Monthly Mortgage Market Share Archives

October 2015 Market Share Report

November 19, 2015

At the end of October and into November we experienced our first closings under the new CFPB TRID disclosures.? More recent closings are happening smoother as everyone gets familiar with the changes. I thought it important to share with you my takeaways from these initial transactions. My first takeaway is being reminded that everyone in the lending and settlement industry is using new software, with new screens and learning new workflow and timelines. The operative word here is ?new.? Just like athletes, regardless of the amount of training anyone has done, it doesn?t simulate real game speed. Until loan processors and loan closers, loan officers and loan underwriters get fifty or sixty real transactions with real circumstances under their belt, they are going to be slower and less sure of what they?re doing. I see it with my team as well. This will affect the speed at which we all can produce our work; especially for the first few transactions. This learning curve is further slowed by the fact we?ve all be doing transactions under both the new and the old rules. This means a lot of back and forth, hardly the ideal environment to burn new procedures into one?s brain cells. Fortunately that will disappear over the next few weeks. And to no one?s surprise, the CFPB rule, at about 1900 pages, is not being consistently interpreted. This leads to slower processing while alignment between the various stakeholders is achieved. And as various regulators start examining TRID transactions, we can expect even more inconsistent interpretations. I don?t intend to suggest that these issues apply to everyone in the business. They are though, quite prevalent although less so than a couple of weeks ago. You may wish to be proactive in your discussions with your clients so that surprises are minimized during these first few months of implementation.

~ John Bethell

Market Share Report-September 2015

jbtcRIP

WASHINGTON D.C.

HUD?1 passed on to the Great Regulator in the Sky at 12:00 a.m., October 3, 2015. HUD?1 is survived by?Dodd?Frank, TRID, Loan Estimate and Closing Disclosure. The funeral and interment will be consummated?following a three day waiting period.

Created in 1974, HUD?1 and its partner, Good Faith Estimate maintained a long and largely unsuccessful?struggle to encourage consumers to shop for their mortgage loan. Much of HUD?1?s life was dominated by?its lifelong sibling rivalry with Truth?In?Lending. A mid?life crisis during the early 2000?s led to a nervous?breakdown in 2008. HUD?1 attempted to reinvent itself in 2009. Using roll ups, tolerances and buckets,?HUD?1 only managed to further confuse consumers.

The family mission to educate mortgage consumers and simplify the process has passed to HUD?1?s?illegitimate step?child, Convoluted Title Insurance Fees Calculation. Regrettably, HUD?1 will always be?remembered most for having to start on page two, to understand it.

In lieu of flowers, the family asks that fines and penalties be paid directly to the Consumer Finance?Protection Bureau.

Market Share Report – August 2015

As we all make our final preparations for the post-Trid implementation world beginning October 3rd, lets pause a?moment and reflect upon the positive aspects of this change.

{{crickets}} . . . . . . . . . Just kidding!

Seriously, although there?re a lot of changes to deal with, and that?s always hard for people, TRID is not all necessarily?bad. Here are my top five positive takeaways from TRID.

5.?Process Improvement: TRID necessitated that each of us closely examine our internal work flow and processes?with respect to new disclosure timing and accuracy requirements. While doing this, many of us have actually found ways?to improve. There?s no getting around the additional days for providing and reviewing disclosures that TRID adds to a?transaction timeline. Those additional days don?t all need to be tacked onto the end, do they? There?s an opportunity to?gain some of those days by improving origination and settlement process.

4. Systems upgrade: We?ve all upgraded existing systems or moved to new platforms to do our work. For many of?us it?s the first major new program since the 2009 RESPA reform. No doubt that all of this software is more robust than?what we were using. That leads to more productivity and fewer errors.

3. The new forms: Combining and reengineering the Truth in Lending and GFE/HUD-1 has resulted in forms that?are easier for the consumer to understand. (The convoluted title insurance fee disclosure notwithstanding.) For?example, we always wondered why there was no ?cash to close? on the GFE. Now we have that.

2. Fewer last minute closing delays: Oh, closings will still be delayed. But they?ll be delayed four days before the?scheduled closing, not four hours. If the Closing Disclosure can?t? be made on Monday, that?s when we?ll know that we?can?t close on Friday. While a delay is obviously not what anyone wants, the fallout stands to be less when moving vans?haven?t arrived or left yet.

1. Industry Awareness: I can?t think of another time in my career when Lenders, Realtors? and Title Companies?were as aware of each other?s world as we are right now. The nightmare scenarios that dominated early conversations?about TRID definitely got everyone?s attention. All of us now have a much better understanding of each other?s role in?the settlement process. This awareness will lead to further improvements as electronic sharing of information between?the participants in the transaction becomes increasingly more prevalent.

And I?ll give you a bonus positive takeaway: Next year, 2016, will be a year when we can all focus on just being better at?what we do. No new software. No life changing regulatory initiatives. Just each of us, trying to do our jobs better!

~John Bethell

September, 2015

Market Share Report – July 2015

We?re now less than two months from implementation of the Truth?In?Lending and RESPA integrated?disclosures (TRID). We?ve carefully studied the rule. We?ve carefully considered how this will affect our?processes. We?ve upgraded our software. We?ve tested our software. We?ve waited for a software patch?to fix the bugs. We?ve tested the software again. We?ve started training our team. We?ve breathed a?sigh of relief when the implementation date was pushed back to October 3rd. Rinse . . . repeat.

Clearly, there?re many important things that we all must do to be ready for TRID implementation. But?what is the most important thing? Process changes more than anything else are people changes. Our?teams need to learn new ways of accomplishing the same tasks in order to have a successful closing.?(Remember I stated in June that I refuse to use the word consummation!) So with all the changes, what?is the most important thing that each of our teams need to do? For me, the most important thing for my?team and my clients and especially the buyers and sellers is to change their mental focus from the?closing date to the disclosure date.

In the pre?TRID world, we pick a closing date and everyone in the process works to get their piece of the?transaction done in time for the closing. Frenzied activity takes place in those final 48 hours to enable a?successful closing. Appraisal questions get answered. Credit reports are updated. Underwriter concerns?get addressed. A lot of things happen because we?re targeting a closing date.?We need to start speaking specifically about the disclosure date and not focus on the closing date.

Instead of ?when is it closing?? we need to be asking ?when are we disclosing?? Instead of setting time?lines backwards from the closing date, we need to measure backwards from the disclosure date. When?we review a purchase agreement, we need to circle the disclosure date on the calendar, not the closing?date. If we meet the disclosure date, everything after that will likely happen smoothly and on time. And?after all, that?s the purpose of TRID anyway, isn?t it?

Let?s stop telling the appraiser, the inspector, the title company, the lender or the realtor to get tasks?completed because ?it?s closing two weeks from today.? Let?s tell them to get things done because??we?re disclosing a week from Monday.? It?s a mindset. If we talk in terms of a closing date to our team?or service providers, they need to do a mental calculation as to what that means for their time line and?their action items. If we talk in terms of a disclosure date, we?ve already done the calculation for them.?They don?t have to think about it as much and can get on with meeting that timeframe.

Insert ?disclosure date? in your transaction vocabulary in place of ?closing date.? For me, that?s the?most important thing.

~John Bethell

Market Share Report – June 2015

July 27, 2015

We interrupt our regularly scheduled programing of compliance induced folderol for this important?message: People are actually buying and selling homes! In fact, they are buying and selling homes in?Monroe County at the fastest rate in seven years; a rate that is almost twenty percent better than the?second quarter of last year.

The chart on page 13 shows Monroe County sale transactions by quarter for the last eleven years. This?past quarter is the highest quarter since the third quarter of 2007. That?s thirty-one quarters!

What was going on in 2007? Well, the first iPhone was released; Bob Barker still hosted ?The Price Is?Right?; Miley Cyrus was better known as Hanna Montana; and we were debating the long term merits of?HD DVDs or Blu-Rays! We were also still underwriting mortgages using a mirror and the fog test; and?verifying incomes with ream sequences.

Also interesting to me are the charts on pages 14 and 15. Second quarter sales of properties not?intended to be the buyer?s primary residence (i.e. investment, commercial, vacant) peaked two years?ago in 2013. However they are still up almost 24% from quarter two of last year. Almost all of the?increase seems to be in the $200,000 and up range.

Sales of properties intended to be the buyer?s primary residence are up 17% from the same quarter last?year. These sales are at the highest level since the sales disclosure data became publicly available. The?increase is over a broader section of the pricing market than non-primary sales.

Total mortgage lending (chart page 7) while not near the refinancing induced peaks of 2009, 2012 and?2013, is still quite strong. And it?s up about 33% from quarter two of last year.

Finally, it looks like the level of foreclosures is stable. See the trend line on page 16. This is the lowest?level of new foreclosures since I began tracking them ten years ago.

We now return to our regularly scheduled program: TRID Compliance Truth or Consequences. Watch for?the October 3rd inaugural season premier!

~John Bethell