Legislative   news                                    

State legislative and National Association of Mortgage Brokers (NAMB) Reports, prepared by Peter Simmons, Chairperson of MBBA-NH Ethics/Legislative Committee.

State of NH Update

SB 332 - Relative to recording requirements for mortgage and foreclosure notices. A comment letter was prepared by the legislative committee and feedback was received by Attorney John Griffin and General Counsel from MERS. The letter was sent out to all board members for review.  Everyone felt it was well-prepared and to the point.  MBBA-NH Legislative Consultant Jim Demers still doesn’t feel the letter addresses the senators' concerns.  He would like us to collect actual notices that are sent out to borrowers when a mortgage is sold or transferred. This will be extremely difficult for us to obtain but per his conversation with the lobbyist from MERS, they are working on this. The committee reached out to Jerry Little and General Counsel from MERS again but haven’t received any additional feedback. The committee feels the letter should be sent to the commerce committee or a meeting needs to be scheduled with Senator Bragdon to voice our concerns. As of last week, the bill was killed.

HB 1340 - Relative to condominium liens and super lien status for assessments. 3/3/2010 amended version has been approved by the house sub-committee.

HB 1279, - Relative to the licenses of mortgage bankers and mortgage brokers. 3/3/2010 has been approved by the house sub-committee.

Due to the short month of February and attending the NAMB legislative and regulatory conference, the committee has not had the opportunity to discuss the tradeoff table with the New Hampshire Banking Department. A meeting will be scheduled with Mr. Demers and will have an update for our next meeting.

National Association of Mortgage Brokers Legislative Conference in Washington, DC

FHA's current changes and proposed changes - As we all know, FHA’s business has grown tremendously since the credit crisis began late in 2007. Today, FHA insures 30% of all mortgages originated and 80% of these transactions are loans to first time home buyers.

Due to the increase in business, along with defaults, FHA has dropped below their reserve requirement of 2%. This is the reason for recent increases to UFMIP and FHA has also proposed an increase to the monthly MI as well. FHA commissioner David Stevens was the keynote speaker at the conference and shared some great comments that I’ve outlined below.

1. FHA does feel there should be an equal playing field in place and all LO’s should be licensed.
2. FHA version of HVCC - Admitted it is currently flawed due to increased cost passed on to the consumer by management companies. The commissioner is strongly against allowing LO’s the option of choosing a specific appraiser. They may adopt a system similar to VA where an approved appraiser is selected directly within FHA Web site.
3. Net worth requirements - Since no official Mortgagee Letter has been published, he wouldn’t directly comment on these amounts going forward. However, he did imply that brokers will no longer need their Mini Eagle to originate FHA loans.  What is proposed will be an increase to lenders' net worth, and they will be held accountable for the quality of origination. With current limits so low for brokers ($63,000), FHA felt a majority of brokers and even small lenders would not have the ability to reimburse FHA on loans that should have never been approved. Since Commissioner Stevens has been appointed, he has terminated 270 companies from originating FHA loans.
4. FHA does feel brokers play an important role in the origination process. Commissioner Stevens has an extensive background in the mortgage industry.  Recently he was the EVP for Wells Fargo wholesale. FHA is aware that the broker channel is the most cost effective way for lenders to originate loans.

Origination Compensation - This was a hot topic at the conference, and there was a session held with Paul Mondor, Senior Attorney, Federal Reserve Board. They also had two additional panel members Ken Markison from the Mortgage Bankers Association and Jennifer Smith from the Small Business Association. Mr. Mondor spoke first and defended the Feds comments on caps to LO compensation. Here are a few bullet points he wanted to get across.
1. YSP - the Fed recognizes that YSP does help consumers and also holds a future value with above par pricing. They would like to regulate YSP so that no LO has discretion over pricing loan terms.
2. Non Steering - Prohibit the LO from putting borrowers into higher cost loans for greater compensation.
3. Definitions of Loan Officer - They feel that a mortgage broker company plays the same role as an individual loan officer.
4. Eliminate Dual Compensation - Remove the option for an LO to receive fees from the borrower while being compensated by the lender
5. Equal Playing Field - It is their goal to create an equal playing field for loan officers but wouldn’t regulate any profits from the sale of a loan after the closing.
The Mortgage Bankers Association strongly opposes restrictions based on loan rates and terms. MBA feels transparent disclosure is crucial and thinks with time the new GFE addresses this concern. MBA wants to preserve the borrower’s rights and choices that are currently in place. The MBA would like to see a level playing field, and they understand the importance of small business in our industry.

RESPA/2010 GFE - The new GFE was discussed in great length.  There were many questions with many answers still unclear. Ivy Jackson, Director of HUD, spoke and outlined HUD’s goals when revising the GFE. The changes have been in the works for many years and our current housing situation dictated a perfect time to release the new GFE. HUD felt there needed to be clarity within the GFE to show borrowers what the true cost of the loan will be. Prior to the new GFE, many borrowers were attending closing in which the costs are much higher than disclosed on the original GFE. They also realized some loan terms may change and implemented the changed circumstances.

HVCC - This has been a tough battle that NAMB has fought hard to overcome. NAMB played an important part in the House Financial Committee passing H.R. 3126 which is the first step in having this code removed. NAMB does know that we are a long way from any type of law as the bill will have to get approved in the House and we haven’t seen the Senate’s version yet. In the meantime, NAMB is partnering with Olde City Lenders Services to create a blind appraisal order system for brokers to utilize.

NAMB DUES - Just like everyone, NAMB needs their dues in order to survive in these challenging economic times. At a state level, we need to follow their reporting process so a proper budget can be prepared. NAMB dues were recently lowered.

NAMB Enterprises, a wholly-owned subsidiary of NAMB - NAMB Enterprises has been partnering up with vendors throughout our industry. NAMB enterprises are slowly becoming a profitable subsidiary of NAMB. As profits grow, this money will be used to help the association keep members cost down while keeping the association strong.

Attended meetings with Representative Paul Hodes and Senator Jean Shaheen.

Miscellaneous Items
*NAMB spent over 1.5 million last year on legal and legislative efforts.
*Mortgage brokers now originate less than 20% of residential mortgages.  At one time, originated almost 70%.
*Wells Fargo, Bank of America, Citi and Chase originate 50% of residential mortgages.