[David] I wanna get over to you, Alice, and talk about some of the regulation. We talked about the MBA talking about the MPR appraisals. And there’s a lot of things seemingly going on behind the scenes when it comes to the regulatory environment. I’ve got a few questions, but let’s start with just the MPR and what else you have on your radar.
[Alice] Yeah, I have two things. So first is the FHA proposed a request for information on the minimum property requirements, and then the second thing is along our lawsuit discussion we were having before. The CFPB, the lawsuit that is against the CFPB that was just recently filed a few days ago, just before the weekend regarding ECOA. So those two things. So with the minimum property requirements I love the FHA product. I wrote a book on FHA, 900 pages, included all their forms. I wrote an FHA practical guide. This product from the appraisal standpoint FHA practical guide. The practical guide. Let’s be really specific FHA practical guide. This is a real part of my DNA, I would say, this topic, because 20 years ago when they made the changes, even back then to try and just do the small change to remove the minor repair things, the number one thing we continue to struggle with this product is realtor perception and so this is a huge opportunity as an industry to, I would say, before you respond, go talk to the realtor community. You probably already know this, but I always say look at all eight sides anyway, right? This is a Bill Cosgrove line that I love to repeat everywhere. You may think you know what the realtors are thinking that are pushback points, but go ask them. It’s an opportunity to go say, “Hey, FHA is looking at removing all these barriers related to the appraisal that so often that’s the number one reason a seller doesn’t wanna offer FHA or is convinced by a realtor to not let someone make an FHA offer.” It’s a great product for a first time home buyer. I’m a big fan of the product. The appraisal does seem to have just a few niches left that gotta get cleared up, so this is a huge opportunity as an industry to go, “Hey, Please make these changes, whether it’s related just to manufactured homes, inspection requirements you’d like to see changed, but this is one to really buckle down with your teams, they’ll know what they’re struggling with, and put that in the comments for real grassroots comments on this one to implement some real change. I think this is a great opportunity. For those of you who don’t deal with this just one quick example on it can be something like with a conventional loan, the appraiser’s going in with a condition rating. And so that gives the appraiser a little flexibility to make an adjustment based on some slightly less than perfect conditions with the property, versus FHA, it’s a pretty bright line. Now they’ve got a condition for the repair prior to closing it’s not as straightforward. So maybe that’s our simple response. Just do it like conventional. Yeah, that is the way to go. Just match Fannie, Freddie and be done. Be done. But there is an aspect of it, never lose track of this is a borrower who generally does not have funds left over after closing. And so they can’t afford to put on a new roof or to start replacing something that is seriously in, in need of repair. There is that balancing act, and always remember FHA is an insurance company, they’re not an investor. And so in responding to this, keep that in mind as you’re wording things from an insurance company’s perspective. So those are my tips on responding. You don’t have time. This is only a 30-day RFI get on it today, folks. This is a great opportunity. The other one Does anybody have any questions about that? Dave, did you wanna expand on that any?
[David] No. If there’s any questions from around. Bill, David, Marc? Okay. No.
[Alice] Great. Nope. Go ahead And so then the other one was the lawsuit that was filed by some by several fair housing advocates that their main point with ECOA is that the changes that the CFPB is proposing that are due out to be implemented, I believe it’s July 21st. So the changes we’ve talked about on the show before, that there is gonna be a change to the way disparate impact is handled. That could be a whole podcast, right? I can- That could be. It should be … I can hear Mitch Kider already, yeah. Yeah. No doubt. Talking about this. So I think the thing today is nothing has changed with this lawsuit. They are challenging whether the Administrative Procedures Act was followed correctly. So as a lender, what should you be doing? You still have to adjust your policies to align with the new rule, because if you get audited on your policy accuracy that has to align with the wording within the rule. You have to acknowledge that. But then, at the same time, don’t back off too far from these, ’cause this is, we’ll see what happens with this lawsuit. There are people who believe that this has merit to at least move forward, not necessarily that it’s a slam dunk win. But we will continue to watch the lawsuit, and maybe we can have- what do you- … an attorney on the show who can talk a little more detailed- Yeah on, where they think the next step is.
[David] And we will. Where, what’s how can they Google and find the w- what lawsuit again, Alice?
[Alice] So the case is the National Fair Housing Alliance, Rise Economy, BLDS LLC, and Solace AI versus CFPB and Russell Volt. So it was filed on May 27th in the US District Court for District of Columbia, for DC.
[David] Yep, good. We’ll look, have that, we’ll put a link to that in your show notes. Folks, you should be taking some, someone within your company should be looking into this, and making sure-
[Alice] They’re suing the CFPB for the ruling that they changed regarding disparate impact.
[David] Yes. Good. Good. Any questions, any thoughts, anyone? Any thoughts on MPR? On what the MBA talked about, Alice? Any following commentary?
[Alice] No, not related to the FHA minimum property requirements- Yeah … ’cause that’s just a request for information, so that’s at the very early stages. Now’s the time to act, folks. I’m always interested when people go, “I can’t believe this rule went into effect.” You’re like did you comment back at the RFI?” Yeah. This is the time to let your voice be heard.
[David] Yeah. So good. Very good. Alice, thank you so much.
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!