[Alice] All right, I’m gonna move on to the legislative update here which is my segment today. We have been talking about the CFPB’s request for information that are, is due Oc- August 10th. So the CFPB issued this RFI regarding potential modifications to the mortgage disclosures. On last week’s show, I talked about the TRID requirements. This week I wanna talk about the right of rescission segment. It’s a pretty open request for information about the right of rescission, and what do we as an industry think are some viable things that we should go after to make this easier for consumers. And I w- am proposing, and thanks to all of you as we did on our pre-show call, I thought of why don’t we just do away with the right of rescission on refinances? If you think about this three-day waiting period, this was put into place, I had to look up the exact date, but it’s been around since I got in this business 43, now 44 years ago. I remember as a processor, they’re going, “The borrower gets three days to change their mind.” And I would go, “Why?” And they go, “I don’t know. Just give it to them,” right? I have no idea why. Just give it to them. Give them three days to change their mind. And you’re a new processor going, “Oh my gosh. Okay, this is real serious.” And I’m like, “Okay I got a customer who wants to waive it. What…” They don’t want to wait three days. They need their money. They’re going out of town. They’re going, “Tough rocks, you can’t waive this unless it’s this bona fide financial hardship,” which essentially is defined as foreclosure is imminent based on litigation and other rulings that have come across over the last many decades this rule has been around since before we had TRID, which now gives the borrower a comprehensive closing disclosure three days in advance of closing, so they have all the fees. That was the whole point of the right of rescission is you weren’t getting really good disclosures at the time. All of that had evolved separately. So now that we have TRID, we have the three-day rule ahead of closing, we really don’t need a second set of three days for a borrower in a refinance to change their mind. So that’s plan A. Now, trying to get a regulator to get rid of a rule that they feel loved about, they love it they feel is important, there’s going to be people on the other side who feel, nope, this is needed. So I would propose as an alternative one, let’s first of all make sure, do customers even want this? Require a study of three-day right of rescission. Require finding out from consumers, is this helpful to them? Do they feel they need this? Instead of just listening to community groups and other special interest groups, let’s just find out if consumers really care and how much this actually is benefiting them. More importantly, I would love… I think this three-year penalty for if you make a mistake on the notice of right of rescission, for those of you who don’t know this, we give the customer their notice of right to cancel, which by the way, we have to give them two copies, which is ridiculous, right? That was in the days of carbon paper. So we shouldn’t be having to do that. But we have to give the customer their copy, and if we make a mistake on that, if it’s delivered late, we have customers who when they go into foreclosure, their attorneys are trained to go back and look at how we executed on TRID. And if we made a mistake, something was a day late or certain fees were off by, which can happen just for, at really good companies and just honest mistakes, nothing that was egregious to the borrower, there is a potential three-year right of rescission that can go into play if the lender is found to have made a mistake. That needs to go away also, because that’s inhibiting the customer’s ability to waive the three-day right of rescission. So we have to attack this from multiple angles to remove the penalty from being so severe and allow borrowers more opportunity to waive this. ‘Cause today it’s literally not permitted to waive except in very rare circumstances. Lenders who waive it feel that there is significant financial risk for multiple reasons, including fair lending, have I applied it equally. So we wanna… I would love to see that they do away with that, let consumers waive it more often. If they want it gone, let, okay, let them waive it. Obviously it can’t be robotic waives that waiving of that right that a cust- a lender puts in place. So I think there’s many ways to attack this to make it a lot better. I will stop. I will get off my rant. Marc, I’m gonna see if you have anything to add, ’cause if this, being on the servicing side, I’m assuming you saw this three-day rule taken, or three-year penalty taken advantage of
[Marc] Yeah, But even looking at the whole process as long as it’s been around, the number of right of rescissions you can count on your hands just about. We did a survey one time at a company to see how many we had, and it was one tenth of one percent at that time. So I don’t know if it serves any useful purpose and ev-ever has served any useful purpose. And like you said now, a purpose it serves, it arms somebody to attack our industry for something that’s ridiculous at the back end, which doesn’t make any sense. So I agree that it should go away, and I just don’t know how we get people to to get rid of it. I don’t know how we get people to think… the, the politicians love to hear themselves talk, and they usually don’t say anything that’s real important. They go around in circles. So we deal with something like this, it has some meaning to it and is a meaningful thing that we can get rid of. It’s just like the, it’s just the– We were talking about the MIP earlier and the upfront MIP and all that being paid. Maybe we ought to take the MIP fund and grow it even faster by loaning that money back to ourselves and the government rather than putting bonds out there for money. There’s a lot of things we can do in our country that’s better than what we do. But I definitely agree that it should go go apart. But just so you’ll know this the right of rescission went into place in nineteen sixty-nine. So I’ve been in the business forty-eight- Oh, thank you for that. It– I remember that date. I’m not gonna tell you why I remember that date because you all think I’m sick. But but anyway, nineteen sixty-nine and it was a month of my birthday that year, but what month is that coming up this right now? So it is July nineteen sixty-nine. But I… so it was in longer than I’ve been in the business, and I’ve been in forty-eight years, but at the same time, I don’t think it served any useful purpose so I support every- thank you for- I support everything you said. I just wish I had a magic wand I could wave and fix it. I can’t. And think- us thinking collectively that our political structure could get this changed. The only time– Only way we’re gonna get this changed is we don’t have them around anymore, like a Ralph Nader get on it and go nuts about it And get enough politicians to start thinking it’s something important and be done. So rather than doing that, we’ll have politicians work on other ridiculous legislations pieces that don’t, are mean- not meaningful e- either. So here’s something that could be meaningful and it’s not happening,
[Kittle] so Alice, was it the CFPB that- Yeah … who, The Consumer Finance- Yeah … would make a change here? Yeah. Yeah, they I think it’s a brilliant idea. And to Marc’s point, nobody uses it. And what, you’ve already got the, the three-day anyway, so add it and make it You know, together, put it together, the same period they’re waiting on Yeah
[Alice] Crazy Their customers have to wait so long, and it’s a difficult thing to explain to them when you say to them you, I can’t give you your money yet.” And you’re like why?” They need it, right? They’re planning on that closing. A good loan officer prepares them, and so most of your customers are well prepared that they’ll have to wait. But it’s such a challenge for-
[Kittle] I think I was taught back then the way you framed it, as I recall now that I’m thinking about it, it was what, the cooling off period, right? Yes, that’s the technical term. Yeah. Yeah, the technical term- Yeah … which is total BS, ’cause all it does is make people hotter around the collar ’cause they want their money. We’re important. This is the, it’s not cooling off. Yeah. It’s making you mad period. Yeah. Alice, could you take and put everything you verbalized into a document? Could we send it to MBA, , could we send it to certain regulators? Could we send it to David’s meeting coming up, that he’s got coming up, his big meeting? And let’s start a petition inside the mortgage bankers in the country, and see if we can get 20 or 30,000 of them to sign it, and maybe we can get somebody’s attention out there. If we could accomplish that as a podcast, might be outside of our normal what we’re supposed to do, but God, would it wouldn’t it be a wonderful gift- if we could do it?
[Alice] It would be. So I’m on it, Marc. I will do that. I’ve written a few comments m- many of these as a matter of fact, in the past, and this one I feel pretty strongly about that we have a really good case for something that’s been around, as you reminded us, since 1969, and is still around today. So Marc, I for- also have to ask, when is your birthday? You said July? Yeah, my birthday’s tomorrow. I’m a big 76 tomorrow. Ah. Hey, happy birthday, man. Happy birthday. Thank you. Your birthday’s- Thank you … oh, that’s wonderful. Well- Yeah … we’re recording this on Monday, folks, so that means it’s July 28th, your birthday. Yep, yep. Same day as my daughter’s, and I should remember that. Happy birthday. We wish you a wonderful day. We will get that letter put out,
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!