[David] Alice, good to have you back with a legislative update
[Alice] Hi, everybody. Hi, Dave. Welcome back, Dave, and congratulations again. Thank you. Just wanted to give everyone… This week I’m going to give a quick update on what’s going on with the agencies. We haven’t talked about Fannie, Freddie memos and that type of thing in a while, so just a quick update. Fannie did issue a memo that made some changes in the allowable foreclosure and bankruptcy attorney fees. There was also a selling guide announcement that changed some nuance things within the loan process, like verbal verifications how to handle Schedule K-1 income if ownership is below 25%. So little micro pieces that a lot of our listeners may not be dealing with unless you’re actually in the processing and origination side. But some good stuff, some good nuggets to make sure that you go pay attention to. The other thing that we’d been waiting on, I’m glad FHA came out with, that they are allowing the Vantage score 4.0 for case numbers on or after January 1st of ’27. For those of you who don’t deal a lot with FHA, everything’s always based on when do you order that case number. Like we just said, don’t get out in front of your skis. You can start talking about it now. But keep in mind that you’ve got a little bit of time before you could actually order that appraisal and get that case number. But it is on the table. So you’re gonna have to read the memo. They’ve got some good information out there to know if I’ve got multiple scores score models, how do I manage that? But all the borrowers on the loan have to be using the same score model. But you’re still gonna have to work with the same criteria, same thresholds for credit scores. That still, it still applies no matter which score you’re using. So check out that detail that FHA has provided. Just a reminder on VA. VA has their VA Loss Mitigation Waterfall and Partial Claim program. Must be fully implemented by November 28th. So you are running out of time if you haven’t got that one figured out. And last but not least while I was away, while we were sleeping, we were off last week. USDA was out for only about five, six days there. As of October 6th, they’re back into guaranteeing loans. So just a real s- short changeover period as we had the fiscal year change. So lenders had to hang on to their USDA loans for only a week this time around. So back in business with USDA. And that’s my quick set of nuggets on announcements from the agencies today, Dave. I’ll turn it back to you.
[David] Yeah. One, one of the things that I think it was Kittel made a comment. He said “Can’t wait to get Alice’s assessment with the discussion that happened last week.” I don’t know if you had a chance to go back and listen, but there was a really good discussion that with the ability to apply, the consumer’s ability to apply for a mortgage loan now because of online applications, and it’s gotten so easy. Are we actually gonna find multiple… The problem of multiple apps Which there’s no consequence to the consumer. Why would you not put in three, four apps when you could be- it’s such a low barrier to the effort to get a hedge on rates? That is gonna have a huge cost impact on so many companies. And at one point in time, we’ll talk about this with Alan a bit, but what’s just your thoughts on that, Alice?
[Alice] One thing I can say that I saw was a big difference in companies in regards to that type of fallout that you can have by the customers repeatedly shopping and then leaving you in the lurch is what is your policy on when are you gonna lock the interest rate for them? And so for companies who had a policy that said, “When I took an application, I’m going to lock. You need to lock your rate,” then do you have a customer who’s more committed to you? But if you’re willing to take applications on a floating interest rate, then you have more risk with them going I don’t have any commitment.” I don’t think we’ll go back to the days of trying to collect an upfront fee because that fails real quick when your competitors don’t collect a fee. Yeah. But I would love to know this group’s experience with that. In the companies that I saw, that seemed to make and help keep that fallout number at least manageable. And then of course, as a lender, you’ve got to manage and know what that number is. So there are certain business policies, practices, when a loan can go in your software, that you can take a look at to keep that under control. But I agree. It will be crazier with the way that we have two different scoring models now to work with.
[David] Yeah. I think there’s a lot more- Yeah … chance of that. But anyway, Bill.
[Bill] Yeah, and because the other thing we talked about last week to me, is driving a lot of it is the amount of direct-to-consumer promotion that Vantage is doing right now. They are all over the media, and again, last week I equated it to, the, drug market. Now I’m talking the legal drug market here, right? But how the pharmacy companies they’ve been advertising for years because they want you to go into your doctor and say, ” I want X.” I’m already hearing that’s starting to happen, where customer reaches out and one of their first questions is what scoring model are you using?” Yes. And, I never would have thought that to ever be a conversation. It just was- Yeah Vantage is now very aggressively pushing, a couple of score indicator tools, So it’s great. They’re doing everything they can to empower the customer to know their credit before they start the process, but, Until all this sorts out, I think that’s a significant unintended consequence.
[David] Yeah. Good point.
[Alice] Definitely wanna go online. And my own daughter, I gave her a person’s name. I said, “Call this person to get your mortgage at Union Home Mortgage,” and she still went online. It’s just, she’s a millennial, right? It just- Yeah … it’s second nature to them to just go, “Oh, I’m just gonna go online.” And then of course, it got assigned and was fortunately, to a good person, but through a different division. It was just interesting to me that, it’s second nature for them. I don’t need to go- Yeah … talk to a person.
[David] Yeah, we have different behavior patterns. Yeah. Kidd, what you thought? Anything you wanna add to that?
[Kittle] I think that there are still, again, it depends on your age group, to Alice’s point, they wanna go online. And- … I had a guy in my men’s group come up to me, and there are still those special needs, not many, and he hit me afterward last Tuesday, and he goes, “Man, I’ve I need to leverage my house. I’m self-employed, and this is, I wanna buy this new house.” And I just said “I got the guy for you. I’ll… Let me introduce you to Lisa Gabbert at Merchants Bank, Mike Petre’s bank.” And, they took care of him in less than a half a day. Yeah. Yeah. And he couldn’t get it done anyplace else. He couldn’t have got it done at a regular, unless they had the relationship, right? It comes down to knowing where to go and having the relationship, still, as technology-driven as we are.
[David] Lot of things happening in the market. Things are not quite as predictable as they used to. So does that mean those of us that have all this experience, not worth it? Not at all. You need to be talking to people that have years of experience at this business if you’re trying to figure out. But yet, I’ll tell you what Bill made the comment back in his old snow skiing instructor days, skiing through the trees, “Look at the snow, not at the trees.” And you know what, Bill? There’s a lot of newbies coming in that just say, ” Follow what the instructor says. Okay, look at the snow.” And they successfully n- navigate through. Yet, if you start thinking about this and those of us that are looking at things because we have all this history, gets us in trouble. I thought that was, I thought that was a great point.
Alice Alvey, Master CMB
She handles development of their World Class Training program designed to support UHM partners and organizational effectiveness.
Prior to UHM, Alice served as Senior Vice President at Indecomm leading the Indecomm-Mortgage U division, Internal QA and Compliance and SaaS technologies. Indecomm acquired Mortgage U in 2013, where Alice was President/Co-founder, providing training and consulting since 1996. Prior to MU she served as SVP of Operations at a national bank overseeing operations for wholesale, retail and correspondent from underwriting through servicing, and compliance.
She has been in the trenches of mortgage lending operations from application through servicing for over 30 years. Her authoring work in training content, policies and procedures and the FHA/VA Practical guides illustrates her ability to bridge regulatory requirements with day-to-day operations.
Alice has been a weekly contributor to the Lykken on Lending show since its beginning in April 2009 and has made her weekly contributions to 450+ episodes!