Monday, January 16, 2017 - Article by: bcahoone - Global Home Finance Inc -
A little boy returned from the grocery store with his mom. While his mom put away the groceries, the little boy opened his box of animal crackers and spread them all over the kitchen table.
"What are you doing?" asked his mom.
"The box says you shouldn't eat them if the seal is broken," said the little boy. "I'm looking for the seal."
In Friday's commentary I included a piece on the direction of rates. ("Are you positive that rates are going higher? Me neither, and there are reasons why rates may stay here or actually slide back down a bit. No one has a crystal ball...") The write-up prompted Tom C. to contribute, "Rob, the reasons that interest rates may not go up as expected are complicated and are evolving. Your report discusses near term aspects to the markets and interest rates but does not get into the longer term economic issues like retiring/aging Baby boomers here, and an aging population in Japan and Europe, negative interest rates here and all over the developed world, Keynesian economics influence here, and in most of the major economies that increases the size of government and regulations that interferes with the growth of private enterprise."
His note went on. "In the short run the 10-year range will be in the 2.00-2.75% range through mid-2018. That is, IF Trump achieves real tax reform, both corporate and individual, dramatically cuts superfluous business killing regulations, cuts down the size of government through his different cabinet appointees cutting their departments down, and killing bad regulations, if we get a good immigration plan that allows in needed immigrants, and keeps out the poorly skilled, and he does not start a trade war with China. Then we could see real GDP hit 3 plus percent by 2019 and interest rates on the 10-year could hit 4-5% by 2020. The real long term question is do we end up looking more like Japan/Europe or can we regain the entrepreneurial, free enterprise energy that propelled the US economy after WWII? Too many people want the world to be fair - but we cannot depend on government to save the day!" Thank you, Tom.
What about the overall job market in residential lending? I asked Jim Boghos, President of The Boghos Group. "With volume off as much as 40%, underwriters who moved for higher end comp plans are now at risk for layoff as most originators have operational capacity. The current mortgage job market is squarely focused on adding originations people. Competition for established producers is about to become as fierce as we have seen in recent years. In 2017, look for acquisition of small to medium size originators, recruitment of top performing branches and mortgage brokers continuing to convert to the lender side. Top shelf retail branches and regions originating north of $8 to $10 million per month are the main targets right now. Smaller branches have equal opportunity but the larger branches will be targeted as priority for its impact. Companies that offer excellent support, operational execution and financial transparency will control the deck. Also, make sure you have a compelling story to tell. If you don't have one, you need to develop one because there are a ton of "me too" companies out there saying the same things hoping to recruit the same people." Thanks Jim!
Recently the commentary mentioned a $45,000 settlement in Minnesota between a title company, which had a boat/dinner cruise for clients, and the Minnesota authority. Is taking clients on a cruise illegal? It prompted Louisiana attorney Marx Sterbcowto write, "The RESPA enforcement does seem to be getting extreme as I'm seeing state attorney generals in conjunction with provincial regulators issuing subpoenas or opening up actions involving really innocuous things such as.... a tin foil container full of ribs or hot dogs. This is starting to have a chilling effect as I'm seeing companies withdraw from all legally permissible marketing & Advertising because they are seeing their friends who provided 20 ribs or 50 hot dogs cost wind up having to pay $40k-100k in ESI document production and attorney's fees. It's a different environment and I don't see this slowing down regardless of who heads up the CFPB.
"Here are two different cases involving different lead regulators however the same supporting regulator is the back-seat driver: one involves a bank/mortgage company and the other involves a real estate brokerage. Readers should pay close attention since if you bought someone a hot dog or threw down the 'buy one get second hot dog free coupon' you just violated the law under these and need to produce a receipt to the government so you can self-incriminate yourself in your own document production. And in both cases this is exactly what the government is seeking one simple pricing differential.
"Your readers should always remember that social media is the regulators best friend so those fun pictures you posted on Facebook or Instagram just cost you $50k in ESI production because you posted a picture of you and another settlement service provider eating a hot dog at the same event and the other settlement service provider posted, 'Thanks for the hot dog!'" Thanks Marx!
Sleuthing around a little shows some state-level differences. For example, "Documents sufficient to show the value and frequency of any rebate, discount, abatement, credit, reduction of premium, special favor, advantage, valuable consideration or inducement, fee, kickback, or thing of value, including but not limited to free or discounted meals, provided to XYZ Mortgage in XXXXXX, Alabama. In lieu of providing the actual documents, you may provide a sortable Excel spreadsheet containing the date, value and description of the specified benefits provided."
And in Florida, "Documents sufficient to show the value and frequency of any rebate, discount, abatement, credit, reduction of premium, special favor, advantage, valuable consideration or inducement, fee, kickback, or thing of value, including but not limited to free or discounted meals, provided to REALTOR Suzy Q or XYZ real estate company in XXXXXX, Florida. In lieu of providing the actual documents, you may provide a sortable Excel spreadsheet containing the date, value and description of the specified benefits provided."
The topic prompted attorney Brian Levyto contribute, "While 'anti-inducement' laws that directly impact title and insurance companies in many states can be like RESPA on steroids, under RESPA itself, an enforcement authority needs to not only prove that the hot dog was a 'thing of value,' but also that it was 'in return for referrals.' As a native Chicagoan, I have deeply held opinions on what would constitute a hot dog that could be a thing of value (none of which would involve ketchup). I also believe, given the right narrative, that even if a hot dog is a thing of value, that it could be provided as a legitimate marketing expense (or even in response to a social convention) and not simply as a kickback for referrals. Frankly, (pardon the pun) the 'hot dog as RESPA violation' is a ridiculous case to bring and a hard one to win for the regulator. Still that doesn't mean that a regulator with an axe to grind can't make life tough on regulated entity by imposing huge discovery and legal defense costs to prevail." Thank you, Brian!
Real estate agents are home buyers' most important source of information about new homes after the Internet. Last year, 33% of buyers learned about their new homes via a real estate agent. Agents' influence is not declining despite consumers' use of the Web, and for most new home transactions, Americans still prefer a real estate agent. Last year, 87% of buyers purchased their home through a real estate agent or broker-a share that has steadily increased from 69% in 2001, per the National Association of Realtors.
And bankers and lenders have thoughts on this. "Together, realtors and MLOs can ease buyer concerns around confusing paperwork and unexpected costs, making the home buying process as seamless as possible," said Ryan Bailey, Head of Mortgage, TD Bank. "We're invested in making a positive impact, and this is part of what makes our bank different."
Didn't find the answer you wanted? Ask one of your own.