News

Feb. 19: LO jobs; marketing, training products; ‘nother wholesaler exits; new lender products; conforming news

Where’s John Mellencamp when you need him? Lenders in rural areas know that over half of U.S. farm households lost money farming in the past few years. In 2018, the median (half above, half below) farm income for U.S. farm households was -$1,548. U.S. farm debt hit more than $409 billion in 2018, the largest sum in four decades, and farming’s Chapter 12 bankruptcy filings have been on the rise in the past several years.
 
Jobs and personnel moves
 
“With average loan costs hovering above $8k a pop, if you’re going to compete for purchase business today you need today’s tech! Guess what? Someone’s already overhauled mortgage tech so you can compete on lower margins and higher comp. Yeah, you read that right. Give your clients a better deal AND make more at the same time. Don’t believe it? See for yourself: Canopy Mortgage is trimming the fat AND keeping LO comp intact. Take our price quote engine for a spin to see what it could do for your borrowers! Then schedule a call to see what it will do for your comp. Reach out to Josh Neumarker, Director of Business Development (888-696-9076).”
 
LoanFuel, headquartered in Salem, MA is proud to announce industry veteran Ralph Armenta has joined LoanFuel as its EVP and Chief Revenue Officer to lead the company in its next phase of growth. Ralph has a long history of creating growth and profitability in mortgage banking, private mortgage insurance and financial technology. You can reach out to Ralph@loanfuel.com for more information about the company.
 
Lender products & services
 
Simplify your underwriting process with Loan Product Advisor® asset and income modeler (AIM). Through the expertise of third-party service providers, AIM automates the manual processes of assessing borrower assets and income. AIM reduces the burden of traditional documentation, speeds up the loan origination process and helps you close loans faster. Freddie Mac is working hard to bring you solutions that create efficiencies for your business and improve the borrower experience – giving you a competitive edge. These capabilities are available for Loan Product Advisor submissions and resubmissions on and after December 9, 2018. Gain greater efficiency in your underwriting processes with AIM – get The Freddie EdgeSM.
 
Leaders, 2019 is your year to stack your team with incredible talent. XINNIX has empowered hundreds of mortgage companies and thousands of managers to recruit top-producing mortgage talent and take their business to the next level. Just last year, leaders who engaged with XINNIX for their recruiting efforts hired an average of 1.5 LOs within 90 days of completing a XINNIX Performance Program. Want to learn more about a proven model for recruiting the best talent to build your sales force? XINNIX has developed a new resource to help. The 4 Key Factors for Sourcing Experienced Loan Officers gives managers tips needed to win the recruiting war. CLICK HERE to download Part 1 of the 4-week series. What are you waiting for? If you’re ready for top talent to elevate your team’s production today, contact XINNIX today!
 
Wholesale-Only Platform/Pricing Engine/Portal = More Volume/Happy Brokers/Thrilled Operations Staff/Far Less Cost. ReadyPrice is a plug ‘n play wholesale platform that connects dozens of investors (through you of course) to hundreds or thousands of brokers. It’s an enterprise strength, cloud-based, browser-driven LOS with a fully-embedded Pricing Engine with ERROR TRAPPING that handles all loan types, including non-QM and HELOCs. Plus, a robust Broker Portal/CRM for signing up new brokers in an instant, searching, locking, submitting, underwriting and managing every aspect of their pipes, collaboratively. Best yet, ReadyPrice can stand-up this platform in an hour plus a couple of weeks of admin configuration and training all for a fraction of the price of heavy, legacy competitors. Call us at (408) 357–0931 or email hello@readyprice.com to get a free demo today.”
 
Ever wonder why we call it the “closing table?” Shouldn’t it be the “beginning table?” While you may consider it the finish line, the closing is really the beginning of a lifetime relationship with a customer. Simply put, customer loyalty equals revenue. Learn new tactics at the MBA Servicing Conference where TMS Chief Strategy Officer Barbara Yolles will cover the “Growth Opportunities for Servicers” panel on 2/26 at 2PM.
 
Never lose another pre-approved buyer to the behemoth public real estate search sites. With HomeScout® custom-branded lead and conversion technologies you can take the guess-work out of where your leads and pre-approved buyers are going to search for homes, after they understand their buying power. Make sure they aren’t venturing to public search sites where their private information is sold to your competition – where they’ll experience unwanted sales pressures from strangers who bought their information from those online sources. They’ll appreciate the value of HomeScout’s 100% MLS listing data and guaranteed privacy when searching for their next home. Best of all HomeScout provides a search widget that can be added to your web site and a buyer reporting interface to monitor and support your buyers throughout the entire purchase process. Find out more by contacting the company HERE and scheduling a demo or call 952-831-0623.
 
“Doing business with Caliber Correspondent just got easier than ever! Introducing Encompass Investor Connect™. Caliber Home Loans, Inc. is pleased to announce our latest file delivery enhancement, in partnership with Ellie Mae, Encompass Investor Connect. Caliber is the first non-bank mortgage lender to fully launch this integration with Ellie Mae. Encompass Investor Connect will increase your delivery efficiencies by eliminating the need for uploading a closed loan package via our Correspondent Lending Portal (“CLP”).
Encompass Investor Connect provides an all-in-one solution by establishing a secure system-to-system workflow with Caliber Correspondent. Encompass Investor Connect will also ensure the delivery of accurate and compliant loan data and documents. You must be a mutual customer of Ellie Mae Encompass and Caliber in order to take advantage of this enhancement.”
For more information about Encompass Investor Connect, contact your Caliber Sales Representative
 
Cardinal Financial started with a mission to deliver the best mortgage experience possible. No matter what the market conditions may be, they are determined to deliver on their mission. How do they make this happen? They ensure that their team is empowered and supported by the best tools and technology solutions. When a traditional CRM no longer provided the functionality they needed to deliver the best mortgage experience for their people, partners and customers, they turned to the Total Expert Marketing Operating System® (MOS). Read the full story: How Cardinal Financial Helps People Achieve.
 
Sign of the times
 
From Connecticut comes word to brokers that, “Village Mortgage Company regrets to inform you that we have made the difficult decision to dissolve our Wholesale Division. We all work in a competitive, fast-paced industry; confronted with new regulations, technological advancements, and typical trade challenges every day. Unfortunately, current trends in the Wholesale arena have prompted Village Mortgage Company to phase out this channel… Over the past five years, our Wholesale Division brought many borrowers and their families into the happy homes that they deserved and that could not have been done without all of you! Our portal will remain open for continued access to any current and archived loans until August 2019. However effective Friday, February 15, we will no longer be accepting new files.”
 
New lender products
 
Union Bank’s Wholesale Lending, known for its jumbo and super jumbo product as it has no agency products, let brokers in CA, OR, WA, NV, AZ, and IL know that it has a 40-year IO portfolio ARM product. (It also offers owner-occupied, 2nd home, and non-owner products.) No minimum FICO score on loan amounts up to $750k. No minimum FICO score to $2M on most products. (Questions should be directed to Gina McLeod, VP, AE, 858-344-4254.)
 
TIAA Bank offers a one-time close construction loan. Financing options include new home construction, tear-down and rebuild or existing home renovations. Interested in learning more? Contact David Taormina.
 
Guild Mortgage has launched Guild-to-Go, a mobile application providing a direct connection between Guild loan officers and real estate agents. Designed to provide more transparency and efficiency throughout the loan process, Guild-to-Go allows the company’s real estate partners to connect directly with their preferred Guild loan officer from any mobile device or select a loan officer by location through the app’s built-in map feature. Once registered, agents can refer their clients to Guild to start the loan application and pre-approval process with a few simple clicks.
Guild-to-Go generates customized, on-demand pre-approval letters, allowing agents to submit offers faster for their buyers. Agents also can track the status of their customers’ files throughout the loan process with real-time updates and status notifications from application to close.
 
George Mason Mortgage, LLC, a wholly owned subsidiary of United Bankshares, Inc. rolled out the GMM Digital Mortgage Intuitive Lending™ platform powered by Ellie Mae. “Encompass Consumer Connect offers an engaging online consumer experience for lenders to turn a consumer’s interest into a quality application that can be closed faster with complete transparency and compliance,” said Joe Tyrrell, Ellie Mae Executive Vice President of Corporate Strategy. “With a digital interface, George Mason’s Intuitive Lending™ platform connects borrowers with mortgage professionals at their fingertips on any device, anywhere and offers simplified, faster, more efficient process.”
 
Citadel offers a 1-Month Bank Statement program. Visit the Citadel website to find out additional details including requirements and restrictions.
 
Wells Fargo Funding has expanded its identity-of-interest requirements for conventional Conforming and Non-Conforming Loans as follows: A verification of mortgage is no longer required. An assignment of sales contract is only treated as identity-of-interest if the assignment created a non-arm’s length or at-interest influence.
 
Freddie and Fannie, conforming conventional news
 
Looking for ways to grow your business? Freddie Mac is collaborating with clients to deliver automation and insights that provide a competitive edge. Cut back on documentation and reduce time to close with Loan Product Advisor® automated income and asset assessment capabilities. Save borrowers time and money with ACE appraisal waivers, now available for certain condo unit loans. Grow your condo business with Freddie Mac’s unit-level condo exception tool, Condo Project AdvisorSM. Get greater efficiency with simpler collateral QC and underwriting in Loan Collateral Advisor® Get The Freddie EdgeSM.
 
Uniform Loan Dataset Delivery (ULDD) XML files for conventional Conforming Loans delivered to Wells Fargo Funding on or after February 18, 2019, with applications dated on and after January 1, 2019, must meet ULDD Phase 3 requirements. Sellers are not required to deliver ULDD XML files.
 
PennyMac will be updating the requirements for the “Purchase Special” on the Conventional and Government LLPA tabs of the Best Efforts rate sheet. Effective February 18, 2019, the “Purchase Special” LLPA will only be applicable for 15-day or less lock periods and loans must be delivered by March 17, 2019.
 
Fannie Mae’s Servicing Guide 2019-01 outlines changes related to foreclosure time frames and compensatory fee requirements. FAQ’s related to these changes are also available.
 
Capital markets
 
Tuesday already! Economic data over the last week was mostly soft and has led some to adopt a more pessimistic view of the future demand. Conversely, one could view the 35-day government shutdown as temporarily giving pause to consumer demand which will resume course in February and March as those affected receive their back pay. Globally, demand is slowing, and China is adopting more stimulus to help bolster its economy. Stateside, tighter monetary policy appears to be on hold for the moment, but the stimulative effects from tax reform are fading and Congress has been unable to pass any sort of meaningful infrastructure legislation. For the time being, inflation remains near the Fed’s long-term target and while most economic indicators remain in expansion territory, the rate of expansion has begun to decline.  Initial claims for unemployment remain historically low, however they have trended up since September hitting 239,000 for the week ending February 9. This comes amid a record number of job openings in December and small business lamenting they are having difficulty filling openings.
 
The slope of the yield curve flattened last week. Besides a pod of Fed speakers this week (Fed presidents Mester, Daly, Bostic, Williams, Bullard, and Vice Chair Clarida), there’s a fair amount of news. Today is only the NAHB Housing Market Index for February at 10AM ET. Tomorrow are the MBA’s app stats for last week and January’s FOMC meeting minutes. Thursday we’ll have December Durable Goods Orders, weekly Initial Jobless Claims, and the February Philadelphia Fed Survey. Friday: January Existing Home Sales and January Leading Indicators. The yield on the 10-year, which ended last week at 2.67%, is unchanged as are most agency MBS prices.
 
 
Retire to the South. Y’all kin say whut y’all want ‘about the South, but y’all never heard o’ nobody retirin’ an’ movin’ North, have ya? (Thank you to Rhonda M., who lives in the South, for these; Part 2 of 5)
Georgia
The owner of a golf course in Georgia was confused about paying an invoice, so he decided to ask his secretary for some mathematical help. 
He called her into his office and said, "Y’all graduated from the University of Georgia and I need some help. If I wuz to give yew $20,000, minus 14%, how much would you take off?" 
The secretary thought a moment, and then replied, "Everthang but my earrings."
Louisiana
A senior citizen in Louisiana was overheard saying, "When the end of the world comes, I hope to be in Louisiana." 
When asked why, he replied, "I’d rather be in Louisiana ‘cause everything happens in Louisiana 20 years later than in the rest of the world."
 

 

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, “How are You Going to Compete.” 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.
 
Rob
 
(Market data provided in partnership with MBS Live. For free job postings and to view candidate resumes visit LenderNews. Currently there are hundreds of 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 2019 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.)
 

Feb. 18: Wholesale team available; upcoming events & training; primer on why rates go down when bond prices go up

 
So much going on!
 
The economy? Discount shoe store Payless will close all 2,100 of its locations in the United States and Puerto Rico in the coming months.
The Agencies? Former Congressman Mel Watt “misused” his position as director of the Federal Housing Finance Agency (conservator of Freddie & Fannie) by attempting to “coerce or induce” a relationship with a female employee seeking a promotion.
M&A? Any time a major bank grows unhappy with the earnings and margins of its residential lending arm and servicing portfolio and decides to shop it around, well, that attracts attention. (Rumors of AT&T, Sprint, T-Mobile, Verizon Wireless showing a big jump in cell minutes as competitors called HomeStreet branches are unconfirmed, but what LOs and branches will be left, and what will the buyer actually be buying, when the dust settles? Stay tuned!)
Government? Stockton, CA, “America’s Foreclosure Capital, is sending debit cards loaded with $500 to a select group of residents as part of a closely watched experiment in universal basic income. Glad we’re not socialists! (Recall that Stockton was the largest city to seek bankruptcy protection before Detroit’s 2013 filing.)
 
Wholesale team available
 
For companies looking for wholesale talent, a seasoned group of wholesale mortgage veterans with operations in Northern California and AEs throughout the West is looking to join an established wholesale mortgage banker or bank. The group’s footprint covers the Western states. Members of the group include Account Executives, regional managers, underwriters, customer service reps, funders/closers and set-up. The mortgage banker/bank should be financially stable, customer service driven, and want to expand its presence in the Western US. If you are a mortgage banker/bank who shares a commitment to providing exceptional client service and increase your monthly fundings. Interested parties should contact Anjelica Nixt; principals only please and specify the opportunity.
 
Upcoming events
 
National MI has some training for the remainder of February: 2/20 (How Attractive is Your Brand? The 90-Day Marketing Plan), and 2/21 (How to Underwrite the Self-Employed Borrower AFTER Tax Reform). For the full calendar, please visit the MI University page.
 
MGIC & MBA of Greater Philadelphia are presenting “Rethink Your Social Media Strategy” on Wednesday, February 20, from 1-2PM ET. “You have a Facebook Business Page, you regularly connect with people on LinkedIn and know the difference between a hashtag and a hash brown. What’s next to take your social media game up a level? We will cover: How obsessed we are with our mobile phones and how you can harness that for your business growth. What’s the fastest growing content segment and how you can incorporate it into you marketing. Ideas for cross-marketing so your network promotes you, giving you more online visibility. While there’s many social media platforms, we will specifically focus on examples using Twitter, Facebook and LinkedIn, and touch on using these same strategies on other platforms.”
 
There is still time to register for Plaza’s Wednesday, February 20th webinar: Understanding the Different Generations: Selling to Millennials.
 
Join Plaza on Thursday, February 21st for a free webinar to discuss different types of income and how to document and calculate for qualifying purposes. We will review income sources such as Public Assistance, Disability, Tips, Foster Care, Social Security, etc.
 
Freddie Mac is offering a variety of upcoming virtual class webinars…seating is limited for all trainings. Note: To register for Freddie Mac instructor-led sessions or self-paced learning, be sure to sign up for Freddie Mac Learning. (Your organization must have a Freddie Mac assigned Seller/Servicer or TPO number.) Need help signing up? Watch this short video.
 
February 28thInvestor Reporting Change Initiative Implementation − Learn about loan transactions, edits and drafting of funds, as well as what you can do to prepare for the May 2019 implementation of the Investor Reporting Change Initiative.
 
March 19th or April 10thReviewing Rural Properties − Find out how our general property eligibility requirements apply to properties in rural areas using case studies, tips and best practices, and look at common misconceptions around rural properties.
 
March 12th Realize the Possibilities with HomeOneSM Mortgages − Discover HomeOne, our low-down payment option for first time homebuyers that offers more flexibility while providing a 97% LTV with no income or geographic restrictions.
 
March 21st – Self-Employed: Beyond the Basics − Self-employment is a watchword for the Borrower of the Future®. We’ll walk through case studies that analyze business tax returns, applying Guide requirements, and look at factors that can affect qualifying monthly income.
 
The Lenders One’s March 2019 Summit is in Austin, TX, March 3-6 which is already seeing a record number of registrants. Contact Lauren Ketchum, Director of Member Experience for more information on these programs or how to become a member.
 
NMMLA welcomes The National Real Estate Post as its luncheon guest speaker on March 12th. Register now.
 
On March 13th the Mortgage Bankers Association of Kentucky is hosting its Education Conference in Louisville. Joel Kan (MBA), Scott Weghorst (Diehl & Associates), Sue Woodard (Total Expert), Marla Guillaume (Century Lending), and myself will be speaking.
 
Registration is now open for Ellie Mae Experience 2019. The conference will be held March 10-13 in San Francisco and will encourage attendees to take the digital mortgage journey while participating in exclusive training, hearing the latest in new tracks and sessions and networking with visionaries innovating on behalf of the mortgage industry. From URLA changes to HELOC opportunities to engaging homebuyers at the point of interest, Experience 2019 has it all.
 
On Thursday March 14th the Nashville Mortgage Bankers Association will be hosting its March luncheon. I am fortunate to be attending – registration is open.
 
Register for the California MBA’s Annual Legislative Day and join fellow mortgage professionals and execs on March 18th in Sacramento as industry visits the state capitol and speaks with policy leaders about the critical nature of California’s real estate finance industry. Note – this is a one-day (fly-in, fly-out) event, on March 18th only, that gives you an opportunity to have a face-to-face meeting with key members of the Assembly Banking & Finance Committee and Senate Banking & Financial Institutions Committee.  These are the critical policy-making entities for the mortgage industry. Make sure you help your fellow mortgage colleagues communicate our message to lawmakers.
 
Register for the March 18-22 Independent Community Bankers of America’s ® (ICBA) 2019 National Convention, ICBA LIVE®! Held in Nashville, this is the largest, most comprehensive educational and networking event for the nation’s community bankers with more than 60 learning labs and seven tracks including lending and deposits, risk regulations and exams, and technology, payments and innovation.
 
You are officially invited to be a guest for the 11th Annual Great New England Credit Union Show at the New MGM Springfield on March 29th.  For a limited time, you and your staff can register to attend this record-breaking event as a guest. Just go to this link, and follow the registration prompts on the "Attend" tab. Use the promo code CUFREE19, and you’ll save $195 per person (restriction apply). But don’t wait. This code won’t last forever.
 
Capital markets
 
When running capital markets, I was talking to AEs and LOs on a daily basis about bonds and rates. I always had to make sure I was talking about one or the other. Why? Because a fundamental principle of bond investing is that interest rates and bond prices generally move in inverse directions. When market interest rates rise, prices of fixed-rate bonds fall, aka interest rate risk. But why?
 
When you buy a bond or fund a mortgage, you’re lending money to the bond’s issuer, or borrower, who promises to pay you back the principal on the bond’s maturity date. Like a mortgage! Before the bond is due, the issuer also promises to pay you periodic interest payments to compensate you for the use of your money based on the stated interest or coupon rate, which is generally fixed at issuance.
 
The answer to why the inverse relationship exists lies in the concept of opportunity cost. Investors constantly compare the returns on their current investments to what they could get elsewhere in the market. Market interest rates are changing constantly. The fixed interest rate on a bond becomes more or less attractive to investors based on its relation to market rates. For example, a $1,000 new issue of bonds, or a mortgage, carrying a 5% coupon pays you $50 a year in interest.
 
Now let’s suppose that later that year, interest rates go up and new $1,000 bonds, or mortgages, are paying a 6% coupon, or $60 a year in interest. Who is going to pay the $1,000 face value for your 5% bond seeing as they can get 6% elsewhere? Why would I, or some money manager in Tokyo, want to only earn 5% instead of 6%? So, in order to sell, you’d have to offer your bond at a lower price, a “discount,” that would enable it to generate approximately 6% to the new owner. In this case, that would mean a price of about $833.
 
Similarly, if rates dropped to below your original coupon rate of 5%, your bond would be worth more than $1,000. It would be priced at a premium, since it would be carrying a higher interest rate than what was currently available on the market.
 
Obviously, many other factors go into determining the attractiveness of a particular bond, or a mortgage: the length of time until the bond matures or loan pays off, whether or not its interest is taxable, the creditworthiness of its issuer or the borrower, the likelihood that the issuer or borrower will pay off debt early, and so on. But the important thing to remember is that change occurs in market interest rates virtually every day. The movement of bond prices and bond yields is simply a reaction to that change.
 
Today
 
For interest rates today, for any companies taking locks, the bond markets are closed. The stock markets are closed. Even though they are not required to, most private banks tend to close on federal holidays due to the fact that the Federal Reserve system won’t be operating. (Eleven states don’t observe Presidents Day in February – Delaware, Georgia, Iowa, Indiana, Kansas, Kentucky, Louisiana, North Carolina, New Mexico, Rhode Island and Wisconsin.) But there is no mail delivery, there is UPS & FedEx, most public schools are closed, all government offices are closed, as are courts
 
 
Retire to the South. Y’all kin say whut y’all want ‘about the South, but y’all never heard o’ nobody retirin’ an’ movin’ North, have ya? (Thank you to Rhonda M., who lives in the South, for these; Part 1 of 5)
Florida
A Florida senior citizen drove his brand-new Corvette convertible out of the dealership in Jacksonville. Taking off down the road, he pushed it to 80 mph, enjoying the wind blowing through what little hair he had left.
“Amazing,” he thought as he flew down I-95, pushing the pedal even more.
Looking in his rear-view mirror, he saw a Florida State Trooper, blue lights flashing and siren blaring. He floored it to 100 mph, then 110, then 120. Suddenly he thought, “What am I doing? I’m too old for this!” and pulled over to await the trooper’s arrival.
Pulling in behind him, the trooper got out of his vehicle and walked up to the Corvette. He looked at his watch, then said, "Sir, my shift ends in 30 minutes. Today is Friday. If you can give me a new reason for speeding, a reason I’ve never heard before– I’ll let you go."
The old gentleman paused then said, "Three years ago, my wife ran off with a Florida State Trooper. I thought you were bringing her back."
"Have a good day, sir," replied the trooper.
 

 

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, “How are You Going to Compete.” 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.
 
Rob
 
(Market data provided in partnership with MBS Live. For free job postings and to view candidate resumes visit LenderNews. Currently there are hundreds of 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 2019 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.)
 

Feb. 16: Letters on forecasts for 2019, the role of appraisals, False Claim Act policy, and LO comp

I know Monday is a national holiday, like Thanksgiving or the 4th of July, so who’s checking emails this Saturday? Darned if I know, but it’s a quick read. (When I was a kid, we had both Lincoln’s and Washington’s birthdays off – those were the days!) There continue to be lots of issues in residential lending, so let’s get going.
 
LO Comp: the issue that just won’t go away
 
That whole LO comp thing is “all put to bed,” right? Wrong. I am still hearing that there are issues out there, ranging from companies trying to fine tune their own plans all the way to finger pointing and name calling at other companies, and saying things like, “I heard that some attorney said point banks are just fine!” In a timely note mortgage attorney (who also does company-specific training) Brian Levy with Katten & Temple LLP cabled, “Rob, TILA’s Loan Originator Compensation Rule is a regulatory disaster, but it’s helping to put my kids through college (RESPA is too). LO Comp is an ill-conceived, overly restrictive, anti-capitalist regulation which hamstrings the mortgage industry in unintended and complicated ways. Designed to address the steering concerns of the subprime era, LO Comp wildly swings an axe where a surgeon’s scalpel is needed (or perhaps just some aspirin) by entirely prohibiting the ability of sales organizations to incentivize or disincentivize salespeople based on loan profitability or any proxy for profitability.
 
“Fundamentally, LO Comp runs counter to the sales culture of most mortgage companies, pitting compliance against business instincts. The Rule assumes that any variation in LO compensation results in steering the consumer to a bad loan choice, regardless of whether, in fact, the loan is better, worse or indifferent. So, the Rule requires loan officers to be paid the same for every loan regardless of the revenue that may result to the mortgage company. Originator compensation, however, is the biggest single expense for all mortgage companies.  As a result, the mortgage industry has been complaining about LO Comp (and seeking ways around it) since the Rule was initially implemented in 2011. The issues are particularly acute today due to margin compression forcing lenders to look for ways to remain competitive with commission rates while at the same time maintaining profitability on a wide range of products.
 
“There are many ideas that, if properly structured and implemented, can mitigate some of the adverse effects of the Rule, but smart lawyering alone will not solve many of the fundamental and common concerns. With leadership at CFPB now more willing to hear industry concerns, the Mortgage Bankers Association recently sent a letter to the CFPB practically begging them to amend LO Comp to enable some common-sense items that LO Comp currently prohibits. Specifically, MBA asked for relief on things like paying less for state housing and bond loans and to allow LO’s to reduce commissions to provide consumer discounts and to pay for errors. At this time, although CFPB representatives have verbally expressed sympathy for the industry’s concerns, no official response has been forthcoming. No doubt, the MBA would not bother to send such a letter to CFPB requesting changes if smart lawyers could simply find ways around the challenges.
 
“Yet, I hear on almost a daily basis that ‘others’ in the industry are not waiting for the CFPB to act. For example, some lenders appear to be seeking to justify reducing commission rates on certain types of loan products by assigning the loan to the ‘house/company generated channel.’ Ironically, the same product-based “logic” could be used to increase commission rates for subprime loans (that, of course, was the ‘whole enchilada’ LO Comp was intended to prohibit). Meanwhile, giving LOs pricing flexibility by reducing commissions (or having any kind of a “point bank”) are clearly prohibited and have been the focus of all CFPB enforcement actions to date.
 
“To be sure, the self-generated vs. house/company generated distinction can work to vary commissions in some key instances, but it requires evidence of the loan’s source being different from the LOs normal business generation activity. Varied compensation programs such as the house channel idea, however, need to be able to survive the second prong of the ‘proxy rule’ articulated in the CFPB’s 2014 Rule. So, for the house channel idea to work, the company must be able to show that the LO had no influence over how the loan came in the door. A product selection or type of loan is simply unlikely to be seen as a ‘channel.’ Contrast that analysis with the proxy rule’s application to purchase transactions vs. refinances. It seems virtually impossible for an LO to influence the borrower’s choice between refinance or purchase: e.g., ‘No Mr. & Mrs. Smith you shouldn’t buy that new house, you should refinance your existing home instead.’ I have heard that CFPB has changed its previous position on the application of the proxy rule to the purchase vs. refinance distinction, but there has been no official statement on that issue.
 
“The penalties under LO Comp are governed by TILA and include statutory damages, attorneys fees (class action) and the claims can extend for the life of the loan. CFPB, state regulators, consumer class action attorneys, your own whistleblowing employees (especially former employees) and even warehouse lenders may all raise LO Comp concerns, so hoping violations will avoid detection is a dangerous strategy. Moreover, since LOs can be held personally liable for damages, if the employer is out of business, originators could be left holding the LO Comp bag.  Be careful out there.” Thanks Brian!
 
Penalties
 
This week news broke from the DOJ and HUD settled a claim with Sierra Pacific Mortgage under the False Claims Act by “agreeing to pay the United States $3,670,000 to resolve allegations that it violated the False Claims Act by falsely certifying compliance with Federal Housing Administration (FHA) mortgage insurance requirements in connection with certain loans.” The release finally ended with, “The claims settled by this agreement are allegations only and there has been no determination of liability.”
 
Sierra Pacific reacted: “As you know, a number of larger lenders have also settled claims with the government under this act. The False Claims Act has been used as a tool by the DOJ to punish lenders for alleged abuse during the housing crisis of 2007 – 2008. HUD reviewed nearly 200 loan files originated between 2007 and 2012 and found alleged issues with 16 loans. We have aggressively, contested these claims, but rather then enter into a protracted legal dispute with the Federal Government, we decided to settle this claim admitting to NO wrong doing. Sierra Pacific Mortgage has always originated quality and compliant loans that serve our customers and meet the requirements of our secondary market investors. We will continue to do so.”
 
I received this opinion letter from an industry vet. “Sierra Pacific joins the growing list of DOJ victims! The DOJ wins only, and I mean only, because it has access to taxpayer assets to hold hostage and black mail good companies throughout the U.S. It is truly a travesty of our America. Without any regard to the occasional human mistake, this group of terrorists are allowed to continue this practice.
 
“I wonder how this would proceed if DOJ was obligated to pay exorbitant fines for useless processes. It is sad how this has worked into the business world without cause. Through my position I know of several lenders who wanted to contest the proceedings. All were informed, off the record, ‘Go ahead and fight us, we (the DOJ) will drag it out over enough time to put you out of business.’ The strangest part was that each settlement was an amount firstly from the balance sheet of the client without any basis of wrong doing other than what amount can they afford to pay. Seriously no kidding.”
 
Collateral
 
On appraisal trends and bifurcated appraisals, from New York James Scholl with Aaron Appraisal writes, “Appraisers are the only firewall in real estate and we are removing them from the homes? Our appraisal inspection takes about an hour on average for a simple home and most appraisers take about 100-125 photos. The home is carefully measured according to standards such as ANSI. We note condition, materials, upgrades, smells (pets, etc.), floor plan. We do a thorough inspection of the lot and the neighborhood as well.
 
“Now we are told anyone can do the inspection. Really? If they prefer real estate agents, they should read NAR’s Danger Report. If they prefer Home Inspectors remember Home Inspectors get most of their work from agent referrals who are paid when the home closes.
 
“Why don’t the lenders and regulators want the appraiser in the home? If appraisers don’t go to the homes and neighborhoods their expertise will atrophy over time. The pay for appraisers per bifurcated appraisals is $25-$50. Appraisers will be going out of business in record numbers if the product grows in acceptance. Some say appraisers will simply do many more appraisals to make up the difference. Where will these extra appraisals come from? The number of homes sales and refinances won’t grow any larger so, again, where would these appraisals come from?
 
“If the real goal is faster, cheaper appraisals change the scope of work. About 2005 an appraisal took about 4 hours on average and now it takes about 9 hours. So perhaps modernize Fannie Mae’s old 2055 form (Rev. 1996) and reduce the scope of work at the same time.
 
But if the real goal is to do away with the only firewall in real estate over time by making the job untenable, unprofitable or an anachronism God help us all. Years ago 10,000+ appraisers signed an online petition to halt the excesses prior to and during the last meltdown. There is a new one on change.org and there are already over 5000 signatures. Finally, why don’t the lenders and regulators want the appraiser in the home?”
 
Forward!
 
Talking about guarantee fees from the 1980s is so… passé. What are folks saying about 2019’s environment and beyond?
 
Will talking about something make it happen? The likelihood that the US will go into a recession in the next 12 months rose to 25% this month, compared with 20% in January, according to a Reuters poll of economists. Most of the respondents said they expect the Federal Reserve to leave interest rates unchanged at its March meeting.
 
For interest rates, “What changes to interest rates are expected for 2019? What influence might those rate changes have on lender purchase and refinance volumes? Exactly how much would lending rates need to decline in order to spur a significant pickup in refi activity? Get ahead of the curve with answers to these important questions and more in MCT’s Economic & MBS Market Outlook for 2019, a data-driven forecast from Director of Analytics, Bill Berliner. (There’s an MCT webinar, “5 Ways To Improve Profitability” on February 20 at 11AM PT. “Receive actionable tactics that address both short and long-term profitability and an electronic summary of Jim Deitch’s new book, ‘Strategically Transforming the Mortgage Industry.’")
 
Dr. Rick Roque has his thoughts on the present and future state of retail mortgage banking. Addressing the competitive nature of mortgage banking today, Rick noted, “Companies are hurting today, especially largely conventional mortgage banks or upper Midwest firms that are either wholesale lenders attempting to do retail, or under-capitalized mortgage banks struggling to compete. And often, owners of such companies either become humble and open to change or they dig down and point the finger of blame at the market, certain leaders in the company or some other outside factors – they blame everyone else but themselves. This is the time to be innovative and be humble regarding the future direction of your company. The way you ran your company in the last 10 years is NOT the way you should run your company in the next 10 years. Those companies resisting change will only suffer.”
 
Rick’s note went on to discuss companies his thoughts Virginia’s Atlantic Coast Mortgage (ACM), a regional lender who Rick believes will become a “national player” in residential mortgages. “Interestingly, in my opinion ACM is one of the most innovative mortgage banks that I’ve come across, having a platform truly setup to support top producing loan officers and branch managers. ACM was founded by Timur Tunador, who, with his partners Jon Coy and Patrick Collins, have built a company where Loan Officers can thrive and take their business to the next level. I find Timur’s group to be forward thinking and very practical in the way they run their business. ACM’s platform is unique as they have set up 24-hour branch support which is vital for Branch Managers when changing platforms. Their benefits, including their 401K matching, are better than I have seen in any independent mortgage bank and AMC’s product offering is much wider than the competition along the East Coast. I am really impressed with them.
 
“To be competitive, you have to have be well capitalized and have mature systems like a depository, but close loans like a mortgage bank. ACM is not looking to be the biggest, but simply the best in any market they enter. Quality versus quantity is what matters to the group at ACM. They have become a one of the top mortgage banking operations in one of the most competitive markets in the country and I think they will be a force to reckon with as they move into different markets.” (Rick is a retail mortgage banker whose efforts between 2015-2018 has helped to identify, add, and onboard more than $2.8B in production for companies he has consulted with. He is a national speaker on US mortgage market trends and retail mortgage banking growth strategies and execution.)
 
Lastly, XINNIX passed along that The Mortgage Collaborative shared the results of its annual conference survey, revealing the top 20 issues mortgage lenders believe will have the biggest impact on their business in 2019. The survey was completed by over 250 mortgage professionals, mostly leaders, across the nation.  
 
 

A man is applying for a job in a circus. The interviewer asks, "So what can you do?"

"I can do a really good bird impression," replied the man.
"Oh we already have people who do that here, we won’t be needing you for that."
"Oh well," the man said sadly, and flew away.   
 
 
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, “How are You Going to Compete.” 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.
 
Rob
 
(Market data provided in partnership with MBS Live. For free job postings and to view candidate resumes visit LenderNews. Currently there are hundreds of 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 2019 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.)
 

Feb. 15: Sales jobs, business opportunities; construction, marketing products; impressive Agency earnings

Huh? Radian was recently in takeover talks? I only know what I read in the newspapers! Sometimes I wonder if everyone isn’t in M&A talks to one degree or another, and rumors continue to swirl about a publicly-held bank in the Northwest spinning off its mortgage division. There’s a lot going on in our biz, especially with Freddie & Fannie in the present & future – more below. Even my cat Myrtle is silent, ignoring my questions about what she’s been up to lately.
 
Jobs, promotions, personnel moves
 
Are you in need of sales management expertise? Are you looking to take your existing team to the next level? Or, is your company looking to expand into Third Party Origination 
(Correspondent and Wholesale) or add Non-QM productsA seasoned Sales Executive is seeking a new opportunity to help lead a mortgage company in achieving its growth goals. All institution sizes and locations will be considered. Please send inquiries to Anjelica Nixt to pass along to the candidate and specify the listing.  
 
“The Fed has been throwing us a number of mixed signals, but for now, the market remains very challenging, and winter’s seasonality is not helping. This message is mostly directed to Company Owners, but also to Production Teams. If your volume is less than $1 billion annually you are operating in what is probably the most difficult segment of the market today. You have to staff every operations function without enough units to create any efficiency. You are competing against companies with scale, marketing power, and better technology. Do you think your best strategy going forward is continuing to go it alone, or should you be taking a look at your options with a deep pockets partner? We have pretty much figured out that in most cases you can improve your economics, preserve your own capital, and eliminate most of your risk. For production teams I think the question is whether you feel you are in the right spot to ride out the storm? If you would like to discuss a few of your options, I can be reached at jjcmc@earthlink.net or 707-738-2666.”
 
A leading mortgage technology company is seeking a National Account Manager with a proven track record of success in working with consumer direct lenders. The ideal candidate will have a minimum of 3+ years in selling B2B services and technology. You may work remote, so organization and accountability are a must. Frequent travel across the US to meet and present to potential clients as well as participate in trade show opportunities will be required.  Create and deliver effective presentations. Effectively manage pipeline, sales activity, and provide accurate forecasting. You must have a proven track record of success in a high-volume fast paced role. Previous experience in technology sales selling to financial institutions and C-Level executives. Pre-existing contacts in the mortgage and banking industry are a big plus. Please send resume to Anjelica Nixt for forwarding and specify the opportunity.
 
Envoy Mortgage is excited to announce that Tony Taveekanjana has joined as National Head of Sales. Prior to joining Envoy, Mr. Taveekanjana built a track record and loyal following among high quality production teams as National Head of Sales for two well-known nationwide lenders. “We have spent the last year enhancing our capabilities to provide our distributed retail teams with the product, price, tools, and services they need to outperform their competitors, and now is the perfect time for a leader like Tony to help us take our existing production teams to an unparalleled level of success,” said Ron Millard, Envoy’s CEO. Envoy’s rock-solid balance sheet has allowed it to make a substantial investment in new technology, infrastructure, and leadership exclusively dedicated to serving distributed retail originators. If you are a premiere originator not getting the corporate attention and support you deserve and want to be on a winning team, check out www.joinenvoy.com to learn more about Envoy.
 
Stearns Home Loans announced Jim Linnane will step into the role of National Retail President reporting to David Schneider CEO of Stearns Lending. Linnane previously served as the Division President for Stearns Home Loans over the Central and Eastern regions. “Jim Linnane is an excellent leader with a strong background in production, who has a history of developing strong future leaders,” said Schneider. “Jim will continue to grow Stearns’ national presence and increase volume while expanding our business into new territories.”
 
Congrats to Jim Horgan, the new president of Massachusetts’s East West Mortgage.
 
Lender products & services
 
With the new integration between LBA Ware’s CompenSafeTM and the enterprise digital mortgage solution from SimpleNexus, loan originators can now receive real-time compensation notifications through the SimpleNexus mobile app. SimpleNexus provides LOs with a single, mobile-driven platform to connect with borrowers, Realtor partners and the ancillary systems and tools they use on a regular basis. The addition of compensation notifications from LBA Ware adds to the suite of milestone alerts already available through the app and gives LOs a more complete picture of their individual level of production in real time. Email Lori@LBAWare.com to schedule a meeting with LBA Ware Founder and CEO Lori Brewer at The Mortgage Collaborative’s Winter Conference, February 17-19 in Austin.
 
Simplify your underwriting process with Loan Product Advisor® asset and income modeler (AIM). Through the expertise of third-party service providers, AIM automates the manual processes of assessing borrower assets and income. AIM reduces the burden of traditional documentation, speeds up the loan origination process and helps you close loans faster. Freddie Mac is working hard to bring you solutions that create efficiencies for your business and improve the borrower experience – giving you a competitive edge. These capabilities became available for Loan Product Advisor submissions and resubmissions on and after December 9, 2018. Gain greater efficiency in your underwriting processes with AIM – get The Freddie EdgeSM.
 
“Stop Losing Money in 2019! With the mortgage industry becoming increasingly difficult to survive let alone thrive, companies are in search of new marketing strategies to compete in this new era of credit. The Decision Science team at BBM has created an advanced suite of propensity data models that help professional origination marketers identify homeowners who are actively in the market for FHA, VA, Jumbo and Non-Agency loan optionsOur average loan amount for active FHA/VA and Non-Agency applications exceed $350K and gross top line revenue of nearly $15,000. If you’re marketing is not reaching these levels of performance than let BBM show you how a targeted marketing strategy focused on propensity modeling and targeted revenue opportunity can change the trajectory of your company. For more information about BBM Marketing Services and about becoming an approved origination partner please contact Bill Senteno and visit www.bbm.company.”
 
On the heels of success with the Single Close Construction program in 2018, GSF Mortgage Corp. (GSF) is kicking off the new year strong by attending the NAHB International Builders’ Show in Las Vegas, NV, through February 19-21. Highlights of our Single Close Construction program include, FHA 30 Year Fixed up to 96.5% LTV, VA 30 Year Fixed up to 100% LTV, USDA 30 Year Fixed up to 100% LTV and Conventional 30 year fixed up to 95% LTV. All loans are handled in-house the borrower does not need to requalify after the initial closing and make no interest payments during the build on most products. Eligible home types include stick built, manufactured, modular. Originators and builders are welcome to stop by GSF’s booth (#SU3048) and discuss the program and partnership opportunities with our attending Construction Division team. Please reach out to VP of Retail Lending, Frank Papaleo.
 
 
Agency news keeps on keepin’ on
 
The National Association of REALTORS® has collaborated with Susan Wachter of the Wharton School at the University of Pennsylvania and Richard  Cooperstein of Andrew Davidson and Company on new research exploring ideal restructuring of the secondary mortgage market. Pete Mills, MBA’s Senior VP for Residential Policy and Member Engagement, cabled, “We welcome NAR’s work on this issue, and clearly see a number of places where their paper aligns with the plans MBA and other stakeholders have released. There are some areas where further clarification would be helpful, especially around whether the government guarantee applies to the entities themselves, or, as MBA and others have recommended, just to the mortgage backed securities. It is important to have NAR engaged and we look forward to working with them and a diverse set of other coalition partners to continue to press policymakers to finally address the long-term future of Fannie and Freddie.”  
 
Fannie Mae & Freddie Mac reported great earnings, again, yesterday. Do away with them? I don’t think so: throughout 2018 the two companies together funded approximately 3.2 million mortgages. In the fourth quarter, Fannie had net income of $3.2 billion, and Freddie had $1.5 billion which will be swept into the U.S. Treasury in March while continuing to retain a slim capital buffer of $3 billion each. (Recall that the “net worth sweep,” set up in 2012, forces the two companies to divert profits to taxpayers but allows them to take capital draws in any quarter in which they had a loss.) Delinquencies are less than 1% in the 4th quarter.
 
Yesterday the Trump administration’s pick for head of the regulatory agency, the FHFA, overseeing Fannie and Freddie, Mark Calabria, found himself facing the Senate Banking Committee. If you’d like to read his testimony, here you go: the hearing before the Senate Banking Committee of Mark Calabria.
 
Mr. Calabria avoided being too controversial to annul his appointment. His questions on the mortgage market offered nothing new or provocative in his answers, as he deferred on conforming loan limits saying authority lies elsewhere adding that the 30-year mortgage would still be there when his term ends, despite room improvement (appropriate regulatory structure to control the risk). He favors a larger capital buffer for the GSEs but still supports affordability and low down payment options with caveats.
 
Of course each promoted their strengths. Earlier this week I attended Wells Fargo/Freddie Mac Affordable Housing sessions, and Freddie’s earnings noted that first-time homebuyers made up 46% of mortgage purchase loans in 2018. Nearly all of the apartment rental units it helped finance were for low- and moderate-income Americans. Fannie states that it is committed to “providing support for both affordable and workforce housing,” which it accomplished by having 56% of its mortgage funding go to low- and moderate-income households.
 
New research from Freddie Mac (OTCQB: FMCC) finds that if the U.S. housing supply continues to fall short of demand, home prices and rents are likely to outpace income and household formation will fail to reach potential. Housing supply has been a major challenge facing the housing market in 2018 and will continue to be for years to come, according to its latest Insight.
 
The Freddie Mac Guide Bulletin 2018-26 updates servicing requirements related to: State foreclosure timelines and compensatory fees, the Servicer Success Scorecard and
Mortgage servicing contract rights.
 
Freddie Mac released two white papers detailing the important role that the Low-Income Housing Tax Credit (LIHTC) program plays in rural Middle Appalachia and Indian Areas. The research shows that the LIHTC program supports a relatively high percentage of multifamily rental housing due to the limited viability of market-rate rental housing and a market need for lower income housing. The white papers, along with other research in both the single-family and multifamily markets, are a part of Freddie Mac’s three-year Duty to Serve plan to increase rental and homeownership opportunities in historically underserved markets throughout the nation.
 
Capital markets
 
The bond market yesterday actually reacted to U.S. news instead of overseas news for a change! Rates dropped a little Thursday (the U.S. 10-year closed yielding 2.66%) after the release of a weak December Retail Sales report (actual -1.2%; expected 0.2% – the largest monthly decline in nearly 10 years!). The weakness wasn’t isolated to gasoline station sales but was pretty broad-based across discretionary spending categories like furniture and home furnishings, electronics and appliance stores, clothing and accessories, miscellaneous store retailers, non-store retailers, and restaurants. Federal Reserve Governor Lael Brainard said that the retail sales report is a reminder of downside risks, adding that she believes the balance sheet run-off should end later this year.
 
Internationally, South China Morning Post reported that U.S. and Chinese officials remain far apart on agreeing to a verification mechanism that would ensure that China is implementing structural reforms demanded by the U.S. However, negotiators are reportedly considering the removal of the 10.0% tariff on $200 billion worth of imports from China while maintaining a 25.0% duty on $50 billion worth of imports. China reported a larger than expected trade surplus for January, but imports from the U.S. fell nearly 39.0% YoY while exports to the U.S. increased 1.9% over that same period. Separately, Japan reported a modest expansion in Q4 GDP to avoid a technical recession, but external demand decreased. Germany flash GDP reading for the Q4 showed no growth, but the weak reading was good enough to keep the country out of a recession for the time being.
 
The bond markets and many lenders are closed for the national holiday on Monday, so expect to see things slow down later today as folks head for the exit. We’ve had the February Empire State Manufacturing Index and January import/export prices (“8.8” in February, and -.5% respectively). Next up is January Industrial Production and Capacity Utilization at 9:15am with both components expected to decline from December. Finally 10:00am brings preliminary February Michigan sentiment, expected to tick up slightly. We begin today quietly with Agency MBS a few ticks worse versus last night and the 10-year yielding 2.67%.
 
 
(Thanks to Mark S. for this one about the Cajun Baptist.)
Reverend Boudreaux was the part-time pastor of the local Cajun Baptist Church and Pastor Thibodaux was the minister of the Covenant Church across the road.
They were both standing by the road, pounding a sign into the ground that read: “Da End is Near. Turn Yo Sef ‘Roun Now Afore It Be Too Late!”
As a car sped past them, the driver leaned out his window and yelled, “You religious nuts!”
From the curve they heard screeching tires and a big splash.
Boudreaux turns to Thib and asks, “Do ya tink maybe da sign should jussay… ‘Bridge Out?’”
 
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, “How are You Going to Compete.” 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.
 
Rob
 
(Market data provided in partnership with MBS Live. For free job postings and to view candidate resumes visit LenderNews. Currently there are hundreds of 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 2019 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.)
 

Feb. 14: LO jobs; digital white paper, customer service, pricing products; another False Claims action; risk transfer status

I like Baltimore. It has cool row houses, the Edgar Allan Poe House & Museum, Babe Ruth’s birthplace, Fort McHenry, the Ravens and the Orioles, but… bedbugs? Yes, for the third year in a row Baltimore is tops in the U.S. for bedbugs. (How’d you like to be in charge of that survey, and be volunteered by your child to explain to their class what you do for a living?) I know that this is a weak lead in, but Baltimore is certainly one of the major cities in the U.S., and LOs are always trying to add value to clients through educating real estate agents about home prices and trends. Here’s a useful table showing the median home prices in the Top 100 Metro Areas.
 
Jobs & personnel moves
 
“Are you looking for ‘the one’ this Valentine’s Day? Someone you feel you can count on? Who supports your dreams, encourages your growth and gives you the opportunities you need to turn leads into customers for life? Meet Motto Mortgage. We believe our network deserves the very best which is why we empower each and every Motto Mortgage loan originator with the right tools and training to stay ahead of the competition. In fact, the Motto Mortgage network is aggressively recruiting for loan originators in the following states: Colorado, Delaware, Florida, Michigan, New Jersey, Nevada and Texas. Still unsure? With over 100 franchises sold and 70 offices open in 30 states, our network’s growth makes it easy to cast those first-date jitters aside. Take a chance and swipe right on Motto Mortgage. Contact us (866.668.8649) to learn why we might just be a match made in heaven for your career.”
 
Caliber Home Loans, Inc. CEO Sanjiv Das has been named a "Top 25 Industry Leader & Influencer" by The MReport. He is a 30-year mortgage industry veteran, with executive management experience both domestically and internationally. He has been a featured speaker at renowned institutions such as Harvard Business School and Columbia Business School – and is a regular commentator on CNBC, Bloomberg and for The Wall Street Journal. Since joining Caliber as Chief Executive in 2016, Das has overseen several acquisitions, introduced innovative financing solutions and invested in technology. In 2018, Caliber was among the fastest growing mortgage lenders, increased its market share, grew to the #4 non-bank lender (as reported by IMF) and hired over 1,200 employees. Caliber Home Loans has strength in numbers – and leadership – and is proud of both! 
 
Pavaso announced that Tim Anderson has been named SVP of business development, responsible for developing products, strategies and relationships that drive adoption of Pavaso’s suite of digital products and services.
 
Lender products and services
 
New technology and digital mortgage services have flooded the industry recently, and for good reason. For years, many mortgage lenders have procrastinated adopting digital technology to improve efficiency in their operations, making it harder to attract and satisfy new customers. Late-bloomers are finally coming around, though, as we are seeing more and more lending teams actively researching and purchasing technology solutions to help their business.
With this, it’s hard to know the right questions to ask to help you find the right technology vendor. A newly released eBook, “Digital Mortgage Buyer’s Guide”, shines light on this process, touching on questions to ask and areas to focus on for those considering adopting new digital mortgage technology in their business. An exclusive to Rob Chrisman subscribers today (and a must-read for all lending professionals), Download your complimentary copy here. 
 
Stay tuned for an announcement from ISGN Solutions – a premier provider of productized solutions to the U.S. mortgage industry. ISGN Solutions works with 11 of the top 20 originators and servicers and numerous other great mortgage companies around the country, combining its best-of-breed technologies and 2,000+ employees to help clients move their business initiatives further, faster. A point of pride for ISGN Solutions is being the most licensed and compliant solutions provider in the industry. Visit its website to learn more about how it helps companies stay ahead, and watch for the announcement.
 
Less than 10% of homeowners return to their original lender. This has to be the lowest of any industry! As a point of reference, when the big three automotive companies were in bankruptcy, their customer retention sunk to 17%! That’s almost double our industry. Doesn’t say much about how we take care of customers. Isn’t it time we start thinking about the lifetime value of our customers beyond the closing table? They’re the revenue of the future. Read more in the TMS white paper.
 
LendingPad LOS, endorsed by the National Association of Mortgage Brokers (NAMB) is offering a free service to growing brokers via its NAMB Edition. It is working with a group of wholesalers to further enhance NAMB brokers’ experience with their lenders. In the past brokers had to deal with different lenders’ websites making transaction experience difficult. Now they have one platform to check scenarios, to originate/process a file, and to manage their pipelines. LendingPad’s Lender Services include instant product, pricing & eligibility checks, streamlined registration and submissions for brokers on the NAMB Edition. Interactive product discovery, eligibility advisory, D1C & pricing pushes/alerts are just a few innovations to guide brokers to originate more efficiently. Unlike the few alternatives on the market, the NAMB Edition includes full-featured LOS/POS components or the ability to connect to other providers.  Its versatility, intuitiveness, and extensive capabilities resulted in LendingPad’s rapid growth as brokers’ favorite system-of-record.
 
Looking for ways to grow your business? Freddie Mac is collaborating with clients to deliver automation and insights that provide a competitive edge. Cut back on documentation and reduce time to close with Loan Product Advisor® automated income and asset assessment capabilities. Save borrowers time and money with ACE appraisal waivers, now available for certain condo unit loans. Grow your condo business with Freddie Mac’s unit-level condo exception tool, Condo Project AdvisorSM. Get greater efficiency with simpler collateral QC and underwriting in Loan Collateral Advisor® Get The Freddie EdgeSM.
 
BCG has released its first industry white paper of 2019 on the next wave of digital transformation in mortgage. The paper analyzes mortgage market conditions, details how many lenders are using digital solutions to establish differentiated value propositions, and provides initial results observed from new solutions by review data from Blend, a leading lending platform that processes more than 100,000 applications per month and is used by more than 125 lenders nationwide. The next generation of homebuyers wants a digital-first experience from end-to-end. The paper takes a close look at how digital solutions are poised to help lenders fight their way through tough times ahead. View the white paper here.
 
False Claims News Continues
 
Yesterday the Department of Justice (DOJ) and the Department of Housing and Urban Development (HUD) issued a joint press release indicating that Sierra Pacific Mortgage has settled a claim brought by them under the False Claims Act by agreeing to pay the United States $3,670,000 to resolve allegations that it violated the False Claims Act by falsely certifying compliance with Federal Housing Administration (FHA) mortgage insurance requirements in connection with certain loans.
 
“During the time period covered by the settlement, SPM participated as a direct endorsement lender (DEL) in the U.S. Department of Housing and Urban Development’s FHA insurance program. A DEL has the authority to originate, underwrite, and endorse mortgages for FHA insurance. If a DEL approves a mortgage loan for FHA insurance and the loan later defaults, the holder of the loan may submit an insurance claim to HUD for the resulting losses. DELs are required to follow program rules designed to ensure they are properly underwriting and certifying mortgages for FHA insurance and to maintain a quality control program that can prevent and correct deficiencies in their underwriting practices.
  
“The United States alleged that between April 2007 and June 2009, SPM knowingly submitted loans for FHA insurance that did not qualify. The United States further alleged that SPM failed to properly respond to internal warning signs that its loans were poorly underwritten and failed to properly implement a quality control program once it was aware of those warning signs. By improperly approving loans that did not qualify for FHA insurance, SPM caused the United States to pay insurance claims on those loans when they defaulted.
 
The release finally ended with, “The claims settled by this agreement are allegations only and there has been no determination of liability.”
 
Sierra Pacific reacted: “As you know, a number of larger lenders have also settled claims with the government under this act. The False Claims Act has been used as a tool by the DOJ to punish lenders for alleged abuse during the housing crisis of 2007 – 2008. HUD reviewed nearly 200 loan files originated between 2007 and 2012 and found alleged issues with 16 loans. We have aggressively, contested these claims, but rather then enter into a protracted legal dispute with the Federal Government, we decided to settle this claim admitting to NO wrong doing. Sierra Pacific Mortgage has always originated quality and compliant loans that serve our customers and meet the requirements of our secondary market investors. We will continue to do so.”
 
Capital markets
 
Freddie & Fannie continue to move forward with initiatives that aren’t directly reliant on political decisions. Good for us, right! Dan Fichtler, Director of Housing Finance Policy, for the Mortgage Bankers Association writes, “We continue to be encouraged by the progress the GSEs are making with respect to their CRT programs. For the STACR and CAS offerings in particular, it’s clear that they’ve turned the corner to become better-understood, more-liquid securities, which is increasing investor demand and contributing to tighter spreads. Another very positive development is the decision by both GSEs to issue their STACR and CAS securities as REMICs, which should allow greater investment by REITs. These programs have certainly benefited from the fact that they developed and grew in a period of strong economic growth and rising home prices. It will be interesting to watch how the programs evolve, the securities perform, and the investor base changes during a downturn. Moving forward, our hope is that CRT remains a permanent part of the GSEs’ business models, that the GSEs continue to pursue diverse structures (front-end and back-end; capital markets and institutional), and that offerings are designed in a way that maintains a level playing field.
 
For example, on January 28, Fannie Mae announced an 18-month $2.0 billion Secured Overnight Financing Rate (SOFR) transaction, its third transaction of this type, which is meant to encourage market participation. Each subsequent SOFR deal since the first has seen increased demand, and Fannie thought it a good time to come to market with their first SOFR security maturing at the end of January. This third transaction has seen significant interest from both issuers and investors, as the market is eager to adopt new rates as a result of more varied maturity points. Over $40 billion of SOFR-linked securities have been issued in the marketplace since Fannie Mae’s inaugural offering last July as the company demonstrates commitment to the Alternative Reference Rate Committee’s (ARRC) efforts to develop LIBOR-alternatives. The CUSIP is 3135G0V26 and the pricing is SOFR + 6 bps. 83.7% of the investor distribution will go to the 2a7 fund, 1.3% to commercial banks, 9.7% to the Fund Manager, 0.4% to insurance companies, and 5.6% to state and local coalitions.
 
On January 25, Freddie Mac priced a $1.1 billion offering of Structured Pass-Through K-Certificates (K-087), multifamily mortgage-backed securities that are expected to settle on or about January 31, 2019. The A-1 class has a principal amount of $70.9 million, weighted average life of 5.99 years, a coupon of 3.59%, and a dollar price of $101.99. The A-2 class has a principal amount of $988.9 million, weighted average life of 9.81 years, a coupon of 3.77%, and a dollar price of $102.99. Finally, the A-M class has a principal amount of $56.8 million, weighted average life of 9.90 years, a coupon of 3.83%, and a dollar price of $102.99.
 
Also on the 25th, Freddie priced a $697 million K-C (03) offering of structured pass through certificates expected to settle on or about January 31, 2019. The K-C03 Certificates are guaranteed by Freddie Mac and are backed by a majority of 7-year, fixed rate loans that feature longer than typical periods of reduced prepayment penalties before maturity. There will be three offered classes, as follows. Class A-1 will have a principal amount of $32.4 million, a weighted average life of 4.90 years, a coupon of 3.06% and a dollar price of $99.99. The A-2 class has a principal amount of $664.6 million, a weighted average life of 6.77 years, a coupon of 3.49% and a dollar price of $100.99. The final class, X1, is comprised of the full $697 million but has a coupon of 0.48% and a dollar price of $2.63.
 
On February 6, Freddie priced a $1 billion multifamily K-deal (K-F57), backed by floating-rate multifamily mortgages with 10-year terms expected to settle on or about February 20, 2019. There will only be one offered class (Class A), which has a weighted average life of 9.60 years, a coupon of 1-month LIBOR + 54, and a dollar price of 100.00. The K-F57 Certificates will not be rated, and will include one senior principal and interest class, one interest-only class, and one class entitled to static prepayment premiums.
 
K-Deals are part of the Freddie’s business strategy to transfer a portion of the risk of losses away from taxpayers and to private investors who purchase the unguaranteed subordinate bonds. The certificates typically feature a wide range of investor options with stable cash flows and structured credit enhancement.
 
The U.S. 10-year closed Wednesday yielding 2.71% as the yield curve flattened (does anyone care?) in a “risk-off trade” on no large news stories. International news of note revolved around South Korea’s unemployment rate surging to a 19-year high, and industrial production in the eurozone contracting at the sharpest rate since the financial crisis. In the U.S. Senator Marco Rubio said he will put forward a bill that would result in corporate buybacks being taxed in the same way as dividends, which should encourage productivity improvements and job creation. Lock desks know that yesterday saw the fourth straight weekly decline in mortgage applications.
 
Today’s calendar kicked off with December retail sales (expected +.1% but was -1.2%!), January Producer Price Index (expected +.1%, it was -.1%, core +.3%), and weekly initial jobless claims (expected -10k, it actually shot up 239k). Also of interest to lenders will be the hearing before the Senate Banking Committee of Mark Calabria who has been nominated for FHFA Director. The lone scheduled Fed speaker for the session is Philadelphia Fed President Harker who speaks in Delaware. After the weak retail sales number we begin today with Agency MBS prices +.250 versus last night’s close and the 10-year yielding 2.66%.
 
 
Instead of the never cutting-edge, rarely amusing humor that occupies this spot, let’s have some trivia about smooching, given that its Valentine’s Day in the United States. I mention the U.S. because, surprisingly, few societies have romantic kissing in their repertoire. In a study published in July 2015, less than half of the cultures (46% of the 168) sampled engage in the romantic kiss. Societies with distinct social classes are usually kissers. Societies with fewer or no social classes, like hunter-gatherer communities, are usually not. For some, kissing seems unpleasant, unclean, or just plain weird. Kissing is clearly a culturally variable display of affection.
 
 
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, “How are You Going to Compete.” 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.
 
Rob
 
(Market data provided in partnership with MBS Live. For free job postings and to view candidate resumes visit LenderNews. Currently there are hundreds of 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 2019 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.)
 

Feb. 13: AE jobs; reno, AUS, marketing products; lender legal news; news on OB’s index, flood insurance, ditech’s Ch. 11, Ellie’s purchase

Amazon accounts for nearly 50% of the ecommerce activity in the United States. With that kind of delivery service, it isn’t hard to see why malls are suffering. Which is why, all across the nation, malls are being re-developed, re-purposed, whatever you want to call it, into mixed-use and housing projects. Projects in Phoenix, Cincinnati, and St. Petersburg are all moving forward. I hope that lenders offer products that are tailored to this type of condo and mixed-use housing.
 
Employment
 
California’s Redwood Mortgage, a privately-owned real estate mortgage and investment company, seeks an Account Executive for the Orange County/San Diego area. “Redwood Mortgage has been one of California’s leading innovators in private mortgage lending and mortgage pools. The company offers the right candidate the opportunity to build a territory and career in our loan sales department. The ideal candidate has solid experience in commercial, multi-family and residential investment real estate lending, have an active Cal DRE real estate license, and NMLS. The person will learn and understand the commercial bridge loan product and private money loan product, and manage a territory and develop relationships with Bankers, Brokers and Retail borrowers. Benefits include 401K, dental, life insurance, medical, and vision. Interested parties should contact the Director of Sales and Marketing Steve Belleville.
 
Lender products and services
 
Nations Direct Mortgage is excited to introduce its new dedicated Non-QM Help team! “With the Non-QM market expected to explode to over $35B in 2019, we will provide expert resources to our broker partners so they can grow their Non-QM business” stated Martin Warren, Director of Lending. NDM’s expert team is highly experienced with pricing, structuring and underwriting Non-QM loans and will help you find the right fit for your borrower. Utilize this specialized team to answer guideline and pricing questions, run scenarios, analyze bank statements, and help structure Non-QM loans. Celebrating its 13th year, Nations Direct is solely focused on wholesale partnerships and they pride themselves on employing industry experts dedicated to delivering exceptional service. If you’re interested in learning more about this Orange County, CA based lender and its products, please contact Martin Warren.
 
Vendor Surf built what the industry asked for and continues to be rewarded, achieving over 100,000 page views in just 13 months. We proudly welcome MortgageHippo, Secure Insight, Property Registration Services, and The Gryphon Group. Partners renewing for another year: TENA Companies Inc., Agility 360, Professional Notary Services and AFR Wholesale. Vendor Surf excels at monitoring and reporting on the vendor landscape, providing you with the resources you need to excel in today’s market. For example, plan your event travel schedule and/or learning opportunities via our online calendars – with over 500 items. Find it all in ONE place. Vendors click here to schedule a demo. The industry’s original vendor search engine.”
 
Stearns Wholesale Lending just announced an extension of the initial appraisal fee waiver on FHA loans through February 28, 2019. Available for both purchase and refinance products, this waiver makes it easier for brokers to help borrowers save money when applying for financing. Because every advantage counts when building a solid customer base, Stearns also reduced the loan level pricing adjustment by 25 basis points for FICO scores between 580-619 and 660-679. To learn more about this limited-time fee waiver or discover additional ways Stearns supports their valued brokers, email wholesaleleadership@stearns.com
 
Does your company brand convey what you think it should? Is it connecting with your target audience and employees? Or do you feel your brand needs to be re-energized? These were some of the important questions posed last week to John Seroka and other industry leaders during a panel discussion at the IMB Conference in San Francisco. Ideally, the perceptions of your brand line up with what you intended, are strong, connect with your audience and are well understood. When your brand is weak, it can show in sales volume/new client acquisition numbers, employee turnover, client satisfaction ratings, employee job satisfaction and much more. Find out if your brand could use a revamp by contacting Seroka today for a free consultation. Email info@seroka.com and get ready to #TurnUpYourBrand in 2019!
 
Simplify your underwriting process with Loan Product Advisor® asset and income modeler (AIM). Through the expertise of third-party service providers, AIM automates the manual processes of assessing borrower assets and income. AIM reduces the burden of traditional documentation, speeds up the loan origination process and helps you close loans faster. Freddie Mac is working hard to bring you solutions that create efficiencies for your business and improve the borrower experience – giving you a competitive edge. These capabilities are available for Loan Product Advisor submissions and resubmissions on and after December 9, 2018. Gain greater efficiency in your underwriting processes with AIM – get The Freddie EdgeSM.
 
“Originators, spending valuable time and resources trying to develop a technology platform for your company that competes against the big boys? LendGenuity, a web-based loan origination technology solution, is The Complete Solution offering POS+LOS+Decision Engine technology that out-performs most competing systems in the market today for a fraction of the cost. The POS is a customer-facing fully automated origination platform that sits directly overtop the high-powered LOS designed for mortgage professionals which renders eligibility, pricing, and loan stipulation results instantly via its fully evolved rules-based decisioning engine. Whether you are running 1 business channel or 3, LendGenuity is designed to make the business of originating loans less expensive with a far better customer and originator experience. Each component may be licensed individually or with any of the other components. Visit us for more information or demo request. Don’t forget to ask us about our new NONQM AUS.”
 
Here’s an on-demand webinar: Renovation Lending 101: Understanding Consumer Renovation Loan Products to Grow Your Business. The need and popularity for home renovations are growing at an expansive rate. The opportunity is present for lenders to capitalize on this potential business and provide borrowers with the loan products needed to renovate. Join Land Gorilla to learn how to get started with 203(k) and HomeStyle Renovation loans, typical renovation loan processes and costs, required disclosures, and key performance indicators essential to their success. Register to watch now. 
 
What’s new under the sun
 
Obviously, there are personnel, lender, and correspondent changes taking place, the Chase correspondent layoffs late last week being the latest. I try to group things to provide context but sometimes there are things from such a wide variety of sources impacting so many segments of our industry I just have to blurt them out. In no particular order…
 
Congrats to anyone who owned stock at the beginning of the week of Ellie Mae. Thoma Bravo, LLC, a private equity investment firm, announced an all-cash purchase transaction of Ellie that values it at an aggregate equity value of approximately $3.7 billion. Thoma Bravo is no stranger to this: MeridianLink, the parent of LendingQB, an LOS, was purchased last year.
 
Recall that in the summer of 2017 Binh Dang, the co-founder and former president of LendingQB sought a court to force MeridianLink, the loan origination system’s parent company, to dissolve. At that point Dang owned 249,999 shares of MeridianLink while QBSolutions Group, which Dang is listed as the president, owned one share. I mention this because, regarding the announced acquisition of Ellie Mae by Thoma Bravo, Tim Nguyen, CEO and Co-Founder of MeridianLink, sent a note out to clients saying, “Firstly, I wanted to say congratulations to the team at Thoma Bravo and the team at Ellie Mae on the transaction… I want to state that we remain 100% committed to growing and investing in our LendingQB product line and (this news) does nothing to change that perspective… We will continue to fiercely compete and acquire market share as we have for the past 10+ years!”
 
Ellie’s fortunes, given its size, rise and fall with the fortunes of the residential lending industry. They also rise and fall with Ellie’s market share, estimated to be roughly 40%. All Ellie Mae shareholders will receive $99.00 in cash per share from the $17 billion fund. Meridian Link has a notable footing in credit union and bank software, and of course a smaller presence in mortgage with LQB. Thoma Bravo also has interests in McAfee, Barracuda, Compuware and other big software companies. Bloomberg reports that, “The deal includes a 35-day ‘go-shop’ period when Ellie Mae can seek other offers. The acquisition is expected to close in the second or third quarter of this year.”
 
To nearly no one’s surprise, ditech, aka Ditech, announced that it has entered into a restructuring support agreement (RSA) through a Chapter 11 reorganization to reduce its corporate gross debt by $800 million and continue to “explore strategic alternatives including a whole company sale, an asset sale, and outsourcing to a subservicer.”
 
Analysts were quick to point out possible ramifications for the servicing biz given its servicing of $187 billion of total UPB (unpaid principal balance), $83 billion related to the NRZ agreement leaving $104 billion that could be sold. Keefe, Bruyette & Woods (KBW) has some thoughts pulled directly from the note, which can be viewed in full here: Ditech Files Chapter 11; MSR Sale Could Impact Servicers and Black Knight. Ditech issued an 8-K a couple weeks ago noting NRZ planned to pull subservicing. In that note KBW analysts highlighted that that the NRZ subservicing portfolio is likely to move to Shellpoint, COOP, and potentially others.
 
Who could buy the free $104 billion of ditech servicing? New Res, Two Harbor, Mr. Cooper (ex-Nationstar), or Ocwen jump to mind. KBW points out that Black Knight could suffer a possible setback since some potential MSR acquirers don’t use it. “While most large servicers use Black Knight’s MSP, two notable servicers that do not are Mr. Cooper and Shellpoint. KBW analysts had originally estimated that NRZ pulling its subservicing would amount to servicing revenue headwinds for BKI of less than 1%. However, because the average loan size in that portfolio is below average, KBW analysts would revise that estimate up slightly to about 1.4% (assuming the entire NRZ portfolio leaves MSP which we continue to think is unlikely) … From conversations with NRZ’s management, we would expect NRZ to allocate that UPB among several servicers possibly including Shellpoint and COOP (neither on BKI’s MSP), as well as to some servicers on MSP.”
 
Switching gears to wholesale, brokers learned from United Wholesale Mortgage (UWM) that, “Being in business for yourself doesn’t mean you have to go it alone when it comes to health insurance. United Wholesale Mortgage has negotiated a discounted price with one of the nation’s leading independent insurance providers to make it easy to shop for group health insurance for you and your employees. Health insurance plans include options such as medical, dental, vision, short-term and long-term disability from the top health providers in the nation, such as Blue Cross Blue Shield. To learn more about this great benefit talk to your UWM AE or sign up with UWM and get access to health insurance plans tailored for your needs.”
 
From the Texas Dept. of Housing and Community Affairs comes news that the My First Texas Home special mortgage loan rate, 3.99%, is available to potential homebuyers “right now!” (The Texas Department of Housing and Community Affairs “is committed to expanding fair housing choice and opportunities for Texans through the administration and funding of affordable housing and homeownership opportunities, weatherization, and community-based services with the help of for-profits, nonprofits, and local governments.”)
 
Given rising ocean levels, anything to do with flood insurance is important. Five federal regulatory agencies issued a joint final rule to implement provisions of the Biggert-Waters Flood Insurance Reform Act of 2012 requiring regulated institutions to accept certain private flood insurance policies in addition to National Flood Insurance Program policies. The OCC, NCUA, FDIC, FCA, and the Federal Reserve Board let us know that the rule, which takes effect July 1, 2019, implements the Biggert-Waters Act requirement that regulated lending institutions accept private flood insurance policies that satisfy criteria specified in the Act, allows institutions to rely on an insurer’s written assurances in a private flood insurance policy stating the criteria are met, clarifies that institutions may, under certain conditions, accept private flood insurance policies that do not meet the Biggert-Waters Act criteria, and allows institutions to accept certain flood coverage plans provided by mutual aid societies, subject to agency approval. Regulations implementing the federal flood insurance statutes prohibit regulated lending institutions from making loans secured by improved real property located in special flood hazard areas unless the property has adequate flood insurance coverage.
Final Rule
 
Yesterday, Optimal Blue launched a compelling new resource for lenders, loan officers, and consumers. Optimal Blue Mortgage Market Indices, or OBMMI, provides unparalleled transparency into mortgage rates by utilizing observed, real-time lock data from approximately 30% of the market. The data is aggregated daily into multiple national mortgage market indices and engaging visualizations for popular conforming, jumbo, and government loan products as well as unique loan scenarios based on standard LTV and FICO ranges. It will be interesting to see how this new national benchmark for mortgage pricing will help to streamline the mortgage shopping process and connect consumers with their lenders more quickly.
 
Legal and regulatory changes
Attorney Phil Stein with Bilzin Sumberg Baena Price & Axelrod LLP writes, “Here’s a case development that will likely be of interest to your readers. The case deals with the statute of limitations for many of the lawsuits facing lenders and LOs. The case should send some light on how an “indemnification” claim is in reality indistinguishable from a “breach of contract” claim.
 
The CFPB posted new compliance tool on its website specific to the TRID Rule. Its Frequently Asked Questions (FAQs) provides clarification to the following questions:
a financial institutions obligation to provide a new three-day waiting period along with a corrected Closing Disclosure (CD) when a term previously disclosed has changed. How creditors may use model forms that do not reflect the CFPB’s 2017 amendments to the Rule. The impact of a recent TILA amendment to the requirement for corrected disclosures.
 
Capital markets
 
Rates are gradually trudging higher, because they’re tired of going down? The U.S. 10-year closed Tuesday yielding 2.68% amid reports that partisan negotiators in Congress have reached an agreement to fund the government through the end of the fiscal year while providing $1.3 billion, well short of the $5.7 billion requested by the White House, for border security. President Trump said later in the day that he was not happy with the deal but conceded that another shutdown is unlikely to take place. Separately, there was continued speculation that the March 1 deadline for increasing the tariff level on $200 billion worth of imports from China to 25% from 10% could be delayed. There is said to be much optimism surrounding the U.S. trade delegation in Beijing this week. Finally, British Prime Minister Theresa May reportedly plans to step down after Brexit and hopes to have a say in naming a successor.
 
We began today with the usual mortgage applications from the MBA for the week ending February 8 (which dropped nearly 4%, purchases down 6%), the January CPI report (unchanged as expected, +.2% ex-food & energy). Real weekly earnings are seen increasing 0.1% MoM versus 0.7% in December. We have three scheduled Fed presidents speaking. Atlanta’s Bostic, Cleveland’s Mester, and Philadelphia’s Harker will all take the stage. We begin today with Agency MBS worse/lower a few ticks and the 10-year at 2.69%.
 
 
A successful marriage depends on communication & shared chores. A retired capital markets guy sits around the house in Missouri all day so one day his wife says, “John, could you do something useful like vacuum the house once a week?”
The guy gives it a moment’s thought and replies, “Sure, why not. Where’s the vacuum?”
Half an hour later, John walks into the kitchen to get some coffee.
His wife says, “I didn’t hear the vacuum running; I thought you were going to use it.”
Exasperated, John counters, “The stupid thing is broken and won’t start. We should buy a new one!”
“Really?” she asks. “Show me – it worked fine the last time I used it.”
So, he showed her: https://videos.files.wordpress.com/Xblfe4qf/retired-vacum-cleaner_dvd.mp4
 
 
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, “How are You Going to Compete.” 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.
 
Rob
 
(Market data provided in partnership with MBS Live. For free job postings and to view candidate resumes visit LenderNews. Currently there are hundreds of 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 2019 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.)
 

Feb. 12: LO & Sales jobs; digital, broker products; upcoming mortgage events; conforming/conventional changes

From Twitter: “When self-driving cars become mainstream, dead old people will occasionally just arrive places.” Morbid humor aside, will it really help traffic when cars are programmed to take laps around city blocks rather than look, and pay, for parking? Speaking of city blocks, how’s your jumbo product? If you’re an independent/non-depository mortgage bank, the odds are your jumbo pricing doesn’t stack up too well against the bank pricing that are out there. Those darned portfolio products! What about the really big home loans, say, $10-20 million? There are only 230 of them out there, mostly funded in the last six years, mostly refinances, and mostly ARMs. Closing one would sure make your day, huh?
 
Jobs
 
For loan officers, “Premier Nationwide Lending is pleased to announce that National Mortgage News ranked us as the 22nd Best Mortgage Company on their inaugural 2019 Best Mortgage Companies to Work for List. The Awards Program identifies and recognizes the Best Employers in the Industry based on exhaustive employee surveys and employer reports on benefits. "We are an inclusive company committed to providing our employees the best possible culture, benefits and professional work environment. Our success depends upon our staff and exceeding client expectations, one loan at a time," stated Murdock Richard, CEO. If you are interested in joining one of the Best Workplaces in the industry with a 4.95 out of 5.0-star verified Social Survey rating by thousands of happy clients, contact Joe Collins or John Hammonds.
 
Those interested in a growth-oriented career with ClearEdge Lending in the Arizona area should email Matt Shaw for inside and outside sales positions and Sandy Simmons for loan disclosure specialist and closer/funder positions. Visit the Careers Page for more information. (See more information a few paragraphs down.)
 
Lender products & services
 
Galton Funding specializes in the acquisition of 1st and 2nd lien Non-Agency QM and Non-QM residential mortgage loans focused on Prime and Near Prime credit borrowers significantly lowered their base rates. Check out Galton’s expanded loan features including non-owner, cashout to 95% LTV, I/O and > 80% LTV no MI options; streamlined 1st and 2nd lien programs utilizing a FNMA DU cert; and full and alternative documentation alternatives. Galton has improved rates across the board across ALL products including A+ credit grade (Full Doc- material rate improvements < 660 credit score and > 80% LTV), A credit grade Full/Alt Doc (major improvements especially above 65% LTV…lowering rates an average of 80bps!), A+ credit grade (Alt Doc – largest improvements over 65% LTV and over 660 credit score), and Streamline 2nd Liens (SL2 – .25% rate reduction). Contact Galton’s Business Development team at galtonfunding.com to learn more about their programs.
 
Looking for ways to grow your business? Freddie Mac is collaborating with clients to deliver automation and insights that provide a competitive edge. Cut back on documentation and reduce time to close with Loan Product Advisor® automated income and asset assessment capabilities. Save borrowers time and money with ACE appraisal waivers, now available for certain condo unit loans. Grow your condo business with Freddie Mac’s unit-level condo exception tool, Condo Project AdvisorSM. Get greater efficiency with simpler collateral QC and underwriting in Loan Collateral Advisor® Get The Freddie EdgeSM.
 
ClearEdge Lending is service driven wholesale Non-QM firm that sets itself apart by focusing on simplicity and speed at point-of-sale. Our clients have recently told us, ‘We went from submission to docs in 8 business days with a very good fixed rate.’ (Broker, Riverside, CA.) ClearEdge issues LEs/CDs, full underwrites, loan scenario requests, or bank statement reviews completed same day or next dayWe do not offer retail lending and we are a true end-investor which allows us to make critical credit decisions, same day. Those interested in a growth-oriented career with ClearEdge Lending in the Arizona area should email Matt Shaw for inside and outside sales positions, and Sandy Simmons for loan disclosure specialist and closer/funder positions. Visit our Careers Page for more information. We are accepting new brokers to join ClearEdge Lending team, get approved today.”
 
Thinking about how to make your goals come true now that the new year is in full swing? Join Sierra Pacific Mortgage as they host a webinar on Optimizing LinkedIn, the world’s largest professional network. You’ll learn tactics specific to LinkedIn, but you’ll find that the brand and marketing lessons are transferable to your other social media platforms as well. Don’t miss this opportunity to increase your online brand persona. Register now for Wednesday, February 20th.
 
Today’s home buyers are taking matters into their own hands to research their problems, weigh solutions and potentially eliminate any interaction they would have with a loan officer. To up the stakes even more, 65 percent of consumers have cut ties with a brand after just one subpar experience. What’s the key to being successful in the Amazon, Uber and Netflix era? Organizations must revamp their sales and marketing strategies and re-think how they interact with their customers – including lenders and their loan officers. Read the Total Expert blog: More Transactions, Less Transactional Selling.
 
Optimal Blue’s digital loan trading platform, Resitrader, has achieved unprecedented growth in 2018 – leading the industry in the number of participating sellers and overall trading volume. The company has reported that they expect to reach 200 sellers and $6–8 billion in monthly traded volume by summer 2019. The growth has been attributed to the rapid expansion of trading functionality and overall platform capabilities. By example, Resitrader now includes robust APIs designed to create lights-out integrations with investors’ in-house systems to automate offer pick-up, bid return and trade confirmations. Furthermore, with the addition of new loan products including non-QM, Jumbo, and HELOCs, and CRA loans, Resitrader expands the value they deliver as a unified trading platform to originators, investors, other hedge advisory firms, and the industry as a whole.
 
BCG has released its first industry white paper of 2019 on the next wave of digital transformation in mortgage. The paper analyzes mortgage market conditions, details how many lenders are using digital solutions to establish differentiated value propositions, and provides initial results observed from new solutions by review data from Blend, a leading lending platform that processes more than 100,000 applications per month and is used by more than 125 lenders nationwide. The next generation of homebuyers wants a digital-first experience from end-to-end. The paper takes a close look at how digital solutions are poised to help lenders fight their way through tough times ahead. View the white paper here.
 
Conventional conforming changes continue
 
Yesterday, we incorrectly reported that, “American Financial Resources had discontinued its Home Possible Advantage product line(s)” and apologize for any confusion. In fact, AFR continues to offer this product. To further clarify, Freddie Mac combined their Home Possible and Home Possible Advantage programs in October, and the program is now referred to as Home Possible. For more information about Home Possible or other GSE programs, contact sales@afrwholesale.com (800-375-6071).
 
U.S. Bank Global Corporate Trust is now partnering with Fannie Mae to pilot its new certification system, which includes the ability to provide whole loan certification services. U.S. Bank is one of the first organizations approved by Fannie Mae to provide the service. Joe Giordano, president of U.S. Bank Global Corporate Trust says, “As an established document custodian committed to the mortgage industry, we are dedicated to the safekeeping of important documents for our clients. We are known for working with our clients one-on-one to understand their unique requirements and deliver customized, proactive strategies to help meet their objectives.”
 
During the weekend of March 23, Fannie Mae will implement an update to Desktop Underwriter® (DU®) Version 10.3. This update will simplify and consolidate DU validation service messages – 11 new messages will replace 41 existing messages. This release also will include updates to the HomeReady® Area Median Income (AMI) determination, messaging about properties located in disaster-impacted areas, the DU Underwriting Findings report, and other changes to align with the Selling Guide. If you would like more information, read its
Release Notes.
 
Freddie Mac has closed its first Low-Income Housing Tax Credit (LIHTC) Fund with Enterprise Community Investment, Inc. and its first equity investment within that fund. The closing marks Freddie’s re-entry to the LIHTC (or Housing Credit) market, which finances the overwhelming majority of the country’s affordable rental housing. The Fund has already begun to finance much-needed affordable housing. Freddie Mac and Enterprise also announced an $8.2 million investment in Wintergreen West, which will provide 40 apartment homes for residents of Summit County, Colorado, a rural area 75 miles west of Denver. The units will range from one- to three-bedrooms and offer homes to people making between 30 and 60 percent of the area’s median income. Currently, it is difficult for low- and moderate-income residents to find affordable homes in the area, and short-term rentals have exacerbated the challenge.
 
AmeriHome is now accepting “eligible” income, employment, and asset verifications generated by the Freddie Mac automated Asset and Income Modeler (AIM).
 
The mortgage industry is increasingly using digital technologies to reduce errors and costs, speed up transactions, and drive richer and better customer service. Fannie Mae recently surveyed senior mortgage executives to better understand lenders’ views about artificial intelligence and machine learning technology, including their adoption objectives, implementation challenges, and which application ideas are most appealing.
 
FAMC updated its Conforming Fixed 97 Product to include Freddie Mac’s new HomeOne Mortgage offering. Loans may be locked using this updated product called Agency Conforming Fixes Rate 97.
 
Freddie Mac announced new Loan Selling Advisor® warning edits to prevent delivery of Investor Feature Identifiers for cash specified payups for low loan balance loans, and for the data point Due Date of Last Paid Installment (ULDD Data Point Last Paid Installment Due Date, Sort ID 440). Also added, a new purchase statement data export capability and clarified the instructions for cash specified pool type selection for super conforming mortgages. Read the Single-Family News Center Article for more information.
 
Franklin American Mortgage has updated its Home Possible Fixed Rate guidelines to now permit non-occupant co-borrower with an LTV/CLTV*/HCLTV less than or equal to 95%. *CLTV of 105% is permitted with an eligible Affordable/Community Second. Note that income from non-occupant co-borrowers must be considered in the program income limits.
 
Mortgage Solution Financial posted an announcement regarding DU Refi Plus/LP Open Access Discontinuation.
 
Events in the next couple weeks
 
Help your low- to moderate-income borrowers achieve their new year’s resolution of becoming a homeowner in 2019 by offering a HomeReady® mortgage. It may be a better solution for their homebuying needs with a down payment as little as 3% and innovative income flexibilities. Join us on February 14 at 2 p.m. ET for a live webinar geared toward loan officers (but open to all lenders and housing professionals). This webinar will demonstrate how HomeReady features can help you serve more borrowers, with plenty of time to answer your questions. Register today.
 
Are you prepared for the HMDA deadline? Join MBA Compliance Essentials webinar on Thursday, February 14th and get the specifics on the Home Mortgage Disclosure Act (HMDA) rule March submission deadline. This webinar is complimentary to MBA members. Use promo WEBINAR at checkout for access.
 
The Mortgage Collaborative’s 2019 Winter Conference will take place February 17-19 at the J.W. Marriott in Austin, TX. The interactive agenda will feature over 30 lender led discussion-based educational breakout sessions, a heavy emphasis on peer-to-peer networking and experiences with third parties and exchange of best practices, with a sharp focus on lender growth and efficiency solutions. Visit www.mortgagecollaborative.com or contact TMC COO Rich Swerbinsky.
 
On February 19th, the California MBA Legal Issues Committee is providing a free webinar presenting information on multiple topics including legal pitfalls of CCPA, hot topics in labor law, and Hoang vs. BofA.
 
Sierra Pacific Mortgage hosts a webinar on Optimizing LinkedIn, the world’s largest professional network. You’ll learn tactics specific to LinkedIn, but you’ll find that the brand and marketing lessons are transferable to your other social media platforms as well. Register now for Wednesday, February 20th.
 
You have a Facebook Business Page, you regularly connect with people on LinkedIn and know the difference between a hashtag and a hash brown. What’s next to take your social media game up a level? On February 20th, the MBA of Greater Philadelphia is sponsoring a webinar on Social Media Strategy. This webinar will focus on examples using Twitter, Facebook and LinkedIn, and touch on using these same strategies on other platforms.
 
Capital markets
 
Kind of a snoozer of a day yesterday in the ol’ bond market. The U.S. 10-year closed yielding 2.66% as Treasuries sold off with the optimism surrounding the U.S. trade delegation arriving in Beijing for this week’s trade talks. Chinese Vice Premier Liu He expected to join U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin in high-level talks Thursday and Friday.
 
But the threat of a shutdown in Washington also looms, with political tensions flaring again between Congress and the president. If no deal is reached on the U.S.-Mexico border wall, parts of the federal U.S. government may shut down again later this week when stopgap government funding expires. That could come as the dollar has entered its longest rally since January 2016 (being the highest yielding currency) recouping its year-to-date losses, as central banks around the world tilt more to the dovish side, boosting the relative appeal of the greenback.
 
Today’s economic calendar kicked off with the January NFIB Small Business Optimism Index (continuing to fall). December Job opening from JOLTS are due at 10AM ET with expectations for a slight increase over the previous reading. Fed Chair Powell takes the stage today, as does Cleveland’s Mester, and Kansas City’s George. We begin today with Agency MBS prices down/worse a few ticks vs. last night’s close and the 10-year yielding 2.68%.
 
 
Last night I opened my electric bill at the same time I opened my water bill.
Needless to say, I was shocked.
 
 
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, “How are You Going to Compete.” 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.
 
Rob
 
(Market data provided in partnership with MBS Live. For free job postings and to view candidate resumes visit LenderNews. Currently there are hundreds of 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 2019 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.)
 

Feb. 11: LO jobs; broker, digital, CRM tools & news; conventional conforming changes continue

When I grow up, I want to live…next to the airport? Usually, airports are there before people move in around them, and then the residents all complain about the noise despite the airport already being there: Not in my backyard! But in some areas land is scarce, and there are big projects going in near the Atlanta and Denver airports. And anyone flying in to visit Manhattan is waiting for La Guardia and Newark to be remodeled (wish they could do something about the 90 minutes into Manhattan from there) as well as New Orleans and Pittsburgh.
 
Jobs & career moves
 
Texas Capital Bank, N.A. welcomes Jason Whitmire to its Mortgage Finance Treasury Solutions team. Jason is a 20-year veteran of the mortgage industry, having previously served as treasurer at a well-known independent mortgage banker based in Dallas. In his new role, he will provide guidance and expertise to help IMBs manage their financial picture. Reach out to Jason to see what he can do for your business.
 
Nations Lending has been named a Top Employer for 2019 by National Mortgage Professional Magazine and branded as a Top IMB for all of 2018 by Inside Mortgage Finance. Nations Lending is an industry leader because of our employees.  They provide us feedback revealing how we align them for success with direct access to underwriting, and a Compliance department that stays ahead of industry changes. The Nations Lending tool box provides best-in-the-industry digital technology, including our all-in-one loan officer suite complete with Encompass, our mobile app, CRM, and automated marketing support – convenience at your fingertips so you can concentrate on growing your business. Nations Lending is a well-established, Agency/Government Servicer, licensed in 47 states. We are proud to service 100% of the Agency loans we originate. For an opportunity to join our growing organization, please contact Senior Talent Acquisition Consultant Allison Schock at 440-527-6718, or visit the company’s website.
 
Lender products & services
 
Banc of California, a leading Prime Non-QM lender, is now expanding its broker/banker network. Banc of California’s products include a “just miss” QM product with extensive niches, 12-Month Bank Statements, Asset Income, 1-Year Tax Returns and Expanded Criteria. It offers a Wholesale, Non-Delegated or Delegated relationship. As one of the only non-securitization lenders in the space, BOC is able to offer portfolio products with a competitive price and straightforward guidelines. The product offering is available in 46 states, with loans up to $4MM. With more than half of the “Scotsman’s Top 20 Mortgage Lenders” as partners, BOC continues to be a great source of additional income for originators nationwide. Expand your business and separate yourself from the competition with Banc of CaliforniaIf you would like to find out more about their products and becoming a partner, please reach out to Adam Liebross, National Sales, for more information.
 
Mortgage bankers, are you ready to start a wholesale channel or do you need a better TPO Platform? We can help. For a fraction of the cost of heavy, “legacy” platforms, ReadyPrice can help you start or improve your channel and increase your profitability. The ReadyPrice all-in-one Pricing Engine, LOS and Wholesale CRM platform is fully configured out of the box, and up to 80% less expensive than other more cumbersome competitors. It comes complete with D1C, deep Fannie DU integrations and can be stood-up in a couple of weeks. The ReadyPrice LOS/PPE has funded over 300k units for $70 billion and is leading the way forward for today’s mortgage bankers as we "utilitize" essential mortgage tech. Call them at (408) 357–0931 or email hello@readyprice.com to get a free demo today.
 
Momentifi CEO Gibran Nicholas just recorded a video: Why Improper Use of CRM is Costing You Millions. According to research conducted by STRATMOR and the MBA, loan officer sales productivity hasn’t changed in over a decade despite millions of dollars being spent on technology. “Part of the problem is that our industry has been trained to think of CRM as a
‘marketing tool’ when it really should be used as a sales productivity tool,” says Gibran. “Research confirms that less than half of salespeople are using their CRM to effectively increase sales." This video shows you (1) How to Use a CRM to Reduce Your Origination Costs and Increase Your Profits; (2) How to Use a CRM to Keep Your Team Focused on their Most Important Sales Opportunities; and, (3) How to Use a CRM to Improve Sales Productivity. Click here to get the video.
 
Simplify your underwriting process with Loan Product Advisor® asset and income modeler (AIM). Through the expertise of third-party service providers, AIM automates the manual processes of assessing borrower assets and income. AIM reduces the burden of traditional documentation, speeds up the loan origination process and helps you close loans faster. Freddie Mac is working hard to bring you solutions that create efficiencies for your business and improve the borrower experience – giving you a competitive edge. These capabilities are available for Loan Product Advisor submissions and resubmissions on and after December 9, 2018. Gain greater efficiency in your underwriting processes with AIM – get The Freddie EdgeSM.
 
According to Garth Graham from the STRATMOR group, “One of the most noteworthy findings of our 2018 study is that digital is no longer a competitive advantage — it’s the new reality. Borrowers expect a digital experience, and lenders who are not offering their customers options for executing disclosures, uploading docs, and other origination steps are falling far behind their peers.” Digital mortgage point-of-sale leaders like Maxwell are pioneering the charge to provide highly customizable and effective technology for lending teams to empower their LOs and accomplish more in today’s purchase-heavy environment and drive real results. To learn more about Maxwell’s platform visit www.himaxwell.com or request a demo here.  
 
The Head of Wholesale at Caliber Home Loans, Inc., John Gibson, recently shared his five key reasons that mortgage brokers choose to partner with Caliber Wholesale, with the Mortgage News Network (MNN). During the interview Gibson gave an overview of Wholesale’s product strength, purchase focus and localized support that make up the full-service offerings to its business partners. When Gibson shared the second pillar of Caliber’s wholesale business, he said that “Caliber (Wholesale) is always focused on our clients’ purchase book because that drives their repeat business.” Caliber Wholesale is the #2 lender in the wholesale channel nationwide (IMF) and the top distributed wholesale lender in the country. Watch the full interview to learn more about Caliber Wholesale’s five value propositions to the broker community.
 
Conventional conforming changes
 
Freddie Mac’s Guide Bulletin 2019-4 announced updates to its requirements related to: Condominium projects, borrower income, uniform Loan Delivery Dataset (ULDD) and Certificate of Incumbency forms. Review the Bulletin for details on these topics, an important reminder about the contracting impacts resulting from the implementation of the Investor Reporting Change Initiative and additional Guide updates that may be critical for loans you intend to sell to Freddie Mac.
 
Fannie Mae’s recent Selling Guide update includes process changes to implement Loan Quality Connect™ and removes all references to the Quality Assurance System. This update also eliminates references to the cost of funds index and associated adjustable-rate mortgage plans, clarifies requirements for escrow accounts to fund postponed improvements, and more.
 
As of Tuesday, January 22, Plaza is offering Hybrid eClosing on all conventional Fannie Mae and Freddie Mac loans. Settlement agents will coordinate with borrowers giving them the option to review and execute closing documents online, excluding the Note and Security Instrument which will require wet signatures. Traditional wet signature closings are still an option.
 
The PennyMac Announcement 19-10 specifies updates to Conventional and Government Purchase Special LLPA.
 
Wells Fargo Funding has eliminated the Condo project review fees for all condo project reviewed by Wells Fargo (e.g., Wells Fargo Full Project Review, Condo Project Manager, Project Eligibility Review Service). In addition, it has removed the Social Security Retirement Benefits overlay for manually underwritten Conventional Conforming Loans and will follow the more restrictive Fannie Mae and Freddie Mac requirements.
 
A while back American Financial Resources has discontinued its Home Possible Advantage product line(s). As a result, these products will no longer be offered in the Optimal Blue system. Customers utilizing this content for proprietary products have six months from 10/29/18 to reconfigure eligibility/adjustment sourcing.
 
U.S. Bank Correspondent is updating its rate sheets for loans locked on and after January 29, 2019. Updates will include Conventional SRP including loan amount range/values, State SRP Adjustments (applicable to Conventional programs only) and Escrow Waiver Fees (by applicable state). Read its Pricing Flash for details.
 
Effective February 12th, Franklin American/Corr/DO Lender in DU will be removed as a selection in DU. All loans will need to be moved to FAMC-Citizens/Corr/DO Lender prior to that date. There will be no access to any loans in Franklin American/Corr/DO Lender on or after February 12th. DU and LP loans being underwritten by FAMC or utilizing FAMC Sponsorship must be run through the AUS system as noted: DU – FAMC-Citizens/Corr/DO Lender – Correspondent
LPA – Citizens Bank, NA.
 
UWM has expanded its Easy Valuation program for conventional loans nationwide, revolutionizing the appraisal business with a faster, easier and less expensive way to assess a home’s value. Not only does Easy Valuation give borrowers a 50% chance at an appraisal waiver, it saves them time and money — even if they don’t get one. The entire process can take as few as two business days and doesn’t cost more the $290. Click here to learn more.
 
PennyMac Correspondent Group posted 3 new announcements: 19-05: Updates to Conventional and Government Purchase Special LLPA, 19-06: FNMA High LTV/Freddie Mac Enhanced Relief and Reminder regarding Significant Derogatory Credit, and 19-07: Freddie Mac Bulletin 2018-21 and 2018-23.
 
Single-Family Seller/Servicer Guide (Guide) Bulletin 2019-3 revises guidance previously announced on January 3 in Guide Bulletin 2019-1. With this Guide Bulletin, Fannie provided guidance and requirements related to: Reserves requirements and Verification of income and employment. The guidance and requirements announced in this Bulletin were developed jointly with Fannie Mae and in consultation with the Federal Housing Finance Agency. The temporary guidance and requirements automatically terminated when the federal government resumed full operations, but this may go back on Friday. For complete details on temporary selling requirements, please read Guide Bulletin 2019-3. Fannie Mae issued several lender letters providing Fannie Mae sellers and servicers temporary guidance for borrowers impacted by the federal government shutdown.
 
US Bank Correspondent issued Seller Guide Update 2019-002 which covers multiple topics.
In addition, it has also published Seller Guide 2019-004 regarding Freddie Mac cash back requirements for “no cash-out” refinances.
 
Mortgage Solution Financial posted an announcement regarding DU Refi Plus/LP Open Access Discontinuation.
 
Back in November Fifth Third Delegated has discontinued its Home Possible Advantage product line(s). These products will no longer be offered in the Optimal Blue system. Customers utilizing this content for proprietary products have six months from 11/6/18 to reconfigure eligibility/adjustment sourcing.
 
Capital markets
 
Slow in Europe, kind of unclear here in the U.S. More delayed economic reports were released over the previous week, allowing markets to gain a clearer picture of fourth quarter GDP growth. Factory orders continued their lower trend in November as uncertainty over trade conditions led firms to proceed with caution. Last year, prior to tariffs being implemented, some firms built up inventories of key components which have been gradually depleting. With the potential for more tariffs going into effect on March 1, it does not appear that firms are repeating that strategy and could result in more disruption should they become implemented. A decline in imports of 2.9 percent in November could be the result of manufacturers not preemptively building up their inventories. December’s data could shed more light on whether or not that is the case. Regardless the ISM Manufacturing and Non-Manufacturing reports both fell in November, but remain above 50.0, signaling that economic activity is still expanding; albeit at a slower pace.
 
It is pretty quiet in the bond market although we saw a little rally (lower rates) Friday due to weakness in Europe. The price improvement lifted the 10-yr yield from a five-week low to a one-week low (2.63%) but the 30-yr yield finished the day at its lowest level since January 7. The slope of the yield curve saw some slight flattening last week but not enough matter.
 
For news this week we’ll be focused on another shutdown looming Friday and another gaggle of Fed speakers. Ahead of that, there’s no scheduled news today and tomorrow are a couple minor numbers (January NFIB Small Business Optimism Index and December Job Openings and Labor Turnover Survey). Wednesday things pick up a little with the weekly MBA app data for last week and January Consumer Price Index. Thursday we’ll have December Retail Sales, January producer prices, and weekly Initial Jobless Claims. Friday is a full day with January Export Prices ex-agriculture, Import Prices ex-oil, February Empire Manufacturing Survey, January Industrial Production and Capacity Utilization, and the Preliminary February Michigan Sentiment Survey. We start the week with the 10-yielding 2.65% and agency MBS prices worse/down a few ticks from Friday’s close.
 
 
I got a lift to the eleventh floor in an old-fashioned hotel, and as I got out, the operator said, "Have a good day, son." "Don’t call me son," I said. "You’re not my dad." He scratched his head, "No, but I brought you up, didn’t I?"  
 
 
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, “How are You Going to Compete.” 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.
 
Rob
 
(Market data provided in partnership with MBS Live. For free job postings and to view candidate resumes visit LenderNews. Currently there are hundreds of 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 2019 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.)
 

Feb. 9: A dive into news about lending to both ends of the age curve

I’m getting old. Most of us are. (Although some attendees at mortgage conferences don’t seem to be aging much at all, for whatever reason.) I was recently listening to a speech from the back row and the speaker kept talking about Asian Place. I thought to myself, “Asian Place? I believed I was at the wrong event until it dawned on me that the speaker was discussing “age in place.” Growing older is something we should all appreciate, and never take for granted, and it seems that the majority of older adults prefer to age in place. (I’ll save my story about "clown storage" vs. "cloud storage" for another time.)
 
In general there continues to be, and should be, attention given by lenders to diversity. (See joke.) Companies in the residential business want their lending practices, and employees, to be reflective of the general population. This isn’t confined to race, religion, or sex, of course, but also includes age. Are your 77-year-old LOs in a neighborhood filled with 20-somethings? Are your recent high school graduates in the call center calling retirement communities looking for leads?
 
Is it a surprise to anyone that of the Top 20 affordable retirement communities, 9 are in Florida, aka “God’s Waiting Room”?
 
The volume in the “forward” mortgage market continues to shrink, and lenders are looking at other options. Looking at the role of reverse mortgages under the Home Equity Conversion Mortgage (HECM) program (sponsored by the federal government), it would appear that reverse mortgages are underutilized by seniors today and can help provide added retirement funding security to Americans when used appropriately. According to research presented at the symposium by Dr. Wade Pfau and Dr. Barry Sacks, reverse mortgages can be used in a number of ways to support a more secure retirement by allowing the homeowner to age in place. “A reverse mortgage can extend the longevity of a retirement portfolio when utilized to pay off a traditional mortgage. By doing this, the homeowner gets the flexibility to make mortgage payments when their cash flow and portfolio supports the payment throughout retirement, as opposed to a traditional mortgage which requires monthly payments or else the homeowner risks default.”
 
“The added cash flow helped reduce the percentage that an individual needed to take from their investments during down market years, allowing the portfolio to last longer in retirement. These both appear to be valuable options with many retirees voicing concern that longevity might cause them to outlive their money in retirement.
 
Other researchers at the event called for more regulations and private market product developments, like in the form of consumer protections to help borrowers throughout the life of the reverse mortgage loan. One takeaway from the event was “how little coordination is occurring between home equity and retirement security from current retirees. Laurie Goodman, PhD, Founder and Co-Director of the Housing Finance Policy Center at The Urban Institute presented a study showing that less than one percent of eligible homeowners utilize a reverse mortgage today.  This weak uptake is despite research demonstrating that the number of people that would benefit from the product could be ten times higher.” Recent changes to the HECM program added additional consumer protections aimed at keeping homeowners in the home for their life. And notably, changes in the HECM fee structure have been made to improve the sustainability of the program.
 
Reverse mortgages are a form of borrowing, with a cost – but there is a benefit, which is an insurance component that helps the government provide a non-recourse guarantee, meaning that the homeowner is not on the hook for a HECM debt that exceeds their home value at the end of the loan. Even though this is a government regulated and backed product, homeowners still need to shop around and get advice when considering using the product. While reverse mortgages have been subject to misuse and misconceptions, far too many people today turn a blind eye towards the product. The program that exists today is less expensive and offers more consumer protections than it did in the past. Reverse mortgages deserve a second look because, when used appropriately, a reverse mortgage can help support a more financially secure retirement.
 
Peter Mazonas is a CPA who created, managed and was associated with Transamerica HomeFirst from 1989 through 2006, and with his team was involved in the early design of HECM products. He is currently the founder and CEO of NatEquity, an alternative senior home equity access product company. This week I received a note observing, “Recent articles suggest that for the government Home Equity Conversion Reverse Mortgages (HECM) to remain viable there must be substitute government sponsored entities (GSEs) or private mortgage guarantors. This speculation is particularly relevant due to continuing predictions in the press that the Federal Housing Finance Authority (FHFA) will soon push for privatizing Fannie Mae and Freddie Mac.
 
“Should that happen, HECM will be a casualty of the free markets. Pro-HECM articles ignore HECM’s 25-year history of failure and don’t acknowledge that private programs will not step in to directly compete. HECM is currently costing the FHA Mutual Mortgage Insurance (MMI) fund $4 billion annually and has a $14 billion current accrued future loss. Social pressure has for too long allowed the HECM program to continue at taxpayer expense without promoting private competition. Since HECM ceased to be a pilot program and became commercial in 1993, the program has never been solvent and relies upon the MMI fund at the expense of conventional GSE mortgage products and thus U.S. taxpayers.
 
“Private reverse mortgage-type products cannot and should not try to compete with HECM for an abundance of reasons. First, private real estate lenders and investment companies do not intentionally introduce products to lose money. Private market cost of funds exceeds those backed by the Government’s balance sheet. Costly components in the HECM origination process, like title insurance and escrow fees, need to reflect generally accepted commercial standards. HECM’s e-title insurance is a low-cost substitute that relies upon the government guaranty as a fallback.
 
“HECM’s Reverse Mortgage Backed Securities (RMBS) will be impossible to replicate because private products will not have the favorable spread between the higher interest rate charged borrowers and the much lower rate acceptable to investors in the government guaranteed RMBSs. Private products will have to be more creative. As reflected in reduced contract volumes because of recent HECM program changes, questionable applicants for private reverse mortgages will also not meet credit quality standards.
 
“Annual hands-on servicing costs for private reverse mortgages properties are far in excess of historic HECM servicing costs. Lax HECM underwriting and servicing must now comply with new FHA rules prohibiting HECM servicers the freedom to put HECM contracts back to Treasury until contract irregularities are corrected.
 
“And the government guaranty provides HECM contracts an exemption to be valued at cost under both commercial GAAP and government GAAP mark-to-fair value rules. Without that guaranty, contracts and portfolios must apply mark-to-fair-value GAAP rules. Senior home equity access products will be Level-3 longevity dependent assets. This requires a repeatable and statistically acceptable methodology to predict the NPV of future portfolio cash flows or alternatively suffer steep value discounts.
 
“For-profit senior equity access products need to look beyond the bounds of traditional compound interest mortgages, whether to replace HECM or for the jumbo home value markets. Whatever the pricing strategy, these products will not be able to support every market nationwide; nor will private senior home equity access products have the same pricing. These products will cost more and provide smaller monthly payments or lump sum advances, but presumedly be commercially viable.” Thank you, Peter!
 
At this point many “forward” lenders have reverse mortgage personnel or divisions. For example, this week I spent some time with the crew at Gershman Mortgage, which has a reverse mortgage offering by one of the few husband/wife teams in the biz, Lisa and Bill Nass. (Both are Certified Reverse Mortgage Professionals.)
 
Plaza Mortgage, for example suggests users, “Visit the dedicated Reverse Lending section of the Plaza website to view the Reverse Lending User Guide, market news, mortgage turn times, marketing materials and more. (Username: plaza, password: reverse.)
 
If you don’t mind wading through ads, here’s a reverse mortgage calculator that was recently put in front of consumers.
 
At the other end of the age spectrum…
 
Will potential borrowers in their 20s and 30s abandon the beloved cities to run away to the suburbs and have kids? Who knows — it’s one of the most divisive questions for urban economists. What we do know, thanks to a new study, is that the odds of someone in that age group buying their first home near a city center is 21 percent higher than those of the previous generation. One particularly striking finding was the impact that car ownership had on where a first home was purchased. Owning one car meant the odds of buying a first home in a city center fell by 21 percent. Owning two made it drop 41 percent. On one hand that makes sense: why own a device that aids in commuting if you live where you need to commute to? On the other hand, two cars? In this economy?
 
Where are buyers in their 20s and 30s (aka millennials, although not a favored term) buying homes? SmartAsset is out with its 2019 look.
 
The New Urban Institute Report on Barriers to Homeownership is a good resource. It includes updated data on 31 of the largest US markets that show about 21 million buyers under 40 are mortgage-ready today. In addition, most of the mortgage-ready millennials in the US earn enough to afford a typical house in their city, although this varies slightly by race and ethnicity. The report also analyzes 2017 purchase loan data and how many were eligible for down payment help.
 
Millennial homeownership rates are still poor, due primarily to student loan debt and tepid wages. If millennial homeownership matched previous generations, there would be 3.4 million more homeowners today, per the Urban Institute. The longer millennials delay homeownership, the more baby boomers looking to downsize will be pressured into lowering their home prices when they enter retirement, potentially causing a mass exodus on the market in the future.
 
Every three years, the Federal Reserve conducts their Survey of Consumer Finances (SCF) which collects information about family incomes, net worth, balance sheet components and other financial outcomes such as homeownership. The latest report showed a decline in homeownership to 63.7 percent of all U.S. family from 65.2 percent in the previous survey from a peak of 69.1 percent in the 2004 survey. Not surprisingly, there are large differences in the homeownership rate across income group with the top 10 having a 91.4 percent homeownership rate compared to 46.9 percent for the bottom 50 percent. When observed by age groups, each group with the exception of those 75 years and older saw a decline in the homeownership rate from 2013 to 2016 signaling that it is not just Millennials who are leading to the declines. It is important to note that since bottoming out in 2016, the homeownership rate has been increasing with the most recent data putting it at 64.2 percent. 
 
People born between 1982 and 2000, aka millennials, closed more purchase loans in December 2018 compared to the last two years, according to the latest Ellie Mae Millennial Tracker. Share of purchases accounted for 88 percent of all loans closed by this generation in December, rising 4 percent from the same month in 2017, despite interest rates for all 30-year loans reaching 5.12 percent on average – the highest percentage since Ellie Mae began tracking this data in 2016. The average FICO score for Millennial borrowers on all closed loans dropped to 721, down slightly from 722 in December 2017. For all closed loans in December 2018, 52 percent of Millennial borrowers were married while 48 percent were single. These figures were flat from December 2017. 
  
 
An Englishman, a Scotsman, an Irishman, a Welshman, a Latvian, a Turk, a German, an Indian, several Americans (including a Hawaiian and an Alaskan), an Argentinean, a Dane, an Australian, a Slovak, an Egyptian, a Japanese, a Moroccan, a Frenchman, a New Zealander, a Spaniard, a Russian, a Guatemalan, a Colombian, a Pakistani, a Malaysian, a Croatian, a Uzbek, a Cypriot, a Pole, a Lithuanian, a Chinese, a Sri Lankan, a Lebanese, a Cayman Islander, a Ugandan, a Vietnamese, a Korean, a Uruguayan, a Czech, an Icelander, a Mexican, a Finn, a Honduran, a Panamanian, an Andorran, an Israeli, a Venezuelan, an Iranian, a Fijian, a Peruvian, an Estonian, a Syrian, a Brazilian, a Portuguese, a Liechtensteiner, a Mongolian, a Hungarian, a Canadian, a Moldovan, a Haitian, a Norfolk Islander, a Macedonian, a Bolivian, a Cook Islander, a Tajikistani, a Samoan, an Armenian, an Aruban, an Albanian, a Greenlander, a Micronesian, a Virgin Islander, a Georgian, a Bahaman, a Belarusian, a Cuban, a Tongan, a Cambodian, a Canadian, a Qatari, an Azerbaijani, a Romanian, a Chilean, a Jamaican, a Filipino, a Ukrainian, a Dutchman, a Ecuadorian, a Costa Rican, a Swede, a Bulgarian, a Serb, a Swiss, a Greek, a Belgian, a Singaporean, an Italian, a Norwegian and 2 Africans walk into a fine restaurant.
 
"I’m sorry" says the maître d’, after scrutinizing the group. "But you can’t come in here without a Thai".
 
 
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, “How are You Going to Compete.” 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.
 
Rob
 
(Market data provided in partnership with MBS Live. For free job postings and to view candidate resumes visit LenderNews. Currently there are hundreds of 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 2019 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.)
 

Feb. 8: LO jobs; broker, automation products; nationwide bank M&A news; slowing Europe helping U.S. rates

Here’s some trivia for today’s potluck in the Shipping Department: Las Vegas has 150,000 hotel rooms and spending a night in each would take you 411 years. Less trivial, a couple “sand states” over, Apis Cor, a Russian 3D printing construction company, and Sunconomy, a U.S. construction company, have received permits to build their first 3D printed geopolymer additively manufactured house in Lago Vista, Texas. Helping first-time home buyers or those moving to the area? U.S. Census Bureau research finds 11% of people move in a year, but 62% of those who do, stay in their same county! The main reasons people said they moved were relocate to a better home, establish their own household, for other family reasons, for a new job or transfer, and to find cheaper housing.
 
Jobs
 
There’s more exciting news from emerging banker Pinnacle Home Loans in Northern California. Nevin Miller is pleased to announce that Susan Roy, previously VP of National Operations & Underwriting for Pinnacle Capital Mortgage, has joined their growing team as VP of Operations. Susan brings nearly 30 years of experience in operations & underwriting and will be instrumental in their expansion and unique focus on the loan officer. Congratulations to Susan and Pinnacle for their new association. Branch managers and top MLOs are invited to have a discussion about the new Pinnacle. Interested parties can contact Nevin Miller.
 
What happens when over 1,200 PrimeLending teammates from across the country converge at our annual Sales Rally in Dallas, Texas? “A Breakthrough – our theme for 2019. This event was about broadening horizons, building goals and relationships, and discovering all the ways our industry-leading tools and technology can enhance the lives of our branch managers, loan officers, customers and business partners. Keynote speaker Daymond John, entrepreneur and star of ABC’s ‘Shark Tank,’ inspired our team with ways to break through barriers and find success by outworking and outperforming the competition. We were also joined by more than 50 recruits from other companies ready to experience the PrimeLending difference and take the final step in joining our powerhouse organization. As home of the Modern Originator, PrimeLending continues to create new, innovative ways to enjoy sustained success in the modern marketplace, and that will never change. 2019 will be another historic year for our company and we’re excited for our future. Contact Brian Miller to learn more about what your future could hold at PrimeLending.
 
On Q Financial offers a $1,000 15 Day On Time Closing Guarantee and mobile origination via their app Simplicity, featuring Automated and Digital VOA, VOI, and VOE to end the paper chase for their customers and Originators. Now, they’ve announced a revolutionary Price Match Guarantee to ensure they won’t lose a loan to rate. On Q is simplifying the mortgage process for borrowers AND Originators who can double their business using the company’s innovative Closing Guarantee, paperless process, technology, marketing, and new Price Match Guarantee. On Q’s mission is to simplify the mortgage process to make the dream of home ownership a reality – for everyone. Learn more about On Q’s Price Match Guarantee.
 
PRMG continues to expand their national footprint and starts 2019 strong with opening 6 new Retail Locations during the month of January!  Along with the drive and ambition to bring the American Dream of Homeownership to all cities across the country, PRMG has now opened its doors in St. Paul, MNBethlehem, PAGrove, OKMinden, NVBakersfield, CA and Rochester, MI. PRMG is Built by Originators for OriginatorsTM and is devoted to continuously growing their retail platform.  If you are a Motivated Loan Originator who wants to be Progressively Better, contact Chris Sorensen at 909.262.0452.
 
Gateway Mortgage Group announced it had another record year in 2018, funding more than 29,000 loans totaling $6.1 billion in mortgage loans. The company also opened 40 new branches in 22 states last year and added over 340 team members, bringing its total to team members to 1,169. “Gateway continued its great momentum in 2018, performed better than our competition and continued to grow when others are retreating. We have some exciting news coming down the chute in 2019 that will bring even more opportunity to our Originators who want to increase their personal loan volume,” said Stephen Curry, CEO at Gateway. Gateway’s servicing portfolio grew to $18.6 billion and the company now services a total of 107,282 individual mortgage loans. If you want to bring your bright future to Gateway, contact Howard Hall.
 
Lender products & services
 
Attention brokers living in Irvine, California. There is a can’t miss event taking place in your area on Tuesday, February 12. Three of the major forces in wholesale lending are hosting a free event and networking reception to help brokers accelerate their growth through niche products. REMN is teaming up with Angel Oak Mortgage Solutions, and Liberty Home Equity Solutions, on the Diversify & Thrive Growth Summit series. These in-person events will educate mortgage brokers on the best ways to market and explain niche products, with a focus on renovation lending, non-QM loans, and reverse mortgages. They hosted a similar event on Tuesday, and the venue was filled to capacity, with most attendees staying around until the end of the free cocktail reception as well. If you’re interested in attending, register ASAP at http://diversifyandthrive.com.
 
Quicken Loans Mortgage Services (QLMS) offers an exclusive club to its best performing partners. Pinnacle Club members get a Fresh Start credit repair consultant to assist clients that need help boosting credit scores. All members also receive complimentary five-day rate lock extensions and EPO fees are waived if another originating company pays off the new loan within six months. Lastly, members can attend invitation-only events that combine industry education and once-in-a-lifetime experiences. More benefits will be added this month. To join the club, broker partners must have achieved certain milestones related to number of loans closed with QLMS and they need to have high satisfaction rankings from their clients. If you’d like to learn more about the program, contact your QLMS account executive or go to QLmortgageservices.com.
 
There is exciting news coming soon from ISGN Solutions – a leading Business Process Management company specializing in mortgage end-to-end fulfillment, process automation, omnichannel contact center solutions, title, closing, and loan servicing support. It has been working on this change for some time now. IGSN Solutions is committed to helping lenders lower operational costs, improve efficiencies and enhance the customer experience. Watch this space for more information – in the meantime, visit their website to learn more about the company.
 
Bank and M&A news
 
S&P Global Market Intelligence reports banks and thrifts closed 1,903 branches net or about 2.15% during 2018. We can expect more with the BB&T SunTrust deal.
 
The big bank merger yesterday prompted Virginia’s Joe N. to send, “Did you hear the new name of the SunTrust and BB&T merger? They are going to call it Buntrust.” Yes, certainly cost efficiencies will be achieved since their regional footprints are so similar. The BB&T/SunTrust all-stock deal worth $66 billion will create the sixth-largest US bank based on assets and deposits. Although BB&T (more rural) will buy SunTrust Banks (more urban) for $28.24 billion in an all-stock deal, the companies called it a merger of equals, valued at $66 billion, and is expected to close in the fourth quarter of 2019.
 
Both groups have sizeable overlapping correspondent channels, so one can expect cutbacks. Home loans making up 27% of the combined company’s total lending, with BB&T having roughly 6,000 MLOs compared to SunTrust’s 1,100.
 
Other deals have been announced in the last week or so. In a merger of equals Chemical Bank ($21.5B, MI) will combine with TCF Bank ($23.7B, SD) to create a much larger bank of $45B in assets. In the Sunshine State Central Florida Educators FCU ($1.9B) will acquire Fidelity Bank of Florida ($175mm). Over in Wisconsin Citizens Community Federal ($975mm) will acquire Farmers & Merchants Bank ($195mm) for about $21.6mm in cash (85%) and stock (15%) or about 1.02x tangible book, Greenwood’s State Bank ($178mm) will acquire Fox River State Bank ($95mm), and Bank First National ($1.8B) will acquire Partnership Bank ($307mm) for $41mm in cash (35%) and stock (65%). Out in California SchoolsFirst FCU ($14.9B) will acquire Schools Financial ($2.0B). This is one of the largest credit union mergers in history. In the Sunflower State SJN Bank of Kansas ($147mm) will acquire Nekoma State Bank ($44mm). In New York Community Bank ($10.5B) will acquire The National Union Bank of Kinderhook ($637mm) for $93.4mm in cash (100%) or 1.93x tangible book.
 
Vendors merge too. CoreVest has entered into an agreement to buy the loan assets of Black Square Real Estate, a finance company providing bridge and rehabilitation loans on non-owner- occupied residential properties. As part of the transaction, the entire Black Square team will join CoreVest, including professionals in short-term lending and construction management oversight. "We see the combination as immediately accretive both to our clients and the company," commented Chris Hoeffel, Chief Financial Officer of CoreVest.  "The Black Square addition allows CoreVest to expand our product offerings with single asset bridge lending, ‘fix and flip’ renovation loans, construction lending and short-term lines of credit."  Ryan McBride, Chief Operating Officer, added, "The expanded team will allow us to provide superior service to our borrowers, making CoreVest a single source for all the financing needs of residential real estate investors."
 
Capital markets
 
The volatility seen in December as stocks had a remarkably bad month to end a bad quarter has stoked fears of another recession amid slowing housing growth. Despite strong employment, solid U.S. corporate earnings supported by tax reform, and consumer and small business confidence remaining high, escalating global trade tensions, uncertainty surrounding the effects of global central banks removing stimulus measures, and signs of slowing global growth threaten to become the overriding narrative for 2019. The economy and capital markets are cyclical, expanding and contracting, and recessions and bear markets are simply part of the cycles of economies and markets.
 
For it to be considered a bear or bull market, the economy must move 20% or more from the previous high or low, and even that threshold isn’t a strict definition. Although recessions are fact of life, the economy is more often in expansion mode. If investors are now fearful of a bear market or recession, they have a few options. Long term investors should stay put. Even if you are fortunate enough to sell at the “right” time, the timing decision of when to buy back in, make the attempt to time the markets a bad idea. It is a good time to reassess your willingness and ability to take on risk. It is important to have a portfolio’s risk potential, volatility and short-term unrealized losses, aligned with your ability to withstand that risk. A long-term investment plan won’t work if you can’t stick with it long-term. Nearly every asset type disappointed investors in 2018. December’s S&P 500’s -9 percent return in December was the worst monthly showing since the financial crisis of February 2009 and the worst December return since the Great Depression in December 1931. Only two of the 11 market sectors, health care and utilities, finished with positives returns for the year, while the biggest loser was energy. Additionally, a broad list of 17 major asset classes (different types of bonds, U.S. and foreign stock market indices, listed real estate, and commodities, as compiled by Bloomberg) all had a return lower than the inflation rate last year.
 
In the U.S. the labor market is solid. Going back to the jobs report for December, it was a surprise as 312,000 jobs were added during December and hourly earnings and hours worked also increased. November and October’s were also revised higher by a total of 58,000 jobs.  Even with the substantial increase in the number of jobs, the unemployment rate increased to 3.9 percent due to a large increase in the labor force. The survey showed broad-based gains across industries including an 82,000 gain in education and health services as well as a 38,000 gain in construction. The strong jobs report comes amid other recent metrics that have suggested cooling economic conditions in the US and abroad which should provide for some interesting conversations around future economic policy.
 
Thursday the U.S. 10-year closed Thursday -5 bps to 2.65% as Treasuries across the curve moved similarly. For now our markets are taking their cues from Europe, and the day began with disappointing data out of Europe, with Germany reporting another sharp YoY decline in industrial production in December while Spain’s industrial production also contracted sharply. Additionally, Italy reported a decrease in December retail sales while the European Commission officially lowered its forecast for 2019 Italian GDP growth while also lowering expectations for growth in Germany and across the eurozone (to 1.3% from 1.9%). The Bank of England voted unanimously to maintain its policy stance, which was widely expected. The BoE lowered its 2019 GDP growth forecast for the UK to 1.2% from 1.7%. Domestically, National Economic Council Director Larry Kudlow acknowledged there is a sizable distance to go in U.S. trade talks with China, while President Trump said he will not meet with China’s President Xi Jinping before the deadline on March 1.
 
Today’s calendar has no market-moving announcements in the U.S. San Francisco Fed President Daly is speaking. As we watch Europe slow, rates begin today with Agency MBS a shade higher and the 10-year yielding 2.64%.
 
 
"Honey it’s me. I don’t want to alarm you but I was hit by a car as I was leaving the office. Paula brought me to the hospital. They have checked me over and done some tests and some x-rays. The blow to my head was severe and my neck is in a brace for 3-4 weeks. Fortunately it did not cause any serious brain injury. But I have three broken ribs, a compound fracture in the left leg, and they think they may have to amputate my right foot."
Wife’s response: "Who the hell is Paula?"
 
 
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, “How are You Going to Compete.” 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.
 
Rob
 
(Market data provided in partnership with MBS Live. For free job postings and to view candidate resumes visit LenderNews. Currently there are hundreds of 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 2019 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.)