LenderNews by Rob Chrisman
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May 25: Sales & software & controller jobs; PHH v. CFPB – recording of the arguments, a webinar about yesterday’s action, what’s next?

May 25, 2017

Montana may have its issues with politicians vying for the WWE title belt, but the state does seem to steer clear of cyberattacks. At least, it does in this hypnotic hacking attempt map.
 
Jobs, products, events
 
First Federal Bank of Florida is setting itself apart in the warehouse lending industry with its Construction to Permanent warehouse facility. Clients using this feature of the warehouse line have been successful in partnering with their local builders and real estate agents. In fact, one client began receiving qualified referrals one week after calling on a local builder. First Federal offers the Construction to Permanent warehouse facility nationwide and uses a third-party company to conduct the inspections, draws, as well as the builder and project approvals. This one-time close program and the C/P warehouse sublimit allows clients to set the interest rate for the construction period based on what’s competitive in their market. If you’re interested in learning more about this product, or other traditional warehouse programs or correspondent products, contact Melanie Carrington, SVP/Warehouse Lending (321.243.5628).
 
Lenders One is committed to giving top mortgage bankers the winning edge, which is why we’ve developed a unique program for our members’ Loan Officers on June 22-23 in Chicago. Unlike other LO conferences, this workshop is designed to give you tangible results. Facilitated by one of our highest rated conference speakers, Steve Scanlon, the workshop is designed to build sustainable sales through tips from top 1% originators, development of actionable business plans and breakout sessions focused on increasing production. Past participants have called it ‘an excellent investment of a day and a half’ and ‘…a must to improve your business and life.’ Click here to secure a spot! Interested in learning more? Contact Lauren Ketchum.  Interested in membership with Lenders One? Contact Michael Kuentz.”
 
SimpleNexus, the leading provider of white-labeled mobile apps that connect Lenders with their borrowers and Realtors, is looking for dedicated software account managers and sales executives to nurture existing relationships and create new ones. Ideal candidates will have strong mortgage and consultative software sales experience and enjoy working in a fast-paced, agile environment. Find out more at www.simplenexus.com or e-mail Joe Wilson.
 
There is more growth to report at SocialSurvey with Paul Cassidy being added earlier this year to the Sales Team. With over 20 years’ experience in origination and the secondary markets, Paul brings a unique perspective to the team.  Prior to joining SocialSurvey, Paul held key positions at Bank of the West and Bank of America. Paul has already closed 3 deals in his first 90 days and has several more in the pipeline while covering Northern CA, Oregon, Washington, Alaska, Idaho, Montana, and Wyoming. Let Paul know if you are interested in a demo. SocialSurvey provides a platform for their clients to collect customer feedback, share it on social media, boost SEO, retention, recruiting, and social proof. SocialSurvey is offering salary, commission and equity as they seek to fill openings in Southern California, the Midwest and Plains regions. Send confidential resume and contact info to Ayesha Faiz.
 
“There is an exciting opportunity to join Utah’s fastest growing mortgage banker, Citywide Home Loans. We are seeking a full-time Branch Controller to join our dynamic accounting team at our corporate headquarters in Salt Lake City, Utah. This newly created position will serve as the financial partner to our 50 plus branches to include financial reporting and analysis to help our branch managers maximize their business potential. Mortgage banking and loan level accounting experience a must, as well as a proven ability to collaborate with peers and executive level management on financial matters. Hands on experience in AMB a huge plus. Citywide has the advantages and infrastructure of a large mortgage banker while maintaining the heart of a small, independent company. Come and join our Citywide family! Contact Fawn Bird for further information and to submit your resume.
 
PHH & CFPB drama continues
 
Yesterday the Court of Appeals rehearing of the CFPB/PHH case took place to determine the constitutionality of CFPB’s leadership structure. Remember that in October (time flies) the initial decision by the court determined the CFPB was, in fact, unconstitutional. Yesterday’s hearing was an “en banc” review, previously agreed upon in February.
 
Attorney Brian Levy with Katten & Temple, LLP, contributed, “I just finished listening to the entire 90+ minute oral argument in the PHH Case before the entire DC Circuit sitting en banc. Please allow me save you and your readers some time and give you a brief synopsis. 
 
“While the case is extremely interesting to Constitutional and Administrative law geeks like me, mortgage people mostly just care about the RESPA issues (I’m a bigger RESPA geek). I would estimate that roughly 95% of the back and forth discussion between the lawyers and the judges was about those Constitutional issues. In fact, RESPA was not even mentioned until over an hour into it and then it was mostly a rather sheepish attempt by the CFPB lawyer to support Director Cordray’s ridiculous statute of limitations position. When questioned by one judge as to how industry participants might have received ‘notice’ of the policy shift (from how HUD interpreted RESPA’s 8 (c)(2) provisions), the CFPB lawyer nonsensically said it was in the statute itself.
 
“That’s it folks, the court then got back to the Constitutional issues until PHH’s attorney, Ted Olsen, wrapped up with a plea to remember the importance of deciding the RESPA issues for the industry, highlighting how the CFPB’s RESPA interpretations reflect the result of an unaccountable agency. In fact, if a mortgage professional wanted to listen any of the hearing, I would recommend just listening to the last 3 or 4 minutes of Mr. Olsen’s summation. 
 
Based on what I heard, the Constitutional issues are a toss-up and many of the judges seemed to be campaigning for a Supreme Court resolution (so it is likely to end up there). Sorry if you were expecting any quick resolutions, but RESPA may just have to take a back seat until the broader issues can be teed up for the next round.
 
Benjamin K. Olson, partner with Buckley Sandler LLP, noted, "Based on the questions, some of the judges seem to be concerned that only the Supreme Court can declare the CFPB unconstitutional in this case because prior Supreme Court decisions allowed similar limitations on the President’s removal authority. In contrast, the questions did not indicate much interest in reconsidering the conclusion that the CFPB misapplied RESPA when bringing claims against PHH. It is, however, always dangerous to speculate based on the questions asked during oral argument because appellate judges ask questions for all sorts of reasons. We will not know what they really think until we have a written decision, which is likely to be months from now.”
 
The court banter prompted one industry vet to observe, “I do find it odd that a US Appeals Court would consider pushing off a question of constitutionality to the SCOTUS as disconcerting. I would think that all Federal Courts rise to the level to determine constitutionality of a federal law, that’s why this went to the full court for review.
 
Consumer and civil rights groups chimed in on the hearing. “The hearing reaffirmed the need to keep the CFPB leadership structure intact. Since its establishment, the CFPB has proven to be highly effective in responding to unlawful, abusive practices within the financial services industry. Its ability to make consumer protection a top priority is due to its leadership structure by a single director who is insulated from undue special interests. If the 2008 financial crisis showed us anything, it’s that people need an independent regulator to look after consumers and keep industry accountable. CFPB Director Richard Cordray has led the Bureau with a steady hand and worked tirelessly with his staff to return billions of dollars back to hardworking people across the country harmed by abusive financial practices. The Center for Responsible Lending will continue to support the CFPB as the agency fights to maintain its independent structure so it can carry out its mission,” said Mike Calhoun, president of the Center for Responsible Lending.
 
“Consumers rely on a CFPB run by a strong, independent and accountable director, like Richard Cordray,” said Linda Sherry, Consumer Action’s Director of National Priorities. “As the only federal financial regulator with sole responsibility for consumer protection, consumers cannot afford to lose it to a watered-down, weak regulator overly influenced by industry-controlled advisers. Consumer Action supports a firm and fair CFPB as it is currently structured.”
 
Lastly, Isaac Boltansky with Compass Point LLC clocked in with, “The tone and tenor of these oral arguments were not nearly as conclusive as the April 2016 appeals court hearing where the three-judge panel showed a clear deference to PHH’s argument. Instead, the questions from the en banc panel were generally more balanced. Furthermore, the repeated references to hypotheticals and historiography gave us the distinct impression that the D.C. Circuit felt the Supreme Court needed to consider the constitutional questions. Our sense following this hearing is that the odds are slightly in the CFPB’s favor on the constitutionality questions given both the court composition and the case law.
 
“The hearing focused almost entirely on the CFPB constitutional issues, and we assign a very low probability to PHH having to pay the CFPB’s increased $109M fine. While it was fascinating to hear how different hearing participants play hypothetical chess, there was almost no discussion of the PHH-related RESPA issues, aside from a few statute of limitations questions. Given that the focus has shifted completely away from the initial RESPA issues that catalyzed the case, we continue to think PHH’s ultimate liability on those RESPA issues will be the original ~$5M or less.
 
“We expect a decision from the D.C. Circuit in late 4Q17 or 1Q18. The next step at that point will be determined by the court’s decision. If the court rules in favor of the CFPB on the constitutional questions, PHH will likely appeal to the SCOTUS and our view is that the odds favor certiorari being granted. If this case does make it to the Supreme Court, it will likely take until 2019 for a final decision. But if the court rules in favor of PHH on the constitutional questions, the CFPB would be out of options as it is unable to appeal the SCOTUS under its own authority and would instead need approval from the Attorney General, which would surely be rejected. If this scenario unfolds while Director Cordray is still in his post, he will likely be dismissed by President Trump. Our sense is that the court could rule in favor of the CFPB on the constitutionality questions while upholding the previous decision to vacate the CFPB’s penalty. If this scenario unfolds, some may question the utility of PHH appealing to the Supreme Court.
 
The MBA is hosting a complimentary webinar on PHH vs. CFPB oral arguments today, May 25th, from 2-3PM ET. “The case deals with whether CFPB incorrectly interpreted the Real Estate Settlement Procedures Act. This webinar will provide attendees with comprehensive analysis of the opinion and discuss the likely next steps in the case. To register for the webinar, please click here.”
 
Capital markets – cuz that’s where the capital is
 
The bond markets moved yesterday afternoon after the release of the minutes from the FOMC’s May 2-3 policy meeting. The minutes showed that nearly all the FOMC participants agreed that the Fed should not necessarily halt all reinvestments of the Fed’s balance sheet when it begins to roll off its portfolio, likely later in 2017. Put another way, the tapering of reinvestments, while starting this year, would be gradual and capped, starting at low levels. The news boosted Treasuries from the 5- to 30-year maturities. Throw in a decent 5-year note auction and bonds responded with a small rally although the probability of a June rate hike is still hovering around 80%. The price of anything lenders and borrowers care about improved about .125 – the 10-year’s closing yield was 2.27%.
 
Frankly the Fed has done a good job telegraphing its moves. The minutes discussed the staff’s briefing which stressed the need for a "gradual and predictable" approach which would use a stepped approach and only involve run off (i.e., no sales). First the monthly cap would be announced indicating how much the Fed would allow to run off each month for both treasuries and MBS with any excess proceeds above the cap being reinvested. The cap would be raised every three months over a set period until "their fully phased-in levels" are reached. Most FOMC members pointed towards 2017 being appropriate for shrinking the Fed’s balance sheet with the caveat that the economy stays on track.
 
The bond market seems to have its eyes on the holiday weekend – it is quiet out there. This morning’s Initial Jobless Claims clocked in at 234k, +1k – strong. The advanced reading on the goods trade balance showed a slight widening. Later today is a $28 billion 7-year note auction. In the early going the 10-year is yielding 2.25% and agency MBS prices are unchanged versus last night.
 
 
For today’s humor, Pete M. sent this quick story about a 911 call from someone working from home.
 
 
Visit www.robchrisman.com for more information on our industry partners, access archived commentaries, or to subscribe to the Daily Mortgage News and Commentary. If you’re interested, visit my periodic blog at the STRATMOR Group web site. The current blog is, “Does Everyone Want a Job?” If you have both the time and inclination, make a comment on what I have written, or on other comments so that folks can learn what’s going on out there from the other readers.
Rob
 
(Market data provided in partnership with MBS Live. For free job postings and to view candidate resumes visit LenderNews. Currently there are over 300 mortgage professionals looking for operations, secondary and management roles. For up-to-date mortgage news visit Mortgage News Daily. For archived commentaries, or to subscribe, go to www.robchrisman.com. Copyright 2017 Chrisman LLC. All rights reserved. Occasional paid job listings do appear. This report or any portion hereof may not be reprinted, sold or redistributed without the written consent of Rob Chrisman.)