Daily Mortgage Commentary
June 28: Business opportunities, LO jobs; the economy & rates; originator training; Freedom takes a bite out of the Big Apple
June 28, 2017
Transitional licensing, where a bank LO can move to being a non-depository LO and still can originate? Yup. Contact your rep in Congress to support it. I imagine non-depository lenders are keenly interested in this, although with summer vacations coming up, and plenty already on its plate, the bill may not immediately sail through Congress. Speaking of originators, if you are looking for a good book for training new hires, here is a strong option to help them with their studies: “The Successful Mortgage Broker: Selling Mortgages After the Meltdown.”
Business opportunities, jobs, and products
A retail and DTC origination group with $1.5 billion in annual production is searching for a depository bank that is a good home for this national residential mortgage business, intact. Interested parties should contact Peoples Bank CEO Wint Winter for details; principals only please.
“Does your Subservicer allow you to customize their borrower portal to fit your needs? Do they build custom marketing banners to help you with portfolio retention? Do you work with their analytics and strategy teams to build cross-marketing opportunities for future purchase business, debt consolidation, or other initiatives to help retain your MSR portfolio? If you answered ‘No’ to any of those questions, then you need to reconsider your options. These are just a few ways The Money Source Subservicing has separated themselves from the list of usual suspects in the subservicing realm. To learn more about how you can benefit from a true subservicing partnership, click here.
Have you checked out the 2016 Scotsman Guide Top Mortgage Lender rankings? Scotsman Guide ranked loanDepot as the #1 Top Retail Volume Lender and #3 Top Overall Volume Lender, funding over $38 billion in total loan volume in 2016. It also had 22 originators ranked in Scotsman’s previously released Top Originator’s L, ranking them as the lender with the second most originators on the list. loanDepot’s Retail channel enjoyed a remarkable 2016 – year over year they saw substantial growth. The lender funded over $4 billion in new construction volume alone, is recognized as a top 10 renovation lender, and have a platform that is designed to increase originators’ personal market share. If you are interested in being part of this powerhouse lender that is capturing market share nationwide, contact Shane Stanton.”
Over the past few years consumer portals and apps have started to flourish with great software companies like Maxwell, BeSmartee, Blend and Roostify to name a few. Have we finally seen a slowdown? Perhaps, given the recent news from Matic Insurance to sell their borrower portal and mobile apps (getmatic.com), we’re one step closer to a winner. Matic said they have sold their software source code and just one copy remains for the lender who wants to own and customize their mortgage experience. Aaron Schiff, CEO of Matic Insurance said the move was made last year to "focus on helping lenders close loans faster with our best in class insurance integrations’ which gives borrowers the best HOI policy (and price) in as little as 30 seconds by directly integrating to multiple carriers and operating in all 50 states. To learn more about Matic’s software or Insurance API, email to email@example.com or visit MaticInsurance.com.
In personnel news, Guild Mortgage has promoted Rob Dawson to manager of the National Builder Division where he will oversee the company’s home builder relationships, builder loan officer training and certification and development of builder marketing and promotional strategies.
Company news; gosh, what’s new out there?
Another day, another piece of substantive news. This time ‘round New York Community Bancorp, Inc. announced the sale of its mortgage banking business and residential assets covered under the FDIC Loss Share Agreement to Freedom Financial. Yes, NYCB’s mortgage banking business, which was acquired as part of its 2009 FDIC-assisted acquisition of AmTrust Bank, is heading to Freedom. “Freedom will acquire both our origination and servicing platforms, as well as our mortgage servicing rights portfolio with a current aggregate unpaid principal balance of approximately $21.0 billion. It is expected that Freedom will retain certain employees from the Company’s Cleveland, Ohio mortgage banking business and plans to maintain operations in the area.
NYCB writes, “Additionally, the Company has received approval from the FDIC to sell the assets covered under our Loss Share Agreements (the “LSA”) and we have entered into an agreement to sell the majority of our one-to-four family residential mortgage-related assets, including those covered under the LSA, to an affiliate of Cerberus Capital Management, L.P.…This deal demonstrates the market leading ability of Cerberus, along with its affiliated asset management company, FirstKey Mortgage, LLC, to partner with financial institutions to achieve mutually beneficial outcomes for certain mortgage assets.” The transactions are expected to close during the third quarter of 2017, subject to certain closing conditions.
I am sure LOs are dealing with this one. “Lending Tree, the popular mortgage site, which debuted its own valuation model earlier this month” claims it will estimate someone’s home equity and suggest how and when the owner might want to tap into it.
Today! The Wholesale Division of Finance of America Mortgage is offering a live webinar entitled “The Mortgage Broker Advantage,” a discussion on the benefits of being a mortgage broker in today’s marketplace. “Learn the advantages and steps to becoming a mortgage broker, resources to get started and industry specific services available to support the small business owner. Presented by Ginger Bell, Go2training and Greg Woolsey, Regional Sales Manager, Finance of America Mortgage Wholesale.” Today, Wednesday, June 28th, at 11:00 am PDT.
“Are you closing as many VA loans as you could be? You could be closing more if you were marketing yourself as a Certified Military Home Specialist (CMHS). VA loans are a lucrative market that goes untapped for many because they don’t know how to connect with military borrowers. On Thursday, REMN Wholesale will be hosting a free, two-hour webinar that will enable anyone who participates to take the test to receive their CMHS certificate. The webinar will be conducted by Beverly Frase, who has conducted similar trainings for HUD, the Treasury and Freddie Mac’s borrower help centers across the country. Attendees will learn the best ways to communicate with VA loan applicants, as well as accurately calculate borrower income. The last half hour of the webinar will be devoted to a Q&A session where detailed questions can be answered in-depth. Space is limited, so sign up ASAP at here.
And don’t miss Mortgage Market Guide’s 2017 Mid-Year Economic Review with internationally acclaimed economist Dr. Elliot Eisenberg on Thursday, July 6th. This fast-paced webinar runs through the details that drive Mortgage Backed Securities and home loan rates. Plus, it is delivered in an easy-to-understand way so that you will walk away informed and ready to advise!
Capital markets & the economy
A small amount of inflation is healthy for any economy. Not a lot, like some post-war Germany or some third world country in the 70’s. Inflation is expected to gradually rise in the U.S. but remain below the 2 percent target, as measured by the PCE deflator, and from the FOMC’s point of view these predictions matter more than current inflation numbers which indicate slower growth. Given the model’s projection for higher inflation, many expect one more rate hike in 2017. This is highly dependent, however, on an increase in inflation soon. If inflation does not pick up, don’t expect a move in September. The Fed’s real long-run fed funds rate comes in at about one percent, and such low rates indicate something inconsistent about potential growth and the goals of the current presidential administration.
As a reminder, of more concern to the average mortgage banker who does 30-year loans is whether the Fed will continue buying agency MBS to the tune of $1-2 billion a day. The addendum that accompanied the recent Fed announcement gave a vague estimate as to when normalization would commence, claiming the program would be implemented “this year.” It was confirmed, though, that the Fed will implement normalization by decreasing its reinvestments of principal payments on maturing securities.
For anyone who is asked by their client about the general economy, and want to sound somewhat educated, through 2017 thus far, a strong labor market and solid household spending have suggested U.S. economic growth along with low inflation. Though these numbers appeared somewhat weak at the beginning of the year, new and improving data on orders for new production point to a steadily improving economy in the second half of the year. And though the U.S. economy has been the primary source of global economic improvement in past years, economic reforms in Europe are gaining traction and point to a GDP growth peaking at 1.6 percent.
LOs, however, are usually torn between wanting a strong economy, and more borrowers qualifying, and a slow economy with low rates. Though only moderate by historical standards, this growth is expected to increase even more over the next year and should reinforce global confidence. The combination of steady economic growth and restrained inflation should allow central banks to remove their monetary stimulus. The U.S. economy’s weak first quarter and likely delay of tax reform, however, suggest a weaker dollar outlook than was expected in December. Some experts believe job gains in the U.S. should continue at a moderate pace, and continued brisk home sales should also provide short term economic support. On top of that, low interest rates have supported household cash flow and make a recession very unlikely in the coming year.
Some foreseen risks include U.S.-imposed punitive tariffs, which could increase inflation and hurt companies with international supply chains. Another risk is possible aggressive consolidation of China’s industrial sector, which would slow global trade and affect inflation. And the possibility of nationalist policies in Western democracies could not only impose trade restrictions, but could also sharply inflate prices and borrowing costs. That’s something for the average LO to think about.
Plenty of folks make a living from real estate. Existing home sales rebounded in May with median home prices edging higher relative to a year prior, but the housing market still faces challenges as single and multi-family starts and permits fell during the month.
The next best thing to a strong improvement in economic activity is weak but sustainable economic growth, which is what seems to be happening across the global economy. The expectation is for this global growth to continue gently below the historical average. That should help keep rates low for borrowers!
Enough about news in the economy impacting the secondary markets. How about news from the secondary markets impacting the primary markets, i.e. rate sheets for borrowers? Like ‘em or not, for the first time in four years American International Group (AIG) got back into the RMBS game with the sale of its first bond deal of home loans. So, there’s the news on private mortgage securities: A Triple-A piece of $480 million offered to investors made up of QM mortgages.
Bloomberg writes, “Freddie Mac and Fannie Mae (and other Agencies) still dominate the $10.3 trillion US residential mortgage and debt markets with about a 60% share of the financing pie. Private label securitization still only accounts for about 5%, according to a report from the Urban Institute, a DC-based think tank. But spreads have recently reached all-time tights in the prime jumbo sector, making the economics tilt in favor of private securitizations.”
Turning to rates, and as a reminder that our rates are influenced by overseas factors, yesterday U.S. Treasuries were caught up in a plunging government bond market as European Central Bank President Mario Draghi said that eurozone inflation was being depressed by temporary factors. While this is a mainstream position on the FOMC regarding the U.S. economy, it was taken by investors in EMU debt as a sharp change of tack for Draghi in describing eurozone inflation.
In U.S. news, yesterday the S&P/Case-Shiller 20-City Index was up 5.7% year over year in April, and the Conference Board’s Consumer Confidence Index rose to 118.9 for June from 117.9 in May, beating estimates. But ECB President Draghi sent developed market yields higher; his comments outweighed the usual monthly U.S. news. The 10-year worsened more than .5 in price, closing at 2.20%, and agency MBS prices sank about .250.
On top of that, Fed officials continue to warn everyone about equity valuations and market complacency. Bloomberg discusses how yesterday a trio of Fed officials (Yellen, Williams, and Fischer) all spoke critically of market complacency and equity valuations.
This morning we’ve had the MBA’s weekly mortgage applications (-6% last week versus two weeks ago, and -17% versus the same week a year ago; refi apps were -9%), and May merchandise trade balance deficit (narrowed to $65.9). Coming up is the May Pending Home Sale Index and a $28bn 7-year notes at 1:00pm. The 10-year is currently yielding 2.22% and agency MBS prices are roughly down/worse .125 versus Tuesday evening.
(Thank you to Tony H. for this one. Apply it however you see fit.)
The 3 ages of man-
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, “Does Everyone Want a Job?” 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.)
June 27: AE & LO jobs coast to coast; layoffs & reverse mortgage sale; Nationstar call center move; training in ARMs & HMDA
June 27, 2017
Worries about Europe’s economies have, in most part, subsided. But rumors swirl regarding The Land of Lincoln. Illinois, it seems, isn’t doing too well financially. Underwriters don’t have crystal balls, yet must weigh income from Illinois pensions and government worker income, and the like. Concerns are growing that the US Virgin Islands could slide toward the kind of financial collapse that hit Puerto Rico since the USVI’s government has struggled to meet obligations since a refinery closed in 2012, simultaneously doing away with the biggest private-sector employer and a crucial source of tax revenue. Jobs & CRM product Pacific Union Financial, LLC is growing the Western region of its retail division, opening a new Distributed Retail branch in Salt Lake City, Utah. The branch will service homebuyers in the Salt Lake City Metro Area with home purchasing and refinance needs.
June 26: LO & sales jobs; credit union MI rates; bank news: stress tests, M&A, values, underwriting guideline changes, new products
June 26, 2017
“Statistics are like bikinis. What they reveal is suggestive but what they conceal is vital.” We’re always watching home sales & construction – but it is debatable whether tearing down a house and building another adds to housing stock. About 10.2% of single-family homes rose from tear-down starts in 2016, up from 7.7% in 2015. Jobs, products, credit union MI news A nationally recognized mortgage banker headquartered in Orange County, CA is expanding and looking for experienced Government and Conventional loan processors and underwriters to support its Consumer Direct, Retail and Wholesale operations. “Offering competitive compensation plans with remote positions available, this lender is a Fannie Mae/Freddie Mac seller/servicer and offers all Ginnie Mae and reverse mortgage products. The company fosters a spirit of team work and believes that developing talent creates exceptional teams.” Interested parties can send