Hi Guys,

Here’s the follow up from today.

There’s a “general business day” definition which we use when sending out our EARLY disclosures and there’s a “precise business day” definition which we will use when counting the days after we’ve had to re-disclose prior to signing. See page 8 of this MBAA PDF.

Q: Where can I find out what interest rate the Fed will use so I can figure out if I have a high cost loan?
Here’s some insight from a great article by Blank Rome:

“…the measuring stick is the “average prime offer rate,” which is defined in the Final Rule as an annual percentage rate derived from average interest rates, points and other loan pricing terms that are currently offered to consumers by a representative sample of lenders for mortgage transactions that have low-risk pricing characteristics.At least initially, the Fed will use information derived from Freddie Mac’s Primary Mortgage Market Survey (“PMMS”), but may eventually develop its own tables. The average prime offer rate for both fixed and adjustable rate loans will be published in a table and updated at least weekly.
A loan is considered higher-priced if its APR exceeds the applicable average prime offer rate by 1.5 percentage points or more for first lien loans and 3.5 percentage points or more for junior lien loans.Unlike the HOEPA APR test, which compares the loan’s APR to the applicable Treasury security yield as of the 15th day of the month immediately preceding the month in which the application is received, the Final Rule requires that the loan’s APR be measured against the applicable average prime offer rate “as of the date the interest rate is set.” The Official Staff Commentary clarifies that if a loan’s rate is initially set at one level but then changed prior to closing, a lender must use the last date the interest rate is set before closing.”

The book written by Plato about Socrates’ journey to find the meaning of the word “justice” is called Plato’s Republic. You can get a used copy for $5. A great read. If you liked Ari’s way of solving ethical dilemmas, here is THE book.  Also, available used for under $5. You don’t need all the fancy analysis books, just the plain jane Nicomachean Ethics.

More on The Sociopath. Recognize anyone in your life that fits the profile?  1 in 25…

Here’s the story about HUD possibly adding sexual orientation as one of the protected classes. They’ll start with renters and move on from there.

Here’s a link to the state’s usury law FAQ page.

Here’s a link to the website where you can run a database report on which lenders have high default rates on their FHA originations.

Here’s the Credit Suisse graph showing the coming recasts of Pay Option ARM loans through 2012.

Great analysis from CR (my favorite finance and econ blogger) on how there will be two housing bottoms. Remember, Amir talked about this toward the end of class.

Great article today on the economy, again from CR. I’ll put this in next month’s email newsletter so you’re getting a sneak preview.

Hi Everyone,

Here’s the follow up from class.

Q: Do we have to resubmit our fingerprints?
A: Yes all LOs will be submitting a new set of fingerprints to the NMLS.

Q: Does a designated broker have to retake the LO exam?
A: Yes.

The name of the Northwest Multiple Listing Service Form that George referred to in class is NMLS Form 22 which helps with the automatic extension of the closing date.

Q: Where can I find out what interest rate the Fed will use so I can figure out if I have a high cost loan?
Here’s some insight from a great article by Blank Rome:

“…the measuring stick is the “average prime offer rate,” which is defined in the Final Rule as an annual percentage rate derived from average interest rates, points and other loan pricing terms that are currently offered to consumers by a representative sample of lenders for mortgage transactions that have low-risk pricing characteristics.At least initially, the Fed will use information derived from Freddie Mac’s Primary Mortgage Market Survey (“PMMS”), but may eventually develop its own tables. The average prime offer rate for both fixed and adjustable rate loans will be published in a table and updated at least weekly.
A loan is considered higher-priced if its APR exceeds the applicable average prime offer rate by 1.5 percentage points or more for first lien loans and 3.5 percentage points or more for junior lien loans.Unlike the HOEPA APR test, which compares the loan’s APR to the applicable Treasury security yield as of the 15th day of the month immediately preceding the month in which the application is received, the Final Rule requires that the loan’s APR be measured against the applicable average prime offer rate “as of the date the interest rate is set.” The Official Staff Commentary clarifies that if a loan’s rate is initially set at one level but then changed prior to closing, a lender must use the last date the interest rate is set before closing.”

Mark Palmer mentioned an FTC website article whereas CLA lenders will have to disclose their overages prior to the close of escrow. I’ve asked Mark to foward the link and will upload it here when I receive it.

We had some great debate regarding the definition of a business day. Well I’ve finally figured out why there is so much confusion and a big thanks to Annette Jensen from Neighborhood Mortgage in Bellingham for being the most diligent compliance person I’ve met in a while. The reason why we were disagreeing about how to count days is because there are two definitions of a “business” day. There’s a “general business day” definition which we use when sending out our EARLY disclosures and there’s a “precise business day” definition which we will use when counting the days after we’ve had to re-disclose prior to signing. See page 8 of this MBAA PDF.   Wells Fargo and other lenders have PDFs that give us a visual to refer to with a calendar and some examples.  The only problem that I’m still encountering is that some lenders are using the precise definition of a business day (unless the Saturday happens to be a legal holiday) for the re-disclosure waiting period and some are using the general definition only for early disclosures.  The MBAA is correct. The industry deserves an answer from the FRB on this conflict.

Thanks for a fun class!