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Breaking News: CFPB Announces 'Good Faith' Grace Period For TRID Rule Compliance

by The Cope Real Estate Team

~The Consumer Financial Protection Bureau (CFPB) announced on Wednesday morning that a grace period will be in effect for those servicers attempting to comply in good faith with the TILA-RESPA Integrated Disclosure (TRID) requirements that are scheduled to go into effect August 1.
Both mortgage industry stakeholders (servicers in particular) and lawmakers have been asking the CFPB to delay the implementation of TRID. In a letter to CFPB Director Richard Cordray dated May 20, a bipartisan coalition in Congress asked for a grace period, expressing concerns that "this complicated and extensive rule is likely to cause challenges during implementation" that could "negatively impact consumers."

While the CFPB did not push back the August 1 implementation date of the rule, it attempted to ease some of those concerns on Wednesday by saying it would take into account a company's good faith effort to comply with the rule after it goes into effect.


"We also delivered a letter to Members of Congress stating that our oversight of the implementation of the Know Before You Owe mortgage rule (also known as the TILA-RESPA Integrated Disclosure rule) will be sensitive to the progress made by those entities that have been squarely focused on making good-faith efforts to come into compliance with the rule on time," the CFPB wrote on its blog on Wednesday. "We have spoken with our fellow regulators to clarify this approach. This is consistent with our approach in the implementation of the Title XIV mortgage rules."


Cordray responded to the lawmakers' letter on June 3, stating the Bureau's desire for a smooth transition and that since the rule was published in November 2013, the CFPB has made it a point to "engage directly and intensively with financial institutions and vendors through a formal regulatory implementation project." That project includes inter-agency coordination, the publishing of a "readiness guide" and other resources, publishing amendments and updates to the rule in response to industry requests, providing unofficial staff guidance, conducting webinars, and clarifying misunderstandings.


The CFPB Director also pointed out in his response that the Bureau will continue to work with industry, consumer, and other stakeholders to support implementation of TRID after August 1. Click here to see the full text of Cordray's letter.


Some mortgage industry leaders praised Cordray's response to the concerns expressed by lawmakers and those within the industry.


"I thank CFPB Director Cordray for listening to the requests of CUNA, Congress, and others in our call for a safe harbor period through the end of the year for the enforcement of the TRID rule," said Jim Nussle, president and CEO of the Credit Union National Association (CUNA), released the following statement. "CUNA supports the CFPB’s goal for transparency with the new disclosures helping consumers better understand mortgage terms, and now credit unions will be allowed the time they need to figure out the day-to-day aspects of complying with the rule without worrying about enforcement."


National Association of Federal Credit Unions president and CEO Dan Berger, who along with his staff lobbied Congress and met with Cordray several times to discuss the impact of the TRID rule and their concerns about compliance,  released the following statement: “We appreciate Director Cordray’s consideration and leadership in recognizing the value of ‘good faith efforts’ by credit unions on this complex new rule. We also appreciate the bipartisan support of all the members of Congress who wrote Director Cordray and met with him to urge a restrained examination period. A grace period will not only ensure a smoother implementation of the new TILA/RESPA mortgage disclosure forms, but it will also allow those who make a good faith effort to comply with the regulation to do so without the fear of potential regulatory enforcement actions.”


There were some lawmakers in Congress that were not satisfied, however. Representatives Randy Neugebauer (R-Texas) and Blaine Lutkemeyer (R-Missouri), respectively the Chairman of the Housing and Insurance Subcommittee and Chairman of the Financial Institutions and Consumer Credit Subcommittee, released a statement saying that while they appreciated Cordray's taking a "first step" in showing "regulatory sensitivity" toward those showing good faith efforts to comply with the TRID rule, they believe that anything short of a formalized "hold harmless" period is "unacceptable."


"Today’s announcement falls far short of our expectations and runs contrary to the impression with which Members were left yesterday," Neugebauer and Lutkemeyer said in a joint announcement. "We hope the Bureau and all banking regulators will stand by their commitment to work with consumers and market participants to ensure a seamless implementation of the rules. The Bureau should expect vigorous oversight and attention from members of Congress in how its supervision efforts play out after August 1st’s effective date. To that end, we will be sending letters to all major financial trade associations asking that they keep Congress informed of any and all disciplinary actions taken by the CFPB and other financial regulators on TRID implementation."


Representative Steve Pearce (R-New Mexico) released the following statement: “Since the finalization of the rule, businesses have been working to meet the August 1, 2015 deadline. Despite a concerted effort to meet the demands of the August implementation date, a billion dollars spent by industry to train staff, procure needed new technology and hire additional employees, will not be enough to meet CFPB’s unobtainable requirements. If not changed, the uncertainty would cause fewer homes to be sold during the peak sales season – the end of summer before school starts. Today’s lackluster response from Director Cordray, despite national calls, and repeated bipartisan letters from Congress urging a defined hold harmless period, clearly shows the agency’s disconnect from the American people and the state of our economy. The nondescript and weak announcement from CFPB creates even greater uncertainty in the housing market, at the worst possible time of the year."

The number of single-family homes built-for-rent experienced a 50 percent year-over-year decline in Q1 2015, from 4,000 starts in the same quarter a year earlier down to 2,000 starts, according to data released recently by the National Association of Home Builders (NAHB). The Q1 market share for single-family build-for-rent homes stood at 3.5 percent of all single-family starts during the quarter, which is higher than the historical norm (2.8 percent) but lower than the peak of 5.8 percent in early 2013. The market share is measured on a one-year moving average using NAHB analysis and the Census Bureau’s Quarterly Starts and Completions by Purpose and Design. Since estimates for the market are small, there are rarely any significant statistical changes from one quarter to the next. The market share for built-for-rent homes increased following the financial crisis of 2008, despite a share higher than the historical average in Q1, the total numbers overall are low. This particular measure includes only single-family homes that are built and rented out; it does not include homes that are sold to another party to rent. "Despite the elevated market concentration, the total number of single-family starts built-for-rent remains fairly low – only 23,000 homes started during the last four quarters," said Robert Dietz, economist for the NAHB, on the Eye on Housing blog. "It appears the market is returning to historical averages after recent peaks." Dietz said according to a 2011 American Consumer Survey, the single-family home share of rental housing stock was 29 percent, considerably larger than the built-for-rent share of single-family homes – because single-family homes often transition to rental housing stock as they get older.

Homeowner VS Renter

by The Cope Real Estate Team

Did you know a Homeowner's Net Worth is over 30X Greater Than Renters? Stop renting and give us a call today! 661-871-2673(COPE)

Yup, Pretty Much What We Expected: Pending Home Sales up 11% in March

by The Cope Real Estate Team
There were more houses under contract in March than in any other month since June 2013, according to the National Association of Realtors®. The Pending Home Sales Index shows an 11% increase in home buyer activity from March 2014 to March 2015. The index tracks contracts signed that are waiting to close, so it’s a good indicator of future existing-home sales numbers. A property is marked as “pending” only after all contingencies have been met. For March, pending sales inched up only about 1% from February. However, this is the third straight monthly increase, which leads experts to believe the housing market could be in for a banner year—if only there is enough inventory to satisfy demand. “Demand in many markets is far exceeding supply, and properties in March sold at a faster rate than any month since last summer,” said Lawrence Yun, chief economist at NAR. “This in turn has pushed home prices to unhealthy levels—nearly four or more times above the pace of wage growth in some parts of the country. Simply put, housing inventory for new and existing homes needs to improve measurably to improve affordability.” Of course, some parts of the country performed better than others. Pending sales dropped in the Northeast for the fourth straight month. In the Midwest, the index declined by nearly 3%, but market activity is still more than 11% above where it was in March 2014. No surprise, the strongest markets are posting the highest pending home sales activity. In the South, pending sales increased 4%, bringing the index to 126.5, which is more than 12% above March 2014. In the West, pending sales rose just under 2%, bringing the index to 103.7 and giving March 2015 a nearly 16% increase over March 2014, according to the report. The good news: Housing demand seems to be driven by job growth and traditional home buyers rather than investors. According to the March Realtors Confidence Index, about 15% of first-quarter 2015 home sales were made to investors, down from 19% in the first quarter of 2014.

Foreclosure Starts Leveling Off After Spiking to Start 2015

by The Cope Real Estate Team

[1]Foreclosure starts dropped off by 15 percent according to Black Knight Financial Services [2]' February 2015 Mortgage Monitor [3] released earlier this week, almost reversing the spike they experienced in January – indicating that foreclosure starts may be leveling off and even nearing pre-recession numbers.

Black Knight reported the largest total of foreclosure starts for one month in January since December 2013, a number that was likely due to "seasonality," according to Black Knight's SVP of Loan Data Products, Trey Barnes, who noted that foreclosure starts have spiked in three of the last four Januarys and cautioned that one month's data does not make a trend.

While more than 94,000 foreclosure starts were reported for January, that number sank to slightly less than 80,000 for February, a drop of more than 15 percent and the third lowest monthly total for foreclosure starts since August 2006 – before the housing crisis.

Part of the reason for the repeated January spike in foreclosure starts could be reluctance on the part of mortgagees to enforce foreclosure during the holiday season. For example, both Fannie Mae and Freddie Mac announced right before Christmas that there would be a two-week moratorium on carrying out single-family foreclosure evictions, from December 17 to January 2.

"As in previous years, we believe it is important to extend the timeline of help for struggling borrowers during the holidays," said Joy Cianci, SVP of Credit Portfolio Management for Fannie Mae.

Also according to Black Knight's February Mortgage Monitor, a couple of other noteworthy statistics dipped to near pre-recession levels. Foreclosure inventory, is the total number of residential properties in any state of foreclosure, fell to below 800,000 nationwide for the first time since December 2007. The delinquency rate – the percentage of mortgages 30 days or more past due but not in foreclosure – fell to 5.36 percent in February (about 2.7 million properties), its lowest level since August 2007, according to Black Knight.

Those are not the only foreclosure statistics that seem to be leveling off, however – in the January 2015 National Foreclosure Report [4] by CoreLogic [5],  foreclosure completions – the true indicator of homes lost to foreclosure – declined by 33 percent year-over-year nationwide from 822,000 down to 549,000. CoreLogic is scheduled to release its February foreclosure report on April 14.

Two similar pieces of legislation introduced last month in the House and Senate that would extend tax relief to homeowners who are underwater on their mortgage loans have been referred to committees and are waiting to be heard. Congressman Tom Reed (R-New York) introduced the Mortgage Forgiveness Tax Relief Act of 2015 (H.R. 1002) on February 13, and that bill is now being heard in the House Committee on Ways and Means. Two weeks later, Senators Debbie Stabenow (D-Michigan) and Dean Heller (R-Nevada) introduced a similar bill (S. 608 ), which is currently in the Senate Banking Committee. Both bills would extend relief to homeowners on forgiven mortgage debt – the remaining mortgage balance when a borrower sells a home in a short sale to avoid foreclosure. The bills would allow homeowners to exclude the forgiven debt from federal income tax forms and not report it as earned income. Without such legislation, distressed and underwater homeowners would be required to report the amount of mortgage debt forgiven in a short sale as taxable income. "It is bad enough that so many families in Michigan are faced with mortgages that now exceed the value of their home," Stabenow said. "But to add insult to injury, without this bipartisan legislation, families willing to work with their lenders will have to pay hundreds or thousands of dollars in additional income tax when they sell or refinance their home. That's just wrong." This is not the first time Stabenow and Heller have introduced legislation to help distressed homeowners. In June 2013, the two Senators introduced a similar bipartisan bill to give distressed homeowners tax relief on forgiven mortgage debt. Just before Christmas last year, President Obama signed into law H.B. 5771, which retroactively extended 55 tax provisions – including one for distressed homeowners similar to the one that the bills recently introduced by Reed, Stabenow, and Heller. One of those 55 provisions was an extension of the Mortgage Forgiveness Debt Relief Act of 2007, originally signed into law by President George W. Bush, which relieved distressed homeowners from having to pay taxes on forgiven mortgage debt for the three calendar years of 2007 through 2009. That tax exemption was extended three more years until the end of 2012 with the Emergency Economic Stabilization Act of 2008, and it was extended until the end of 2013 with the American Taxpayer Relief Act of 2012. H.B. 5771 retroactively extended the tax break on forgiven mortgage debt until the end of 2014. The current legislation that has been introduced would extend tax relief to underwater homeowners through the end of 2016. According to a press release on Heller's website, nearly 17 percent of American homeowners (approximately one out of every six) are underwater on their mortgage loans, which means they owe more than their house is worth. The goal of the bill introduced by Reed is the same as that of the bill introduced by Stabenow and Heller, to "amend the Internal Revenue Code of 1986 to extend for two years the exclusion from gross income of discharges of qualified principal residence indebtedness." "Unless Congress acts, those who are underwater in their homes and have received financial relief for their mortgage could be forced to pay a tax on income they never received. This makes no sense, and the legislation Senator Stabenow and I introduced ensures it won't happen," Heller said. "As a member of the Senate Finance Committee I look forward to finding a vehicle to pass this important legislation." At least one state is attempting to adopt similar legislation for distressed homeowners on state income taxes. Earlier this week, a committee in the North Carolina House of Representatives approved an amendment to bill that would permit

10 Terms First-Time Homebuyers Should Know

by The Cope Real Estate Team

In about a month or so, it won't just be spring. It'll be home selling and buying season, and you'll start seeing the "For Sale" signs posted in yards as well as online advertisements beckoning prospective homebuyers.

But before you allow yourself to be beckoned, it would behoove you to familiarize yourself with the following 10 terms -- especially if this is your first time making one of the biggest purchases of your life.

1. Fixed-rate mortgage. This means the interest rate you pay on your home loan won't change. Over the years, your mortgage payment will likely change some -- property taxes will likely rise, your homeowners insurance might climb or fall, or you might shed your PMI (a term we'll come back to). But generally, if you have a fixed-rate mortgage, your monthly mortgage payment won't change much over the years.

2. Adjustable-rate mortgage. Also known as an ARM, this is essentially the opposite of a fixed-rate mortgage. You'll have a fixed rate for several years, maybe five or 10, and then the interest rate adjusts according to the fully indexed interest rate, often the prime rate, which is what banks charge their most creditworthy customers. So while your interest rate and payments will likely be lower in the beginning than those of the homeowner with the fixed-rate mortgage, hope that interest rates remain low throughout the life of your loan. As interest rates climb, so too will your own interest rate and monthly payments.

3. Prequalified. This can be a confusing term, mostly because homebuyers tend to mix it up with preapproved, says Rick Hogle, chief strategic officer at Supreme Lending, a mortgage company in Dallas.

If your lender tells you that you're prequalified for a house, that's a good start -- but you're still a long way from being a homeowner. "Prequalification requires less documentation," Hogle says. "It provides a general idea of the loan amount in which a homebuyer might qualify." This way, you can start looking a home and have a sense of what type of house you can afford.

Preapprovals are a much bigger deal, Hogle says. These require the submission of many more documents, such as pay stubs, bank statements and tax returns.

Preapprovals are really for homeowners who are ready to commit to buying a house. If you're preapproved, you've basically been told that the bank will lend you money for a house, provided you don't blow things in the meantime, while you're house hunting, like missing a bunch of payments or racking up credit card debt before you're actually approved.

4. Conventional loans. These are the typical loans that many people, but not all, apply for when they want a mortgage.

"Those with low credit scores usually won't qualify for conventional loans," says Passard Dean, associate professor of accounting at Saint Leo University in Saint Leo, Florida. "In the past, you were also required to put a down payment of at least 5 percent. However, with the new guidelines from Fannie Mae and Freddie Mac, you can now put a down payment as low as 3 percent. These loans generally require a credit score of above 650.

5. Federal Housing Administration loan . Have poor credit? You'll probably get one of these, also known as FHA loans.

"These are excellent for first-time homebuyers with subprime credit scores," Dean says. "In addition to more relaxed credit scores and lower upfront costs, the down payment can be as low as 3 percent."

6. Appraisal. This is an estimate that determines what your property is worth. Banks need homes to be appraised, in part, so they don't lend you, say, $300,000 for a house that's only worth $175,000. After all, if you can't pay the loan, the bank will send you packing and will sell the home. But most people won't buy a $175,000 home for $300,000, and knowing that, the bank doesn't want to lend you more than your house is worth.

7. Private mortgage insurance. This is a monthly insurance payment you'll have to pay if the down payment on your house is less than 20 percent of the appraised value or sale price. If you don't want to pay the PMI fee -- which often ranges from .03 to 1.15 percent of the original loan, divided into 12 monthly payments -- you'll have to fork over a bigger down payment or buy a cheaper house. Usually, PMI insurance isn't something you pay forever (it just seems like it, if you have a small down payment.) Typically, after your payments reach 20 percent of the value of your home, you stop paying PMI.

8. Closing costs. These are fees related to buying a house that your lender charges you, or you rack up from various third parties, such as a home inspector. According to the online real estate database Zillow.com, expect your closing costs to be 2 to 5 percent of the purchase price of your home. That may sound like a lot, but there are many costs involved in closing the deal, from buying title insurance to paying for points and attorney and surveyor fees.

9. Points. One point is a charge equal to 1 percent of the loan amount. So if you're buying a $200,000 house, and a lender is charging you 2 points, that's $4,000. Three points, $6,000. And why do you care? Because points are prepaid interest. The more points you pay, the lower your interest rate will be. If you're planning to live in your house a few years, you could make a good argument for not paying points, but if you believe you'll go the distance with a 30-year mortgage, it generally makes financial sense to pay as many points as you can afford to snag that lower interest rate, which, in the long run, should save you money. Ask your lender to do the math.

10. Escrow. When you hear your real estate agent throw this word around, you'll know you're probably near the end of the homebuying process. The word can be used in a few different ways, but when you think escrow, think of a third, neutral party. For instance, you may have looked at a house, loved it, made an offer and offered a deposit -- which would then be put in escrow.

That is, it'll be put in a third-party account, probably set up by your real estate agent. This way you aren't giving the homeowner your deposit, also sometimes called earnest money. Usually you can't recoup these deposits if you back out of the contract, but if the seller decides to sell the home to somebody else, you most certainly would get your deposit back. The escrow account keeps your deposit safe so the homeowners don't inadvertently spend your money and put you through the hassle of having to get them to repay you.

You might also hear your lender talking about an escrow account where your property taxes and homeowners insurance go until they're paid.

Of course, you can buy a house without truly understanding real estate and lender speak. Those professionals will walk you through everything, and you can likely nod your way through it all. But that doesn't mean you should. After all, some would argue that's how many homeowners got themselves in trouble before the 2007 recession, making decisions they shouldn't have, and buying homes they didn't realize they really couldn't afford.

Report: Investors Move Toward Potential Ocwen Lawsuit

by The Cope Real Estate Team

A group of mortgage bond investors has sentOcwen Financial Corp. a notice of non-performance in what could be the precursor toward a future lawsuit, according to a media report.

Citing an unnamed source, Reuters reported Friday afternoon that a number of major investors, including BlackRock, MetLife, and Pimco, filed a formal notice to Ocwen accusing the servicer of failing to properly collect payments on $82 billion of home loans.

In a public release, law firm Gibbs & Bruns LLP said a "lengthy investigation and analysis by independent, highly qualified experts" turned up multiple instances of Ocwen's failure to perform, including use of trust funds to pay borrower relief obligations through modifications on trust-owned mortgages; conflicts of interest with affiliate companies; failure to maintain adequate records and communications with borrowers; and "[e]ngaging in imprudent and wholly improper loan modification, advancing, and advance recovery practices;" among others.

As a result, the group says the trusts took losses of more than $1 billion.

A voicemail left with a spokesperson for Ocwen was not immediately returned.

The investors' dissatisfaction comes as more bad news to Ocwen, one of the biggest mortgage servicers in the United States.

After closing the book on nearly a year of operational probes with a $150 million settlement, the Atlanta-based firm took another hit earlier this month, when the California Department of Business Oversight (DBO) said it was seeking to suspend the company's mortgage license in the state. DBO spokesperson Tom Dresslar said the state sought the suspension after Ocwen failed to provide adequate proof of compliance with California's Homeowner Bill of Rights.

Shortly after Friday's news broke, the department released a statement announcing a $2.5 million settlement with the company.

Under the terms of that agreement, Ocwen is also barred from taking on any new customers in the state until the regulator determines that it "can fully respond in a timely manner to future requests for information."

The company also agreed to pay for an independent, third-party auditor to be selected by the DBO. That auditor will review Ocwen's loan file information and submit a report on its compliance with state and federal regulations.

"The Department is committed to supporting a fair and secure financial services marketplace for all California consumers," DBO Commissioner Jan Lynn Owen said. "This settlement allows us to move forward and ensure that Ocwen is meeting its obligations under the law."

Report: Housing Market Will Gain Momentum In Next Year

by The Cope Real Estate Team

   The housing market will continue its gradual recovery and gain momentum in 2015 after a disappointing 2014, according to the Wells Fargo Economics Group 2015 Economic Outlook entitled "A Whole New Ballgame," released earlier this week.

Wells Fargo cited a number of reasons in the report for its optimistic housing market predictions for next year, namely easing of credit, job and income growth, and mortgage rates near their lowest levels in a generation. The economists predict existing home sales, which dropped by 3.8 percent for the first 10 months of 2014, will grow by 4.1 percent in 2015.

Single-family starts, which grew by just 6 percent (655,000 units) in 2014 due to a weak job market, slow household formation, tight lending standards, and a backlog of troubled mortgages going through the foreclosure process, are expected to make a comeback in 2015, according to Wells Fargo. Economists expect the percentage of single-family starts to more than double next year, up to 13.7 percent.

Two major factors in the turnaround in homeownership have been the rise in foreclosures and with the earlier decline in home prices, according to Wells Fargo. The homeownership rate, which peaked 10 years ago, has fallen 4.8 percentage points down to 64.4 percent, the lowest rate for homeownership in 19 years.

"We would expect this series to overcorrect because of tight mortgage credit, changing attitudes towards homeownership and household finances continue to be repaired," the report said.

Foreclosures peaked about four years ago, resulting in large numbers of investors purchasing many homes at low prices in major metropolitan areas. The foreclosure crisis is mostly over, having decreased significantly in the last three years since their peak, but the numbers are still above long-run norms, according to Wells Fargo. Foreclosure numbers remain high particularly in judicial foreclosure states, such as Florida, New Jersey, Maryland, and Illinois, where the foreclosure process must pass through the courts. 

Mortgage Delinquency Rate Tumbles to Seven-Year Low in October

by The Cope Real Estate Team

The nationwide mortgage delinquency rate in October fell to its lowest level in seven years, according to Black Knight Financial Services' "First Look" at October 2014 Mortgage Data released on Friday.

October's delinquency rate, or the rate of loans that are more than 30 days past due but not in foreclosure, was reported at 5.44 percent, its lowest level since November 2007, according to Black Knight. The delinquency rate in October was a 4.1 percent decrease from September and a 13.4 percent decline from October 2013.

Both foreclosure pre-sale inventory (the number of residential homes in some state of the foreclosure process) and foreclosure starts took big year-over-year tumbles in October, according to Black Knight. Foreclosure pre-sale inventory totaled 1.7 percent in October, a decline of 33.5 percent from the same month a year ago (and a drop of 3.9 percent from September).  Black Knight reported that foreclosure inventory hit its lowest level since February 2008. Foreclosure starts in the U.S. totaled 81,400 for October, a decline of 31.5 percent from October 2013 and a drop of 10.6 percent month-over-month.

The number of non-current loans, which are those that are more than 30 days past due or in foreclosure, also plummeted both month-over-month and year-over-year, according to Black Knight. The number of non-current loans in the U.S. totaled 3.61 million for October, down 154,000 from September and down 810,000 from October a year ago.

October's pre-payment rate, typically an indicator of refinance activity, increased month-over-month for the first time since July up to 0.98 percent, an increase of 3.6 percent from September and 3.9 percent from October 2013, Black Knight reported. 

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The Cope Real Estate Team
Keller Williams Realty
5601 Truxtun Ave #150
Bakersfield CA 93309
661-871-COPE(2673)
Fax: 661-670-5210

Jared Cope DRE# 01506193 | The Cope Real Estate Team