[David] Let’s get Alice in here. I agreed what you said about Alice being point to the shorten, to the concise and getting her statements out. Something I struggle with for sure. But I also wanna say this about Alice. One of the things that I value about Alice since the beginning is she has always been like my big sister who’s been there says, Dave, you know when you said this, that probably wasn’t necessarily appropriate or something like that. So, she is also corrects, she puts guardrails up and I’m so grateful for you, Alice, in so many ways. But let’s get into, now that you’re retired, we have even more of Alice. So anyway, what you got for your report, Alice?
[Alice] Thanks everyone. Thanks Les and everybody on the call here. That was just fantastic discussion. I took a lot of notes, my only last thought is everybody should go back and listen to that about three times because I don’t think I got everything written down. I will try and track all of Les’s predictions as they came out. Those were amazing and I do wanna go back. Les, you mentioned something about a writeup about, by 2030 you have a writeup out there. Is that something we can access now or you’re in the middle of working on that?
[Les] I published it in or it was published in 2022. Jess Ledderman is a great leader in our industry, he’s done a number of collaborative type books, and I did one with him back in the 90’s on mortgage banking stuff and a couple articles. David Lykken also contributed to the mortgage handbook. It’s gone through two revisions and on the second revision, he asked for people to update their chapters and we did a significant rewrite on the one that Brian Fitzpatrick, my former boss CEO of LoanLogics and we had written it together. The revision he did get to editorialize after I had rewritten it on the, I spoke about population growth and or declines that’s gonna, is long-term problems for back to 2030. And also talked about the condition of mortgage banking. I did at that time, it was very politically incorrect to talk about the evils of DEI, but I did speak I thought that it’s very wrongly placed in the mortgage banking business and that’s now mortgage bankers. MBA is not fully awoken from its wokeness yet, but it certainly has moved in the right direction and major companies have moved in the right direction in mortgage banking and I wanna make one quick thought on that Alice. Mortgage Bankers. Being intermediaries. They absolutely do not care about the ethnic profile of anymore. Any consumer, we’ll take any loan, it’s just zero. Yeah. They’ll take any loan and they also will say, we will have people process it, people underwrite it, people work in compliance that can get that process done as quickly as possible because we don’t, we will lose money if we can’t do it efficiently. So that’s my only comment on DEI.
[Alice] Thank you.
[David] Yeah. Listeners, we’ll put a link to the Mortgage Professionals Handbook. I contributed, Les contributed. Many did. It was, it’s really well done. And I’ve read back that article. I recommend that if we could do an excerpt out of that list to talk about that. That was really well, read. But anyway, we’ll put a link to it. It’s there and so you guys can go and grab it. All right, Alice. All right, good.
[Alice] I just wanted to make sure it brought that back up. I wasn’t sure if it was something new on top of that, all right. Perfect. And all of this, folks, as you’re listening, especially loan officers, this is why. Don’t play the market every day. As you’re locking loans, right? Yeah. They’re trying to play it by the minute right now with the way the market’s going and their customers are calling. But so anything I have to talk about seems awful way down. The priority scale compared to what we were just covering. There was one case I wanted to bring. Marc Hell in. There was some reporting out there about the Texas Capital Bank. Yes. Ruling the judge ruled, against Texas Capital Bank Texas Capital Bank. In this particular case, it was dealing with hams and the tail of a hecu that amount that’s still out there not the actual first lien itself and Marc, I know you’ve talked about reverse mortgages quite a bit in the past, and you have a lot of experience in this, and I just wanted to get your thoughts, in the article, they were saying that lenders should be concerned about this, that Ginnie May now does not have to make Texas Capital whole on this and of course, Texas Capital is going to appeal. Just wondered, Marc, if you wanna share anything with our listeners on, is this something we should be worried about?
[Marc] I certainly think so. Alice the judgment was in Texas federal court and basically it’s over $28 million worth of home equity conversion tales. Let me give you a little reverse mortgage 101 here to explain what that is. When you issue your first Ginnie Mae security on a reverse mortgage loan, you have your closing balance and all that, and it goes in. Now, since it’s a reverse security and people are not making payments on it, you have things happen that loan, you gotta get paid your servicing fee, you gotta pay MIP, it’s gotta be added to loan balance, and you gotta accrue interest. Those things become basically a tail that’s out there that need to be funded. Okay? and so what happens is. It, you create this funding and you advanced all this money internally. The mortgage company does, and you gotta have financing for it. So the mortgage companies reached out to Texas Capital and obtained as, and there were a few other banks doing this, a tail security, financial median to handle that and as they create these, they plug these things in there and I actually have a consulting company that does the work for Texas Capital to certify that those funds are good funds, meaning they’re legitimate. The loans aren’t in default, it’s still securable and it is made up of those things I just mentioned and we handle that for a number of clients. That situation works and it’s worked really well in this situation, RMF went under, and that money was sitting there getting ready to be issued in a tail security and that tail security would’ve been executed for a number of points. It could have been 3, 4, 5 points made on that security. But it was sitting there on a warehouse line at Texas Capital Bank. was it part of the loan? Yes, technically, but it was not part of the loan that RMF had funded. The bank had funded. Okay and there’s supposed to be documentations you signed with Ginnie made it. Have you somewhat quasi protected in that if you’re a lender apparently is a big dollar amount. And rather than letting that tail security be issued by somebody who was taking over the servicing of the loans for Ginnie Mae and get that money back that way. They just decided, guess what, we’ll take a $28 million gain on this and we’ll probably be able to eat these issue, these securities and we’ll probably not only make a premium on issue the security through a sub-servicer, but we’ll probably, get our be a hundred percent whole. I think it’s a travesty. I think it’s the most ridiculous thing ever heard of. It’s overreach and I’m hoping like hell when Texas Capital appeals it to a higher court that they’ll see the reasoning behind it and realize Ginnie Mae wasn’t gonna lose any money on this transaction anyway because he had a security. It’s worth well over premium. And it’s just a matter of getting it into a funnel where they’re, they got an issuer who can issue the security form and do it and it was overreached by the United States government in the form of Ginnie Mae. And I’ll stand by that the day I die. And if they don’t fix it, there’s not gonna be any warehouse banks here real soon. It’s gonna be the entail finance. That’s the problem’s gonna be risk, right? Yeah. On anybody it goes under or has starts having problems.
[David] See, that’s the part of, I really wanna underscore it could be a systemic risk to our warehouse banking community when this kind of ruling and I don’t wanna dwell on it a lot because there’s, it’s gonna be appealed with hopefully you’re gonna prevail. But that was the concern I had is that what this could do to Texas Capital Bank’s willingness to be in warehouse lending if that happens. others are finance.
[Marc] I’m concerned about that, David. I’m very concerned about that. And I wouldn’t blame ’em if they lose this appeal. I would not blame ’em if they stepped away from this product. But remember, they won’t just step away from the product. I’m not speaking for them. I have no idea what they’re gonna do. Yeah. But if they step away, they probably will step away from the product, all of it. The original pools, all of it and the tail pools, banks, nobody wants to take that kinda risk. It’s a volatile program. So it’s interesting. Would like to ask Mr. Parker if that was concise enough.
[Les] It is it’s a very d it’s a difficult topic, so it’s hard to boil these things down. Concise. Something complicated. But since I now have the mic for a moment, I have something for David Kittle. David Kittle. It’s a numbers game and Bill Corbett, who already knows the answer, he could rescue you if you need it. I’m gonna give you some numbers. I want you to try and guess what it’s tied to. 14, 13, 11, 7, 4, 2, 1
[Kittle] Number of national titles, university of Kentucky has compared to everybody else.
[Les] Yeah, you’re close, actually. It is the SEC. The SEC had four men’s basketball had 14 teams go into the tournament after the first four, it was down to 13 teams. After the, in the next round it was 11 teams. After the next round, which is the sweet 16, it was seven teams. Then the elite eight was four teams, and then in the final four was two teams and now tonight it’s one SEC team left going against the University of Houston.
[David] Yeah. Yes. Boy, what an amazing Final Four.
[Kittle] Like I said before you got on Les, if Kentucky’s not gonna win it as long as Duke doesn’t win it, I’m good.
[Les] They’re out. So that’s good.
[Marc] Les, you continue to amaze me. You got skills I never knew you had.
[David] Yeah, Parker in numbers. Parker in numbers. All right, Alice, let’s see. Anything else you have for us today, Alice?
[Alice] Just one last thing. I do wanna give a shout out for everybody to go check out Rob Chrismans write up on Saturday. It was a really good one I thought on Fannie and Freddie, it was just, that I thought a lot of folks wanna know what happens with conservatorship, what does it really mean? and I thought there was some good information in that. So take a read on that write up.
[David] That was really good idea. That was well written. Kudos to Rob what he wrote up. I thought it was really concise and to the point. Speaking being concise. Mr. Parker? Good job. Alice.
[Alice] Back to you guys.
[David] Alright, very good.
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!