Johnston & Associates March Newsletter

In this newsletter we cover the following:

• Welcome to the March Installment of JT’s Newsletter
• Compliance Spotlight: Loan Officer Compensation – Charge-Backs for EPOs / EPDs
• Johnston & Associates and The Mortgage Collaborative to Co-Host “First Annual Regulatory Round-up: Invaluable Tips for Maintaining Compliance in 2020 and Beyond”
• Johnston & Associates to Host “Agency and RMBS Litigation Overview: How to Defend Against Agency and RMBS Claims by JPMorgan Chase, EMC and Lehman Bros.”
• Regulatory Compliance and Litigation Webinars: Complimentary Recordings and PPTs for JT’s Marketing Service Agreement, Loan Officer Compensation, and other Complimentary Webinars
• The Legal Services we offer at Johnston & Associates
• Conference Attendance by Johnston & Associates

Welcome to the March Installment of Johnston & Associates Newsletter

To all our preexisting clients, industry friends and strategic partners whom are in receipt of the Johnston & Associates Newsletter, as well as any and all the new readers whom subscribe hereto, we welcome and thank you for taking the time to read about those topics that are of great importance to the mortgage banking industry.

First and foremost, with the rapid increase in concerns about COVID-19 (e.g., health, business/economic, etc.), please know that Johnston & Associates has taken and will continue to take any and all steps reasonably necessary to ensure both the safety of our employees and the continuity of the critical work that we do every day on behalf of our clients all across the Country.  Along those lines, should any of our clients have any questions and/or concerns with regard to any matters that we are assisting you and your companies with, concerning the manner in which newly released COVID-19 rules may affect the continuity of your businesses, regarding what the economic fallout of the COVID-19 pandemic may mean to the mortgage banking industry and regarding those steps that your companies may take to mitigate the impact of the economic fallout, please reach out to myself or whichever attorney on our team whom you are working with and we will ensure you and you’re your companies receive a prompt response.  Otherwise, on behalf of myself any our entire team, please know that our thoughts and well wishes are with all of you, your families and your businesses.

Finally, as many of you already know, the professionals who comprise Johnston & Associates Mortgage Banking Practice Group represent our clients in matters that include, but are not limited to, repurchase and make-whole lawsuits, Servicer litigation, third-party mortgage fraud litigation, appeals to HUD’s Mortgagee Review Board, preparation of policies and procedures, creation of Loan Officer Compensation plans, formation of Marketing Service Agreements, assisting with the negotiation and review of Broker  Agreements and Correspondent LPAs, and much, much more.

Compliance Spotlight: Loan Officer Compensation – Charge-Backs for EPOs and EPDs

In the mortgage industry, an Early Payment Default (EPD) is a mortgage loan that goes 90+ days delinquent or into a default status in its first year.  On the other hand, an Early Pay Off (EPO) is a mortgage loan that has the balance paid in full within a relatively short period of time from the loan origination funding date.

To prevent mortgage portfolio runoff, many investors loan purchase agreements (LPAs) require some level of monetary reimbursement for loans that go into EPD or that payoff within the first few months of a loan being purchased (usually within a 6 to 12-month period). Unfortunately, these EPD and EPO reimbursements can quickly begin to add up and cost originators very significant sums of money.  Given the harm that can be in inflicted on originators as a result of EPDs and EPOs (including indemnification, quality control audits, etc.), most originators would understandably like to have their loan officers share in the losses as a possible remedy for the loan officers being paid on such loans.

Along those lines, we routinely advise our originator clients that while it is indeed permissible for them to cover certain “unforeseen” costs that arise on occasion (i.e., those costs that arise after the Loan Estimate is provided and in spite of the originator’s reliance on the best information that is reasonably available, the rules do not allow originators to set compensation at a certain level and then subsequently lower it in selective cases).  Notwithstanding the foregoing, the CFPB’s rules state that the long-term performance of loans are not loan terms and are factors that can be considered when it comes to the compensation of an originators loan officers.  In fact, one of the safe harbors listed within the Loan Originator Rule is the quality of the loan files (e.g., accuracy and completeness of the loan documentation).  Of course, this is only allowable as long as the compensation reduction is based on “accuracy and completeness” of loan documents (i.e., the reduction in compensation cannot be tied in any way to the pricing or profitability of the loan).

If you and your companies are interested in learning how to craft language that allows for the adjustment of compensation as a result of EPDs and EPOs, please contact Johnston & Associates Mortgage Banking Chairman James Brody.

Johnston & Associates and The Mortgage Collaborative to Co-Host “First Annual Regulatory Round-up: Invaluable Tips for Maintaining Compliance in 2020 and Beyond”

Date:             Thursday, March 19, 2020
Time:             10:30 a.m. PST / 1:30 p.m. EST
Duration:       Approx. 90 Minutes

With the first quarter of 2020 wrapping up, as well as many in our industry who may be looking for a distraction to life in quarantine, now is the perfect time to make sure you and your companies are up to date on the top trending Compliance topics of the year.  To that end, please know that Johnston & Associates and The Mortgage Collaborative (TMC) invite you to attend our upcoming complimentary webinar, wherein we will provide critical insights into those compliance issues that we are handling for our mortgage banking clientele and which include, but are not in any way limited to, the following:

• Consumer privacy;
• Licensing;
• Loan officer compensation;
• Marketing service agreements;
• Federal and state regulatory audits;
• Vendor management;
• Non-QM programs.

Moderator and Speakers

James Brody, Esq., Chairman of Mortgage Banking Practice Group
Johnston & Associates Attorneys at Law, P.C.

In order to register for this complimentary webinar, which will be limited to the first 1,000 registrants, please click on the following link:

https://register.gotowebinar.com/register/6435618983052174859

Otherwise, should you have any follow-up questions or have any difficulty registering for the upcoming webinar, please contact Mr. James Brody. After registering, you will receive a confirmation email containing information about joining the webinar.

Johnston & Associates to Host Compimentary Webinar, Entitled “Agency and RMBS Litigation Overview: How to Defend  Against Claims by JPMorgan Chase, EMC and Lehman Bros.”

Date:              Thursday, April 9, 2020
Time:             10:30 a.m. PST / 1:30 p.m. EST
Duration:       Approx. 60 Minutes

Although the mortgage banking industry had experienced a much needed slowdown in the number of repurchase and indemnification claims being made in connection with GSE loan production over the last couple of years, there had been and continues to be a large spike in the number of repurchase and indemnification claims being made in connection with private label/RMBS loan production.

Specifically, Lehman Bros. Holding, Inc. (LBHI) had filed and continues to prosecute private label/RMBS related claims against a massive number of lenders in a New York Bankruptcy Court.  Further, while EMC/JPMorgan Chase (Chase) have focused most of their efforts on trying to informally resolve their own group of private label/RMBS related claims against the lending community, they have been threatening to begin filing lawsuits and have in fact done so with regard to a significant case that had been filed against Pulte Mortgage.

With Johnston & Associates defending one of the largest groups of lenders, brokers and credit unions against claims made by LBHI, EMC and/or Chase, both in and out of court, we will use this webinar to pass along invaluable information and tips to help you and your companies defend against similar claims that you may be defending against now or in the future.

Moderator and Speakers

James Brody, Esq., Chairman of Mortgage Banking Practice Group
Johnston & Associates Attorneys at Law, P.C.

In order to register for this complimentary webinar, which will be limited to the first 1,000 registrants, please click on the following link:

https://attendee.gotowebinar.com/register/3255797271026739469

Otherwise, should you have any follow-up questions or have any difficulty registering for the upcoming webinar, please contact Mr. James Brody. After registering, you will receive a confirmation email containing information about joining the webinar.

Legal Services Offered by Johnston & Associates in the Mortgage Banking Industry

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