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Aussie firm snaps up Specialized Loan Servicing

August 24, 2011 By 1 Comment

Jacob Gaffney, Housing Wire

An Australian tech company called Computershare, a provider of software solutions and professional services to the securities industry, purchased Specialized Loan Servicing for $113.6 million in cash.

In a presentation to investors, Computershare CEO Stuart Crosby said that the market for servicing distressed mortgages in the United States is only going to grow, thus providing the impetus for the purchase.

Under the terms of the deal, Computershare may make some additional payments in the next three years. Japan-based Shinsei Bank previously held a majority stake in Colorado-based SLS.

In 2010, SLS posted revenue of $84 million. It services 219,000 loans with $16.5 billion in unpaid principal balances.

SLS is a primary and special servicer of U.S. residential mortgages, including first-liens, subordinated and home equity lines of credit.

Read more here

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Wells Fargo Requires Attorney To Write Essay In Order To Receive Financing

August 23, 2010 By Leave a Comment

Tara Siegel Bernard, NY Times

When Linda Falcão applied for a mortgage from Wells Fargo, she didn’t realize she would be required to write the type of essay that’s more commonly included with a college application.

So she and her husband, Kemuel Ronis, were taken by surprise when Wells Fargo asked the couple, both 50, to pen a “motivational letter” explaining why they were moving. What they found even more shocking, however, were some of the themes that Wells required them to include in their statement, specifically, their plans regarding an “increase/decrease in family” or property size.

“It is wrong and invasive to ask people about their family plans,” said Ms. Falcão, a civil rights attorney and founder of America Serves, a youth volunteer organization. “It very much offended me.”

Offensive or not, basing a loan decision on a borrower’s family status or future plans is also against the law.

It violates the Fair Housing Act, a law enforced by the Department of Housing and Development, which prohibits discrimination in lending based on disability, sex or family status — including pregnancy or having children in the family.

“The question itself certainly suggests that the lender is violating the Fair Housing Act by making decisions based on their familial status,” said a federal investigator who would speak only on the condition of anonymity.

Besides asking for information about their family plans, which was paired with questions about plans to change the “property size,” Wells Fargo also requested that the letter include information that supported the fact that the property, in Glen Mills, Pa., would be their primary residence. The bank also asked them to include their commuting distances to work, as well as other properties that they may own in the area. The request for the so-called motivational letter was included in the bank’s mortgage commitment letter, which offered to approve their loan if they answered the bank’s questions and provided other documentation.

A Wells Fargo spokesman said that motivation letters were generally requested when the loan underwriter had more questions about a borrower’s “occupancy intentions.” For instance, he said the company might request such a letter when a family’s existing home is not yet sold and it wants the buyer to show that the new home will indeed serve as the primary residence.

The spokesman did not say why the bank would request information about a prospective borrower’s family plans, but said that “under no circumstances would any information about family status be used by Wells Fargo as the basis for a decision on a loan application.”

But then why did it ask? The spokesman said he could not answer that for certain without knowing more about the specifics of the case.

Last month, I wrote an article that found that some lenders were taking a harder look at prospective mortgage borrowers who were out on temporary leave, including parents at home with a newborn. Shortly after the article ran,the housing department said it would investigate the lending practices of certain mortgage lenders to see if any would-be borrowers had been illegally denied a mortgage because they were pregnant or on short-term disability.

Read more here: http://bucks.blogs.nytimes.com/2010/08/23/wells-fargos-odd-mortgage-essay-question/?src=busln

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Wells Fargo Requires Attorney to Write Essay As A Requirement For Financing

August 23, 2010 By Leave a Comment

Tara Siegel Bernard, NY Times

When Linda Falcão applied for a mortgage from Wells Fargo, she didn’t realize she would be required to write the type of essay that’s more commonly included with a college application.

So she and her husband, Kemuel Ronis, were taken by surprise when Wells Fargo asked the couple, both 50, to pen a “motivational letter” explaining why they were moving. What they found even more shocking, however, were some of the themes that Wells required them to include in their statement, specifically, their plans regarding an “increase/decrease in family” or property size.

“It is wrong and invasive to ask people about their family plans,” said Ms. Falcão, a civil rights attorney and founder of America Serves, a youth volunteer organization. “It very much offended me.”

Offensive or not, basing a loan decision on a borrower’s family status or future plans is also against the law.

It violates the Fair Housing Act, a law enforced by the Department of Housing and Development, which prohibits discrimination in lending based on disability, sex or family status — including pregnancy or having children in the family.

“The question itself certainly suggests that the lender is violating the Fair Housing Act by making decisions based on their familial status,” said a federal investigator who would speak only on the condition of anonymity.

Besides asking for information about their family plans, which was paired with questions about plans to change the “property size,” Wells Fargo also requested that the letter include information that supported the fact that the property, in Glen Mills, Pa., would be their primary residence. The bank also asked them to include their commuting distances to work, as well as other properties that they may own in the area. The request for the so-called motivational letter was included in the bank’s mortgage commitment letter, which offered to approve their loan if they answered the bank’s questions and provided other documentation.

A Wells Fargo spokesman said that motivation letters were generally requested when the loan underwriter had more questions about a borrower’s “occupancy intentions.” For instance, he said the company might request such a letter when a family’s existing home is not yet sold and it wants the buyer to show that the new home will indeed serve as the primary residence.

The spokesman did not say why the bank would request information about a prospective borrower’s family plans, but said that “under no circumstances would any information about family status be used by Wells Fargo as the basis for a decision on a loan application.”

But then why did it ask? The spokesman said he could not answer that for certain without knowing more about the specifics of the case.

Last month, I wrote an article that found that some lenders were taking a harder look at prospective mortgage borrowers who were out on temporary leave, including parents at home with a newborn. Shortly after the article ran,the housing department said it would investigate the lending practices of certain mortgage lenders to see if any would-be borrowers had been illegally denied a mortgage because they were pregnant or on short-term disability.

Read more here: http://bucks.blogs.nytimes.com/2010/08/23/wells-fargos-odd-mortgage-essay-question/?src=busln

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RESPA and Secondary Market Concerns

March 23, 2010 By Leave a Comment

by John Levonick, Chief Legal and Compliance Officer at Mortgage Cadence, Inc.

While it is no surprise that compliance with the new RESPA requirements has been very challenging to all Brokers and Lenders, there seem to still be new issues emerging on a weekly basis. The strict GFE disclosure requirements and the resulting re-disclosure requirements have made the phrase “changed circumstance” part of every originators vocabulary. Just as we begin to understand the nuances of what is in fact a “changed circumstance,” concerns have surfaced as to how this RESPA requirement will be handled by the Secondary Market and Auditors. Specifically when a re-disclosure of the GFE occurs, a lender must ask themselves; what was the basis for the changed circumstance, to what extent do I need to verify the validity of the changed circumstance, and how must I prove that the resulting change on the GFE is directly related to the changed circumstance?

Tracking Re-disclosed GFEs
When the GFE has been re-disclosed, the chain of the GFE disclosure and the rationale “changed circumstance” must be documented. Closed loan files that make their way into the Secondary Market will need to have the requisite proof of what triggered the “changed circumstance” or supporting information proving the specific “borrower request” to support the re-disclosure and the resulting change. In addition, should there be a change in “fee type” or “fee amount” resulting from the changed circumstance or request, it must be clearly tied to the change or request.
Establishing that nexus between valid purpose for change and proper fee amendment is a challenge. However, memorializing that change in a form that can be clearly communicated to anyone reviewing that loan file in the future may prove to be exponentially more difficult. While there is no clear guidance on what form the documentation must take, or how much proof is necessary, lenders face much uncertainty when it comes to protecting themselves against possible repurchase risk or audit questioning.

“It really is a complete nightmare,” was the response of Jeffrey DeMaso, Senior Regulatory Counsel at Clayton when discussing how Due Diligence firms are auditing loans for RESPA compliance. “My instructions [to the underwriters] are to look in the file for documentation of the changed circumstance if they see a re-disclosed GFE. Only those fees affected by the changed circumstance can change.”

It appears that the lenders must not only establish that the GFE was in fact properly re-disclosed and tie the change in fees to the changed circumstance, but somehow memorialize this so when the loan is audited either by a lenders Quality Control representative, a Regulator, or a Due Diligence firm, there is a clear understanding that the Lender met all necessary obligations in re-disclosing the GFE. It is not clear if we will see guidance on this particular issue, but in the absence of clear obligations, it is always in a lenders best interest to clearly document and create a clear record of what the circumstances were that led to the re-disclosure.

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