Bank fund pay outs

 How bank funds are being spent:

 

http://www.wsj.com/articles/new-york-gov-andrew-cuomo-legislators-jockey-over-bank-settlement-proceeds-1418436720?mod=WSJ_hps_MIDDLE_Video_second 

 

Just clicking on the above link will take you to the fight over the bank settlement funds in New York State.  One city wants water pipes.  Another wants a bridge.  The state wants economic development.

 

But....wait.  Wasn't this from the big, bad, criminal banks?  Wasn't this over the mortgage crisis - they lent money recklessly to make bazillions from unsuspecting citizens?

 

If that premise is correct, and the government is fully repaid on the monies lent out, with interest, why are these proceeds not going to the victims?

 

Does this not remind you of the 1990's and the lawsuits against the cigarette manufacturers? 

 

Looser lending misrepresented by press

It's all over google, yahoo and other search engines.  Banks are loosening up lending and that will make getting a mortgage easier.  Pundits are stating the doors are now opening up for individuals who otherwise would be denied a loan.

But, after the housing crash and the accusations of mortgage misdeeds - demanding that lenders know who they are lending money to - how could this occur?

In actuality, it really is about the documentation.  Not the standards of underwriting such as credit scores, how long you're employed or how much you're trying to borrow.

Lenders have gotten into lawsuits with each other and with national agencies such as HUD, Fannie Mae and Freddie Mac demanding what is called a "put back".  A "put back", in mortgage parlance, is when a national agency like HUD or a lender who bought a loan from another lender "puts the loan back" to the original lender.

Say you went to a bank and got a mortgage.  Your loan probably was sold once or more times since you received the initial loan.  That's normal in the industry - it keeps the cash flowing for more borrowers to get more loans.

But, lets' say you miss one or two payments.  You had severe medical bills, you were out of the country, whatever the reason - it is not important.  What happens?  As far as you're concerned, you get late payments (which you do not want) on your credit reported on your mortgage payment history.

However, behind the scenes, the action unfolds.  Someone somewhere is tasked with going through your loan and looking at every single document that you provided and that you signed.   The intention is to determine one of four things:  1. You signed something incorrectly (a mistake by your original lender) with the wrong date or the wrong information on the disclosure.  2. You lied and are a fraud.  3.  The Underwriter made a mistake and improperly underwrote your loan to the proper guidelines.  Or 4.  There is some paper that has some error or something missing.

The employee who finds this gets a big slap on the back and the company then sends a demand letter to the bank that originally gave you the loan saying "We're sending the loan back to you ("put back") and you need to wire us the money for the loan ASAP or we are going to sue you"

For cases like egregious underwriting errors or fraud, this is common practice

But, this practice was abused by many major banks who kicked loans back and forth to one another and abused by agencies who did not want to insure loans to banks.  They looked for simple, tiny, errors that they could use as an excuse to trigger the "put back" or "buy back" clause

After much discussion in Washington, there was an agreement that limits this practice.  Because, typically, if an Agency like HUD, Fannie, Freddie or the VA refuse to insure a loan -you can bet that every bank between San Fran and Miami start kicking the loan back and putting it back - because none of them want an uninsured loan.

So, the agencies have come to an agreement to limit the demands to egregious issues and not to smaller items that do not materially change the fundamental quality of the original loans.

This does not translate to easing of credit.

This translates to less lawsuits from "put backs"

After all, if the government is going to legislate to a lender that they can only lend you what you can afford - (google "ability to repay") - do not thing for one second that they just loosened lending up like it was 2002 all over again

Should we loosen up lending?

Reuters reports BOA won’t take the bait from government policy makers to loosen credit
Here’s the rub.  While government leaders bemoan the real estate market lackluster recovery and go on Sunday morning talk shows ginning up need for looser mortgage underwriting credit --  one wonders if they are surprised that banks are not only ignoring their cries, but are openly saying “no”.
First, the government called for more home ownership in the 1990’s and pushed for greater capacity by increasing the amount of one’s income used for housing expenses (higher DTI).  Then, the government enticed that by tying the higher DTI to handing out candy to banks via CRA credits.  Without those CRA credits, banks could not operate fully.  So, out came “Low to Moderate Income” loans (“LMI”) and the slippery slide to no income verification loans and the sub prime was greased all the way to 2008 when it crashed.  
During the crash the government sold banks on acquiring the now defunct banks.  The Banks followed through.  BOA took over Countrywide.  Wells took over Wachovia.  You remember the famous picture of the banks lined up alphabetically in a room with government regulators looking for bail outs for failing banks?
Fast forward from 2008 to 2013 and 2014 and the regulators created by the government went on a PR campaign to blame banks and then fine banks – billions of dollars – for the acts that the government asked them to do.
Politicians felt pretty good.  They had banks save the failing banks (and they lent a large sum of money to failing banks themselves) and the went on a new PR campaign blaming banks (not themselves) for the reckless lending, tying it to high profits over sound lending.
So, lending got tight.  Now the economy is not recovering as quickly as they would like. So, now they want the banks to loosen up again.
So – after creating the mess, blaming it on the banks, lending untold billions to bail everyone out, failing to tell anyone they got their money back with interest, now the government wants banks to loosen lending?
JP Morgan Chase already said they are re-evaluating FHA mortgages and may exit from it.  HSBC pretty much has throttled back.  Mortgage brokers are for the most part, extint.  Small mortgage bankers are closed.  Mid sized mortgage bankers are seeking out marriage partners to survive.  Big banks won’t loosen lending.  Bank of America said “
In October, the top regulator for the U.S. housing market announced plans to allow many more Americans to buy homes by making a down payment of as little as 3 percent of the purchase price.
But Bank of America CEO Brian Moynihan said at an investor conference his bank hosted on Wednesday that it will require borrowers to make larger down payments "to make sure that can withstand the bumps in the road" of homeownership, such as "unemployment, divorce or sickness."
"I don't think there's a big incentive for us to start to try to create more mortgage availability where the customers are susceptible to default," Moynihan said.
"I know that that doesn't sound good for an instant housing recovery and faster housing markets but it's actually good because in the long term it keeps the housing more fundamentally based," Moynihan added.
Now, is that not what the regulators and government screamed on top of Mount Rushmore about?  Isn’t Moynihan giving them what they demanded?  As one said, be careful of what you ask for – you may get it.
Harsh?  Perhaps.  The losers?  Sound borrowers with credit scores in the low to mid 600’s who had an issue that they got past and want to buy into a home – who just a few years ago a good underwriter would have worked hard to get them approved for their mortgage.  Today – no way without a large down payment and higher credit score. 
Why after paying billions of dollars, facing exuberant regulators who do not know the 5-C’s of underwriting but are quick to judge a file’s compliance to underwriting.  Years of regulators issuing out “Sanctions” that lenders have to sign or face more severe penalties.  Years of dealing with regulators like the North Carolina Commissioner of Banks who simply make decisions and issue out findings without rationale or the New York State Financial Services Department who literally employs individuals who not only have no clue about lending; but can not speak English.   Yet, these people can and will close down a company or fine another or issue out edicts.  And, that’s the state level.  Try facing the feds.
Why would anyone lend a penny more that could default or comes within 10 feet of what was “wrong” two-years ago?
That is like you being told by a policeman that you went 35 miles an hour three years ago when the speed limit was 35 mph, so now you face a 10,000 dollar fine and they release your mug shot.   Then, the mayor complains that people are literally doing 30 miles an hour and encourages people to take it up to 35 MPH, the posted speed limit.
I’d be the first to keep it at 30MPH, below the posted high speed limit and above the minimum – just in case someone gets in an accident at 35mph and the police go backwards in time to issue out more tickets again……
Silly?  That’s what happened.  And, now we must live with that irrationality.

Cost of Regulation

According to the MBA,  higher costs and concerns about buybacks are driving the decline in mortgages for home purchases. It will slow to $635 billion this year, a 13 percent drop from 2013.
Banks have constrained home lending to many borrowers deemed creditworthy by mortgage finance companies Fannie Mae (FNMA) and Freddie Mac. Applicants approved for mortgages to purchase homes had an average FICO credit score of 755 in August, according to Ellie Mae, a company that makes software used to process mortgage applications. In contrast, Fannie Mae and Freddie Mac guidelines allow for credit scores as low as 620 for fixed-rate mortgages in some cases.
Lenders reported a 30 percent median increase in compliance costs this year from 2013, according to a survey by Fannie Mae released this month. And 72 percent of lenders surveyed said they spent more on compliance this year compared with last year

FHA Flipping Policy

FHA flipping policy

In an effort to stimulate repairs and sales in neighborhoods hard hit by the mortgage crisis and recession, the FHA waived its standard prohibition against financing short-term house flips. Before the policy change, if you were an investor or property rehab specialist, you had to own a house for at least 90 days before reselling — flipping it — to a new buyer at a higher price using FHA financing. Under the waiver of the rule, you could buy a house, fix it up and resell it as quickly as possible to a buyer using an FHA mortgage — provided that you followed guidelines designed to protect consumers from being ripped off with hyper-inflated prices and shoddy construction.

Access to credit

Removing barriers to getting a mortgage

HUD has been talking to their counterparts in the government about the reduction in FHA loans.

Jamie Dimon from JP Morgan stated in  a conference call that perhaps its’ time to re-think doing FHA loans.

Mortgage Bankers are looking at alternatives to Fannie Mae and Freddie Mac loans.

Why is all this going on?

Lenders are tired of being sued for lending.  That one-sentence probably best sums it up.  The days of subprime mortgages and bad lenders were cleansed when the market crashed and rinsed and washed a second time with some valuable Frank-Dodd reforms.

However, the US government continues to sue lenders and announce large settlements, regulators continue to overzealously enforce provisions that even they do not fully understand and banks and bankers seek to settle because the cost of litigating is high, but to litigate your regulator is toxic.

What choices do lenders have?  Lend without using Fannie, Freddie or FHA.  Tighten lending standards above and beyond what CFPB requires and deny credit to anyone who would have gotten a loan as recently as 2011.  And, lenders now over underwrite and over request documentation while over disclosing and demanding proof from the borrower that they received the disclosures to ensure they are in compliance.

So, HUD and Fannie have taken a step back.  HUD is in the process of re-writing their FHA lending requirements and Fannie and Freddie are looking at providing a more concise lending matrix that is very clear about how lenders can protect themselves from claims over bad loans.

The claims over bad loans are a big issue to lenders.  Fannie, Freddie and HUD all look to kick a loan back to the lender for the smallest of things when that loan is, typically, found to be 30 or 60 days late.   The late payment status of a particular loan triggers a complete review of the loan.  Any “t” not crossed or “I” not dotted triggers buy back demands.  This then triggers lenders to demand buy backs from other lenders and the game of “Hot Potato” with Mr. and Mrs. Smith’s mortgage begins.  As the game heightens and the loan gets sent from lender to lender back down the chain, the borrowers find themselves getting notices that their loan payment is not due to lender X, it’s due to lender Y now and maybe in 3-months it may be due to lender Z.   This hurts everyone and typically is caused by Mr. Smith forgetting to make the mortgage payment and everyone from Fannie to the small mortgage banker that originally originated the loan getting involved in who has what exposure.

Now, Fannie, Freddie and HUD realize that the mortgage market has gone too far in tightening credit.  They don’t cite the reasons, but the reasons are clearly outlined above – they and the government went too far and became too punitive following the market crash of 2008 and 2009.

To ease the situation Fannie, Freddie and HUD know they have two issues to attack.  One is the reduction in credit to individuals that is pushing potential homeowners into the rental market and slowing the home buying market.  The second is being clear to lenders that if they lend in good faith and follow the rules, they will not be held accountable if a loan becomes non-performing.

Recently, Fannie and Freddie announced that they were working to clarify what constitutes a buy back.  In 2013 they stated that no buy back would be demanded if the borrower did not miss any payments for three years.  In May they announced that the borrowers could miss two nonconsecutive payments within three-years without triggering a buy back demand.

The agencies are now working on other issues including small mistakes (minor clerical errors or missing paperwork that does not alter the soundness of the underwriting decision made while processing and approving the loan).   That’s a big concern for lenders because many banks and agencies will look for a missing pay stub or a missing disclosure to trigger a buy back on a loan that they just want to find a reason to demand it be purchased because they simply do not want that loan.

Also, fraud is coming into view in the horizon.  They are finally looking at what constitutes fraud and the definition of that.   This is an important point because lenders have met and exceeded due diligence in making a mortgage to a borrower only later to find out that the borrower was slick in providing false and misleading information to the lender to induce the lender to provide a mortgage.  This has led many lenders to close, others to be wrongfully accused of fraud and yet still others to lose a lot of money on fraudulent loans.  And, this problem, comes from consumers and individuals outside the mortgage industry.  The general public has been sold the story by the US Government that the bad guys are the mortgage professionals and they do not know the story of the bad person who may be living next door to them that pulled off a sophisticated mortgage fraud scheme to acquire their home (which, is the equivalent of stealing hundreds of thousands of dollars from a bank but since it was not done with a stick up they are not, in many cases, being prosecuted.  Instead, the lenders is being scrutinized by investigators from three, four and five federal agencies looking for anything to indict a company or staff of a felony; when in fact they were a victim.  Most people don’t view lenders as victims following the outrage of the crisis and the shrill voice of uniformed politicians throwing red meat to the angry voter)

So, how does the government provide lenders with the protections that they need so that they can make solid, good loan decisions based on information provided to them and received by them using third party tools to verify said information without fear of being second-guessed later on?  

How does the government reduce angst by lenders so that they loosen up credit?

And, how does the government address the fraud question and determine who is culpable (and this is a sticky one because, in the defense of the government, anyone could have committed the crime since there’s gain to be had for everyone in the process from the lender to the loan officer to the borrower to the attorney to the realtor and so on).

Well, that process has begun.

Fannie & Freddie are coming out with new “road rules” that address buy backs and addresses expanding credit to borrowers with lower down payments.  And, they’ve begun to attack the buy back issue along with the fraud issue.

HUD also has begun that process

So, it may be a new day in the mortgage industry where saner heads prevail and the adults take control of the room from the crazy kids who ran rampant.

Perhaps returning to vanilla products that were available before Clinton pushed for expanded home ownership is a sound decision.  Perhaps throwing in a few more products like one or two expanded ratio products geared specifically to LMI borrowers as defined by HUD medium incomes, issued by Fannie/Freddie is wise. Sticking to basic DTI’s and sticking to basic credit requirements is key. 

In 1995 the mortgage market began to see the lugs that held the wheels to their cars loosen when first the government announced that certain minorities lacked access to traditional credit and an underwriter could use alterative credit sources – and such began the process of tiered credit (Tier I, Tier II and Tier III credit) that could be used instead of traditional credit reports.  

That lead to tossing the basics out of underwriting and off loaded tax returns, eliminated proving income, went off only credit if the borrower put “enough down” and lent to borrowers at higher and higher DTI’s to get the coveted CRA’s from the government.

That was insanity.  And, that led to the subprime market.  And, that is a story the government does not want told  - its’ to arcane a story to tell and the public would prefer to dumb down what happened and blame the lenders.  This works for the likes of Barney Frank who pushed for the very rules he railed against in hearings in 2008 and 2009.

Maybe now we realize that too far left and too far right is simply too far.  Perhaps we now get that lending soundly means lending rules should be clear, concise and across the board.  The basic underwriting tools used from the 1990s were sound,: they should be used universally. 

Borrowers who don’t meet the criteria of vanilla conforming or vanilla govy loans or even vanilla expanded credit loans (lower LTV) should be viewed as tomorrow’s borrower.  Not today’s reject or the need for some politician to interject about unfair and discriminatory lending demanding new lending laws.

Lenders and agencies need clear rules of the road that dictate when a loan does not conform to agencies guidelines or regulations that then does trigger a buy back.

And, regulators and the government need to let people know that they will prosecute Joe Blow for lying on his mortgage application and getting a mortgage in addition to prosecuting rings of thieves who do so and rings of those in the industry who do so.   Breaking lending laws is not just the provence of those inside the lending industry.

Access to Credit

Removing barriers to getting a mortgage

HUD has been talking to their counterparts in the government about the reduction in FHA loans.

Jamie Dimon from JP Morgan stated in  a conference call that perhaps its’ time to re-think doing FHA loans.

Mortgage Bankers are looking at alternatives to Fannie Mae and Freddie Mac loans.

Why is all this going on?

Lenders are tired of being sued for lending.  That one-sentence probably best sums it up.  The days of subprime mortgages and bad lenders were cleansed when the market crashed and rinsed and washed a second time with some valuable Frank-Dodd reforms.

However, the US government continues to sue lenders and announce large settlements, regulators continue to overzealously enforce provisions that even they do not fully understand and banks and bankers seek to settle because the cost of litigating is high, but to litigate your regulator is toxic.

What choices do lenders have?  Lend without using Fannie, Freddie or FHA.  Tighten lending standards above and beyond what CFPB requires and deny credit to anyone who would have gotten a loan as recently as 2011.  And, lenders now over underwrite and over request documentation while over disclosing and demanding proof from the borrower that they received the disclosures to ensure they are in compliance.

So, HUD and Fannie have taken a step back.  HUD is in the process of re-writing their FHA lending requirements and Fannie and Freddie are looking at providing a more concise lending matrix that is very clear about how lenders can protect themselves from claims over bad loans.

The claims over bad loans are a big issue to lenders.  Fannie, Freddie and HUD all look to kick a loan back to the lender for the smallest of things when that loan is, typically, found to be 30 or 60 days late.   The late payment status of a particular loan triggers a complete review of the loan.  Any “t” not crossed or “I” not dotted triggers buy back demands.  This then triggers lenders to demand buy backs from other lenders and the game of “Hot Potato” with Mr. and Mrs. Smith’s mortgage begins.  As the game heightens and the loan gets sent from lender to lender back down the chain, the borrowers find themselves getting notices that their loan payment is not due to lender X, it’s due to lender Y now and maybe in 3-months it may be due to lender Z.   This hurts everyone and typically is caused by Mr. Smith forgetting to make the mortgage payment and everyone from Fannie to the small mortgage banker that originally originated the loan getting involved in who has what exposure.

Now, Fannie, Freddie and HUD realize that the mortgage market has gone too far in tightening credit.  They don’t cite the reasons, but the reasons are clearly outlined above – they and the government went too far and became too punitive following the market crash of 2008 and 2009.

To ease the situation Fannie, Freddie and HUD know they have two issues to attack.  One is the reduction in credit to individuals that is pushing potential homeowners into the rental market and slowing the home buying market.  The second is being clear to lenders that if they lend in good faith and follow the rules, they will not be held accountable if a loan becomes non-performing.

Recently, Fannie and Freddie announced that they were working to clarify what constitutes a buy back.  In 2013 they stated that no buy back would be demanded if the borrower did not miss any payments for three years.  In May they announced that the borrowers could miss two nonconsecutive payments within three-years without triggering a buy back demand.

The agencies are now working on other issues including small mistakes (minor clerical errors or missing paperwork that does not alter the soundness of the underwriting decision made while processing and approving the loan).   That’s a big concern for lenders because many banks and agencies will look for a missing pay stub or a missing disclosure to trigger a buy back on a loan that they just want to find a reason to demand it be purchased because they simply do not want that loan.

Also, fraud is coming into view in the horizon.  They are finally looking at what constitutes fraud and the definition of that.   This is an important point because lenders have met and exceeded due diligence in making a mortgage to a borrower only later to find out that the borrower was slick in providing false and misleading information to the lender to induce the lender to provide a mortgage.  This has led many lenders to close, others to be wrongfully accused of fraud and yet still others to lose a lot of money on fraudulent loans.  And, this problem, comes from consumers and individuals outside the mortgage industry.  The general public has been sold the story by the US Government that the bad guys are the mortgage professionals and they do not know the story of the bad person who may be living next door to them that pulled off a sophisticated mortgage fraud scheme to acquire their home (which, is the equivalent of stealing hundreds of thousands of dollars from a bank but since it was not done with a stick up they are not, in many cases, being prosecuted.  Instead, the lenders is being scrutinized by investigators from three, four and five federal agencies looking for anything to indict a company or staff of a felony; when in fact they were a victim.  Most people don’t view lenders as victims following the outrage of the crisis and the shrill voice of uniformed politicians throwing red meat to the angry voter)

So, how does the government provide lenders with the protections that they need so that they can make solid, good loan decisions based on information provided to them and received by them using third party tools to verify said information without fear of being second-guessed later on?  

How does the government reduce angst by lenders so that they loosen up credit?

And, how does the government address the fraud question and determine who is culpable (and this is a sticky one because, in the defense of the government, anyone could have committed the crime since there’s gain to be had for everyone in the process from the lender to the loan officer to the borrower to the attorney to the realtor and so on).

Well, that process has begun.

Fannie & Freddie are coming out with new “road rules” that address buy backs and addresses expanding credit to borrowers with lower down payments.  And, they’ve begun to attack the buy back issue along with the fraud issue.

HUD also has begun that process

So, it may be a new day in the mortgage industry where saner heads prevail and the adults take control of the room from the crazy kids who ran rampant.

Perhaps returning to vanilla products that were available before Clinton pushed for expanded home ownership is a sound decision.  Perhaps throwing in a few more products like one or two expanded ratio products geared specifically to LMI borrowers as defined by HUD medium incomes, issued by Fannie/Freddie is wise. Sticking to basic DTI’s and sticking to basic credit requirements is key. 

In 1995 the mortgage market began to see the lugs that held the wheels to their cars loosen when first the government announced that certain minorities lacked access to traditional credit and an underwriter could use alterative credit sources – and such began the process of tiered credit (Tier I, Tier II and Tier III credit) that could be used instead of traditional credit reports.  

That lead to tossing the basics out of underwriting and off loaded tax returns, eliminated proving income, went off only credit if the borrower put “enough down” and lent to borrowers at higher and higher DTI’s to get the coveted CRA’s from the government.

That was insanity.  And, that led to the subprime market.  And, that is a story the government does not want told  - its’ to arcane a story to tell and the public would prefer to dumb down what happened and blame the lenders.  This works for the likes of Barney Frank who pushed for the very rules he railed against in hearings in 2008 and 2009.

Maybe now we realize that too far left and too far right is simply too far.  Perhaps we now get that lending soundly means lending rules should be clear, concise and across the board.  The basic underwriting tools used from the 1990s were sound,: they should be used universally. 

Borrowers who don’t meet the criteria of vanilla conforming or vanilla govy loans or even vanilla expanded credit loans (lower LTV) should be viewed as tomorrow’s borrower.  Not today’s reject or the need for some politician to interject about unfair and discriminatory lending demanding new lending laws.

Lenders and agencies need clear rules of the road that dictate when a loan does not conform to agencies guidelines or regulations that then does trigger a buy back.

And, regulators and the government need to let people know that they will prosecute Joe Blow for lying on his mortgage application and getting a mortgage in addition to prosecuting rings of thieves who do so and rings of those in the industry who do so.   Breaking lending laws is not just the provence of those inside the lending industry.

Ebola, Stocks and the Economy

As stocks continue the trend from last week - the gains seen in the stock market are being eroded.  What is driving this is the concern that Japan and Europe are slowing down.  And, on top of this, as oil prices drop stocks go with them.  Lastly, consumer spending came in below expectations.  All of this drives traders to drive stocks downward.

On the bright side, this should help long term interest rates (mortgage rates) to either go down or hold steady based on previous trends.  Some lenders clearly are holding rates steady and booking profits on the increased gains.  However, others may lower rates to pick up desperately needed volume in new mortgage loans.

Meanwhile we should be keeping an eye on the Ebola crisis, that clearly has clearly entered the United States.  US cases include the two initial Atlanta cases that then grew to a 3rd person who entered without symptoms and died in Dallas.  Then we heard of another case of a journalist in the Midwest who has Ebola.  Now, two health care workers in Dallas have been infected.  If we strip this down we have to realize that there most likely will be more cases - which means Ebola has arrived in the United States and is no longer a West African problem.

So, we are closing out the 3rd quarter with many pressures.  For those of us in the mortgage industry - sales will probably remain weak despite lower rates.  Those who had higher rates have mostly re-financed and the remaining can't with the tougher lender standards.  That leaves lenders looking at the purchase market that has been stagnant as that is tied to consumer confidence levels.

With Europe and Japan having economic issues, rising US dollar - we are facing a possible slow down in the US economy which will most likely bring lower rates but fewer new home and existing home prices.

Editorial: What are we to think of CPFB action against M&T?

M&T Bank signed a consent order and settled with the CPFB, in essence stipulating that they are to refund bank account fees to consumers who had opened accounts advertised as "free accounts".

What got M&T Bank in hot water was not that they did not offer this product.

In essence M&T Bank was spanked for two reasons: 1)  M&T bank failed to tell the consumer that this particular free account required a threshold of transactional history to qualify as a free account. 2) M&T Bank automatically transferred customers accounts to fee accounts if their account did not qualify transactionally for the free one that the consumer initially opened.   3.  And, M&T did not notify their customer that they were going to be moved to the new account automatically.

Regulators have, for a long time, overseen banks advertising.   False or misleading advertising to lure customers has always been a hot button issue.  State and Federal regulations have even gone so far as to stipulate that the font size be of a certain number.

New York, where M&T is headquartered (Buffalo) has since the 1990's (and maybe before) stated clearly that deceptive ads were a very large concern.  This is why NYS was one of the first to push that anyone who advertised "no fees" on, say a mortgage transaction, make sure that they list the APR that shows clearly the fees are being rolled into the loan amount forcing the APR higher when compared to a fee based mortgage transaction, for example.

So, while M&T states this is a new regulation and one that they are compliant today, they are probably on face value stating the truth.

But, at the end of the day, advertising free and then moving clients to fee-based products and not telling them never was viewed by regulators as proper.

That is why advertising for financial products must be transparent and truthful so that consumers are not being nickeled and dime'd that, when taken in the aggregate, brings a large swath of cash to an institution.

So, M&T stating that the CPFB was not in existence and the rules are changing is correct.  And, M&T's statement in essence that they are in compliance probably correct.

But truthful advertising has always been a mainstay of regulators.

And, M&T's actions at the base level were certainly not ethical.

CFPB Takes Action Against M&T Bank for Deceptively Advertising Free Checking

M&T to Refund $2.9 Million to Approximately 59,000 Account Holders Who Paid Fees for Free Checking

WASHINGTON, D.C. – Today the Consumer Financial Protection Bureau (CFPB) took action against M&T Bank for deceptively advertising free checking accounts. The CFPB found that M&T lured in consumers with promises of “no strings attached” free checking, without disclosing key eligibility requirements. When consumers failed to meet the requirements, M&T automatically switched them to checking accounts with fees. M&T will provide $2.9 million in refunds to the approximately 59,000 consumers deceived into paying fees and it will pay a $200,000 penalty for the violations.

“Although M&T promised people free checking, tens of thousands of consumers ended up paying for a product they had thought was free,” said CFPB Director Richard Cordray. “This is an important reminder to all banks and credit unions that they cannot misstate to consumers whether a financial product or service is free. Today we are putting $2.9 million back in the pockets of consumers as a result.”

The M&T consent order can be found at:http://files.consumerfinance.gov/f/201410_cfpb_consent-order_m-t.pdf

M&T Bank, headquartered in Buffalo, N.Y., is a retail bank that offers various deposit account products and has hundreds of branches in the northeastern U.S. During a routine CFPB supervision exam, the CFPB found that M&T was advertising a “Free Checking” account, then converting many consumers into a fee-based “M&T First” account. Banks and credit unions are prohibited from deceptively advertising deposit accounts. If an account is described as free or no cost, it cannot, for example, have any maintenance or activity fees, or any fees to deposit, withdraw, or transfer money.

The CFPB found that M&T:

• Deceptively advertised checking accounts with no strings attached:M&T’s free checking account advertisements included such ads as, “Untangle yourself from monthly service fees. Get a free checking account at M&T. No strings attached.” But M&T did not disclose in such ads that the free checking account customers had to maintain a minimum level of account activity with deposits and withdrawals to maintain the free account. These kinds of ads for free checking ran in various geographic regions through mediums including television, print, and radio. M&T also marketed the free checking accounts to its customers on their account statements and on ATM screens and receipts.

• Automatically converted many free checking accounts into accounts with fees: If there was no account activity for 90 days, M&T automatically converted the “Free Checking” accounts to “M&T First” checking accounts. Consumers with “M&T First” accounts who failed to maintain an average or combined monthly balance of $1,500 were charged fees of $5 to $14 per month.

• Did not adequately alert consumers to the account conversions: The only indication customers received that their “Free Checking” account had been converted to an “M&T First” account due to account inactivity was that “M&T First” would appear on account documents, such as paper statements.

During the period covered in today’s order, M&T converted approximately 80,000 “Free Checking” accounts to “M&T First” accounts. Of those, about 59,000 were charged account fees because they did not meet the $1,500 threshold required in the “M&T First” accounts. M&T assessed approximately $2.9 million in monthly maintenance fees from these consumers.

Enforcement Action

Under the Dodd-Frank Wall Street Reform and Consumer Protection Act, the CFPB has the authority to take action against institutions violating consumer financial laws, including engaging in unfair, deceptive, or abusive acts or practices. Today’s order covers from Jan. 1, 2009 to Sept. 25, 2012, when M&T stopped the conversions. Among the things the CFPB’s order requires of M&T:

• Refund $2.9 million to consumers: M&T must refund each of the approximately 59,000 affected consumers the sum of all monthly maintenance fees they paid under the “M&T First” accounts. If the consumers have a current checking, savings, or money market account with the bank, they will receive a credit to their account. For closed or inactive accounts, M&T will send a check to the affected consumers or reduce charged-off balances by the amount they were charged in fees.

• Update credit reports: In the cases where M&T closed an account due to a negative balance, M&T will provide updated information to each credit reporting agency to which M&T had previously furnished information.

• End all deceptive advertising: M&T cannot misrepresent, or assist in misrepresenting, that a checking account is free when the terms and conditions of the account impose account activity requirements or when the account will convert to an account with monthly maintenance fees if the account activity requirements are not met.

• Pay a $200,000 fine: M&T will make a $200,000 penalty payment to the CFPB’s Civil Penalty Fund.

###http://www.consumerfinance.gov/newsroom/cfpb-takes-action-against-mt-bank-for-deceptively-advertising-free-checking/

M&T Bank ordered to return 2.9 Million dollars to consumers for deceptive Ads; according to Consumer Financial Protection Bureau (CPFB)

M&T Bank ordered to return 2.9 Million dollars to consumers for deceptive Ads; according to Consumer Financial Protection Bureau (CPFB)

The CPFB announced it had signed a Consent Order with M&T Bank, based out of Buffalo, New York; for 2.9 million dollars to be returned to consumers.  The CPFB stated that M&T Bank lured people to open "free" accounts; that were not free.

In essence, the CPFB said that M&T Bank lured people to open accounts without telling the consumers that if they did not use the account to a certain degree (by depositing and withdrawing a certain amount per month) the accounts would be converted to regular accounts.  There was no notice given to the consumers.

Under the regular accounts, the consumers had to maintain a certain balance or were faced with monthly fines.

The CPFB directed M&T Bank to refund 2.9 million dollars to consumers and the CPFB fined M&T Bank $200,000 dollars.

M&T Bank signed the consent order, agreed to the payments and issued a statement stating they complied with the CPFB and that they had adopted to regulatory changes about two-years ago.

Rates drop, re-finances up

Interest rates dropped after the Fed's Minutes were released.  Rates are lower than they were 16-months ago, fueling a rise in mortgage re-finance applications for lenders.

With this comes new activity and false hope that the phones will continue to ring and paychecks will continue to flow through January. 

But what about after January?  With the Feds concerned about a global slow down and an increasingly strong US dollar, we have to wonder if this will affect US consumers and the US economy.  Some forecast that stocks will remain flat in 2015 and others that we may see a mild dip.

If there's any truth to any of this, loan officers need to keep a balancing act between refinance activity and new purchase business.   You do not know where the market will go at this juncture.  Don't think that your realtor referral source won't notice you are not in her or his office asking for business - in fact, they will think you're not there and that you're making money while they are not selling houses. And, that will fuel jealousy and annoyance that you really only want their business and nothing more (which of course is true, but who wants to face that reality when the chips are down?) and they will cut you off.

So, balance your sales approach - - take the re-finance business and give the best service you can so those folks can and will refer you to their friends seeking to re-finance.  In fact, hand them three business cards and ask them to refer three friends.

And, if one of those friends is house shopping, refer them right back to your Realtor who is closing on fewer homes today then he/she was closing just a few months ago.   The referral back will pay in huge dividends going forward

Mortgage Compliance, can you afford not to?

Mortgage Banking Regulatory Compliance - you can't afford not to!

Mortgage Banking has evolved, as life seems to, and change demands change.  There was a time when Mortgage Bankers served a vital link between borrower and access to credit that large banks did not serve and Mortgage Brokers could not provide.

Mortgage Bankers set up a Sales Department to reach out to borrowers, a Risk Management Department to set interest rates and sell the loans to secondary, an Accounting Department to settle out the financial transactions, a Processing and Underwriting Department to process, underwrite and approve the loans, and of course a Closing Department to work with title companies to close and fund the loans.

In 2008, as the sub prime market imploded there was a tremendous shift to mainstream mortgage bankers from sub prime lenders who no longer could access credit on Wall Street.  This intense volume that was also under pressure by borrowers seeking to refinance at lower interest rates, as those begin to tumble downward.

In 2009, main stream mortgage bankers and Banks began to realize that the unsavory types had crept into the mortgage world previously occupied by the professional lenders.  All the Tom, Dick's and Sally's who put a shingle out and were fleecing borrowers with 120% LTV loans, Neg Amort loans and other predatory types of loans - came running to Bankers and Banks because they could not deal with "change" as they found their mortgage brokers closing in response to Wall Street's inability to purchase those previously hot loans that came with great rates for investors.

As a result of that and the economy, which saw unemployment well above 8% and people were losing jobs everywhere, mortgages began to default left and right.   All of a sudden a lender with a .80% 2-year default or a 1.02% default were seeing defaults rise to 3% and higher.  This caused panic in the mainstream lending environment.

No one knew if it was fraud or the economy, but no one cared either way.  They wanted the defaults to stop because big banks who sold loans at a great profit to one another began litigating over whether a loan was improperly underwritten which could then trigger a buy back.  It became an intense case of a hot potato - who had the loan and who was trying to get whom to buy the loan back because it was 30 or 60 days late.

In came the US government.  First they put in rules to license and professionalize those individuals in the mortgage world; to weed out the unsavory individuals who had come from the brokers that were doing subprime loans - and many of whom were thieves working with straw borrowers and stealing money by lying on mortgages unknown to banks, bankers and other parties who were severely hurt financially and who's reputation were negatively hurt by such acts.

Then came the many, many underwriting changes that tightened credit access to borrowers.

And, in the interim, HUD (who had taken control of Fannie and Freddie) and the new Federal oversight - the Consumer Protection Financial Bureau (CPFB) began to enact laws and regulations that dictated lending.  Those laws and regulations impacted everything from mundane disclosures, timing of said disclosures to what constituted "predatory lending" including "high cost loans" and what was a proper loan - i.e. not lending to those who could not afford a loan, also called the "Ability to Repay" loans under the Qualified Mortgage "QM" theory.

 These seem rationale and in fact, they are.  However, to comply with these things required an army.  Lenders were scrambling to A. Figure out the new law.  B.  Figure out how it affected them.  C. Figure out how to implement it. C. Figure out who was responsible in the company to make sure that these things were happening.

All of a sudden, Mortgage Bankers saw that instead of the five (5) departments outlined in the beginning paragraph, they needed a sixth (6th) department.  An Internal Auditing Department also known as a "Compliance Department" that reviews all the forms and systems and audits select files to insure compliance with hundreds of federal, state, agency, investor and internal credit overlay regulations and guidelines.

If this department did not exist a lender faced serious consequences that include:  1.) Buy back of loans from banks who find the loan does not conform to lending requirements and 2).  Serious regulatory retaliation for flouting the rules and regulations of state and federal Regulators.

One buy back, one regulatory fine could and does wipe out profits and could result in a company facing serious financial challenges and stresses.  Just ask Bank of America, JP Morgan and others who have paid billions and now have openly questioned the wisdom of lending FHA loans in a move to defend themselves from government regulators.

This sixth (6th) department is costly, however.  Typically, it needs to be headed by an attorney who can interpret legal regulations so that those can be implemented by management and the Compliance Department that oversees compliance and internal auditing.

Any company putting out a product has someone on board reviewing the quality of the product that is put out to accomplish basically two goals:  1. To get repeat business because the product is of excellent quality.  2. To defend against lawsuits brought against sloppy products or dangerous products that harm a consumer on some level.

This is a new concept to Mortgage Bankers who never had to deal with this before.  They view this as a cost of doing business that can't be passed onto the consumer (pricing doesn't price in this cost as it has remained flat).  But, regulators require that lenders eliminate mistakes in mortgages and that loans are perfected at point of origination.   In addition, there are reports to managers and internal reviews that must be done and must be produced to an outside audit to show the company is actually doing these things and is on the look out to make sure their products conform to the laws.

The bottom line is that these departments are a cost of doing business for a mortgage banker and these departments will bring with them significant costs that Regulators in their "high cost" calculations have pretty much made sure lenders can not "price in" these costs to the consumer to offset them to a net zero effect.

In other words, expect to spend a lot of money in this department.

Looking at the business it is clear that small and mid-size Mortgage Bankers simply can not afford these departments and simply can not afford not to have these departments.  Many are holding out hoping to remain under the radar of regulators while issues about buy backs get sorted out (can a lender force a loan back because, in reality, it just is not performing and they scoured the file to find one, tiny, small mistake and they called out as "we gotcha, you have to buy this bad loan back now or we will sue you".   And, do not think for one minute that banks do not do that to Mortgage Bankers.

This is not going away.  Lenders need these departments.  This requires lender to either bite the bullet and open, fund and get behind this department - or they need to A. Close  B. Merge or C. Sell to another lender.  Period.

According to industry experts, any lender not closing 25 million a MONTH is just not going to be able to afford to comply and in the end - be it in the next few months or the next one to two years, will be forced into A, B or C listed above.

Let's look why lenders under a 20 to 25 monthly million in loans won't make it:

Say you're lender is closing 12 million a month.  And, it has three to four investors.  In this environment, they already are pressured to give more to one lender to get preferred pricing but fear doing that to alienate lenders 2, 3 and 4 who they need in case lender 1 makes a negative business move.  So, that puts their gov pricing at say 300 to 250 basis points and their conforming say at 250 basis points.

Say they are doing 50/50 in business.  So, they are grossing on average 275 basis points.   And their average loan size is around 180,000 dollars, which outside of any growing market in the US is pretty much on target.

They are grossing 330,000.00 a month.  LO's will take $100,000.00 in commissions and costs (base salaries, volume bonus, company FUTA/SUTA/UI costs, benefits, et al)    The remaining 220K now goes to support staff salaries.   If you have 12M a month @ 180K average loan; you're kicking 67 files out a month.  That requires a minimum of 2 underwriters and 2 processors.  That's 25K in salaries, bene's and other employee costs right there.  Now you're left with 195K to pay for the salaries of the people in accounting, closing, pricing/secondary.   That's another 40K a month spread out over those people - which is on the low end.  That 195K is now 155K.

You need to put 10% of your gross in reserves for buy backs - so that 10% of the original 330K.  So, your 195K is now reduced to 160K.

Then there's rent, leases, phones, copiers, and all the other fixed costs which will run the gamut depending on how many offices and if you're in a high rent or low rent district.  Most lenders pay out about 50K a month for these services if doing this amount of loans. 

All of a sudden you're left with 110K and you still have to pay the receptionists, the owners and you have to save for the annual audits and the attorneys.  Financial audits alone will cost over 50K and attorney retainers run around 70K a year.  That's 120K a year - or 10K a month. 

Now you're at 100K left.  If you've invested millions into a business, you expect to make a tad more than the average salaried person as you need to return the investment.  Most owners earn over 180K a month in this area and that reduces the available cash to 85K which seems like a lot - but there are a million things not listed including E&O insurance, general liability, sexual harassment insurance, employee training, previous unpaid costs, and, of course, the costs to appraisers, title companies, Fannie/Freddie, DU/LP, credit reports et al that were not caught or borrowers refused to pay - and do not forget that one mistake on a Good Faith must be paid by the lender. 

That 85K quickly drops to 10K or less.

Which means, there is no cash left to bring on a department at will cost about 120,000.00 USD a years.

So, either you up your volume (and increase your costs) or you close, merge or sell - because you can not afford to ignore compliance and adherence to compliance.  And, at this volume, you can not afford to pay for it.

Which means that in the next few months and years there will be a migration and Mortgage Bankers who are local or regional will begin merging with bigger players leaving large Mortgage Bankers licensed in 30, 40 or all 50 states and Banks and Credit Unions providing access to credit to borrowers.

Just as the days of Mortgage Brokers has come and gone, the days of small and mid sized mortgage bankers are about to end as well faced with the regulatory changes imposed upon bankers as a result of greedy people on wall street selling sub prime loans, greedy loan officers hawking them and con artists who took on roles of loan officers, realtors, attorneys, appraisers and even the average Joe on the street - who stole from lenders; requiring these changes to defend the financial market from a repeat.

Mortgage Banking Regulatory Compliance - you can't afford not to!

Mortgage Banking has evolved, as life seems to, and change demands change.  There was a time when Mortgage Bankers served a vital link between borrower and access to credit that large banks did not serve and Mortgage Brokers could not provide.

Mortgage Bankers set up a Sales Department to reach out to borrowers, a Risk Management Department to set interest rates and sell the loans to secondary, an Accounting Department to settle out the financial transactions, a Processing and Underwriting Department to process, underwrite and approve the loans, and of course a Closing Department to work with title companies to close and fund the loans.

In 2008, as the sub prime market imploded there was a tremendous shift to mainstream mortgage bankers from sub prime lenders who no longer could access credit on Wall Street.  This intense volume that was also under pressure by borrowers seeking to refinance at lower interest rates, as those begin to tumble downward. 

In 2009, main stream mortgage bankers and Banks began to realize that the unsavory types had crept into the mortgage world previously occupied by the professional lenders.  All the Tom, Dick's and Sally's who put a shingle out and were fleecing borrowers with 120% LTV loans, Neg Amort loans and other predatory types of loans - came running to Bankers and Banks because they could not deal with "change" as they found their mortgage brokers closing in response to Wall Street's inability to purchase those previously hot loans that came with great rates for investors.

As a result of that and the economy, which saw unemployment well above 8% and people were losing jobs everywhere, mortgages began to default left and right.   All of a sudden a lender with a .80% 2-year default or a 1.02% default were seeing defaults rise to 3% and higher.  This caused panic in the mainstream lending environment.

No one knew if it was fraud or the economy, but no one cared either way.  They wanted the defaults to stop because big banks who sold loans at a great profit to one another began litigating over whether a loan was improperly underwritten which could then trigger a buy back.  It became an intense case of a hot potato - who had the loan and who was trying to get whom to buy the loan back because it was 30 or 60 days late.

In came the US government.  First they put in rules to license and professionalize those individuals in the mortgage world; to weed out the unsavory individuals who had come from the brokers that were doing subprime loans - and many of whom were thieves working with straw borrowers and stealing money by lying on mortgages unknown to banks, bankers and other parties who were severely hurt financially and who's reputation were negatively hurt by such acts.

Then came the many, many underwriting changes that tightened credit access to borrowers.

And, in the interim, HUD (who had taken control of Fannie and Freddie) and the new Federal oversight - the Consumer Protection Financial Bureau (CPFB) began to enact laws and regulations that dictated lending.  Those laws and regulations impacted everything from mundane disclosures, timing of said disclosures to what constituted "predatory lending" including "high cost loans" and what was a proper loan - i.e. not lending to those who could not afford a loan, also called the "Ability to Repay" loans under the Qualified Mortgage "QM" theory.

 These seem rationale and in fact, they are.  However, to comply with these things required an army.  Lenders were scrambling to A. Figure out the new law.  B.  Figure out how it affected them.  C. Figure out how to implement it. C. Figure out who was responsible in the company to make sure that these things were happening.

All of a sudden, Mortgage Bankers saw that instead of the five (5) departments outlined in the beginning paragraph, they needed a sixth (6th) department.  An Internal Auditing Department also known as a "Compliance Department" that reviews all the forms and systems and audits select files to insure compliance with hundreds of federal, state, agency, investor and internal credit overlay regulations and guidelines.

If this department did not exist a lender faced serious consequences that include:  1.) Buy back of loans from banks who find the loan does not conform to lending requirements and 2).  Serious regulatory retaliation for flouting the rules and regulations of state and federal Regulators.

One buy back, one regulatory fine could and does wipe out profits and could result in a company facing serious financial challenges and stresses.  Just ask Bank of America, JP Morgan and others who have paid billions and now have openly questioned the wisdom of lending FHA loans in a move to defend themselves from government regulators.

This sixth (6th) department is costly, however.  Typically, it needs to be headed by an attorney who can interpret legal regulations so that those can be implemented by management and the Compliance Department that oversees compliance and internal auditing.

Any company putting out a product has someone on board reviewing the quality of the product that is put out to accomplish basically two goals:  1. To get repeat business because the product is of excellent quality.  2. To defend against lawsuits brought against sloppy products or dangerous products that harm a consumer on some level.

This is a new concept to Mortgage Bankers who never had to deal with this before.  They view this as a cost of doing business that can't be passed onto the consumer (pricing doesn't price in this cost as it has remained flat).  But, regulators require that lenders eliminate mistakes in mortgages and that loans are perfected at point of origination.   In addition, there are reports to managers and internal reviews that must be done and must be produced to an outside audit to show the company is actually doing these things and is on the look out to make sure their products conform to the laws.

The bottom line is that these departments are a cost of doing business for a mortgage banker and these departments will bring with them significant costs that Regulators in their "high cost" calculations have pretty much made sure lenders can not "price in" these costs to the consumer to offset them to a net zero effect. 

In other words, expect to spend a lot of money in this department.

Looking at the business it is clear that small and mid-size Mortgage Bankers simply can not afford these departments and simply can not afford not to have these departments.  Many are holding out hoping to remain under the radar of regulators while issues about buy backs get sorted out (can a lender force a loan back because, in reality, it just is not performing and they scoured the file to find one, tiny, small mistake and they called out as "we gotcha, you have to buy this bad loan back now or we will sue you".   And, do not think for one minute that banks do not do that to Mortgage Bankers.

This is not going away.  Lenders need these departments.  This requires lender to either bite the bullet and open, fund and get behind this department - or they need to A. Close  B. Merge or C. Sell to another lender.  Period. 

According to industry experts, any lender not closing 25 million a MONTH is just not going to be able to afford to comply and in the end - be it in the next few months or the next one to two years, will be forced into A, B or C listed above.

Let's look why lenders under a 20 to 25 monthly million in loans won't make it:

Say you're lender is closing 12 million a month.  And, it has three to four investors.  In this environment, they already are pressured to give more to one lender to get preferred pricing but fear doing that to alienate lenders 2, 3 and 4 who they need in case lender 1 makes a negative business move.  So, that puts their gov pricing at say 300 to 250 basis points and their conforming say at 250 basis points.

Say they are doing 50/50 in business.  So, they are grossing on average 275 basis points.   And their average loan size is around 180,000 dollars, which outside of any growing market in the US is pretty much on target.

They are grossing 330,000.00 a month.  LO's will take $100,000.00 in commissions and costs (base salaries, volume bonus, company FUTA/SUTA/UI costs, benefits, et al)    The remaining 220K now goes to support staff salaries.   If you have 12M a month @ 180K average loan; you're kicking 67 files out a month.  That requires a minimum of 2 underwriters and 2 processors.  That's 25K in salaries, bene's and other employee costs right there.  Now you're left with 195K to pay for the salaries of the people in accounting, closing, pricing/secondary.   That's another 40K a month spread out over those people - which is on the low end.  That 195K is now 155K.

You need to put 10% of your gross in reserves for buy backs - so that 10% of the original 330K.  So, your 195K is now reduced to 160K.

Then there's rent, leases, phones, copiers, and all the other fixed costs which will run the gamut depending on how many offices and if you're in a high rent or low rent district.  Most lenders pay out about 50K a month for these services if doing this amount of loans.  

All of a sudden you're left with 110K and you still have to pay the receptionists, the owners and you have to save for the annual audits and the attorneys.  Financial audits alone will cost over 50K and attorney retainers run around 70K a year.  That's 120K a year - or 10K a month.  

Now you're at 100K left.  If you've invested millions into a business, you expect to make a tad more than the average salaried person as you need to return the investment.  Most owners earn over 180K a month in this area and that reduces the available cash to 85K which seems like a lot - but there are a million things not listed including E&O insurance, general liability, sexual harassment insurance, employee training, previous unpaid costs, and, of course, the costs to appraisers, title companies, Fannie/Freddie, DU/LP, credit reports et al that were not caught or borrowers refused to pay - and do not forget that one mistake on a Good Faith must be paid by the lender.  

That 85K quickly drops to 10K or less.

Which means, there is no cash left to bring on a department at will cost about 120,000.00 USD a years.

So, either you up your volume (and increase your costs) or you close, merge or sell - because you can not afford to ignore compliance and adherence to compliance.  And, at this volume, you can not afford to pay for it.

Which means that in the next few months and years there will be a migration and Mortgage Bankers who are local or regional will begin merging with bigger players leaving large Mortgage Bankers licensed in 30, 40 or all 50 states and Banks and Credit Unions providing access to credit to borrowers.

Just as the days of Mortgage Brokers has come and gone, the days of small and mid sized mortgage bankers are about to end as well faced with the regulatory changes imposed upon bankers as a result of greedy people on wall street selling sub prime loans, greedy loan officers hawking them and con artists who took on roles of loan officers, realtors, attorneys, appraisers and even the average Joe on the street - who stole from lenders; requiring these changes to defend the financial market from a repeat.