Mortgage lenders now have to get referrals from their real estate agents the old-fashioned way: earn them.
Lenders have long relied on formal contracts with agents, known as marketing services agreements, to get referral business. These agreements call for the parties to advertise together or provide other services to consumers.
But in 2015 the Consumer Financial Protection Bureau, while not outlawing the practice, put the industry on notice that it considers certain forms of MSAs to violate of the Real Estate Settlement Procedures Act ban on payments for a referral.
In response, several major lenders, including Wells Fargo, PHH Mortgage and Prospect Mortgage, said they were terminating their MSAs. With these arrangements on their way out, traditional word-of-mouth referrals are now the best and most cost-effective way of driving new business.
Some are suggesting that an end to MSAs will help level the playing field between […]
Mortgage originators will spend much of 2016 working their way through the hiccups caused by the October implementation of new mortgage disclosures, but those problems are unlikely to have a meaningful impact on loan origination volume next year.
“I expect origination volumes to be flat to slightly down because of some of the other things going on in the market today,” said Brian Benson, chief executive officer at closing cost data provider ClosingCorp. “I don’t know that the regulatory changes are appreciably going to change industry volume.”
While total mortgage volume may decline somewhat, purchase mortgage volume is expected to increase over 2016. Frank Nothaft, the chief economist of CoreLogic, predicted a 10% increase in purchase dollar volume, driven by improved home sales and higher prices. He said he expects the rate of price increases to flatten out as the year goes on.
Another driver of higher purchase volume […]
Expect mortgage lenders to finally conquer their fear of repurchases in 2016 and ease their standards, but whether those changes will be enough to spur major growth in volume is the big question.
The sources of that doubt are several likely drags on the market: higher rates, higher costs and mixed conditions in the secondary market.
On the plus side, lenders seem increasingly comfortable with Fannie Mae and Freddie Mac’s demands.
“We fully understand when we might be buying back a mortgage if we underwrite to their [expanded] guidelines,” said Scott Haymore, TD Bank’s head of pricing and secondary markets. “I think they’ve made it very clear.”
Both the government-sponsored enterprises, and the Federal Housing Administration that insures loans sold by into Ginnie Mae securitizations, have been encouraging broader lender underwriting and plan to continue to do so next year.
The GSEs have limited lenders’ liabilities […]
The House Financial Services Committee approved a bill Tuesday that would direct the Federal Housing Administration to relax restrictions on its condominium loan program.
Sponsored by Rep. Blaine Luetkemeyer, R-Mo., the bill would streamline the FHA’s certification requirements for condo projects, allow more commercial space in FHA-approved condo buildings and relax owner-occupancy requirements.
Supporters of the condo bill claim it would open up homeownership opportunities for first-time buyers and urban families. The bill would also provide the Rural Housing Service with direct endorsement authority for the first time. Currently, RHS officials must approve each loan package. The committee approved the legislation by a 44-10 vote.
The House committee also approved a data security bill that would require all financial companies to have similar security protections and notification requirements as banks.
The bill, sponsored by Reps. Randy Neugebauer, R-Texas, and John Carney, D-Del […]