  Any unused portions would eventually be refunded to the mortgage servicer if they are not required to cover unanticipated operating costs of the servicer.  Under this structure, use of the reserves should be the exception, not the rule, and would not be expected to occur under normal market conditions.

We believe that this approach is the best of the options presented, though we would reiterate: the fact remains that despite the issues in the mortgage servicing market and the need for investment and training in servicing, the current mortgage servicing compensation structure is appropriate and suitable to meet the needs of the market.

Thank you for your consideration of our comments.  If you have any questions, please contact (480) 538-5565.

Sincerely,

Jannine Bielesch
Regional Manager, US Bank
2012 Vice President Elect of Advocacy – Arizona Mortgage Lenders Association

Don Hagan
President Elect 2012 – Arizona Mortgage Lenders Association

The failed, and now defunct, Congressional Super Committee originally proposed the use of the Government Sponsored Agencies (GSEs) in their efforts to reduce the $1.2 Trillion budget deficit.  This idea has again resurfaced, specifically to sustain and extend the payroll tax cut.  This legislation would allow for an increase between 10-12.5 basis points in the guarantee fees (G-Fees) paid to the GSEs, namely Fannie Mae (FNMA) and Freddie Mac (FHMLC).  This increase would be used to pay for the $38 Billion payroll tax cut extension over the next 10 years.  As David Stevens, President of the MBA, has stated, “using the GSEs as piggy banks for tax policy is a slippery slope.”  We need your help fighting this piece of legislation.  Below you will find bullet points for your review, and as speaking points.  If you would like more detailed information, please contact Don Hagan (hagan1don@aol.com or Jannine Bielesch (jannine.bielesch@usbank.com).

• First, this increase will be directly passed on to the borrower, and will result in a higher cost for them to finance a new mortgage.  While the economy and housing market is still in recovery, increasing the costs for the borrower is not the best plan to put into place.
• Second, it is a very dangerous initiative to increase the cost of homeownership to support some other part of the government.
• Third, GSE reform is still on the table.  As both FNMA and FHMLC are in Government conservatorship there are diligent efforts being made to wind these two giants down, and once again privatize the market.  This new legislative initiative is being set up for failure if in a few years the GSE are no longer in existence, as is currently being planned.
• Fourth, there are currently too many other regulations/rulings/legislation that are as yet undecided which will greatly affect the industry and the costs to the homeowner.  For example, a final ruling on the definition of QRM, establishment of National Servicing Standards, FHFA’s proposal to increase the G-Fees, and GSE reform just to name a few.  The manner in which these issues are resolved will change the GSE, their cost and the costs passed on to the servicer, securitizer, originator and ultimately the borrower. Until these are decided upon and enacted, it seems as though Congress would be putting the cart in front of the horse with this new piece of legislation.

If Congress does not act, the payroll tax cut is scheduled to increase by two percentage points, to 6.2 percent from a rate of 4.2 percent – which would effectively increase taxes by $1,000 for the average family next year.  It is not in dispute that this is a serious problem, however, it is not one that should be solved on the back of the housing industry. This is moving quickly, and has support by both Republicans and Democrats.  Please do not just delete this email.  This industry and every homeowner needs you to do something! Please educate your partners in the industry and call your district representative today!

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I would like to take a moment to share some very exciting news with all of you. In recent months, AMLA has partnered with iBranding, a division of Inspire Business Concepts, a local virtual brand marketing firm to help us take some meaningful strides in developing our virtual brand. As a result, I am very pleased to announce that we have now launched a completely revamped website. This new site will provide several key benefits to our members and the mortgage lending community as a whole:

Increased usability and intuitiveness – our new site has been completely optimized with a fresh, minimalistic design that makes content easy to find and interact with.
 
Dynamic content – our new site utilizes a class-leading content management system (CMS) that makes it extremely quick and easy for content to be updated by the organization and its members.

Increased member engagement – our new blogging platform and content management system will make it easy for our members to both provide and interact with valuable content on our new site.

Increased consumer engagement – with fresh, hyper-relevant content being supplied by our members on our easy to use content management system, we are confident that we can drive engagement from consumers, which will create greater exposure and opportunities for our members.

New events calendar – we’ve enhanced our events calendar by making it more accessible and more intuitive to navigate.

Increased marketing opportunities – we will be partnering with Inspire Branding to offer advertising services to our associate members, which will allow them to purchase ad space and eye-catching ads that will help them to reach a targeted audience at extremely affordable rates.

Integrated PayPal functionality – we will now be using the super-secure PayPal platform for online payment processing.

It is my hope that you will all enjoy the enhancements to the new site. If your business could benefit from similar services, don’t hesitate to reach out to our friends at iBranding for more information: www.inspirebranding.com.

Sincerely yours,

Ted Theiste, President