Monthly Archives: July 2017

HUD – Provides List of Regulatory Waivers


Section 106 of the Department of Housing and Urban Development Reform Act of 1989 (the HUD Reform Act) requires HUD to publish quarterly Federal Register notices of all regulatory waivers that HUD has approved. Each notice covers the quarterly period since the previous Federal Register notice. The purpose of this notice is to comply with the requirements of section 106 of the HUD Reform Act. This notice contains a list of regulatory waivers granted by HUD during the period beginning on January 1, 2017, and ending on March 31, 2017.


For general information about this notice, contact Aaron Santa Anna, Assistant General Counsel for Regulations, Department of Housing and Urban Development, 451 7th Street SW., Room 10276, Washington, DC 20410-0500, telephone 202-708-3055 (this is not a toll-free number). Persons with hearing- or speech-impairments may access this number through TTY by calling the toll-free Federal Relay Service at 800-877-8339.

For information concerning a particular waiver that was granted and for which public notice is provided in this document, contact the person whose name and address follow the description of the waiver granted in the accompanying list of waivers that have been granted in the first quarter of calendar year 2017.


Section 106 of the HUD Reform Act added a new section 7(q) to the Department of Housing and Urban Development Act (42 U.S.C. 3535(q)), which provides that:

1. Any waiver of a regulation must be in writing and must specify the grounds for approving the waiver;

2. Authority to approve a waiver of a regulation may be delegated by the Secretary only to an individual of Assistant Secretary or equivalent rank, and the person to whom authority to waive is delegated must also have authority to issue the particular regulation to be waived;

3. Not less than quarterly, the Secretary must notify the public of all waivers of regulations that HUD has approved, by publishing a notice in the Federal Register. These notices (each covering the period since the most recent previous notification) shall:

a. Identify the project, activity, or undertaking involved;

b. Describe the nature of the provision waived and the designation of the provision;

c. Indicate the name and title of the person who granted the waiver request;

d. Describe briefly the grounds for approval of the request; and

e. State how additional information about a particular waiver may be obtained.

Section 106 of the HUD Reform Act also contains requirements applicable to waivers of HUD handbook provisions that are not relevant to the purpose of this notice.

This notice follows procedures provided in HUD’s Statement of Policy on Waiver of Regulations and Directives issued on April 22, 1991 (56 FR 16337). In accordance with those procedures and with the requirements of section 106 of the HUD Reform Act, waivers of regulations are granted by the Assistant Secretary with jurisdiction over the regulations for which a waiver was requested. In those cases in which a General Deputy Assistant Secretary granted the waiver, the General Deputy Assistant Secretary was serving in the absence of the Assistant Secretary in accordance with the office’s Order of Succession.

This notice covers waivers of regulations granted by HUD from January 1, 2017 through March 31, 2017. For ease of reference, the waivers granted by HUD are listed by HUD program office (for example, the Office of Community Planning and Development, the Office of Fair Housing and Equal Opportunity, the Office of Housing, and the Office of Public and Indian Housing, etc.). Within each program office grouping, the waivers are listed sequentially by the regulatory section of title 24 of the Code of Federal Regulations (CFR) that is being waived. For example, a waiver of a provision in 24 CFR part 58 would be listed before a waiver of a provision in 24 CFR part 570.

Where more than one regulatory provision is involved in the grant of a particular waiver request, the action is listed under the section number of the first regulatory requirement that appears in 24 CFR and that is being waived. For example, a waiver of both § 58.73 and § 58.74 would appear sequentially in the listing under § 58.73.

Waiver of regulations that involve the same initial regulatory citation are in Start Printed Page 29304time sequence beginning with the earliest-dated regulatory waiver.

Should HUD receive additional information about waivers granted during the period covered by this report (the first quarter of calendar year 2017) before the next report is published (the second quarter of calendar year 2017), HUD will include any additional waivers granted for the first quarter in the next report.

Accordingly, information about approved waiver requests pertaining to HUD regulations is provided in the Appendix that follows this notice.

Dated: June 23, 2017.

Ariel Pereira,

Associate General Counsel for Legislation and Regulations.


Listing of Waivers of Regulatory Requirements Granted by Offices of the Department of Housing and Urban Development January 1, 2017 Through March 31, 2017

Note to Reader:

More information about the granting of these waivers, including a copy of the waiver request and approval, may be obtained by contacting the person whose name is listed as the contact person directly after each set of regulatory waivers granted.

The regulatory waivers granted appear in the following order:

I. Regulatory waivers granted by the Office of Community Planning and Development.

II. Regulatory waivers granted by the Office of Housing.

III. Regulatory waivers granted by the Office of Public and Indian Housing.

I. Regulatory Waivers Granted by the Office of Community Planning and Development

For further information about the following regulatory waivers, please see the name of the contact person that immediately follows the description of the waiver granted.

  •  Regulation: 24 CFR 92.2.

Project/Activity: The City of Gainesville, Florida requested a waiver of 24 CFR 92.2 paragraph (3)(iv), which states that officers or employees of a government entity may not be officers or employees of a community housing development organization (CHDO). The City requested this waiver to permit the Mayor of the City of Archer, Mr. Corey Harris, Florida to act as the Executive Director of the City of Gainesville’s only CHDO.

Nature of Requirement: Paragraph (3)(iv) of the definition of a CHDO in the HOME regulations at 24 CFR 92.2 prohibits an employee of a governmental entity from serving as an employee of a CHDO. This provision ensures that there is no conflict of interest between a participating jurisdiction and a CHDO that received HOME funding from the participating jurisdiction. The provision also guarantees that a CHDO is indeed a community-based and community controlled organization.

Granted By: Harriet Tregoning, Principal Deputy Assistant Secretary, D.

Date Granted: January 10, 2017.

Reason Waived: Mr. Harris is currently the Mayor of Archer Florida; a City within Alachua County and a wholly separate and non-contiguous entity from the City of Gainesville. Mr. Harris is also the Executive Director of NHDC; the only designated CHDO in the City of Gainesville. The City of Gainesville does not expend HOME funds outside of the City’s limits, including the City of Archer. Further, Mr. Harris, as the Mayor of the City of Archer and as the Executive Director of NHDC, has no official decision-making authority or influence in the City of Gainesville’s funding decision’s. The City stated that NHDC is the only viable CHDO within the City of Gainesville’s jurisdiction, and the exclusion of NHDC as its CHDO would create hardship. The waiver permitted Mr. Harris to remain in both position and enabled the City of Gainesville to retain its only CHDO.

Contact: Virginia Sardone, Director, Office of Affordable Housing Programs, Office of Community Planning and Development, Department of Housing and Urban Development, 451 Seventh Street SW., Room 7164, Washington, DC 20410, telephone (202) 708-2684.

  •  Regulation: 24 CFR 92.252(d)(1).

Project/Activity: The City of Daly, California requested a waiver of 24 CFR 92.252(d)(1), which requires a participating jurisdiction to establish maximum monthly allowances for utilities and services (excluding telephone) and update the allowances annually. The City requested this waiver to allow use of utility allowance established by local public housing agency (PHA) for a HOME-assisted project under construction—Sweeny Lane Apartments.

Nature of Requirement: The regulation at 24 CFR 92.252(d)(1) requires participating jurisdictions to establish maximum monthly allowances for utilities and services (excluding telephone) and update the allowances annually. Participating jurisdictions must use the HUD Utility Schedule Model or otherwise determine the utility allowance for the project based on the type of utilities used at the project. Consequently, participating jurisdictions are no longer permitted to use the utility allowance established by the local PHA for HOME-assisted rental projects for which HOME funds were committed on or after August 23, 2013.

Granted By: Harriet Tregoning, Principal Deputy Assistant Secretary, D.

Date Granted: January 19, 2017.

Reason Waived: The HOME requirements for establishing a utility allowances conflict with Project Based Voucher program requirements. Consequently, it is not possible to use two different utility allowances to set the rent for a single unit and it is administratively burdensome to require a project owner establish and implement different utility allowances for HOME-assisted units and non-HOME assisted units in a project.

Contact: Virginia Sardone, Director, Office of Affordable Housing Programs, Office of Community Planning and Development, Department of Housing and Urban Development, 451 Seventh Street SW., Room 7164, Washington, DC 20410, telephone (202) 708-2684.

  •  Regulation: 24 CFR 92.252(d)(1).

Project/Activity: The City of Sacramento, California requested a waiver of 24 CFR 92. 92.252(d)(1), which requires a participating jurisdiction to establish maximum monthly allowances for utilities and services (excluding telephone) and update the allowances annually. The City requested this waiver to allow use of the utility allowance established by the local public housing agency (PHA) for two existing HOME projects—Sierra Vista Apartments and Washington Plaza Apartments.

Nature of Requirement: The regulation at 24 CFR 92.252(d)(1) requires a participating jurisdiction to establish maximum monthly allowances for utilities and services (excluding telephone) and update the allowances annually. Participating jurisdictions must use the HUD Utility Schedule Model or otherwise determine the utility allowance for the project based on the type of utilities used at the project. Consequently, participating jurisdictions are no longer permitted to use the utility allowance established by the local PHA for HOME-assisted rental projects for which HOME funds were committed on or after August 23, 2013.

Granted By: Harriet Tregoning, Principal Deputy Assistant Secretary, D.

Date Granted: January 19, 2017.



RHS – Updates HB-1-3555

hington, D.C 20250 DATE July 7, 2017 PROCEDURE NOTICE RD MANUAL CHANGES INSERT RD INS 2018-G U.S. GOVERNMENT MOTOR VEHICLE OPERATOR’S (WSAL) INSTRUCTIONS. This Instruction is partially revised to clarify several issues. Each driver must now certify that they have a valid operator’s license. Form RD 2018-3 was developed for those employees that do not already have an AD-728 or Form RD 2018-1 on file. A log must be maintained for vehicle usage and a new request form. REMOVE INSERT Table of Contents; Table of Contents revised; All Pages. Pages 1 through 11 revised 07-07-17. RD HANDBOOK CHANGES INSERT RD HB-1-3555 SFH GUARANTEED LOAN PROGRAM TECHNICAL (WSAL) HANDBOOK. Chapter 16: Paragraphs 16.2, the power of attorney language was updated to clarify when it may be utilized;. Paragraph 16.11(C)(1), language regarding the maximum hazard insurance deductible was modified; Attachment 16-A, Reference to HUD-1 was updated to Closing Disclosure, link to the training resource library was updated and reference to Form RD 1980-18 was updated to Form RD 3555-18. REMOVE INSERT Table of Contents: Table of Contents: Pages 11 & 12; Pages 11 & 12 revised; Chapter 16 dated 03-09-16: Chapter 16 dated 03-09-16: Pages 16-1 & 16-2 and Pages 16-1 & 16-2 and 16-17 & 16-18; and 16-17 & 16-18; and Attachment 16-A. Attachment 16-A revised 07-07-17. (OVER) READ PROCEDURE – DISCUSS IN STAFF CONFERENCE – KEEP PROCEDURE MANUAL UP TO DATE Page 2 ISSUED: PN 501 July 7, 2017 FORM REPLACEMENT RD 2018-2 RURAL DEVELOPMENT VEHICLE ALLOCATION (WSAL) METHODOLOGHY (VAM) dated 06-17. Prescribed in RD Instruction 2018-G. The Form and FMI are revised to add a block for the Departmental approval. This Form and FMI are available on the Rural Development Instructions home page ( No paper copy distribution of this form will be made, and it will not be stocked in the warehouse. REMOVE INSERT FMI dated 08-21-13. FMI revised 07-07-17. RD 2018-3 REQUEST TO RESERVE/USE GSA MOTOR VEHICLE (WSAL) dated 06-17. Prescribed in RD Instruction 2018-G. The Form and FMI are revised to provide a method of tracking requests to use a GSA motor vehicle and provides a certification that the requester of a motor vehicles has a valid operator’s license. This Form and FMI are available on the Rural Development Instructions home page ( No paper copy distribution of this form will be made, and it will not be stocked in the warehouse. INSERT FMI revised 07-07-17. NO SPECIAL PROCEDURE NOTICE RELEASED. ADMINISTRATIVE NOTICES RELEASED: (See AN Checklist)



Freddie Mac – Announces Guide Bulletin 2017-10

SUBJECT: SELLING UPDATES This Guide Bulletin announces: Uniform Closing Dataset  Requirements for the delivery of the Uniform Closing Dataset through Loan Closing AdvisorSM – September 25, 2017 (New) Collateral representation and warranty relief expansion  Removal of the requirement that a Mortgage be submitted to Loan Product Advisor® to be eligible for collateral representation and warranty relief – August 4, 2017 Electronic Recording of paper and electronic closing and post-closing documents  Removal of the requirement that a Seller/Servicer retain a wet ink signed assignment of a Mortgage or a modification agreement when those paper documents are electronically recorded Selling System®  Requirements for third-party advisors, known as Secondary Market Advisors, to access the Selling System® to perform services for Sellers – July 31, 2017 (New)  Delivery requirements for low loan balance Mortgages – New  Pricing and contracting Guide terminology updates related to previously announced Selling System capabilities Additional Guide updates  Further updates as described in the Additional Guide Updates section of this Bulletin EFFECTIVE DATE All of the changes announced in this Bulletin are effective immediately unless otherwise noted. UNIFORM CLOSING DATASET Effective for Mortgages sold to Freddie Mac with Note Dates on and after September 25, 2017 When originally announced, the Uniform Closing Dataset (UCD) XML with the embedded closing disclosure PDF was to be required on all Mortgages sold to Freddie Mac with a Note Date on and after September 25, 2017. However, as communicated in our June 6, 2017 Single-Family News Center article, in response to Seller feedback regarding UCD adoption, the GSEs are offering a six-month relief period for embedding the closing disclosure PDF within the UCD XML file. Please refer to the UCD web page for more information. While Sellers must still submit the UCD XML file for Mortgages sold to Freddie Mac with Note Dates on and after September 25, 2017, they now have until at least April 2018 to deliver the XML file with the embedded PDF. Nonetheless, Sellers are encouraged to submit the UCD XML file with the embedded PDF starting on September 25, 2017 if they have the capability to do so. We will provide adequate notice to Sellers of the date when the delivery of the embedded PDF will be required. We have created new Guide Chapter 5801 to provide information and requirements related to the UCD and delivery through Loan Closing Advisor. TO: Freddie Mac Sellers July 12, 2017 | 2017-10 Page 2 Loan Closing Advisor is Freddie Mac’s electronic collection solution for the UCD that helps Sellers validate that their closing data aligns with the UCD. Loan Closing Advisor then assesses the data against the UCD specification, checking for the completeness, validity and accuracy of certain calculated values and consistency of the data. The submission of the UCD through Loan Closing Advisor is fulfilled when:  The transaction has received data quality feedback messages; and  The Loan Closing Advisor feedback certificate indicates that the UCD requirement has been satisfied To obtain access to Loan Closing Advisor, Sellers should contact their Freddie Mac Account Executive or visit the Loan Closing Advisor web page and click on the “Get Started” button to start the process. Guide impact: Guide Section 5801.1 COLLATERAL REPRESENTATION AND WARRANTY RELIEF EXPANSION Effective for appraisals submitted to the Uniform Collateral Data Portal® on and after August 4, 2017 In Bulletin 2017-3, we announced that a Mortgage must be submitted to Loan Product Advisor to be eligible for collateral representation and warranty relief. With this Bulletin, we are enhancing our offering by no longer requiring a submission to Loan Product Advisor. Therefore, eligibility will no longer be dependent on submission to Loan Product Advisor. Collateral representation and warranty relief status will continue to be communicated through the Uniform Collateral Data Portal®, Loan Collateral Advisor®, Selling System, Loan Coverage Advisor®, and when applicable, Loan Product Advisor and Loan Quality Advisor®. We are also updating our eligibility requirements to include that the Mortgage must have a loan-to-value (LTV)/total LTV (TLTV)/Home Equity Line of Credit (HELOC) TLTV (HTLTV) ratio less than or equal to 95% to obtain collateral representation and warranty relief. Guide impact: Section 5601.9 ELECTRONIC RECORDING OF PAPER AND ELECTRONIC CLOSING AND POSTCLOSING DOCUMENTS In Bulletin 2016-16 we announced that, for closing documents that are electronically recorded, Freddie Mac does not require Seller/Servicers to store paper copies. However, electronically recorded post-closing documents such as assignments of Mortgages, modification agreements, etc., were not explicitly referenced in Sections 1401.14 and 1401.15, which were revised as part of Bulletin 2016-16. Based on Seller/Servicer feedback, we are now specifying that a Seller/Servicer does not need to store the original wet ink-signed paper assignments of Mortgages or modification agreements when such documents are electronically recorded. Seller/Servicers may now store Electronic (as defined in Section 1401.2) copies of electronically-recorded paper assignments of Mortgages or paper modification agreements, etc., but must do so securely and ensure such Electronic copies contain all the recording information. We have also clarified storage and delivery requirements for paper and electronically created closing and postclosing documents that are electronically recorded, as follows:  Seller/Servicers may store such Electronic copies of such documents as long as the copies or other Recording Confirmations from the Recording Office contain all of the recording information  Seller/Servicers must still deliver to the Document Custodian or Designated Custodian, as applicable  The original wet-ink signed paper assignments of Mortgages, powers of attorney, modification agreements, etc., that have been electronically recorded, and  Paper copies of such electronically recorded documents or other Recording Confirmations from the Recording Office Revising these requirements will create operational efficiencies for Seller/Servicers by reducing some storage costs and making it easier to store and retrieve documents. In addition, it reduces the risk of lost documents.

After delivery of the Mortgage to Freddie Mac, a Servicer may only enter into paper modification agreements with original wet-ink signatures, except for Electronic modification agreements under the Home Affordable Modification Program (HAMP®). Servicers must comply with the requirements set forth in Section 9205.20 with respect to HAMP eModification Agreements, as defined in Section 9205.20. With respect to non-HAMP eModification Agreements, Servicers may store such documents electronically provided they deliver to the Document Custodian or Designated Custodian, as applicable, the original wet-ink signed paper modification agreement and paper copies of such electronically recorded documents. At this time, Servicers remain subject to the paper document retention requirements set forth in Chapters 3301 and 3302 for those documents that have not been electronically recorded. Guide impacts: Sections 1401.14, 1401.15, 2202.4, 6304.1, 6304.3 and 9206.17 SELLING SYSTEM Authorizing access to the Selling System for third-party advisors Effective July 31, 2017 More Sellers are utilizing the services of third-party advisors, now defined as Secondary Market Advisors (SMA), for assistance on secondary market activities. We have added requirements for Sellers that want an SMA to perform duties on their behalf in the Selling System. These new requirements include forms that both a Seller utilizing an SMA and an SMA must complete to provide the necessary authorizations and create a Selling Agent relationship between the Seller and the SMA. Section 2403.3 is being repurposed to outline the use of SMAs and Selling Agents. It previously contained requirements regarding separate written agreements between the Seller and Freddie Mac for entering the Selling System. This is being removed as the written agreements have now expired. Additionally, we have added new Glossary definitions for the terms Secondary Market Advisor and Selling Agent. For an SMA to become a Selling Agent and be authorized to act on behalf of the Seller, the following must occur:  The SMA must complete, sign and deliver to Freddie Mac new Guide Form 478, Secondary Market Advisor Selling Agent Agreement, and  The Seller that will be utilizing the SMA must complete, sign and deliver to Freddie Mac new Form 900SA, Selling System Agent Identification and Authorized User Role Form, for each authorized employee of the Selling Agent. A Seller that currently has an SMA performing services on its behalf in the Selling System under a services agreement and has an executed and approved “Selling System Price Sheet Analyst User ID Request Form” and/or Form 900 is not immediately required to execute a Form 900SA unless and until one of the conditions listed in Section 2403.3(f) applies. Guide impacts: Sections 2403.1, 2403.3 and 2403.11 and Forms 478 and 900SA and the Glossary Cash payups for Mortgages with low loan balances Effective June 26, 2017 Our June 14, 2017 Single-Family News Center article described how we simplified the process in the Selling System to receive cash payups for fixed-rate Mortgages with specific loan attributes, such as UPBs less than or equal to $175,000. In order to take advantage of these cash payups for each Mortgage, Sellers must deliver the ULDD Data Point Investor Feature Identifier (Sort ID 368) and enter the applicable valid value provided in new Section 6302.39 associated with the UPB of the Cash Specified Pool Type to which the Mortgage has been allocated. Guide impacts: Section 6302.39 and Guide Exhibit 34 Page 4 Pricing and contracting terminology updates Bulletin 2017-2 announced new Selling System functionality for Sellers to obtain their Guarantor and MultiLender pricing for Purchase Contracts. In support of those changes, we are updating Guide terminology to align with the Selling System’s new capabilities. We are replacing references in the Guide to “Master Commitment number” with “Pricing Identifier,” which we are adding as a Glossary term. “Pricing Identifier” is defined as a number (or such other designation that Freddie Mac may select) that identifies an agreement providing the terms under which Freddie Mac will purchase eligible Mortgages over a fixed period of time. In addition, we are updating the Glossary as follows:  Replacing the term “Master Commitment” with the term “Pricing Identifier Terms,” which is defined as terms associated with a Pricing Identifier under which the Seller may sell Mortgages to Freddie Mac  Replacing:  “Effective Date for Delivery” with “Pricing Identifier Effective Date”  “Master Commitment Amount” with “Commitment Amount”  “Required Delivery Date” with “Pricing Identifier Expiration Date”  Updating the definitions for “Master Agreement,” “Minimum Contract Servicing Spread,” “Purchase Contract” and “Purchase Documents”  Removing the term “Maximum Master Agreement Amount” as it is no longer relevant All applicable Guide references have been updated to reflect these terminology changes. Pursuant to Section 1501.2, provisions, including terms of business in Master Agreements and/or Master Commitments and other Purchase Documents, are hereby amended such that all references to previously-defined terms are deemed to be references to the revised Glossary terms noted above. Sections 1501.1 and 1501.2 have been revised to reflect updates to Master Agreements and other Purchase Contracts. Loan Product Advisor feedback messages have been updated to reflect these changes. Guide impacts: Sections 1501.1, 1501.2, 1501.4, 1501.5, 1501.6, 1501.7, 1501.8, 5203.2, 6201.1, 6201.2, 6201.15, 6202.3, 6203.4, 6203.5, 6204.4, 6204.5, 6205.4, 6205.5, 6302.3, 6302.4, 6401.1, and 6401.2, Exhibits 6, 28 and 28A, Form 900 and the Glossary ADDITIONAL GUIDE UPDATES Concurrent Transfers of Servicing Seller/Servicers are encouraged to implement the below changes immediately, but must do so no later than October 9, 2017. In response to Seller/Servicer feedback for processing Concurrent Transfer of Servicing requests, we are clarifying:  Responsibilities between the Seller, the Servicer and the Servicer’s Document Custodian  When certification of the Notes must be performed As a result, we are updating the Glossary as follows:  Deleting the term “Transferor Seller”  Revising the term “Concurrent Transfer of Servicing” as follows: Page 5 A Transfer of Servicing initiated by a Seller to a Servicer that occurs, subject to prior Freddie Mac approval, concurrently with Freddie Mac’s purchase of a Mortgage on the Settlement Date: for the sake of convenience, the Seller may be referred to as the “Transferor Servicer” and the Servicer may be referred to as the “Transferee Servicer.” In each instance, the Mortgage is delivered for certification to the Servicer’s Document Custodian. Guide impacts: Sections 6301.6 and 7101.9, Form 960 and the Glossary Exhibit 13 The Federal Emergency Management Agency (FEMA) has revised the Standard Flood Hazard Determination Form, FEMA Form 086-0-32, Freddie Mac Exhibit 13, and extended the expiration date to October 31, 2018. Use of the new form is recommended; however, the previous form with the expiration date May 30, 2015 continues to be acceptable. Guide impacts: Section 8202.3 and Exhibit 13 GUIDE UPDATES SPREADSHEET For a detailed list of the Guide updates associated with this Bulletin and the topics with which they correspond, refer to the Bulletin 2017-10 (Selling) Guide Updates Spreadsheet available at CONCLUSION If you have any questions about the changes announced in this Bulletin, please contact your Freddie Mac representative or call Customer Support Contact Center at (800) FREDDIE. Sincerely, Christina K. Boyle Senior Vice President Single-Family Sales and Relationship Management


Fannie Mae – Updates to Servicing Guide

Servicing Guide Announcement SVC-2017-06 July 12, 2017 Servicing Guide Updates The Servicing Guide has been updated to include changes related to Property Inspection and Preservation Updates. These policy changes also apply to Home Keeper® loans but are not applicable to Home Equity Conversion Mortgage (HECM) loans. The affected topics for these policy changes are included below. Servicers should review the Servicing Guide and the Property Preservation Matrix and Reference Guide to gain a full understanding of the changes. Property Inspection and Preservation Updates In response to industry feedback and in an effort to better serve our customers, we are  updating the Property Preservation Matrix and Reference Guide to provide servicers with more specific and detailed procedures for preserving and completing inspections for properties that secure delinquent mortgage loans;  restructuring Servicing Guide D2-2-10, Requirements for Performing Property Inspections, to clarify requirements for ordering and completing inspections for properties that secure mortgage loans that are in default; and  making the process easier for completing maintenance work by adding or updating reimbursement limits in Servicing Guide F-1-06, Expense Reimbursement, for the following:  moisture control,  address discoloration,  roof cleaning,  repair/replace fascia,  repair/replace soffits,  emergency pump water,  plumbing services,  utility service – initial service and per month,  code violations for fines/fees/liens,  cleaning toilet – life of loan maximum expense limit added,  repair/replace fence gate/lania,  repair/replace exterior door, and  repair/replace exterior door jamb. Additionally, Servicing Guide E-3.3-03, Inspecting Properties Prior to Foreclosure Sale, has been updated to change the number of days to complete an inspection from 30 to 35 days prior to the foreclosure sale. Additional Servicing Guide Topics Impacted References to the revised Property Preservation Matrix and Reference Guide were added to the following topics:  A2-1-01, General Servicer Duties and Responsibilities  D1-6-02, Handling Notices of Liens, Legal Action, Other Actions Impacting Fannie Mae’s Interest  D2-2-10, Requirements for Performing Property Inspections  D2-3.3-01, Fannie Mae Short Sale  D2-3.3-02, Fannie Mae Mortgage Release (Deed-in-Lieu of Foreclosure)  E-1.2-02, Timing of the Foreclosure Referral for Mortgage Loans Generally  E-3.2-12, Performing Property Preservation During Foreclosure Proceedings © 2017 Fannie Mae. Trademarks of Fannie Mae. SVC-2017-06 2 of 2  E-3.3-03, Inspecting Properties Prior to Foreclosure Sale  E-3.5-02, Handling Third-Party Sales  F-1-06, Expense Reimbursement  F-1-09, Managing Foreclosure Proceedings Effective Date Policy changes must be implemented by October 1, 2017. However, servicers are encouraged to implement the updated expense limits and guidelines for these policy changes as of the date of this Announcement. ***** Contact your Customer Delivery Team, Portfolio Manager, or Fannie Mae’s Single-Family Servicer Support Center at 1- 800-2FANNIE (1-800-232-6643) with any questions regarding this Announcement. Carlos T. Perez Senior Vice President and Chief Credit Officer for Single-Family


CFPB – Amendments to Federal Mortgage Disclosure Requirements

BUREAU OF CONSUMER FINANCIAL PROTECTION 12 CFR Part 1026 [Docket No. CFPB-2016-0038] RIN 3170-AA61 Amendments to Federal Mortgage Disclosure Requirements under the Truth in Lending Act (Regulation Z) AGENCY: Bureau of Consumer Financial Protection. ACTION: Final rule; official interpretation. SUMMARY: The Bureau of Consumer Financial Protection (Bureau) is modifying the Federal mortgage disclosure requirements under the Real Estate Settlement Procedures Act and the Truth in Lending Act that are implemented in Regulation Z. This rule memorializes the Bureau’s informal guidance on various issues and makes additional clarifications and technical amendments. This rule also creates tolerances for the total of payments, adjusts a partial exemption mainly affecting housing finance agencies and nonprofits, extends coverage of the TILA-RESPA integrated disclosure (integrated disclosure) requirements to all cooperative units, and provides guidance on sharing the integrated disclosures with various parties involved in the mortgage origination process. DATES: The final rule is effective [INSERT DATE 60 DAYS AFTER DATE OF PUBLICATION IN THE FEDERAL REGISTER]. However, the mandatory compliance date is October 1, 2018. For additional discussion of these dates, see part VI of the SUPPLEMENTARY INFORMATION Section below. FOR FURTHER INFORMATION CONTACT: Jeffrey Haywood, Paralegal Specialist, 2 Dania Ayoubi, Pedro De Oliveira, Angela Fox, Jaclyn Maier, Alexandra Reimelt, and Shelley Thompson, Counsels, and Krista Ayoub, David Friend, Nicholas Hluchyj, and Priscilla Walton-Fein, Senior Counsels, Office of Regulations, Consumer Financial Protection Bureau, 1700 G Street, NW., Washington, DC 20552, at 202-435-7700. SUPPLEMENTARY INFORMATION: I. Summary of the Final Rule For more than 30 years, Federal law required lenders to issue two overlapping sets of disclosures to consumers applying for a mortgage. In October 2015, integrated disclosures issued by the Consumer Financial Protection Bureau, pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act, took effect.1 The Bureau has worked actively to support implementation both before and after the effective date by providing compliance guides, webinars, and other implementation aids. To further these ongoing efforts, on July 28, 2016, the Bureau proposed amendments to the integrated disclosure requirements in Regulation Z (the proposal). 2 The Bureau is now issuing this final rule to memorialize certain past informal guidance, whether provided through webinar, compliance guide, or otherwise, and make additional clarifications and technical amendments. This final rule also makes a limited number of additional substantive changes where the Bureau has identified discrete solutions to specific implementation challenges. Specifically, among other changes, the final rule:


Schools are Banning Fidget Spinners

As if worrying about funding and quality teachers weren’t enough, now schools on both sides of the Atlantic are dealing with a mighty serious problem of another sort: fidget spinners and their cousins, fidget cubes.

The little gadgets supposedly meant to help kids focus in school are bothering teachers and administrators so much that they are being banned or otherwise restricted in classrooms in the United States and the United Kingdom. Why? Because they can be distracting when kids use them as toys to do tricks — such as trying to balance them on their noses — and, some say, because they can be dangerous if the tricks go awry and the spinning gadget hits someone.

Fidget spinners are little devices with a bearing in the center of shaped material — plastic, stainless steel, etc. — that can be spun by the holder. They are often marketed as a stress-relief device for people who can’t sit still, and some companies directly appeal to kids who have a hard time focusing in class. Some of the devices make noise when they spin; others don’t.

Invented more than a dozen years ago, the toys have suddenly become so popular that “Saturday Night Live” made them the focus of a skit on a recent show. Popular online videos explain how to do tricks (one has more than 5 million views; another posted just a week ago about music to go with your fidget spinning already has more than 600,000 views) and stores can’t keep them in stock.

Schools and individual teachers in Florida, Illinois, New York, Virginia and other states are banning them from classrooms, while others are taking the fidget spinners away from kids who seem too distracted by them — or are distracting others. According to Working Mother, schools in at least 11 states have banned them and more are likely to do so.

On April 24, the Carroll Gardens School for Innovation/M.S.442 in Brooklyn posted this on its Facebook page, reflecting the concerns of administrators at other schools as well:

Dear M.S. 442 Families,

The safety, well-being and education of your children has always been our main concern. Occasionally, there are toys and gadgets that are trending in the media that all the kids seem to want. The latest is an object called a “fidget spinner” that kids are bringing to school.

Although seemingly harmless, these items are being taken out during class causing a distraction to students and staff. They are also being thrown around during transition in the hallways to and from class and in the cafeteria and at recess. They are small in size, but can seriously hurt someone.

In an effort to prevent injuries, we must officially ban these fidget spinners from being brought into our school. Please discuss this matter with your child, as we have, so they understand how important it is that all students and staff remain safe at MS 442. We will ask your child to surrender the item to an adult if it is brought to school and in turn, a staff member will call to advise you of the situation.
Please note that if your child has a sensory issue and needs a fidget, we have them on hand.

Thank you for your continued support.

In Virginia, a petition was started on to persuade officials at Holman Middle School in Glen Allen to reverse a ban on fidget spinners and cubes. One student who signed it wrote:

I’m signing because fidget spinners help and need to be unbaned. They help you stay awake during class


The 5 Best & Worst States for Retirement

When you picture retirement, you might imagine yourself soaking up the sun in Florida, moving to California to enjoy summer year-round, or even spending your days in tropical Hawaii.

But these states may end up costing you big-time, because they’re not the most retiree-friendly, financially speaking.

In a recent report, Bankrate ranked each state in America based on how comfortably someone could retire there. Using data from the Council for Community and Economic Research, the Agency for Healthcare Research and Quality, and the Tax Foundation, Bankrate included important factors such as the cost of living, healthcare quality, tax rate, crime rate, and overall community well-being to determine which states offered the best retirement environment and which ones should be avoided.

So where does your state (or preferred state) land on the list? Here are some of the best and worst places to retire.


The top 5

The best states to live during retirement may come as a surprise, as they’re not areas that are normally considered retirement havens. Nevertheless, they’re states you may want to consider if you’re thinking about retiring soon.

First, though, let’s take a look at the different factors that go into these rankings:

  • Cost of living: The cost-of-living factor is based on information from the Council for Community and Economic Research.
  • Crime rate: Using data reported by the FBI, the crime rate is a measure of both property crime and violent crime reported by police departments.
  • Community well-being: This measure is based on the results of satisfaction surveys for each state, and it’s meant to gauge a community’s overall happiness.
  • Healthcare quality: This measure is based on information from the Agency for Healthcare Research and Quality, which studies each state’s performance on roughly 160 healthcare-related issues and how they compare to other states.
  • Weather: While this is a subjective topic, Bankrate’s study used both data from the National Oceanic and Atmospheric Administration (average temperatures, humidity, sunshine levels, etc.) and public opinion to determine which areas of the country were the most desirable to seniors.
  • Tax rate: This factor is based on a variety of taxes paid by state residents, including sales tax, income tax, and property tax.

1. Wyoming

Wyoming may seem like an odd retirement destination, but it ranks the best in the nation overall. The tax rate is unbeatable, partly because the state has no income tax, and the sales tax and property tax are among the lowest in the nation at just 5.40% and 0.51%, respectively.

Also, the crime rate is among the lowest in the country (ranking No. 5 among all states), and the weather is pretty nice, too (at least according to the survey respondents), with average high temperatures peaking in the low 80s in the summer.

2. Colorado

Colorado is not the cheapest place to live, ranking 30th out of the 50 states in terms of overall cost of living. The average home price in Denver reached a record high of $487,974 in April, and even in the less expensive city of Colorado Springs, the average price for a single-family home is $298,774.

Yet there’s a reason why people are flocking to Colorado: the gorgeous weather and the wonderful sense of community, based on resident satisfaction surveys. The healthcare quality is also fantastic, ranking 14th in the nation.

3. Utah

Utah makes the list for several reasons: the low cost of living (the state ranks at No. 7 overall in the country), the quality healthcare (also ranking at No. 7), and the great weather.

The median home value in Salt Lake City is about $281,000, according to Zillow. And in less expensive cities, such as Ogden, the median home value is just $145,000. Utah also has one of the healthiest populations in the country, and it has some of the lowest healthcare costs per capita, based on data from the United Health Foundation.

4. Idaho

While most people don’t dream of moving to Idaho the minute they retire, it does offer the distinct advantage of having one of the lowest costs of living (coming in at third in the nation) and a low crime rate (second only to Vermont).

The median home value in Idaho is just under $190,000. In more expensive areas — such as Boise — the median value is around $214,000, according to Zillow. And in less expensive areas — such as Idaho Falls — housing is even more affordable, with a median value of $140,000.

5. Virginia

Virginia shines with its low crime rate (ranking 4th in the country), and it also has quality healthcare (ranking 13th, just above Colorado) and great weather (at least according to Bankrate’s survey respondents).

Smaller towns and suburbs in particular offer attractive benefits for retirees. In the small town of Cedar Bluff, for instance, the population is just over 1,000 people, crime is virtually nonexistent, and the median home value is just $100,500.

The bottom 5

Every state has something to offer, and where you choose to spend your golden years is a deeply personal decision. That said, the states below don’t hold as much appeal for retirees, whether it’s because of a high cost of living, low quality of life, or high crime rates.

46. Louisiana

Louisiana is one of the lowest-ranking states for crime rate (at No. 49, above only New Mexico), and it’s also not known for its community well-being (ranked 48th) or healthcare quality (tied with Kentucky for 45th).

The sales tax in Louisiana is also the highest in the country (at 9.98%), but the state shines when it comes to property tax. Ranked third in the country for its low property tax of just 0.50%, Louisiana may help homeowners save some money.

47. West Virginia

West Virginia, unfortunately, is ranked dead last for both community well-being and healthcare quality. It’s also ranked 32nd for its tax rate and 23rd for its cost of living.

The state has earned the (unfortunate) title of “Most Miserable State” six years running, according to the yearly Well-Being Index by Gallup-Healthways. The survey cites the dying coal industry and lack of jobs as possible reasons why residents are so unhappy. It also noted that the state’s population is one of the least educated in the country, which could be a contributing factor, and many of the respondents in the survey said they lacked the motivation to achieve their goals.

48. Alaska

Alaska may be beautiful, but the harsh winters aren’t for everyone. It also takes the No. 49 spot for cost of living (just above Hawaii) and the No. 46 spot for its crime rate.

The high crime rate may seem surprising for a state where moose outnumber people, but while crime in the country overall has decreased in the last 20 years, the violent crime in Alaska continues to increase. It’s also not the cheapest place to buy a home, with the average home value in Anchorage at just under $300,000.

49. New York

New York has many great qualities, but its tax rate isn’t one of them. It ranks 50th in the country for its taxes, and it ranks 47th for cost of living and 42nd for sense of community.

It’s important to keep in mind, though, that there’s a huge difference between living in New York City and living in the rest of the state. For example, the median home value in Manhattan is over $1.3 million, while the median value of a home in the less expensive city of Albany is only $169,500. And while there may be less sense of community in New York City (where it may be harder to get to know your neighbors), that’s not the case in other parts of the state.

50. Arkansas

In unfortunate news for residents (or potential residents) of Arkansas, the state was ranked as the “worst” state to retire in. While it did rank well for its cost of living, it also ranked 45th for crime rate, 47th for community well-being, 44th for healthcare quality, and 39th for tax rate.

Arkansas also ranked poorly in Gallup’s Well-Being Index, and Fort Smith in particular was named the most miserable city in the country. The survey pointed to high poverty rates, financial stress, and poor health as a few of the reasons cited for residents’ low levels of satisfaction.

As you decide where you want to retire, keep in mind that there are dozens of other factors that you should consider before packing up and moving. But before you make any big decisions, it’s a good idea to make sure the state you’re considering spending the rest of your life in fits your lifestyle and financial needs.

The $16,122 Social Security bonus most retirees completely overlook
If you’re like most Americans, you’re a few years (or more) behind on your retirement savings. But a handful of little-known “Social Security secrets” could help ensure a boost in your retirement income. For example: one easy trick could pay you as much as $16,122 more… each year! Once you learn how to maximize your Social Security benefits, we think you could retire confidently with the peace of mind we’re all after. Simply click here to discover how to learn more about these strategies.


CFPB is Making It Easier to Sue Banks ?

The Consumer Financial Protection Bureau just made it easier for ordinary citizens to sue banks by restricting how they can use mandatory arbitration to block class-action lawsuits, according to Bloomberg. But the decision – inspired by a 2015 investigative series in the New York Times about how US companies, particularly credit card companies and payday lenders, abuse the practice – likely won’t stay on the books for long. As the LA Times writes:

It’s all but certain that Republican lawmakers in control of the House and Senate will move quickly to overturn the rule as part of their ongoing efforts to cripple the consumer-watchdog agency and create a more business-friendly regulatory landscape.”


Clauses requiring arbitration to settle disputes are inserted routinely in contracts for credit cards, payday loans and other financial products. They typically prevent consumers from filing lawsuits or banding together in class actions.

“Arbitration clauses in contracts for products like bank accounts and credit cards make it nearly impossible for people to take companies to court when things go wrong,” CFPB Director Richard Cordray said in a statement.

“These clauses allow companies to avoid accountability by blocking group lawsuits and forcing people to go it alone or give up. Our new rule will stop companies from sidestepping the courts and ensure that people who are harmed together can take action together.”

From the time they formally receive the ruling, lawmakers have 60 legislative days to overturn the bureau’s decision. Republicans have been using the Congressional Review Act, a little-known provision, to undo more than a dozen Obama-era regulations during the closing days of his presidency, including the CFPB’s plans to implement tougher standards for prepaid debit cards.

“As a matter of principle, policy and process, this anti-consumer rule should be thoroughly rejected by Congress,” Representative Jeb Hensarling, the Texas Republican who leads the House Financial Services Committee, said in a statement.

Congress isn’t the only body that’s skeptical of the ruling: In an unusual move, the head of a key banking regulator wrote to Cordray to raise concerns about it. Keith Noreika, the acting Comptroller of the Currency, asked that the CFPB share data used to develop its arbitration rule, according to a letter dated Monday that was obtained by Bloomberg.

“We would like to work with you and your staff to address the potential safety and soundness implications of the CFPB’s arbitration proposal,” Noreika said in the letter. “That is why I am requesting the CFPB share its data.”

Noreika cited a section of the Dodd-Frank Act that gives the Financial Stability Oversight Council – a panel of regulators headed by the Treasury secretary – power to set aside any CFPB rule that can be shown to put the safety of the wider financial system at risk.

However, studying the fairness of arbitration clauses appears to be well within the bureau’s remit: Dodd-Frank says the CFPB “may prohibit or impose conditions or limitations on the use” of arbitration clauses if it determines that restricting such provisions “is in the public interest and for the protection of consumers,” according to the LA Times.

During its study, the CFPB found that hundreds of millions of contracts include arbitration provisions and that companies have used the clauses to keep fights out of court almost two-thirds of the time. Very few consumers even consider bringing individual actions against financial-service providers in court or in arbitration.

Despite the rule’s near-certain erasure, Christine Hines, legislative director for the National Assn. of Consumer Advocates, told the LA Times that the CFPB isn’t thumbing its nose at Republican lawmakers who have insisted for years that the agency is a rabid regulatory pit bull in need of either a very short leash or a trip to a farm.

“The agency has to continue doing its job,” she said, “even though there are very anti-consumer people in power.”

Other consumer advocates echoed that sentiment.

“The rule will help to combat the culture of companies profiting from charging illegal fees and committing other crimes against their customers,” said Rohit Chopra, senior fellow at the Consumer Federation of America.

Said Lisa Donner, executive director of Americans for Financial Reform: “The consumer agency’s rule will stop Wall Street and predatory lenders from ripping people off with impunity, and make markets fairer and safer for ordinary Americans.”

The new rule will cover new agreements for products such as credit cards, auto loans, credit reports and even mobile phone services that provide third-party billing. Companies can still include arbitration clauses in contracts, but they must state that those can’t be used to stop individual consumers from joining class-action cases.

According to Bloomberg, it is also possible that industry groups will sue to overturn the CFPB rule. Groups including the US Chamber of Commerce have said arbitration is a valuable tool to prevent frivolous, expensive lawsuits that often don’t do much to benefit borrowers. Meanwhile, consumer advocates say restricting arbitration clauses will deter bad actors and force companies to reconsider certain activities because consumers will be more inclined to sue.



Considering an SBA Loan Program

Entrepreneurs and small businesses are a vital part of the U.S. economy. The nation’s 28 million small businesses account for 54 percent of all domestic sales, provide 55 percent of all jobs and have added 8 million jobs to the economy since 1990, according to the U.S. Small Business Administration (SBA).

It’s no coincidence this growth has occurred in tandem with an increase in the accessibility and range of SBA loan programs. Why should commercial mortgage brokers care? Because SBA loans provide a unique opportunity for brokers to expand their offerings beyond conventional mortgage loans.

With an SBA loan option for their clients, mortgage brokers can offer businesses access to the same type of long-term, fixed-rate financing enjoyed by larger companies. Interest rates are equivalent to favorable bond-market rates and are backed by an SBA loan guarantee.

Each SBA loan program is structured under government-directed guidelines to include maximum loan amounts and interest rates, guarantee fees, use of proceeds, eligibility criteria and more. Matching clients to the right program requires a deep understanding of these intricacies.

Plus, SBA requirements are constantly changing. Brokers need to be plugged in to keep up, so the support of a team of SBA loan specialists is a critical first stage of client engagement.

What are SBA loans?

SBA loans are long-term, low-interest loans tailored to small businesses, the definitions of which vary widely among industries. Small-business loans also are backed by a government guarantee, alleviating risk for lenders and opening doors to financing for businesses that have struggled to get a traditional loan.

“ SBA loan programs have capped interest rates and offer lower downpayments, making upfront costs more affordable. ”

SBA loan programs have capped interest rates and offer lower downpayments, making upfront costs more affordable. They also feature longer repayment terms, which reduces monthly payments. The programs include refinancing options to reduce debt and release cash flow; programs for providing easier access to credit for so-called “high-risk” industries like construction, gas stations and home-based businesses; and programs that help free up capital for real estate investments.

The SBA 7(a) program, for example, with loans up to $5 million and fees as low as zero percent, can be used to purchase real estate or equipment — including the cost of construction or renovation — purchase an existing business, or to refinance debt.

Certified Development Company (CDC)/504 loans are ideal for businesses looking to expand through investments in land or buildings — but not speculation or investments in rental real estate. The CDC/504 loan provides long-term, fixed-rate financing up to $5.5 million. Soft costs like architectural and legal fees also can be rolled into the loan. Downpayments as low as 10 percent are a big attraction of this program, because banks often require 20 to 30 percent of the purchase price. That downpayment is based on total project costs in most cases, which includes renovations and soft costs. That allows a business to preserve cash for working capital.

Advantages for mortgage lenders include lower risk, because the SBA guarantees the loan; a lower loan-to-value (LTV) ratio; Community Reinvestment Act credits; and being able to offer another option for keeping growing, small-business clients happy. Essentially, SBA loans offer a valuable financing option that enables brokers to expand offerings to eligible businesses beyond their current purview by teaming with an SBA lending partner.

Work with the right lender

It’s important to understand that the SBA lending landscape is not equal. To service small businesses more efficiently, the SBA has three categories of lender programs – General Partner (GP), Certified Lender Partner (CLP) and Preferred Lender Partner (PLP).

PLP status is the most desirable accreditation that an institution can receive because it gives the lender the authority to make the final credit decision, simplifying and expediting the loan-approval process for all parties. Nonpreferred lenders must submit loans to the SBA for approval, a process that can take several weeks, delaying approvals and yields.

 Key Points

Questions to ask before expanding into SBA loan programs

SBA loans are a valuable resource for commercial mortgage brokers seeking to expand their base, reduce risk and offer clients alternatives to conventional mortgages. But to participate fully and successfully, brokers must understand the market well and partner with an accredited SBA loan expert. If you’re considering adding SBA loan programs to your brokerage service, consider the following:

  • Does your brokerage have a full understanding of the intricacies of the SBA lending market, so you can determine which loan will work best for your borrowers?
  • Is your team familiar with the complexities of the SBA loan-application process and the precise requirements needed to ensure a successful application?
  • Could you act as an effective middleman to guide and inform your clients as they proceed through the underwriting and post-closing reviews?
  • Do your referral options include SBA-accredited banks that have the skills and expert staff to service and report on these loans in accordance with SBA guidelines (1502 reporting)?
  • Does your lending partner have sufficient back-office capacity and know-how to support SBA lending requirements?

Achieving PLP status requires lenders to have in-house staff expertise and a track record of success in the processing and servicing of SBA loans. To ensure a successful SBA loan application for your client, it’s recommended that mortgage brokers work with an SBA lender that has PLP status.

SBA loans offer many unique opportunities for lenders and brokers alike, but can be complex, and require significant resources and expertise. Here’s a breakdown of the process:

  • Loan application and underwriting. Applying for, structuring and underwriting SBA loans is a multifaceted process handled by a lender, not the SBA. The lender must determine a borrower’s eligibility, complete a credit analysis and package paperwork, all in accordance with SBA requirements. Brokers should work with lenders that have clear policies on credit parameters and what defines an “acceptable” loan.
  • Staffing and skill sets. To participate fully and successfully in SBA financing, lenders and brokers must understand the market well by investing in training and specialized staff, as well as integrating new risk and compliance protocols to ensure they meet government requirements. Small businesses are encouraged to seek out lenders with a solid track record of processing SBA loans. Again, this makes it critical for brokers to work with an SBA lender, preferably one with PLP status.
  • Loan servicing. Once the SBA approves a loan, lenders must administer it in accordance with federal guidelines and regulations. Complex standard operating procedures (SOPs) govern the 7(a) and CDC/504 programs. If a lender fails to demonstrate continued ability to evaluate, process, close, disburse, service and liquidate small-business loans, the SBA may refuse or revoke its SBA lending status.

Real estate red flags

Even with the right SBA partner, there are several proactive steps that mortgage brokers can take to ensure a winning SBA loan application and bring additional value to their client relationships.

Appraisals can trip up any real estate deal. With construction costs rising each year and the potential for material costs to change during the approval process, financial projections can easily go awry. Work with a good appraiser or get multiple appraisals to ensure you’re reflecting the big-picture financials.

Another surprise that can ruin any deal is an environmental issue, such as mold, radon or other land contaminants, as well as a failure to comply with applicable environmental laws. Work with an environmental consultant to identify and manage these problems before they derail your client’s property transfer or financing transaction.

Whether a client is looking to buy an existing facility or construct a larger facility, it’s likely they already have business debt tied up in existing assets. Rather than increase their debt or hurt their chances of being approved for a loan, become knowledgeable about how SBA refinancing options can consolidate existing debt. Work with your client to understand their debt and how they can save money through refinancing.

• • •

Partnering with an SBA lender is an essential step in not only ensuring your clients are matched with the right loan, but that the loan has the best chance of being approved by the SBA and serviced in accordance with SBA requirements. Sending along a loan referral also can pay dividends in terms of your client relationship and the added bonus of a nice referral fee. •



Small Banks Competing with Big Data Mining

When you talk to Jeffery Lee, it’s hard not to hear how excited the chief marketing officer of Seacoast National Bank is about the power of big data. The same goes for Robert Stillwell, the head of analytics at the $4.7 billion asset bank based in Stuart, Florida. With a small handful of colleagues in Seacoast’s marketing department, Lee and Stillwell have combined data analytics and marketing automation software to gain insights into their customers and run dozens of targeted marketing campaigns that, in some cases, generate returns on investment in excess of 100 percent.

Seacoast proves that a bank doesn’t have to be big to benefit from big data. In Lee’s estimation, in fact, just the opposite is true. “Our size is an advantage because our data isn’t trapped in a bunch of different silos,” says Lee. “We have one core banking provider, everything flows through it, and the data is readily available.” This eliminates the technical challenge of wrangling data from disparate sources. It also means that Seacoast “doesn’t have to fight battles about who owns which data,” explains Lee.

The chief information officer of Memphis, Tennessee-based First Horizon National Corp., the holding company for First Tennessee Bank, says the same thing. “This may be an advantage of smaller institutions,” says Bruce Livesay. “Because our environment is less complex, we can use a single tool across all of our channels. And it’s easier for us to do that than the big guys,” he continues, referring to the $29 billion asset bank’s data-driven marketing platform.

Of 13 global and regional banks surveyed by consulting firm McKinsey & Co. recently, almost every one listed advanced analytics among its top five priorities, with many investing heavily in it already. Yet, the expected results haven’t materialized. The problem is that these “efforts remain unconnected and subscale; they have not yet tied together their disparate efforts into a single, unified business discipline.”

Costs no longer serve as an impediment either, even for banks without hundreds of billions of dollars in assets. “The cost of software is unbelievably attainable. I had no idea it had dropped that much,” says Lee, who worked for a major credit card company before joining Seacoast in 2013. This includes the bank’s marketing automation platform as well as its analytics software.

“Because the [cost of] technology required to gather and store relevant data has gone down, it is no longer cost prohibitive for small and midsized financial institutions to get into big data analytics,” says David Macdonald, vice president of financial services at SAS, a leading company in business analytics software and services. Livesay agrees. While he wouldn’t disclose how much First Tennessee’s data-driven marketing automation platform from IBM costs, he made it clear that it “more than pays for itself.”

A direct mail campaign conducted by Seacoast over the past year offers a case in point. By analyzing branch visits, the bank identified customers who frequented branches to deposit checks instead of using mobile deposit. To encourage these customers to switch, Seacoast sent checks for nominal amounts to them with instructions on mobile deposit. Seven percent responded by permanently changing their behavior. That’s seven times the conversion rate one would ordinarily expect from a campaign that isn’t informed by advanced analytics, says Lee.

But if scale and cost aren’t impediments, what’s keeping smaller banks from taking better advantage of their data?

The answer is: Talent. Seacoast hired Stillwell, who had been using data analytics software for 15 years when he joined the bank in 2014. Like Lee, Stillwell came from the credit card industry, which has a reputation of being especially effective purveyors of data. Stillwell started on a shoe-string budget, with analytics software from SAS that ran on a personal computer. This worked as a proof of concept, giving Stillwell the tools and programming language needed to analyze large amounts of data without requiring a substantial investment. Seacoast then upgraded to a more expensive server-run version a year later.

Stillwell has since gone on to use the software to develop a customer lifetime value model that estimates per-customer profitability—it also specifies why a customer is or isn’t profitable. He built an opportunity-sizing engine, too, which identifies the next best product to sell a customer based on the product’s profitability and the customer’s current product portfolio. The bank is now combining these tools with its marketing automation platform to complete and automate the circle between insights and execution.

Once this happens, Lee believes Seacoast will be able to scale up its highly targeted marketing campaigns from the 40 or so it runs right now to more than 10 times that amount. “Most banks our size are doing one marketing campaign a quarter; we’re doing 40 at all times,” says Lee. “And we could be running 400 campaigns.”

Seacoast’s marketing department is now rolling these tools and insights out to a broader audience at the bank. Stillwell built a user interface atop the analytics platform to enable remote access, and the bank has begun educating frontline employees about how the insights from the data can help serve customers more effectively. It does so by offering insight into the products and services each of Seacoast’s customers would benefit most from, as well as the best channels over which to engage them, explains Lee.

These efforts have been well received, though they have at times run up against long-held assumptions. This is especially true in the context of customer profitability. “You ask someone in the branch who their best customer is, and they say it’s the person who comes in every day,” says Lee. But because it costs a bank more to service these customers compared to those who bank remotely, Seacoast’s profitability model comes to the opposite conclusion. “It’s a big cultural change because there are perceptions that don’t always align with what the data tells you,” says Lee.

First Tennessee saw a similar cultural change after implementing its own customer profitability model. “There’s absolutely no doubt that it’s changed the culture of the company. Most banks can’t give these kinds of insights to their bankers,” says Livesay. “The fact that we can has changed the behavior of our sales people. It prioritizes which customers they should be talking to and informs those conversations.”

At the end of the day, there’s no question that big banks derive many benefits from their massive balance sheets, but there are some areas where scale can be a disadvantage. The timely implementation of a fruitful data analytics program may be one of them.


Web Statistics