LenderNews by Rob Chrisman
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Feb. 27: LO jobs, reverse training; LO comp survey; lender and bank M&A continues; Powell: more short term rate hikes

February 27, 2018

Every home owner was, at one time, a first-time home buyer, right? Now it seems that every lender, investor, politician, and special interest group is focused on the fabled first-time buyers. Most are in their 20s or early 30s, and yes, they want to own a place of their own. Lots of folks like lists, and any loan officer in these “Top 10 places for First Time Home Buyers” had better have a set of decent down payment assistance programs up their sleeves. On the front end of this, here is information on how some builders are making plenty of profit building entry level new homes.
Jobs, lender products, training
The mortgage industry continues its dramatic shift into a purchase-heavy market and along with it, a decline in profitability for many lenders across the nation. Towards the end of 2017 lenders were averaging around 42 bps of profitability with Q1 of 2017 reaching a low of only 10 bps. To put this in perspective, in Q3 2012 the industry averaged 119+ BPS! These numbers should not be surprising, but it doesn’t mean you cannot achieve greater profitability by focusing on the right elements and metrics of your business. A newly released industry paper, “3 Steps to Profitable Growth” outlines key focus areas for lending managers to drive profitability in a challenging purchase heavy market. Exclusive to Rob Chrisman subscribers today and a must read for all lending managers, Download your free copy here! 
Vendor Surf is a B2B search engine dedicated to the advancement of premium vendors across the financial services ecosystem, especially within mortgage and credit unions, while guiding buyers to make wise decisions. With over 80 categories of vendors and 3,000+ search filters, Vendor Surf quickly and efficiently matches buyers to vendors that best meet their needs. Besides searching for vendors, you can also view a searchable list of more than 220 upcoming industry events. Vendor Surf recently added these vendor partners: 1st Choice Title SolutionsBlack, Mann & GrahamExcel Title GroupMortgage Information ServicesRobertson Anschutz VettersShep Hyken, and Wolters Kluwer. If you are a professional looking for new vendor partners search Vendor Surf for FREE by visiting www.VendorSurf.com. Selling? You can learn more about listing your business, product or service by contacting Scott Roller or Craig Leabig.  Be sure to ask for the 2018 Vendor Surf media kit to learn more.
“Is there a doctor in the house? At Sierra Pacific Mortgage they understand the unique financial needs of Medical Professionals who are in a residency program and/or a clinical fellowship program. That’s why they have several Medical Loan programs aimed at providing new medical professionals with simple solutions to meet their home financing needs. You should contact your favorite Sierra Pacific person today for more information about this type of loan. Your podiatrist needs a place to rest his feet at the end of a long day.  Now he can… in his own home.”
Reverse Mortgage Funding LLC is offering a free, in-person “Reverse Mortgage Jump Start” accelerated learning course — one in Redondo Beach on Wednesday, March 21 , and another in San Diego on Thursday, March 22. Each half-day session will be from 10:30 a.m. to 3:00 p.m., with lunch included. Find out how you can easily add this missing piece to your product mix, with a team of industry-leading professionals on your side. If you’re originating mortgage refinancing, home purchase loans, and/or lines of credit and not offering reverse mortgages, you’re missing out on a huge market opportunity — homeowners and homebuyers age 62+. This is a great way to learn the ropes and how you can get started. Admission is free, but seating is limited so reserve your place today!
PrimeLending is booming in a Central Texas “Boom Town.” A vast military population and thriving growth rate equal a prime opportunity in Killeen, Texas. Homebuyers need a proven lender they can trust for professional guidance and timely results. Enter PrimeLending’s newest branch in “K Town.” Led by Branch Manager Deborah Huddleston (NMLS 208924) and her team of dedicated mortgage leaders, PrimeLending offers expertise, support and responsiveness few others can match. The Killeen branch hit the ground running with a suite of over 400+ products, including a ‘Loans for Heroes’ program for VA borrowers. When you’re part of a Top 10 National Mortgage Lender that empowers you to grow your business your way (like Killeen), you can build the career you’ve always strived for — and there’s no better place to build it than PrimeLending. Contact Dudley Strawn (469.737.5743) today to raise your game and discover your best.”
Kurt Reisig, chairman of American Pacific Mortgage, asksare you getting the support you need to thrive in today’s market?APM has the scale and balance sheet to offer you the right combination of products, process, support and technology to help you grow your production. In today’s competitive housing market, we provide full TBD underwriting loan approval that is fully backed by our Keys on Time commitment to an on time close of escrow. Our culture is dedicated to providing unprecedented support and finding you the solutions and products you need to succeed in delivering home ownership in your community. Have questions? Contact Dustin Block (303) 378-3166 or Peter Schwartz (916) 770-0053.
Congrats to Paul Buege who is Inlanta Mortgage’s new president. Chairman John Knowlton made the announcement. Mr. Buege is currently the Chief Operating Officer and will continue those responsibilities, while Nick DelTorto will remain as CEO.
LO compensation
Could your payout levels be affecting your LO retention rates? In 2017, the average Loan Officer was paid 100bps on production, but the results varied dramatically by type of lender, with Banks paying an average of 74bps versus Independents paying 118bps on average. How do your payouts compare to peers? Participate in the 2018 STRATMOR Compensation Connection Survey to find out. The survey is open to all lenders, so don’t miss your chance to learn how your compensation, compensation plans & benefits compare to industry standards and your peers. To participate in the survey, or to learn more about STRATMOR’s Compensation Connection, visit STRATMOR Group’s website or email compconnection@stratmorgroup.com.
These days not a day goes by without someone asking me about this or that rumor. Unfortunately, we’ll see plenty of lenders quietly scaling back, or going away entirely, without a formal announcement this year. Let’s face it: there’s a lot of over-capacity in the biz, and only so many loans to go around. The polite smiling at conferences between “friendly competitors” only goes so far, and plenty of owners want to “take their chips off the table.”
Silverton Mortgage Specialists, Inc., headquartered in Atlanta, Georgia, a distributed Retail Mortgage company licensed in 11 states, announced it has signed a definitive agreement to join the Berkshire Hathaway family of companies. With the acquisition by Vanderbilt Mortgage and Finance, Inc. it is anticipated that this strategic transaction will enable Silverton Mortgage to continue its rapid growth as a national Retail lender while retaining its name, leadership, employees and corporate identity following the transaction. “While we were not actively looking to be acquired, we are grateful for this opportunity to expand our services, both in terms of geographic footprint and loan product offerings, while keeping our identity and the great people that have built our culture of unparalleled service to our customers and communities,” said Josh Moffitt who will remain the president and CEO of Silverton Mortgage. “For over 40 years, Vanderbilt Mortgage has offered financing for manufactured and modular homes, and services over 200,000 loans. Over the past few years Berkshire has added several single-family home builders to its family and this acquisition in the Retail Mortgage space should only strengthen that channel.”
Bank of America has partnered with Amazon to provide loans to merchants. Amazon reportedly wanted to partner with the bank to reduce its credit exposure to such loans and provide more access to credit for merchants leveraging Amazon Lending. Amazon Lending originates loans up to $750,000 and issued $661mm in 2016 and $662mm in 2017 according to Amazon’s annual report.
Do you think we need fewer or more depository bank branches out there? S&P Global Market Intelligence reports US banks and thrifts closed a net 68 branches in January, taking the total down to 89,027. On a larger scale, the latest Bank Director M&A survey finds 77% of those surveyed say they do not plan to sell their bank by the end of this year and only 1% say they are actively seeking an acquirer. The rest either said they were open to selling but had not been offered a fair price (18%) or were considering a sale or had entered into an agreement with another bank (4%).
In recent weeks the mergers and acquisitions in the banking world has continued. In California CVB Financial Corp (Ontario) and Community Bank (Pasadena) agreed to merge, Pacific Premier Bank ($8.5B) will acquire Grandpoint Bank ($3.2B) for about $641.2mm in stock (100%) or about 2.12x tangible book, and Mechanics Bank ($5.6B) will acquire Scott Valley Bank ($692mm). Choice Financial Group ($1.3B, ND) will acquire Venture Bank ($730mm, MN). In Texas PlainsCapital Bank ($9.6B) will acquire The Bank of River Oaks ($454mm) for about $85mm in cash (100%) or about 1.8x tangible book, and Guaranty Bank & Trust ($2.0B) will acquire Westbound Bank ($228mm) for about $30.5mm in cash (21%) and stock (89%) or about 2.08x tangible book.
In Florida Achieva Credit Union ($1.5B) will acquire Preferred Community Bank ($118mm), and in Georgia Ameris Bank ($7.8B) will acquire Hamilton State Bank ($1.8B) for about $405.7mm in cash (10%) and stock (90%) or about 2.05x tangible book. In Minnesota Hometown Community Bank ($32mm) will acquire Quality Bank ($28mm). Swiss banker Joseph Benhamou and certain members of his family have agreed to acquire Brickell Bank ($492mm, FL). (The Benhamou family owns an $8.5B private bank in Switzerland.)
But hey, check this out! Infinity Bank, ($33mm, CA) just opened and is California’s 2nd de novo bank in 2018, after Endeavor Bank ($26mm, CA), according to S&P Global Market Intelligence.
Capital markets
Don’t think that the Fed is more transparent than several years ago? Fed KC President George said she believes it is important that the Fed continue to gradually raise rates and that the group currently expects about 3 rate hikes in 2018 and 3 in 2019. Meanwhile, Fed PA President Harker said he is open to a March rate hike but said the Fed should not move so fast that it inhibits growth. Harker said he has penciled in 2 increases for 2018 with an upside scenario of 3 hikes.
JP Morgan’s chief economist adjusted down Q1 projected GDP from 3.0% to 2.5%, as inflation skyrocketed to its biggest MoM increase since 2005 in Jan and retail sales numbers were soft. The chances of a March rate hike are now up to 80% and Goldman puts them at 95%. The expectation at this point from many pundits is now 4 rate hikes in 2018.
U.S. equity markets were down yesterday, though Treasuries gained, as January New Home Sales failed to meet expectations. The actual figure reported of a seasonally-adjusted 593K was well short of the consensus 645K. This is 7.8 percent below the revised December rate of 643k and is 1.0 percent below the January 2017 estimate of 599k, the most likely culprits being high prices and rising mortgage rates. The median sales price of new houses sold in January increased 2.5% YoY to $323,000, while the average sales price increased 7.0% to $382,700.
Markets moved within a tight range ahead of Fed Chair Jay Powell’s first semiannual testimony on monetary policy, which begins today with an appearance before the House Financial Services Committee and is followed by an appearance in front of the Senate Banking Committee on Thursday. Powell will say that further gradual rate hikes are “in the cards.” The 10-year yield receded from an overnight high of 2.88% to a low of 2.83% until profit taking forced that number slightly higher to a close of 2.86%.
Fed Chair Powell’s testimony is the headline today, however, we have a busy economic calendar. Durable goods orders, always volatile, was released: -3.7%, ex-transportation -.3%. The Redbook Same-Store Sales Index will be released at 8:55am, while The December FHFA and S&P/Case-Shiller home prices indices will be released at 9AM ET and at 10AM ET we have February consumer  credit and the February Richmond Fed Manufacturing and Services. With that as a backdrop we have the 10-year currently at 2.89% and agency MBS prices worse .125-.250 versus last night.
On average, an American man under age 75 will have sex two to three times a week.
Whereas, a Japanese man the same age will have sex only one or two times a year.
This is very upsetting news to many of my friends…as they had no idea they were Japanese.
Visit www.robchrisman.com for more information on our industry partners, access archived commentaries, or to subscribe to the Daily Mortgage News and Commentary. If you’re interested, visit my periodic blog at the STRATMOR Group web site. The current blog is, “Servicing: All It’s Cracked Up to Be?” If you have both the time and inclination, make a comment on what I have written, or on other comments so that folks can learn what’s going on out there from the other readers.
(Market data provided in partnership with MBS Live. For free job postings and to view candidate resumes visit LenderNews. Currently there are over 300 mortgage professionals looking for operations, secondary and management roles. For up-to-date mortgage news visit Mortgage News Daily. For archived commentaries, or to subscribe, go to www.robchrisman.com. Copyright 2018 Chrisman LLC. All rights reserved. Occasional paid job listings do appear. This report or any portion hereof may not be reprinted, sold or redistributed without the written consent of Rob Chrisman.)