Saturday Cup of Joe: a lending and techish newsletter

Friends & Colleagues:

Good Morning! Lucky #13 today. Coming to you from Detroit, MI, USA. Today it’s more links with less description, I think. We’ll see what SatCOJ readers prefer! Thanks for all the kind words over the last few weeks. I’m enjoying the process of sharing Saturday morning with you and thrilled to find out its valuable. With that, we expect to be checking in with the Olympics this week, but since we dropped DirecTV about a year ago, we’re relying only on NBC for all our coverage. The one downside of cord-cutting. Either way, go Team USA!

This week we look at:

· Highlights from CFPB’s TRID amendments (Of Interest)

· CFPB’s use of UDAAP authority (Got Me Thinking)

· Millennials and home improvement $ (A Look Ahead)

· A deep quote from Tony Robbins (see below) — if you haven’t watched Tony Robbins: I Am Not Your Guru on Netflix, it is a documentary well worth your time. An in-depth look at his “Date with Destiny” program in 2014. Interesting stuff.

Of Interest: CFPB releases TRID amendments. Everyone’s friend, Greg Korn of Merrimack Mortgage, posted his review of the high points of the proposal. Thanks for the patience and hard work on our behalf, Greg! The proposals in the rule are up for comment until October, planned to be finalized in April 2017 and effective on October 1, 2017. Overall the proposals are narrow in scope but move us in the right direction. Here are a few of the wins (#1–3) and a few of the potential problems or unresolved areas (#4–5).

The Takeaways:

1). CFPB addressed the issues related to changed circumstances after the initial Closing Disclosure (CD) has been provided to the consumer. Lenders may now issue a revised CD any time after the initial CD as long as the same standards/criteria exist to have justified a revised disclosure at any other time as well.

2). CFPB attempted to clarify when disclosures may be provided to a representative of the consumer, such as a real estate agent. This appears to be a loosening of the privacy standards by giving lenders guidance on how to “redact” the CD. (Yes, the commentary will address a modified disclosure that agents can receive but this only creates more gray area about how lenders and real estate agents interact.)

3). CFPB has provided tolerance for Total of Payments amount on the CD.

4). CFPB is proposing to require a disclosure on the CD informing the client that a cure is being provided to correct a tolerance violation. This would highlight the issue for the consumer even where (as is often the case) it is being paid by the lender.

5). CFPB choose not to address the confusion disclosing the cost of owner’s title policy in certain states.

Have you heard?: Apparently, CFPB has moved forward with changes/updates to the CFPB Complaint Database. On Friday, CFPB published the proposal so that, according to the filing, “Consumers will have the option to provide feedback on the company’s response to and handling of their complaint via all channels including online, phone, fax, and mail.” It seems the proposal is meant to continue to build the interaction between the CFPB and the consumer. The example above is to allow consumers an avenue to disagree (I assume) after the company’s response. It is not surprisingly or overly concerning to me that the CFPB has gone back to the CFPB Complaint Database for enhancements. What is concerning is the way CFPB seems to be trying to address the Complaint Database and gathering data from consumers/lenders, in general. It feels a lot like the CFPB is looking to expand both the collection and publication of complaint data without involving (or trusting?) industry to be a partner. That might very well be a founded concern, but I have seen no evidence or basis for that position from the CFPB (or anecdotally). For example, this proposal was released (quietly?) ahead of or, at least, along side of the much anticipated TRID amendments. The TRID amendments took the news and headlines, of course. Coincidence?

Got Me Thinking: You have heard of “material support for terrorism”? Well, over the last year or so, CFPB has been adding a “substantial assistance to UDAAP” claim onto their enforcement actions. UDAAP being Unfair, Deceptive, Abusive Acts or Practices which a veteran outside counsel recently said boils down to “anything I don’t like.” State Attorneys General and CFPB/DOJ often use it in negotiating as well as tacking it onto any complaint “just in case.” I think this is important in several contexts. First, the line between RESPA Section 8 violations and UDAAP is nonexistent and likely when you have one you have the other. So, as CFPB ramps up its scrutiny of third party management including marketing service agreements (MSAs) and joint ventures, we can expect the “substantial assistance” trend to continue. Second, if you read between the lines, I think CFPB believes this gives them the authority to reach beyond the lender-vendor or lender-referral source relationship (which the CFPB calls counterparties) and into the different parties who work with the vendor or who work with the referral source. One quick for instance — the National Association of Realtors (NAR) have done a great job lobbying themselves out of CFPB supervision, enforcement and oversight on many, many issues, yet for some brokers who have an in-house mortgage or title provider, there is direct authority. For others, the CFPB can use substantial assistance to reach into the broker business and “look around.” Not to mention software providers, marketing companies, lead providers and others. I’ve attached an in-depth summary of the legal issues if you are interested in reading more.

A Look Ahead: Millennials have not started moving the needle on mortgage loan volume yet but many are speculating when we might start to see an influx in millennial customers. When we do, PwC speculates millennials will be looking for value, energy-conscious houses and outdoor space with some character and quality to it. Remodeling will either be the preference or the requirement. The homeowners that saved more diligently than the generation before them will have the ability to afford upgrades. Otherwise, it may become a requirement (for everyone) as houses naturally age and require ongoing updating.

Marketwatch published a quick look at some of the softer issues also associated with selling homes. There are some interesting comments about what makes sellers sell or not sell. Love It or List It, right? One thing I picked out was a (probably) underestimated figure on how much we are likely to spend on home improvements this year. I’m assuming these are related to projects with formal contracts or permits, but nevertheless, something to keep an eye on especially in relation to the previous article’s comment about millennials making improvements on aging inventory. Quote: “What we’ve seen is that when [empty nesters] do sell, they are up-sizing, not downsizing,”… Indeed, Americans will spend a record $350 billion on home improvements in 2016, according to the American Institute of Architects.

Quick hit: I thought the rule was location, location, location. If size is more your game, Bloomberg published the largest and most inexpensive starter homes in the country. Who doesn’t love a good list? Detroit managed to be on the smallest square footage homes and the most inexpensive homes, as well. Could be worse, I suppose. There could be a list for small and expensive.

Sidenote: If I had a nickel…apparently TSA has quite a few. According to USA Today, TSA collected over $765,000 in spare change left in airport security bins. Phoenix and Denver have set up coin collection stations that donate the spare change to charity. Otherwise, TSA has a fund set up for the windfall. It’s a reminder to me that if you get enough people to give a small amount, you can come up with real money. Now I understand how Dollar Shave Club was worth over $1 billion. Somewhere in that $1B is my $6 a month. Average $6 a month X 12 months in a valuable demographic (18–55 year old men) who may pay even more for Boogie’s Pomade or Dr. Carver’s Shave Butter and you get Unilever to pony up real money. If you’ve never seen the viral video that made DSC famous, click here.

Today’s Thought: A thousand little things. Dan Gilbert often says if you do one thing well, your competition will easily mimic or steal that thing, but if you do thousands of little things well, no one can compete with that. I want to take that one step further. If we, as leaders, condition our organizations to make sure they are focusing on the little things and doing them according to our culture and our purpose each and every time, when a “big thing” comes along, they will be prepared. In other words, the little things are just practice — creating a habit — for when the really important moments hit. So, beyond the competitive advantage of having above average awareness internally, there is a major risk management and productivity advantage as well. The team knows how to behave/act/react and can seriously head off or mitigate issues in real time.

Quote: “The strongest force in the human personality is the need to stay consistent with how we define ourselves.” — Tony Robbins

​​Presented without comment: Massachusetts passed a law (the first of its kind nationwide) prohibiting employers from asking a job applicant about their current salary/compensation, which until now has been a standard question.

Bonus article: This attorney billed his own company for services “performed” by a vendor operated by his wife. Except, the services were just his actual job responsibilities and the company was nothing more than a name on a piece of paper. Yikes! CFOs and CCOs everywhere are cringing. Every now and then it’s a good idea to delay payment on a questionable invoice (to see who follows up for payment, if anyone) or randomly select a handful to contact each month (to see who answers the phone).

Continued Success,

Written by

Thinker, curious leader, once an attorney…always trying to answer well.

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