Daily Mortgage Commentary
Jan. 16: Management, LO, AE jobs; upcoming events & training; 4th quarter big bank mortgage performance as bellwether
January 16, 2017
2017 will certainly be the “Year of the Rumor” in residential lending, many of which eventually come true. Some lenders & investors are eliminating entire divisions while others scale back selectively and then that news becomes a rumor that the company is closing an entire channel. Most fly under the radar, not wanting the bad press, or cut back just enough to help overhead but not to arouse angst or spook the other employees. Others, like Wells Fargo, publicly announce closings – in Wells’ case, 400 branches in the next two years due to online banking trends. (But heck, that’s less than 5 per state per year, right?) It has been quite a month for employment news already. Gosh, even the owners of Ringling Bros and Barnum & Bailey Circus announced that they will close the 146-year-old show in May. And sorry – there are no job openings at the CFPB.
But others are hiring. Alight Inc. is looking for a Director of National Accounts to develop a portfolio among the top tier of independent mortgage banking firms for its forecasting and scenario analysis solution. With a sharp focus on driving revenue through the forging of strategic relationships that help uniquely support the goals and objectives of these large firms, success includes both the addition of new customer firms, along with the widespread adoption of Alight’s solutions throughout those firms. The Director of National Accounts will own all aspects of the customer’s relationships, including the building of strong relationships with CEOs, firm owners, CFOs and other senior leadership. This position reports to Ralph Armenta, Vice President, Alight Mortgage Solutions; contact him for confidential inquiries.
I recently spoke at a national conference for a growing retail mortgage bank and they put on a great event to fire up and engage its LOs. Every LO seemed very happy they are with this firm now and most are doing more business since they made the move. I suspect it is because of their platform – operations is very deep and frees originators to do more originating, not processing, while marketing systems are in place to handle 90% of what any pro LO should be doing (and usually don’t) and it’s all done for them. At the conference, they rolled out new mobile technology, social media support, niche products, and more. If you’re interested in opportunities to jump on board, especially west of the Mississippi, please send confidential inquiries to me; please specific the opportunity and excuse any delays in response due to travel.
LenderFi.com a nationwide retail direct lender is continuing to expand! “We have immediate openings for 100 loan originators who are self-driven and looking for an opportunity to work in our Calabasas office, Los Angeles’ premier call center. We provide 100% of the leads needed to be successful which allow our originators to solely focus on producing as opposed to traditional methods of prospecting. We are a LendingTree certified lender and buy the best leads in the industry. We can close loans in 3 weeks or less. By leveraging technology, we have created a culture where our average mortgage banker is earning $13,951 monthly. Please send your confidential resume to Edwin Eshaghian.
On the TPO side of things, Paramount Residential Mortgage Group, Inc. is actively hiring experienced wholesale and correspondent AEs to help support and serve the entire Western United States / Pacific Northwest / Mountain / Midwest / Northeast and Southeast regions. Consistently ranked in the TOP 25 of the TOP 100 Mortgage Companies in America, PRMG has made it their #1 mission to providing the best combination of product, pricing, fulfillment, marketing, compensation and advanced technology to our wholesale and correspondent customers! PRMG employs over 1300 people nationwide and is licensed in 47 states with 85 branches located throughout the country! Isn’t it time that you take a good hard look at PRMG? Contact HR@prmg.net for a complete job description or confidential inquiries.
On Friday, the commentary had a notice for Buckley Advisors, a provider of Quality Control and Due Diligence Auditing. There was an e-mail mix-up, so here you go: Buckley Advisors is expanding its Audit area this year. "Our audit services are compliant with GSE and Agency requirements; staff has on average over ten years of underwriting/audit experience and we can assist in developing solutions to address recurring defects. We offer competitive pricing and personalized services not available elsewhere.” For more information contact Mike Celenza (904.329.7247).
Happy trails to Edith Ramirez. The FTC announced that after nearly 7 years its Chairwoman, appointed by President Barack Obama, will be stepping down next month.
Events & training:
NewLeaf Wholesale is providing a webinar on January 18th to provide details on its new specialty programs which include NewLeaf Residual Income Program, NewLeaf Asset Depletion Program, NewLeaf Jumbo 90% LTV NO MI and NewLeaf Foreign Investor Program.
On January 18th, join Plaza’s free webinar to learn about its FHA 203(k) Standard and Limited loan programs. These renovation loan programs enable borrowers to purchase a home that may need repairs or refinance their existing home for remodeling.
Join MBA of New Jersey on Thursday January 19th for breakfast at Ponzio’s Diner. Discussions will include changes in loan officer comp plans and other CFPB issues. Email email@example.com if you plan on attending.
Hey, if you’re in the San Francisco area this Thursday night the 19th, around 6:30, more specifically just north in Marin County, I will be giving a presentation on what 2017 might hold for lenders and real estate agents. “If you’re curious how things might change with our new administration, please stop by our offices to hear Rob Chrisman share his thoughts on how Marin and the SF Bay Area real estate market will fare over the next four years. RSVP to Jenn Pfeiffer.
On Thursday, January 19th at 11AM PT, hear from Quicken’s Rocket Mortgage Product Lead Regis Hadiaris and other top tech and marketing experts about their takeaways from the recent Digital Mortgage Conference and what to expect in 2017. Click here for more information and how to register for CMBA’s free event.
In Colorado, CMLA’s first Leadership Development Forum is on February 10th. Presenter Jeff Carney will continue with the second half of teaching “The 7 Habits of Highly Effective People,” by Stephen Covey. The deadline to participate in this forum is February 3rd. Location will be provided to Forum Members prior to meeting.
Don’t miss early bird registration for Lenders One’s Winter Conference on March 5 – 8 at the Loews Sapphire Falls Resort at Universal Orlando. This members-only event will deliver valuable insights and includes access to brand-new 2017 Lenders One programs and services. Hear from keynote speaker Kevin Carroll, who has worked with organizations such as Walt Disney, Nike, ESPN and Starbucks, to learn how to elevate your business through the power of play. With education session tracks including leadership & growth strategy, compliance, business development and operational efficiency, plus multiple networking opportunities for sharing best practices — this is an event you’ll want to attend. Contact Susan Malpocker for questions or more information about Lenders One.
The big news Friday was the earnings reports from four of the country’s biggest banks. Generally, they posted healthy numbers and solid revenues to end 2016, though net income was down for PNC and Wells Fargo. Bank of America and JPMorgan Chase posted increases quarterly and year-over-year profits in their end-of-year financial statements.
The Fed increasing its benchmark lending rate (overnight Fed Funds) usually helps banks boost net interest margins (the difference between what firms charge for loans and pay depositors) but residential mortgage banking is also usually profitable – but bank executives are bracing for a slower year for mortgage revenue.
What do their earnings tell others in the industry about how the 4th quarter went? First, remember that Wells and other big banks have been losing production market share for several years. One can attribute that to fears of future liabilities, being sued for FHA underwriting violations by HUD and the Department of Justice, fear of buybacks, running afoul of the CFPB, etc.
Mortgage banking earnings for both JPM and Wells Fargo were down in 4Q, driven by lower gain-on-sale margins. JPM’s mortgage origination volume of $29.1 billion was up 7.4% Q/Q from $27.1 billion, while WFC’s origination volume was up 2.9% to $72 billion from $70 billion Q/Q. Gain-on-sale margins were down more meaningfully at JP Morgan (and at BAC) vs. Wells Fargo. (Remember that Wells Fargo’s gain-on-sale recognizes gains on closing vs. rate lock, resulting in less downward pressure on GOS margins as rates increase, and vice versa.)
Wells and BofA said they’re starting to see demand for home loans taper off as the Federal Reserve raises interest rates. Wells Fargo, the biggest U.S. mortgage lender, said that its pipeline of applications for home loans dropped 40 percent to $30 billion at the end of the fourth quarter, compared with three months earlier. The decline capped a year in which Wells’ mortgage revenue fell to $6.1 billion, the lowest level since 2009.
Bank of America, meantime, and which has no wholesale or correspondent channels, said its pipeline shrank 43 percent in the quarter as fewer customers sought to refinance existing debts. Mortgage banking noninterest income was $1.4 billion in Q4, compared with $1.7 billion in Q3 2016. Residential mortgage loan originations were $72 billion in the fourth quarter, up from $70 billion in the third. Total mortgage production grew $4.9 billion (29 percent) to $21.9 billion. BOA’s mortgage-backed securities were ranked among top three by volume in 2016.
Chase’s mortgage group earned the bank almost $1.7 billion in Q4, up slightly over Q4 of 2015, but down from $1.8 billion in mortgage income in Q3. Over at PNC residential mortgage banking noninterest income decreased $18 million, “primarily due to lower loan sales revenue from lower application and origination volumes,” the bank stated. Residential mortgage banking noninterest income increased $29 million.
Keefe, Bruyette & Woods thinks that U.S. home loan originations will drop 17% to $1.5 trillion in 2017. Unlike non-depository lenders, whose only source of revenue is lending and servicing, banks have ways that the impact of higher rates, if they occur, may be blunted. Even if the pipeline shrinks, a larger share of loan applicants may decide to complete the process as they believe rates will keep getting worse. Wells Fargo CFO John Shrewsberry opined, “Everyone wants to get their loan closed before rates move up. Once customers initiate transactions, they’ll work harder to finish them. They don’t want to start over again. They don’t want to expose themselves to either refinancing at a higher rate or trying to buy a home at a higher rate.”
A drop in earnings from servicing home loans also weighed on the quarter – but the value of portfolios went up. JPMorgan Chase & Co., Wells Fargo, and Bank of America all reported declines in that business. At Wells Fargo, servicing results were hurt by costs to prepare foreclosed properties for return to the U.S. Department of Housing and Urban Development for liquidation. Wells and JPMorgan Chase both reported mark-ups on the asset value of their servicing portfolios for 4Q16. Wells, the nation’s number one ranked servicer, marked up its MSRs by an impressive 24.4 percent to $12.95 billion.
Bank mergers and acquisitions continue to motor along, and not necessarily confined to banks. In the last week or two it was announced that in Virginia Farmers & Merchants Bank ($745mm) will acquire Valley Southern Title. (Valley provides title insurance and real estate settlement services.) Louisiana’s First NBC Bank ($4.9B) will sell 9 branches, $1.3B in loans, and $1.1B in liabilities to Whitney Bank ($23B, MS). The move increases capital ratios for First NBC as it shrinks its balance sheet.
Capital markets and rates?
Bond sales surged to a record in the first week of 2017 as banks moved swiftly to get as much borrowing done as possible before interest rates move higher. And in the world of pure supply and demand, if supply increases, and demand is steady, bond prices would drop and rates rise. But the demand has held up well, and on the mortgage side of things we still have the NY Fed buying $1-2 billion a day of various coupons and agency MBS securities. For numbers MBS prices and the 10-year worsened about .125 on Friday (closing yielding 2.38%).
Today is a bond market holiday, and a holiday for a good chunk of the nation, so be wary of rate sheet pricing. And there are no news announcements in the States to move interest rates. Tomorrow, however, we kick things off with Empire Manufacturing. Wednesday, we can look forward to the MBA’s application data for last week, the Consumer Price Index, the Industrial Production and Capacity Utilization duo, and NAHB Housing Market Index from the builders. Thursday we have Initial Jobless Claims, the Housing Starts and Building Permits couplet, and the Philly Fed figures.
It is hard to believe that Martin Luther King Jr. was killed nearly 49 years ago. And it is worth a reminder about what a great orator he was, among other things.
If you’re interested, visit my periodic blog at the STRATMOR Group web site. The current blog is, “Are You Sure that Rates are Going Higher?” If you have both the time and inclination, make a comment on what I have written, or on other comments so that folks can learn what’s going on out there from the other readers.
(Market data provided in partnership with MBS Live. For free job postings and to view candidate resumes visit LenderNews. Currently there are over 300 mortgage professionals looking for operations, secondary and management roles. For up-to-date mortgage news visit Mortgage News Daily. For archived commentaries, or to subscribe, go to www.robchrisman.com. Copyright 2017 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.)
Jan. 14: Notes on the lender’s job market & training, interest rates, & Realtor survey results; is buying a hot dog a RESPA violation?
January 14, 2017
Some people reading this have jobs, some don’t, but regarding last week’s 156k nonfarm payroll number I received a note asking, “Back in the Bush I and Clinton eras we supposedly needed to create 325,000 jobs per month just to break even. Where did that 325k number come from or where did it go to? If we are happy about 156k jobs being created, aren’t we about 175k short every month? Did the Department of Labor change something? Am I missing something?” I have my opinion, but for an answer I turned to the noted MBA economist Mike Fratantoni who replied, “US labor force growth had dropped by more than half over the past decade or so. This is largely a result of baby boomers reaching retirement age while subsequent generations are not big enough to fill their slots
Jan. 13: Subservicer reviews, business opportunity, AE jobs; a primer on HUD and the likely Secretary’s testimony – inside Dr. Carson’s home
January 13, 2017
Are you positive that rates are going higher? Me neither, and there are reasons why rates may stay here or actually slide back down a bit. No one has a crystal ball… certainly the demand for mortgages has fallen since the autumn, but then again, in talking to lock desks they are seeing signs of life as clients, and LOs, adjust to slightly higher rates. Then again, the business plans of top lenders and originators are rarely entirely dependent on rates. Or forecasting them. A trusted provider of Quality Control and Due Diligence Auditing since 2011, Buckley Advisors is expanding its Audit area this year. “Our audit services are compliant with GSE and Agency requirements; staff has on average over ten years of underwriting/audit experience and we can assist in developing solutions to address recurring defects. We offer competitive pricing