There have been eleven bank closures so far in 2011, four of which occurred last Friday. The First State Bank (OK) was sold to Bank 7 (OK), Evergreen State Bank (WI) was sold to McFarland State Bank (also of WI), FirstTier Bank (CO) was placed into the FDIC-created Deposit Insurance National bank of Louisville, which will remain open until Feb 28 to give depositors time to open accounts at other banks, and lastly First Community Bank (NM) was sold to US Bank (MN).

Wells Fargo said it will cut temporary 145 employees from its wholesale mortgage lending division.

But hiring continues. Weichert Financial Services/Mortgage Access, a privately held, top real estate affiliated mortgage company, licensed in 43 states with a significant Northeast presence, is actively hiring licensed loan officers in New Jersey, New York, Connecticut, Pennsylvania, Virginia and Maryland. The company has been around over 30 years. Contact Recruiting Manager Sean O’Flynn at [email protected].

April Fool’s Day is two months from today, and the compensation issue is heating. NAMB issued an “action alert” for members to contact their Senators’ or Representative and urge them to stop the Fed’s Rule on Loan Originators Compensation. Delay or issue a complete compliance guide! “Dial the U.S. Capitol Switchboard at (202) 224-3121…Ask to be connected to your Member of Congress’ office…Urge them to Delay the Fed Rule on LO Compensation Regulation Z: 12 CFR 226. Ask for their e-mail or fax number to send your letter…Write your letter to the Federal Reserve Board and email or fax to your members of Congress.”

Here is Part VI of the compensation Q&A from the MBA and Fed….

Q19. In situations in which a lender acts as a mortgage broker and, thus, is a loan originator for purposes of the rule, if the party has an affiliated settlement service provider, such as a title company, are the bona fide and reasonable charges received by the affiliated settlement service provider considered part of the loan originator compensation?

A. Fed Response - No. The reason for treating affiliates as a single person is to avoid attempts to circumvent the rule by allowing a company to set up two separate companies with different commission structures and permitting its loan officers to deliver loans to either company. This is addressed in Commentary Section 226.36(d) (3)-1. This concern is not presented when a loan originator has an affiliated settlement service provider, because to be excluded from compensation under the rule the fees of the provider for the settlement service must (a) not be retained by the loan originator and (b) be bona fide and reasonable. The bona fide and reasonable requirement is sufficient to address any concern that the loan originator may seek to receive compensation by having its affiliate charge higher fees for its settlement services.

Q20. May a creditor permit certain loan originators to establish rate and point combinations for loans below the creditor’s standard rate and point combinations without first seeking approval of a supervisor, subject to a limits on the amount per loan and the total amount per loans
within given period (such as no more than Y basis points per any individual loan and no more than an aggregate of Z basis points per all loans during a quarter)? This is done to meet competition. The compensation of the loan originators would not vary based on whether or not the rate and points established for a loan was below the creditor’s standard rate and point combinations.

A. Fed Response - Yes. As long as a loan originator’s compensation does not vary based on whether or not the rate and points established for a loan is below the creditor’s standard rate and point combinations, certain loan originators may be permitted to establish rate and point combinations for loans that are below the creditor’s standard rate and point combinations.

Q21. May a loan originator pay some or all of the third party fees of a consumer or otherwise credit the consumer from a premium rate or out of his own pocket?

A. Fed Response - No. The rule prohibits overages and underages tied to terms including rate. The Board has concluded that if it did not prohibit lowering of loan originator compensation, the industry may establish high prices/compensation amounts, and then lower prices and compensation amounts for borrowers who negotiated. The Board views an originator’s agreement to reduce compensation to pay fees as essentially the same as an underage where loan originator compensation is lowered.

Well, not that the market has turned, but the amount of chatter out there in the ranks about ARM loans is increasing by the day. Maybe folks are bored with talk about compensation, buybacks, RESPA, refi’s disappearing, etc. A survey done by FHLMC (uh, Freddie) of over 100 lenders showed that conventional conforming ARMs are starting to attract applicants again, and that their market share may go from 3% in 2009 to almost 10% in 2011. Gone, for the most part, are two-year adjustables, option ARM’s, “pick-a-pay” ARMs, etc., and they’ve been replaced with the 3-1, 5-1, and 7-1. These hybrids have better rates than the 30-yr product, in some cases 1-1.5% better. Better dust off those manuals that define terms like margin, index, and so forth!

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