Friday, April 15, 2011

NMLS Call Reports

Quick question for mortgage bankers - Who's handling the Q1 NMLS call reports for your firm? If you hesitated, it's time to move this up your list of key items to address. If you were one of the VERY few bankers which confidently answered that question, here's a quick follow-up - How are these reports put together? Some LOS's have built out functionality but data integrity and HMDA issues are likely to rear their ugly head. Here are some quick thoughts relating to these new NMLS Call Reports which must be submitted in exactly one month from today:

  • Talk about increasing your operational costs. These reports are only due once a quarter but they could be as daunting as an additional audit. I can see key personnel from QC, Compliance, Ops, or Management taking a week out of their schedule to compile this data.

  • The more complex the operation, the larger the task. Call reports need to be broken down on a state and loan officer level, not to mention retail, wholesale, and servicing platforms.

  • Look out for HMDA red flags. Too many lenders deny, cancel and withdraw files but then actually close them. Think about this a bit as it's not exactly kosher.

  • Files with missing or inaccurate data will cause inaccurate reporting. Are certain key fields left blank in an LOS? Do files sit in the pipeline for months without being decisioned or moved to a new status or folder?

  • Rumor has it that these reports may be referenced by the Consumer Finance Protection Bureau to help monitor lender compliance with new regulations (LO comp, Dodd-Frank etc)

These call reports are pretty detailed and for large firms operating in multiple states with multiple business channels, putting them together will be pretty taxing. With the banking conference in two weeks and the reports due shortly after, many lenders really have about two weeks to get this data and process ironed out.

Wednesday, April 6, 2011

The Stay Is Over

Well April 1 turned into April 6 and the hope was pretty short-lived. All new LO compensation schedules and rate sheets were rolled out today, or should've been!!! Think that was the hard part? I wonder how many bankers thought this whole change through. How will weighted average margins be affected? (i.e. NET revenue) Were lock policies and guidelines updated? I sure hope so. Were margins updated and how so? I see costs increasing and therefore rates which may translate to non-competitiveness in the market! No? The bankers who kept everything status quo will see their revenue plummet in the coming months. Striking the right balance is a delicate dance. How about the wholesale channel - brokering loans out and taking in TPO files. What a mess. Dozens of custom rate sheets, originating loans at losses, ensuring partners are compliant and don't get me started on the safe harbor nightmares - I still haven't heard one solid plan from any originator for that. Who's modeled out the implications here? Nobody is immune!!! -If margins (and rates) aren't up, they're down; either way volume and revenue will see a change. -Limit options for sales and both volume and fees tighten -Think loan officers have their head in the game? We're not even a week into April and I've heard from dozens of LOs looking to make moves and exit the mortgage game. Some will struggle, others will succeed. I see a bright future for only those with their eyes wide open.