From the Editor
BY IVANNA C. SUKKAR, EDITOR
Inthe Past Month
NEWS FROM THE INDUSTRY AND ABROAD
IN TWO MONTHS, THE WAY THAT RESIDENTIAL MORTGAGE ORIGINATORS ARE PAID
IS SET TO CHANGE. ALTHOUGH THIS WILL AFFECT ALL MORTGAGE ORIGINATORS, THE
BROKER CHANNEL IN PARTICULAR APPEARS TO BE FACING THE BIGGEST CHANGE.
Some interpretations would have you believe it’s the end of the broker channel, while others
say wholesale lenders will adapt their broker-compensation structures and that brokers will
move on, as they have with past challenges.
With all the different expectations and interpretations, however, it seems to be common belief
that we may not know exactly how this will affect brokers’ and originators’ compensation structures until the Federal Reserve Board rule that implements the change takes effect on april 1.
and complicating matters further, the Dodd-Frank financial-reform act includes additional provisions regarding loan-originator compensation.
For 2010, mortgage rate
at 55-year low
WaSHINGTON, D.C. — average interest rates for 30-year
contracts averaged 4. 7 percent in 2010, the lowest average
since 1955, Freddie Mac said.
By itself, the low rate is not unprecedented, but it’s not
exactly an apples-to-apples comparison. In 1955, the
average U.S. home cost $22,000, Freddie Mac Vice
President and Chief Economist Frank Nothaft said — about
$150,000 less than the average price in 2010.
This month’s Scotsman Guide lays out some of the varying interpretations for you. In his column, The FinePrint (Page 16), Churchill Mortgage’s Richard Smith discusses the view that many
brokers, as well as NaMB — The association of Mortgage Professionals, share: that the Fed rule
and Dodd-Frank provisions are detrimental to brokers’ and originators’ businesses, as well as
to consumers, and should be delayed.
In fact, NaMB is circulating a petition among its members to stop or delay the rule’s implementation. The Mortgage Bankers association (MBa) also is taking action — this past December, it
sent a letter to the Fed requesting further clarification and written guidance about its compensation rule. you can see the MBa’s letter at sctsm.in/MBa_Fed.
Vince Parlove of Michigan Mutual Inc. discusses the varying provisions in both the Fed rule and
the Dodd-Frank act, potential impacts, and further areas still needing clarification on Page 34.
New-, existing-home sales
increase in November
WaSHINGTON, D.C. — Sales of new and existing homes
turned higher in November after a month of declines,
according to reports from the U.S. Department of
Commerce and the National association of Realtors.
Sales of existing single-family homes, including co-ops,
condominiums and townhouses, increased by 5. 6 percent
after falling 2.2 percent in October, the Realtors group said.
Meanwhile, sales of new single-family homes increased
5. 5 percent in November compared with October, the
Commerce Department said.
The Commerce Department said the median sales price
for a new home sold in November was $213,000. The
national median price for existing homes in November was
$170,600, according to the Realtors group.
Meanwhile, 360 Mortgage Group LLC’s andrew Weiss-Malik takes the view that brokers’
compensation structures aren’t changing all that much, that yield-spread premiums are
not disallowed and that brokers shouldn’t buy into what he sees as scare tactics. Read that
take on Page 24.
Existing-home sales: Feb. 23
New-home sales: Feb. 24
Regardless of which interpretation of loan-originator-compensation changes you agree with,
one thing is clear: Brokers and other mortgage originators must stay apprised of how their
businesses will be affected, even if the effects stay unknown until the actual implementation
date, delayed or not.
you can do this by keeping up with your associations — NaMB, MBa and others — and by
networking with your peers and with lenders. In fact, a LinkedIn group ( sctsm.in/DiscussPay)
dedicated to the topic was recently created, and discussions among its members provide
varying insights into the rule and changing compensation structures.
Pending home sales
continue to increase
WaSHINGTON, D.C. — Pending home sales increased 3. 5
percent in November, following a 10.4-percent jump the
previous month, the National association of Realtors said.
The Pending Home Sales Index, which predicts home
closings one and two months down the road, increased to
92.2 from a revised 89.1 for October, the Realtors group said.
The index was 5 percent below November 2009.
Pending home sales: Feb. 28
TIP OF THE MONTH
… in March’s Scotsman Guide
•How to employ helpful
Follow the leads
• What to do when credit
problems are your own
• Where Massachusetts’ housing
market is headed
• What to consider before
… and much more.
Many of your former competitors are
gone, and many of those who remain
likely continue to focus on closing out
their pipelines or refinancing loans. Now
is the time to hit the streets — or rather
the real estate offices and open houses
in your area — and develop valuable relationships with good agents while your
competitors aren’t looking. as business
shifts to purchase loans in 2011, real
estate agents remain a prime source for
Home prices decline
NEW yORK — U.S. home prices showed declining rates of
growth in October in 18 of 20 monitored cities, according to
the S&P/Case-Shiller U.S. National Home Price Index.
The index dropped 0.8 percent in the month, compared
to October 2009. In a 10-city index, prices increased 0.2
percent, although year-over-year gains were only noted in
four of the 10 cities, the report said.
Only Washington, D.C., and three cities in California — Los
angeles, San Diego and San Francisco — showed year-over-year gains.
From this past September, prices declined in each of the
20 cities monitored, and in six cities — atlanta; Charlotte,
N.C.; Miami; Portland, Ore.; Seattle; and Tampa, Fla. —
prices dropped to their lowest level since prices began to
decline before the recession.
S&P/Case-Shiller Home Price Index: Feb. 22
Online? Check out current and past editions
of Scotsman Guide at scotsmanguide.com.
— DOUG SMITH,
DOUGLAS SMITH & ASSOCIATES,