Everett Ives and Associates 1

Discussion: Interest Rates Non-Prime Lender Types Legislation / Regulation Areas of Concern TRID Managing the Bubble 2Everett Ives and Associates – “We build mortgage companies!”

Interest Rates Currently just below 4% for 30 yr fixed Below Government set rates for FHA in 1934 Current rates are likely the floor for 2016 Election year, political pressure 2016 is not likely a year of rising interest rates Notwithstanding the Federal Reserve 2016 is likely the last year to “have your cake and eat it too” Low mortgage rates Low home purchase prices 3Everett Ives and Associates – “We build mortgage companies!”

Sub-Prime Lending: It’s Back! Now called “Non-Prime Lending” Sub-Prime was 23.5% of all transactions in Everett Ives and Associates – “We build mortgage companies!”

Sub-Prime Lending: 2006 Everett Ives and Associates – “We build mortgage companies!”5

Sub-Prime Lending: 2007 Everett Ives and Associates – “We build mortgage companies!”6

Sub-Prime Lending: 2008 Everett Ives and Associates – “We build mortgage companies!”7

Sub-Prime Lending: It’s Back! Now called “Non-Prime Lending” Sub-Prime was 23.5% of all transactions in 2006 By 2008 was 1.7% of all transactions The sudden elimination of financing is what burst the bubble and started the downward spiral of values. 8Everett Ives and Associates – “We build mortgage companies!”

Lender Types: Broker and Banker Banker is the model that grew over the past 10 years Emerging Mortgage Bankers used to be brokers Now have Underwriters and Closing staff Broker is coming back. Likely one originator shops “Doctor’s office” model SML is effective at Examinations, Investigations and license removal for non-compliance 9Everett Ives and Associates – “We build mortgage companies!”

Legislation / Regulation Texas Not in session until January 2017 Congress HR 3393 – level the playing field on compensation Nothing likely because of the election CFPB Nothing as big as TRID Emerging Lenders Marketing Agreements Always meddling 10Everett Ives and Associates – “We build mortgage companies!”

Legislation / Regulation CFPB has announced: (Calvin Hagins, CFPB Deputy Asst Dir for Originations on December 9, 2015) Loan Officer Compensation Ability to Repay Rules Truth in Lending / RESPA and TRID Marketing Services Agreements Unlicensed Activity Backward look – perhaps beyond 3 years No grace period 11Everett Ives and Associates – “We build mortgage companies!”

Areas of Concern: Cyber threats 15% of Fortune 500 employees tested fell for a phishing attack The Human is the weakest link in cyber security AML – Anti Money Laundering Real Estate for cash is the perfect asset Marketing Agreements Make certain you are very clear on RESPA Make certain you have documented your structure and costs Make certain you have reviewed your arrangement with well placed lawyers 12Everett Ives and Associates – “We build mortgage companies!”

TRID Both of our industries could have fought harder Documents used for 30 years are suddenly replaced One page documents are now five pages “Shoe is on the other foot” in preparation of final closing document – the CD Title companies are experiencing what lenders had to deal with previously In some states (Texas) the CD does not even balance 13Everett Ives and Associates – “We build mortgage companies!”

Managing the Bubble Nobody is in charge of the Bubble Always have occurred, always will Easy to recognize and usually precedes a bust Possible actions to manage a bubble Increase Mortgage Insurance reserves and coverage Lower LTVs Tighten lending underwriting Tighter appraisals Higher RE taxes 14Everett Ives and Associates – “We build mortgage companies!”

The bubble does not hurt as much as the bust 15Everett Ives and Associates – “We build mortgage companies!”

Thank you Everett Ives and Associates provides experienced advice, coaching or referrals on all matters related to the mortgage industry. Thank you for your time Everett Ives and Associates – “We build mortgage companies!”