All posts by Sunil Sunil

Upgrade to a Better Whiskey

When I met Patrick Marran, it was a cold December night in New York City. My girlfriend and I had just given up on trying to break through the crowd at Rockefeller Center to see the big tree and we were in desperate need of a drink. We made our way down 49th Street to escape the masses, rounded the corner of 10th Avenue, and there it was, our saving grace, a whiskey bar.

Learn What All Those Confusing Whiskey Label Terms Mean With This Guide

Whiskey can be a little intimidating, especially when you don’t know terms like “single-barrel” and …

We were immediately drawn to its low-key lighting and relaxed atmosphere, so we walked in, took off our coats, and Patrick, the bartender, immediately greeted us with a hearty “Welcome to On the Rocks.” The bar itself isn’t a big place, but it’s overflowing with every kind of whiskey you could ever want served neat, up, on the rocks, or even in specialty cocktails. And their goal at On the Rocks is simple: they want you to try whiskeys you’ve never tasted before. Marran will ask you what you’ve had and what you’ve liked, then try to show you a better version of your affordable go-tos. After sampling a few glasses of Japanese whiskeys and American ryes I’d never heard of, I was sold, so I asked Patrick if he’d help me offer some useful recommendations to other whiskey fans out there who are looking to upgrade.

Like Maker’s Mark? Try W. L. Weller Antique

What most people don’t understand about their bourbon preferences is the ingredient percentage. Marran explains that Maker’s falls under the category of “wheated bourbon,” which means that after the required 51% corn, wheat makes up a majority of the other grains used during the distillation process. It makes wheated bourbons a very smooth, accessible drink. That’s why W. L. Weller Antique (Old Weller Antique) from Buffalo Trace Distillery is the perfect upgrade for Maker’s fans, and it’s a great stepping stone toward the mythical Pappy Van Winkle. It’s not too expensive either. You can find bottles for around $30.

Like The Macallan 12 Year? Try the Yamazaki 12 Year

The Japanese have been crafting award-winning whiskey for decades, forcing die-hard Scotch drinkers to take notice. Marran says that the Yamazaki almost always wins the blind tastings he does at the bar if someone asks for a Scotch whiskey flight. I’ve had a couple bottles of the Yamazaki 12 myself and can attest to its superior quality. Grab a bottle for around $100.

Scientists Prove Adding Water to Whisky Makes it Taste Better

I used to get in debates almost every time I drank whiskey on whether or not it was appropriate to…

Like Jameson? Try Some Green Spot

Marran describes Single Pot Still whiskey as a bridge between blended Irish whiskey and Scotch whiskey, and Green Spot from Mitchell & Son is an affordable way to dip one’s toes into the quality improvement over regular blended whiskeys. Marran says:

So many people stroll into a bar and dismiss the Irish whiskey as somehow inferior. That’s about as wrong as snow in July. This is my hands-down favorite option to break someone’s misconceptions.

If you want to go up in price from there, Midleton’s Redbreast isn’t a bad option either. You can find bottles of Green Spot for around $70.

Like Bulleit Bourbon? Try Michter’s US 1 Bourbon

A lot of people enjoy Bulleit bourbon and regard it as one of the best, but Marran suggests Michter’s US 1 Bourbon is a little more balanced in its taste. It’ll cost you a few more bucks, but Marran says it’s ideal for bourbon fans who know that a high-corn ratio in the mash bill is their “problem with whiskey.” And if you’re interested in a whiskey education, he recommends their Rye and American varieties to give you a good example of how different whiskeys taste. You can usually find bottles between $50 and $60.

Like Four Roses Yellow Label? Try Sons of Liberty Uprising or Stranahan’s Yellow Label

If you’re always on the lookout for a “super smooth whiskey,” Marran suggests you stay away from bourbons and go for some American single malts. Both Sons of Liberty Uprising and Stranahan’s Yellow Label will have you covered for younger, full-bodied whiskeys that always go down smooth. You can find a bottle of Sons of Liberty Uprising for around $50 a bottle (hard to find in the West), and you can find Stranahan’s Yellow Label for about $65 a bottle.

Like Laphroaig 10? Try Bruichladdich Octomore

According to Marran, Laphroaig Scotch seems to be the go-to for most novice peaty (type of smokiness) drinkers, but there are a dozen other Islay distilleries that deserve your attention. Bruichladdich Octomore is a higher-end smokey whiskey that comes in a few styles and showcases the artistic way the distillers make the flavors pop. Marran recommends you have it neat or with a few drops of water (even an entire ice cube is too much for the peat). You can find a bottle of Bruichladdich Octomore for around $60 to $80.

Like Dewars or Johnny Walker? Try The Shackleton Whiskey

This blended Scotch is easy to spot thanks to its robin’s egg blue box and label. Marran describes it as a blended whiskey that’s “designed” to taste like a single malt, so it’s the perfect whiskey to help ease your transition to a single malt palate. It has a full body, but it’s smooth on the tongue and easy going down. Plus, the recipe has some interesting history behind it. It’s based on the Scotch Sir Ernest brought with him during his 1907 expedition to Antarctica. You can find it for about $40 a bottle.

Like Old Overholt? Try Ragtime Rye

If you’re a rye kind of guy (or gal), Marran says the jump from a basic well rye to a three-year rye is going to knock your socks off. New York Distilling Company’s Ragtime Rye is part of a new whiskey movement in New York City where nine different distilleries are rolling out ryes that are 75% rye compared to the required 51%. This is your chance to upgrade to a “real rye,” as Marran puts it. You can find bottles for around $45.

Everything You Need to Know to Get Started Drinking Scotch Whisky

If you’ve never really explored it before, drinking whisky can be intimidating. Deciding what…

Like Bulleit Rye? Try WhistlePig Farmstock

According to Marran, people like Bulleit Rye because it’s an affordable, mellow rye that eases them into the world of decent whiskey after their college whiskey shooting days. If you’re ready to upgrade to something that’s just as mellow, but with more rye and a better bite, WhistlePig’s Farmstock is the way to go. There are notes of vanilla and toasted honey, and runs for about $90 a bottle.

Already like Yamazaki 12 Year? Try Amrut Single Malt Cask Strength

If you’ve already tasted the greatness that is the Yamazaki, Amrut should be your new best friend. Marran says it’s something all whiskey enthusiasts should try:

Whether you’re in it to show you know more about whiskey, or you merely want to continue building your exotic Single Malt collection, this single malt from India is a must-have in order to see why so many companies are taking the barley approach from Scotland and giving it a whirl.

Amrut’s whiskeys are a bit younger than others, but they’ve got full flavor and have been winning awards. You’ll probably have to order it online (prices can range from $60 to $100 a bottle), but it’s a tasty international whiskey that you can definitely show off to your friends.


2018 HMDA Issues to Focus On

Banks and credit unions are markedly more worried about regulatory compliance and risk management, according to new data. The results of the Wolters Kluwer Regulatory and Risk Management Indicator revealed that overall risk management concern is up 13 percent over the year. Regulatory concerns are up 3 percent for the same period.

According to the Indicator, which polled more than 600 banks and credit unions across the country, top regulatory concerns include the fair lending exam, new Home Mortgage Disclosure Act rules, and the ability to track, maintain, and report to regulators. Just under 50 percent of respondents said they’ve noticed increased scrutiny based on their most recent fair lending exam, while HMDA changes came in as the single-biggest concern across the board.

As for risk management, cybersecurity and data security topped the list, with a whopping 83 percent of those surveyed saying they’re either “concerned” or “very concerned.” IT risk and regulatory risk also came in high.

According to Timothy R. Burniston, Senior Adviser and Principal Regulatory Strategist at Wolters Kluwer, 2017’s many data breaches are likely to blame.

“These results—compiled against a backdrop of highly publicized data breaches at well-known entities, and at a time when financial institutions are preparing for the implementation of the most significant set of HMDA changes in several decades—drove the increase in concerns expressed in this year’s survey,” Burniston said.

On the compliance front, respondents were mostly concerned with optimizing their compliance spend, reducing exposure to financial crime, and managing their compliance monitoring and testing efforts.

“These responses, when viewed collectively, reinforce for financial institutions the strategic imperative of having a proactive, well-staffed and supported corporate compliance program that operates across the three lines of defense —the business units, along with compliance/risk and audit areas—in tandem with an overarching risk management framework integrated with all lines of business,” Burniston said.


Credit Score Changes Could Lead to Higher Mortgage Volumes

This battle over credit scores could shake up the mortgage market

Millions in home mortgages may be on the line as the Federal Housing Finance Agency debates whether to accept a new credit scoring system for loans backed by Fannie Mae and Freddie Mac.

Currently, Fannie and Freddie won’t buy mortgages unless lenders assessed the borrowers using the FICO credit score, which was created decades ago by Fair Isaac Corp. But several non-bank lenders argue that the system is too restrictive and excludes millions of potential borrowers from the mortgage market. They want the FHFA to start accepting VantageScore, a rival credit scoring system created by Equifax, Experian and TransUnion.

Last month, the FHFA asked lenders to chime in on the issue as it weighs a decision, the Wall Street Journal reported. Because around half of all U.S. mortgages are backed by Fannie and Freddie, the decision could have a big impact on the housing market.

VantageScore argues that it could assign credit scores to 30 million more people than FICO and potentially make 7.6 million more people who use little to no credit eligible for a mortgage. “Doing something just because you’ve always done it that way isn’t a good enough reason,” Mat Ishbia, CEO of United Wholesale Mortgage, told the Journal.

But some banks worry that a change could loosen lending standards and lead to more defaults. [WSJ] — Konrad Putzier 


2018 Mortgage Compliance Trends – Be Prepared

2017 began with a bang as hope permeated the banking industry.

A new administration promised to ease the compliance burden through deregulation, even commanded such through an Executive Order to revoke two existing regs for each new one issued.

Despite these attempts, the year went out with a whimper. The industry has yet to see any substantive change that could be considered burden reduction. While many changes remain bottlenecked inside the legislative process, agencies continued to finalize new regulatory requirements that had already been in the reg-writing pipeline before the reduction order took effect.

Because of this uncertainty, financial institutions have had to rethink their regulatory change management processes. In a climate rife with continuous and often complicated change, the industry turned to technology, which some call “regtech”—as well as hybrid solutions that combine expertise with technology—as a source of stability and to generate predictable outcomes.

Last year presented more “actionable items”—our term for a regulatory tweak that requires a financial institution to take some sort of action in response—than any time in recent banking history. There were more final rules issued (including one repeal); guidance documents published; updated booklets; and manuals updated—than ever before. Regulators issued a staggering 200-plus of these actionable items.

Against the backdrop of a desire for deregulation, other key themes rounded out the year:

• New exam criteria sharpened supervisory expectations for consumer compliance.

• Administrative controversy plagued the CFPB, as its authority (and existence) underwent review.

• Public sentiment turned against regulators in the wake of high-profile scandals and breaches.

• Controversial rules on payday lending and arbitration were delayed or modified.

• Mayhem prevailed in mortgage compliance with HMDA reporting and servicing rules seeing significant overhaul.

Let’s look at each of these developments in more detail.

New exam criteria

During this murky time, an element of clarity was the newly updated consumer compliance rating system. The first upgrade to this rating methodology in over 40 years offered meaningful and actionable guidance on how financial institutions can prepare for examinations across 12 assessment criteria.

The new criteria require examiners to assess four elements of board and management oversight (including how well institutions manage regulatory change), plus four elements of the compliance program in place. The last four criteria direct examiners how to evaluate violations of law, if found, and the extent of consumer harm such violations caused. Examinations taking place after March 31 applied the new rating system.

Confusion at CFPB

Since its inception, and well before Director Cordray’s resignation, CFPB has been a source of controversy. Legislators have sought to eliminate or modify the single-Director structure of the bureau, with several different bills proposing a panel structure or various advisory councils for governance. Talk also surfaced at various times about decommissioning or de-funding the bureau. Previously, the U.S. Appeals Court announced that a case deeming the CFPB unconstitutional in its nature would move forward in 2018.

Richard Cordray’s resignation, preceded by his nomination of Leandra English as his acting replacement, and President Trump’s appointment of Mick Mulvaney to the same acting post, has stoked ambiguity. The situation is still unfolding, in part because New York-based Lower East Side People’s Federal Credit Union has called on a federal court to remove Mulvaney and affirm English as the acting head of the bureau, citing the regulatory chaos that his appointment has caused. Meanwhile, English has been pursuing an injunction intended to install herself as acting head of the bureau.

While the fate and nature of CFPB remains uncertain, the silver lining is that even a shift in structure or leadership is unlikely to impact the methodology by which banks and credit unions are evaluated. The last methods were applied for four decades, so change in the short term is unlikely. Developing a solid compliance management system that adheres to the principles mandated in the assessment criteria was and will remain a sound strategy for years.

Changing public sentiment toward regulators

Two significant events impacted public sentiment toward regulatory bodies: Wells Fargo’s ongoing woes and the Equifax security breach.

In July, Wells Fargo’s forced placement of collision insurance on approximately 800,000 consumer auto loans resulted in thousands of wrongful delinquencies and repossessions. This public scandal came less than a year after CFPB fined Wells Fargo $185 million for wrongfully opening accounts for consumers without their.

During the first Wells Fargo scandal, there was speculation that CFPB would issue rules or guidelines on account opening incentives to discourage similar activity in the future. Although both events were widely discussed, consumers typically have a short memory for these types of controversies and public outcry quickly died down.

The Equifax data breach happened in March, and was publicly disclosed by the company in September. This breach had a more widespread impact on consumers, and heightened industry concerns around cybersecurity. Modest estimates placed the impact of the data breach at 143 million consumers, nearly half of the population of the U.S.

Experts were surprised and dismayed to learn of the vulnerabilities of a service provider as large and sophisticated as Equifax. Financial institutions reacted strongly, taking a renewed interest in how their third-party vendors manage cybersecurity risks.

The number of affected consumers added to the industry’s concerns regarding cybersecurity, and underlined the need for more direct and specific regulatory oversight of this area at the federal level. Consumer-friendly states like New York led the charge on adopting enhanced regulations. Federal regulators have yet to follow suit, though in his first meeting with reporters new Comptroller Joseph Otting indicated concerns in this area.

Controversy around payday lending

One of the more controversial regulations of the year was the CFPB payday lending rule finalized in October. The new regulations place an emphasis on lenders determining a borrower’s ability to repay; enforce cutoffs that restrict how often lenders can attempt to debit a borrower’s account; and encourage smaller loan amounts with longer repayment timelines and less risky loan options for lenders.

The ruling becomes effective on Jan. 16, 2018, and has a mandatory compliance deadline of Aug. 19, 2019.

While traditional bankers see the rule as an overdue attempt to curtail predatory lending, many payday lenders have taken steps to sue CFPB over the new reg. And last December 2017, a bipartisan resolution to repeal the rule was introduced in the House. Supporters cited the importance of these loan types for consumers with short-term cash flow issues.

In addition to legislative threats, the rule is even more vulnerable thanks to the bureau’s leadership controversy. Acting Director Mulvaney lacks authority to repeal the rule, but he can extend its effective date or reopen the comment period. The drama unfolding around payday lending regulations showcases the divided perception of the role of regulatory requirements, especially in 2017, when this sharp rift has resulted in so many consecutive changes to the same regulations (i.e. HMDA and Mortgage Servicing).

Arbitration: perfect snapshot of 2017 regulatory environment

The finalization and subsequent congressional repeal of the CFPB arbitration agreements rules illustrates the confusion and uncertainty in the regulatory environment.

The original rule prevented financial services providers from forcing consumers into arbitration instead of enabling them to pursue lawsuits. Immediately following publication of the final rule, certain members of Congress and lobbyists called for its repeal.

That repeal, by way of a House-passed Congressional Review Act resolution, was approved by the Senate and signed by the President in November. The industry had never seen a regulation issued and then repealed so quickly.

HMDA amendments impacting lending, including CRA and ECOA

2017 saw amendments to amendments as well. This year’s changes to the 2015 HMDA Amendments had a profound impact on the industry upon their release in August organizations have scrambled to prepare for the Jan. 1, 2018, deadline.

In keeping with the tone of uncertainty, industry insiders believe bankers should brace for the possibility of even more HMDA changes in 2018. Congress may even attempt to extend the due date and revise the reporting criteria.

Amendments to the Community Reinvestment Act (CRA) and the Equal Credit Opportunity Act (ECOA) were also needed to align with the HMDA amendments.

The CRA amendments use definitions of “home mortgage loan” and “consumer loan” that are consistent with the revised HMDA reporting criteria. ECOA was amended to permit creditors to collect the expanded demographic information required by the new HMDA rules. Without these updates to CRA and ECOA, lenders would be forced to apply disparate definitions for the same loan types, and the different demographic data collection rules would also make reporting extremely challenging.

Guidance offered on TRID through amendments

CFPB finalized amendments to TRID in 2017 and proposed additional amendments. (TILA RESPA Integrated Disclosures) Some additional mortgage lending regulations that CFPB proposed this year focused on clarifying TRID, specifically offering guidance around common questions that lenders had raised over the last two years. Some of those updates include clarification around common construction lending questions and whether making changes to a loan a few days before closing requires a new statement. This represents one attempt of many in 2017 to clarify existing regulations.

Clarifying common mortgage servicing concerns

In July, CFPB published amendments to its 2016 Mortgage Servicing amendments, effective in October 2017 and April 2018. Early intervention notice requirements were amended effective Oct. 19, 2017, and proposed amendments to periodic statements will become law in April 2018.

The general rule established in 2016 states that once a borrower becomes delinquent, mortgage servicers must notify that consumer of available foreclosure prevention options every 45 days. At the same time, servicers are prohibited from sending the notices more than once in a 180-day period.

Lenders expressed concern about this 180-day window for providing a subsequent notice, observing that if the day fell on a weekend or holiday, it would be impossible to comply. In response to this concern, the amendment provides a ten-day extension period. CFPB also clarified timing requirements for modified statements for borrowers in bankruptcy.

In other important but less complicated developments:

• A revised Call Report template was introduced effective with the March 31 filing for use by financial institutions with no foreign branches and assets under $1 billion.

• Regulation CC was amended to modernize electronic check collection and return procedures. The new rules, effective July 1, 2018, establish warranties for electronic presentment.

Summing it up

In conclusion, 2017 presented the financial services industry with a challenging and confusing regulatory environment in a constant state of flux. Supervisory agencies and Congress seemed to have conflicting objectives at times, which manifested in startlingly swift responses or retractions of each other’s progress.

Regulatory change in all forms, whether new requirements or deregulation efforts, requires significant time and effort to implement.

Because of the incessant changes throughout this year, with more than 200 actionable items that financial institutions carefully implemented, the regulatory burden has been more strenuous than ever.

Part 2 of this series will offer insights for 2018 and strategies for managing regulatory change.

About the authors

Pam Perdue is chief regulatory officer and executive vice-president at Continuity. Donna Cameron is director of regulatory I/O, CRCM, CCBCO. Continuity is a provider of regulatory technology (regtech) solutions that automate compliance management for financial institutions of all sizes.


Upcoming Mortgage Regulation & Compliance Changes for 2018

Getting a mortgage today is much different than it was before the financial crisis.

Loans have to meet certain standards and there are many rules lenders and servicers have to follow. But after a shakeup in leadership at the Consumer Financial Protection Bureau, the future of some policies is uncertain.

Here’s why: The new acting director of the CFPB, budget director Mick Mulvaney, is expected to review regulations that haven’t been finalized, and he may try to alter rules that are already in place.

Here are three policies Mulvaney could change and what adjustments to them might mean for homeowners and homebuyers. The CFPB has already announced plans to reconsider certain rules.

Home Mortgage Disclosure Act

When you apply for a mortgage, some information – including your race, ethnicity and sex – could be released to the public.

For thousands of lenders, reporting mortgage information is mandatory under the Home Mortgage Disclosure Act (HMDA). While the law has been around since 1975, the amount of data made publicly available is increasing, and not everyone is thrilled.

The mortgage industry believes that publishing so much data raises concerns about consumer privacy. And there’s no way to opt out of having your information shared, notes Richard Andreano Jr., partner at the Ballard Spahr law firm.

“They expanded the data set so much that there was a concern that if it was all made public, at what point are borrowers able to be identified using HMDA data?” asks Alexander Monterrubio, director of regulatory affairs at the National Association of Federally-Insured Credit Unions (NAFCU).

Consumer advocates want more information released. Doing so, they argue, protects borrowers from discriminatory lending. It also holds lenders accountable for their actions, says Jaime Weisberg, senior campaign analyst at the Association for Neighborhood & Housing Development (ANHD).

The latest HMDA requirements go into effect January 1, 2018, but the CFPB, the Federal Deposit Insurance Corp. and the Office of the Comptroller of the Currency announced that lenders won’t be penalized for mistakes made while collecting data in 2018 or reporting it in 2019. They also won’t have to resubmit data unless errors are “material.”

The CFPB also said that it would revisit certain aspects of HMDA.

“HMDA could be made almost worthless,” says Peter Smith, a senior researcher at the Center for Responsible Lending. “We need a good body of rules to make sure lenders are playing a fair game with consumers.”

Ability-to-Repay and Qualified Mortgage Standards

Another rule that has been subject to debate is the qualified mortgage (or ability-to-repay) rule implemented in 2014. It requires most lenders to make a “good-faith effort” to determine whether someone can afford a mortgage and eventually pay it back.

Critics say the new standards have kept many people, including low-income individuals, from becoming homeowners.

The CFPB is obligated to review the ability-to-pay rule since the bureau is required to assess existing regulations within five years.

With the CFPB’s change in leadership, there may be pressure to loosen lending requirements, says Barry Zigas, director of housing policy at the Consumer Federation of America. There’s already a Senate billaiming to give qualified mortgage status to loans offered by many banks and credit unions without requiring the lender to meet every condition under the ability-to-repay rule.

The bill’s supporters say it would give more consumers access to mortgages. But Zigas calls it a “dangerous effort to undermine consumer protections.” If it passes, a financial institution may legally avoid going through all of the steps lenders take to ensure borrowers can repay their loans, like considering their debt obligations, verifying income and employment history, and calculating their monthly debt-to-income ratio.


In 2015, the CFPB combined the mortgage disclosure obligations required by the Truth in Lending Act and the Real Estate Settlement Procedures Act under the TILA-RESPA Integrated Disclosure (TRID) rule. One result of the TRID rule is that consumers preparing to close on a house have two documents explaining their closing costs and mortgage terms, rather than four.

While the new forms helped simplify the closing process for homebuyers, the TRID rule created other problems. For one, it could prevent buyers from closing on their homes as quickly as they want to, says Brandy Bruyere, vice president of regulatory compliance at NAFCU.

For many items on the disclosures, there’s little or no tolerance for last-minute changes, and lenders have had to choose between rejecting borrowers’ requests and eating additional fees.

The CFPB has worked to fix the TRID rule and clear up confusion for lenders. But it hasn’t addressed every issue, leading members of Congress to create a bill that would make additional adjustments.

“The TRID disclosures are solid, and any significant change would add additional costs and uncertainty to the closing process,” says Smith from the CRL.

Rules won’t change overnight

The CFPB’s final rules can’t be modified without issuing a notice and asking the public for feedback. Take these steps to ensure your voice is heard, especially if you’re concerned about how rule changes could affect you.

Comment on any potential policy changes. When the opportunity arises, visit the CFPB’s website and comment on the rules the agency is proposing. “The CFPB doesn’t have to do what the comments say, but they have to provide a reason for not doing so to avoid the rule being struck down as arbitrary and capricious,” says Benjamin Olson, a former deputy assistant director for the Office of Regulations at the CFPB. 

Contact your representative. Congressional leaders can review certain rules issued by the CFPB and potentially overturn them. That’s what happened with the CFPB’s arbitration rule. The policy would’ve made it easier for consumers to file class action lawsuits against banks, but lawmakers used their powers under the Congressional Review Act to kill it before it could take effect. Legislators are now considering the CFPB’s final rule on payday lending and may seek to repeal it. 

Use the complaint database. If you’ve had issues with your mortgage lender or servicer and you’re having trouble resolving them, file a complaint with the CFPB. Typically, you’ll receive a response within 15 days. You can use the same database if you’re having problems with other financial entities, like the bank managing your checking or savings account.

If you’re looking at mortgage rates and preparing to buy a home for the first time, read reviews and do your homework before choosing a lender.


Why are There Too Few Homes For Sale

Almost anyone who has searched for a house recently knows there are not enough houses for sale.

One simple number defines the problem:

In October 2017, the nation had a 3.9-month supply of existing homes for resale. That means, at the pace seen then, it would have taken 3.9 months to sell all the homes on the market. A supply under six months puts home buyers at a disadvantage.

“Inventory is tighter than it appears. It’s much lower for entry-level buyers,” said Sam Khater, deputy chief economist for CoreLogic, a data provider for the real estate industry. He spoke at the Urban Institute’s annual housing finance symposium on Nov. 1.

Why don’t millennial, first-time buyers and Generation X move-up buyers have more to choose from? Who is responsible for the shortage of homes for sale and why? We’ve identified some suspects.

1. Boomers won’t move

More than three-quarters of baby boomers own their homes. For millennials to buy their first homes, and for homeowning Gen Xers to move up to their second home, boomers have to sell. But boomers are staying put. conducted a survey this year that found that 85% of boomer homeowners planned to stay put over the next 12 months. “The reasons for that could be that they’re living longer, they’re living healthier and so staying in place is more possible for them,” says Danielle Hale, chief economist for

“[Baby boomers] have been slower than previous generations to sell the family home, thus exacerbating the shortage of houses for sale,” concluded a Freddie Mac research report.

Also, thanks to rising home prices, would-be downsizers can’t find smaller homes that cost much less than their current homes, says Dennis Cisterna, chief executive officer of Investability Solutions, a real-estate investor marketplace. So they stay put. “There’s no urgency to sell right now unless you have to,” he says.

2. Landlords won’t sell

Millions of single-family homes were converted to rentals after the foreclosure crisis, Cisterna says. “Those investors have no incentive to sell,” he says. When a house goes up for sale, “now you’re competing not only with your neighbor who wants to buy that house, you’re also competing with investors.”

Renters made up 36% of households in the third quarter of 2017, up from 31% in 2005, according to the Census Bureau.

With greater demand for homes, but less supply, home values rise. Meanwhile, rents are rising faster than home prices. “Both of those factors would tend to encourage landlords to hold onto those homes and rent them out,” Hale says.

3. Owners are hooked on low mortgage rates

Over the last three years, the interest rate on outstanding mortgages averaged just 3.8%, according to the Department of Commerce. People savor their low mortgage rates and don’t want to give them up.

So as mortgage rates rise, homeowners tend to keep their homes a little longer, said Frank Nothaft, chief economist for CoreLogic, at the Urban Institute symposium.

“That means the inventory of homes for sale, which is already very low, is likely to remain that way if we see higher interest rates,” Nothaft said.

4. Builders ignore entry-level buyers

Through the first nine months of 2017, about 473,000 newly constructed houses were sold, according to the Census Bureau. Fifty-five percent of those homes cost $300,000 or more. “Of the new homes that we are building, the vast majority are move-up products,” Cisterna says. “They’re not for the entry-level buyer anymore.”

Builders counter that they pay $45,000 for a typical buildable lot nationally and around three times that in New England. And they say they face a shortage of skilled construction labor because experienced workers dropped out of the construction trades during the Great Recession, younger people aren’t replacing them, many job applicants can’t pass drug tests, and immigration enforcement is scaring some laborers away.

5. Regulations add costs

Homebuilders say regulations — including environmental protection, infrastructure fees and rules that specify minimum lot sizes — add tens of thousands of dollars to the cost of every home. Regulations account for about one-quarter of the cost of each home, said Michael Neal, assistant vice president for forecasting and analysis for the National Association of Home Builders.

A Freddie Mac report concurred. “Land-use regulations have become more burdensome” in the last 30 years, making it costlier to build, it said. Freddie Mac found that it takes just 3.5 months to get a building permit in lenient New Orleans, whereas it takes 17 months to get a building permit in restrictive Honolulu. A longer permitting process costs money as developers carry the investments on their books while awaiting permission to build.

6. Owners want to restrict supply

Local zoning and land-use regulations aren’t bestowed by a hidden hand. They’re enacted by officials who were elected by the people. When planning and zoning officials limit the number of houses that can be built in a neighborhood, or when they set minimum square footage for houses, they’re limiting the supply of homes and making them more expensive. They’re responding to constituents.

“There are regulations that are more about the neighbors’ sensibilities than they are about the safety of the people living in the houses,” says Miriam Axel-Lute, associate director of the National Housing Institute, a nonprofit that examines how social issues affect housing.

“It’s neighbors who want their property values to go up, in most cases, who are insistent upon some excess safety design standards or minimum lot sizes or other things,” she says. “They either want their property values to go up or they don’t want, quote, ‘the wrong sort of people’ in their neighborhoods. This is the pressure behind a lot of the most damaging regulations out there.”

How can home buyers respond?

Clearly, it will take time and concerted effort to fix the problem of not enough houses for sale. Meantime, there are things home buyers can do:

Be realistic about how long it will take to find and buy a home. Real-estate agents can provide an estimate, based on market conditions.

Save plenty of money for a down payment and reserves.

Improve your credit score to get a good mortgage deal.

Be ready to make a competitive offer when a suitable home comes on the market.

That advice works for any real-estate market, whether it favors sellers or buyers. But these tips are especially appropriate when inventory is low.


Want Higher Returns on Mortgages ?

With strict new federal mortgage regulations on banks coming in January, more borrowers – and investors – will be looking at alternative financing. Investing in alternative mortgage lending is already a fast-growing, multi-billion dollar industry.

Two key avenues for investors are Mortgage Investment Corporations (MICs) and syndicated mortgages. They both lend money to higher-risk borrowers, but  investors must understand the pros and cons of each, and what makes them so different.

Mortgage Investment Corporation (MIC)

An MIC is a pool of capital that is raised through shareholders and is collectively lent to a diversified pool of residential and commercial mortgages. You are buying shares in a corporation that invests on your behalf.


Since you are investing in a pool of mortgages you can mitigate a great deal of the typical risk associated with direct private or syndicated mortgages.

An MIC has a team of professional mortgage underwriters who review mortgage loans every day and can determine the risk on your behalf.

It creates regular monthly cash flow that can be tax f ree savings account (TFSA) or registered retirement savings plan  (RRSP) eligible.

If a mortgage goes into default, it is only one of many, so the MIC can begin the foreclosure procedure without having to disrupt monthly cash distributions to the investor.

Targeted returns are typically from 7 per cent to 8 per cent, annually.

The monthly payment is a “flow-through” from the pool of monthly mortgage payments back to the shareholders. There is no term; it is continuous.

A MIC will have an offering memorandum that clearly outlines the parameters and lending restrictions, including: maximum loan to value and percentage allowable for commercial real estate, raw land or development.


An MIC has higher overhead and, as such, charges a management fee. The gains are net after fees. Thus net returns are often closer to 7 per cent rather than the 10 per cent targeted by privates or syndicates.

Caution is required that the MIC does not do the following: allocate an excessive amount of loans to farmland, raw land or developments, since these are hard to foreclose on, and it can be difficult to recuperate the loan in the event of a forced sale; or loans lent to personal friends or management partners.

Check that the MIC you invest with has a third-party independent advisory board that oversees the nature of the loans and ensures that they are consistent with their operating memorandum.

Syndicated mortgages

This is the scenario in which two or more individuals lend their money to a specific project and borrower. The money could be lent on anything from a single-family house to a developer with a large project.


A syndicated loan is a direct loan to an individual with no fees to a middleman, so the return can be higher – typically above 10 per cent.

The syndicated group can be on title.

A mortgage broker who tends to “de-risk” the investment typically sources syndicated mortgages.

You know exactly whom you are lending to and what you are lending on.

It provides monthly cash flow.


The biggest downside is that you are lending directly to a single individual or developer.

Any individual can encounter problems beyond his or her control, which could cause a default on the mortgage, even foreclosure.

In the event of such trouble, the syndicated partners may not have the experience and/or willingness to foreclose, a process that can take months.

If you have to foreclose, your money, cash flow and return can be held in limbo for months. If you lent to a development that was half complete when foreclosed on, the syndicate could lose a large portion of its investment.

A syndicated loan can be re-paid early (depending on terms) and it may take time to find the next “deal” or person to lend to. The return on syndicated loans looks attractive but your money is not always at work for 365 days a year. Your real annualized returns over a five-year period may be closer to 8 per cent.

Not all syndicated mortgages are TFSA or RRSP eligible.


Investing through a syndicated mortgage will generate higher returns than an MIC, but in doing so you take on more risk.

There is always a risk that some people will default on their mortgage – remember, there is a reason they did not qualify at the bank. The single biggest difference between an MIC and a syndicated mortgage is that with an MIC, you bought shares in a fund that invests in a pool of mortgages, so if up to 5 per cent go into default, 95 per cent are still paying monthly. With a syndicated mortgage, if the person you lent to defaults, your income stops and your money is at risk.

Syndicated mortgages are more appropriate for the sophisticated investor who understands the risks associated and expects a higher return.

MICs are more suitable for the less-experienced investor who is willing to accept a slightly lower return in exchange for increased security.



Thinking of Leaving Your Mortgage Company ?

Mortgage lender Guaranteed Rate alleges that while still employed at the company, one of its “most highly compensated executives” planned and participated in an exodus of more than 20 employees to a newly formed rival, according to a lawsuit filed by the Chicago-based company.

Joseph Caltabiano, the former senior vice president of mortgage lending at Guaranteed Rate who is named in the lawsuit, disputes those claims. “I deny the allegations that I did anything inappropriately,” he said.

The employees who left Guaranteed Rate allegedly joined the staff of Bemortgage, a recently launched mortgage lender that operates as a division of Bridgeview Bank Group, according to the lawsuit, filed Wednesday in Cook County Circuit Court. Caltabiano joined Bemortgage’s ranks as senior vice president of mortgage banking about two weeks ago, he said Friday.

Guaranteed Rate paid Caltabiano about $1.75 million this year through Nov. 15, according to the lawsuit. He was one of the three highest producing loan originators employed by the company, and remains the ninth largest shareholder, the complaint states.

The company “terminated” Caltabiano on Nov. 16, according to the suit. Court documents say Caltabiano allegedly coordinated the transition of Guaranteed Rate’s Chicago-area team to Bemortgage with senior executives at Bridgeview, some of who had also previously been employed at Guaranteed Rate.

Those team members’ transition allegedly had been planned while Caltabiano was still employed at Guaranteed Rate, according to the complaint. The lawsuit alleges that Caltabiano breached his fiduciary duties to Guaranteed Rate by soliciting its employees to leave and join Bemortgage and by competing with it on behalf of Bemortgage.

“Mr. Caltabiano was terminated for misconduct, as described in our lawsuit,” Guaranteed Rate said in a statement Friday.

Caltabiano denied those allegations and said he disagrees that Guaranteed Rate terminated him. He said he worked there for 15 years and that it was a good place to work, but the time had come to explore more opportunities.

“I have a staff that works with me that voluntarily decided to pursue other opportunities as well,” he said. “You’ve got a lot of new opportunities in the mortgage banking space that weren’t here five years ago.”

Also named in the suit is Bridgeview Bancorp, holding company of Bridgeview Bank, which has about 15 locations throughout the Chicago area. The lawsuit also alleges Bridgeview and Caltabiano conspired to breach their fiduciary duties. Peter Haleas, chairman of Bridgeview’s board, said the bank did nothing wrong.

“I know that Bridgeview conducted itself in the full spirit of the law and business ethics, and we have no culpability,” he said.

In May, Guaranteed Rate filed an unrelated lawsuit alleging an employee and two former employees solicited other workers to join competitor Cross Country Mortgage and planned to open competing branches while still employed by Guaranteed Rate. The case was dismissed in September, according to court documents.



Fannie Mae Updates Selling Guide

Selling Guide Announcement SEL-2017-09  October 31, 2017 Selling Guide Updates

The Selling Guide has been updated to include changes to the following:

 Servicing Execution Tool™ (SET™) and Servicing Marketplace  Inter Vivos Revocable Trusts

 Consolidation of eSign and Electronic Transactions  Mortgages Paid by Others

 Form 1004D as Optional for Uniform Collateral Data Portal (UCDP)

 Miscellaneous Selling Guide Updates Each of the updates is described below.

The affected topics for each policy change are listed on the Attachment. The Selling Guide provides full details of the policy changes. The updated topics are dated October 31, 2017. In addition, revisions to the Texas Security Instrument are described in this Announcement.

Servicing Execution Tool (SET) and Servicing Marketplace In December 2014, we introduced the Servicing Execution Tool (SET) Bifurcation option for concurrent transfers of servicing via the Pricing & Execution – Whole Loan® (PE-Whole Loan) committing platform, under which the selling representations and warranties for the delivered loans are bifurcated from the servicing duties, obligations, and responsibilities. With this update, we are expanding access to the bifurcation of selling and servicing representations and warranties available through PE-Whole Loan. In addition, we are introducing the Servicing Marketplace, an application designed to enhance and bring new concurrent transfer of servicing options to customers. This expansion is designed to simplify the customer experience related to concurrent transfers of servicing transactions and provide certainty of sale, execution, and process efficiency. In order for a seller to join SET or Servicing Marketplace, the eligibility criteria outlined in the Selling Guide must be met. As a reminder, specific lender approval is required to participate in the SET and Servicing Marketplace solutions. Effective Date Loans delivered against PE-Whole Loan servicing released commitments taken on or after December 4, 2017 will be bifurcated if seller participates in SET or Servicing Marketplace. Inter Vivos Revocable Trusts Normally, Fannie Mae deems property in which no borrower has a direct ownership interest as ineligible collateral. An exception has been granted for inter vivos revocable trusts, a common estate planning tool that may involve instances where no individual borrower has an ownership interest in the mortgaged property. We have made changes to the Selling Guide to clarify the distinction between the individual borrower and the inter vivos revocable trust as owner of an interest in the mortgaged property. We also clarify our expectations for the execution of notes and mortgages. © 2017 Fannie Mae. Trademarks of Fannie Mae. SEL- 2017-09 2 of 4 Effective Date These updates are effective immediately. Consolidation of eSign and Electronic Transactions In line with our continued efforts to simplify and consolidate policies shared by the Selling and Servicing Guide, we have again updated and streamlined duplicative content in a few topics in Part A, Doing Business with Fannie Mae, pertaining to electronic records, signatures, and other electronic transactions. With this update, we have  consolidated into one topic the various policies that pertain to the management of electronic transactions and confirmed that sellers/servicers are authorized to originate, service, and modify loans using electronic records (special approval is still required for electronic promissory notes);  clarified that audio and video recording are not permitted formats except to the extent requested by us in connection with permitted remote notarizations;

 streamlined language to clarify that electronic records must accurately reflect information and formatting as it was presented to the intended beneficiaries and signers;

 required that systems generating electronic records generate them as valid records and be maintained as secure;

 confirmed that recorded mortgages and deeds of trust need not be maintained in paper format;

 confirmed that all electronic signatures must comply with ESIGN, UETA, and applicable law; and

 removed requirements for document custodians from the Guide as they were duplicative of requirements in Fannie Mae’s Requirements for Document Custodians (RDC). There are no policy changes associated with this consolidation of content. The duplicative content was removed from the Servicing Guide in the update published on October 11, 2017, and the consolidated policy now resides within Selling Guide A2-5.1-03, Electronic Records, Signatures, and Transactions. Effective Date These updates are effective immediately. Mortgages Paid by Others We recently updated our policies in the Selling Guide related to multiple financed properties and mortgage debts paid by others. With this update, we are clarifying that when a borrower is obligated on a mortgage, but another party has been making the mortgage payments  the lender may exclude the full monthly housing expense from the DTI ratio, provided the borrower is not using rental income from the applicable property to qualify; that is, the PITIA may be excluded and not just the principal and interest payment;  the mortgaged property must still be included in the borrower’s multiple financed property count and the unpaid principal balance for the mortgage must still be included in the calculation of reserves for multiple financed properties. Effective Date These clarifications are effective immediately. Form 1004D as Optional for Uniform Collateral Data Portal (UCDP) To align with the UCDP Release Notification from September 12, 2017, we updated our policy related to forms that can be submitted to UCDP. Lenders now have the option to submit the Appraisal Update and/or Completion Report, (Form 1004D) directly to the portal for conventional mortgage loans delivered to Fannie Mae. © 2017 Fannie Mae. Trademarks of Fannie Mae. SEL- 2017-09 3 of 4 Effective Date Effective immediately. Miscellaneous Selling Guide Updates  B4-1.3-01, Review of the Appraisal Report. We updated the overview to clarify the purpose of our appraisal report policies.  B5-5.2-03, DU Refi Plus and Refi Plus Property Valuation and Project Standards Condo, Co-op, and PUD Project Review Requirements. To align with our standard policy, we updated the condo, co-op, and PUD project insurance requirements for DU Refi Plus loans to remove the requirement for liability insurance coverage.  A2-4-01, Master Agreement Overview. The Selling Guide contains a list of the types of mortgage loans that currently require negotiated terms in a Master Agreement, which includes second mortgage loans. From time to time, we receive questions as to whether we are currently negotiating second mortgages. As a result, we have added a clarification that we are not approving lenders for or accepting deliveries of second mortgages. Revisions to the Texas Security Instrument Fannie Mae and Freddie Mac have revised the Texas Deed of Trust (Form 3044) to reflect recent changes to state law that affect the date of foreclosure sales. The revised Form 3044 (with a revision date of 10/17) is available on the SingleFamily Security Instruments page on our website. Effective Date Lenders are encouraged to use the updated document immediately, but must do so for mortgage loans with note dates on or after April 1, 2018. Proposed Texas Constitutional Amendments for Home Equity Lending Voters in Texas will be voting on proposed amendments to the Texas constitution on November 7, 2017. These amendments, if passed, will affect home equity lending in Texas, and will become effective on January 1, 2018. Fannie Mae is assessing the potential impact on our Texas home equity legal documents and will provide guidance and updates if the amendments are passed. ***** Lenders who have questions about this Announcement should contact their Customer Delivery Team.


CFPB Publishes Information Regarding Beta Launch HMDA Platform

The FFIEC and HUD have published the following resources for financial institutions required to file Home Mortgage Disclosure Act (HMDA) data:


Updated November 2017:

The Bureau launched the beta version of the HMDA Platform.

A new short video introducing the HMDA Platform is now available on CFPB’s YouTube channel.

HMDA Platform

The beta version of the HMDA Platform allows financial institutions to upload sample HMDA files and perform validation on the data; review edits; confirm the test data submission; and conclude the test HMDA filing process.

Technology Preview

The Technology Preview provides resources for financial institutions preparing their systems to file HMDA data with the CFPB.

Filing Instructions Guide

Separate Filing Instructions Guides (FIG) are now available for data collected in 2017 and 2018.

For data collected in 2017

For data collected in or after 2018

For data collected in or before 2016, please visit the FFIEC website  for data submission resources.

Loan/Application Register (LAR) Formatting Tool

The LAR Formatting Tool is intended to help financial institutions, typically those with small volumes of covered loans and applications, to create an electronic file that can be submitted to the HMDA Platform.

File Format Verification Tool (FFVT)

The File Format Verification Tool is provided for filers who wish to confirm that a LAR file is formatted in the required pipe delimited text file format, and meets certain formatting requirements specified in the Filing Instructions Guide. Section 3 of the HMDA Tools Instructions guide provides further information on using the FFVT.

HMDA Loan Scenarios

The HMDA Loan Scenarios is provided as an illustrative aid to help HMDA filers prepare their loan/application register.

Frequently Asked Questions (FAQs)

Do you have additional questions? Please check out the FAQs.


For technical questions about reporting HMDA data collected in or after 2017 use this form or email

source :

Web Statistics