When you see the folding of these Jumbo Bank lenders with phenomenal rates are you surprised? The numbers and spreads don't match...too good to be true is too good to be true...If you have a book of business and are a true advocate for your customer selling to dozens of banks is better than representing just one...The M&T-Hudson City Deal: It's the biggest bank merger announced this year, and one of the biggest since the dark days of 2008 (either No. 7 or No. 11, depending on whether you rely on the Journal or the FT, respectively). M&T, based in Buffalo, will pay $3.7 billion in stock for the struggling Hudson City in Paramus, N.J. … And it still feels kind of weird to describe Hudson City as "struggling." Remember, this was the mortgage lender that, after the bubble burst, received widespread praise for having just said no to subprime and stuck to old-timey, fuddy-duddy practices like verifying borrowers' incomes. But mortgage lending entails hazards other than the borrower not paying you back, such as the borrower paying you back sooner than expected, and interest rate risk has bedeviled Hudson City of late(American Banker--subscribe today)
Please read below from Rob Chrisman's recent blog on Mortgage News Daily ( a wealth of daily information all in our business should read)
While attending a Lender's One conference last week, also prior to the Friday announcement, one of the guest speakers, an attorney out of DC, that deals extensively with all these CFPB audits and LO Comp contracts, spoke at length about ABA's and also warned that LO's need to realize that if they are paid under an improper LO Comp plan that per Dodd Frank (Section 14.04) that the LO is personally responsible ( as well as his company) for triple damages of all commission paid to them and legal fees on every client found to have been closed under that improper comp plan as those clients were not given access to equitable rates as the LO could price up to make more with such illegal commissions structures as a point bank. He said this would be most likely a class action and not just a single client so the damages could be substantial....pretty scary stuff. The attorney's point was that the MLO themselves would be liable (in addition to the company) if they accept payment on a loan that is a flawed or illegal plan. Interesting about the "whistleblowing" too - human nature being what it is, some folks may allege that company X has an illegal plan, just to try and slow down their competition- perhaps? Nasty but imaginable."
As the CFPB findings start to drip out LOs may change their tune to ?I know my plan doesnt sound compliant but my company said its ok and their attorney, who has no background in complaince, said its ok!" We all have a NMLS number that tracks us for life, you cant hide behind the comapny anymore. They had you take a test so you know whats right and wrong. ignorance doesnt work as a defense withthese guys....
as we wait for the written formal audits of the larger mortgage entities to become public articles like this can give you a flavor for our future regulatory climate..CFPB Recruiting Undercover Agents To Spy On Financial Institutions... http://www.mortgageorb.com/e107_plugins/content/content.php?content.12178