In a recent survey, 97% of millennials said that they were tired of being surveyed. Seriously, well that probably is seriously, according to a new TransUnion survey, 42% of millennials (born 1982-2000) are delaying buying a home because of the December 2016 interest rate hike. Really? How about because not a lot of 26-year-olds have saved up the money for a down payment, or don’t know where they’ll be living in two years? I’ll stop being flippant. Yesterday’s tax proposal won’t help either. Per NAR, by doubling the standard deduction and repealing the state and local tax deduction, the plan would effectively nullify the current tax benefits of owning a home for the majority of tax filers. Analysts thinks the odds of it passing are nil.
Vendor products hitting the shelves
Mortgage Automation Software provider, Floify, announced the launch of the Floify App Store, “which allows other mortgage providers to build complementary apps, and offer branded data and functionality, visually within the Floify platform. Floify’s 150,000 registered users already have access to Floify-built integrations with loan origination systems, SMS providers, asset and income verification partners, e-signature providers, and file-sharing platforms. Like your smartphone, 3rd party providers (think mortgage CRMs, pricing engines, and loan origination systems) can build apps that LOs can download, see, and use right from their Floify account. The latest addition is their Salesforce app, built by Razor IT Solutions, that lets loan officers access their Salesforce summary reports right inside their Floify pipeline dashboard. LO’s and their teams can get more information and a demo of the Floify App Store here.”
Great publicity and effective marketing can be a game-changer. “In the mortgage business, this requires extensive industry expertise. Rosalie Berg, the founder of Strategic Vantage, believes that a marketing and public relations agency should exemplify the way good marketing is done in the mortgage industry. Rosalie observes, ‘We’ve been focused exclusively on the mortgage industry for well over a decade, and have helped over 100 companies during that time. Our expertise is what makes the difference between trial and error, and getting it right the first time.’ Strategic Vantage helps companies increase their sales by generating positive publicity, improving their name recognition, creating sharp marketing materials and executing smart marketing campaigns. If you’re looking to up your game, give them a call or you can plan to meet Rosalie at the MBA Secondary Conference. Or visit the website!”
“Minimize risk and maximize profits with high-performing AVMs. Better real estate decisioning with exceptional Hit Rates, and Unsurpassed Accuracy with VeroVALUE AVM by Veros. VeroVALUE is fast, cost-efficient, and provides realistic valuation estimates, even in rapidly changing markets. VeroVALUE Portfolio draws upon the industry’s leading sources of automated valuation models, including VeroVALUE AVM, to deliver reliable and current property value information on a broad spectrum of properties. Veros’ alternative valuation solutions are ideal for banks, credit unions, servicers, mortgage bankers, and investors looking to minimize risk, improve productivity, reduce costs, and make confident decisions. Veros has been building compliant property valuation and collateral risk solutions for more than 15 years, and as an industry leader Veros implements rigorous and comprehensive AVM testing and validation monitoring to ensure the continued transparency and integrity of VeroVALUE AVM. To run a free market test contact Susan Anderson (860-402-8337).
LendingQB’s LOS platform has received high marks for its vendor satisfaction and customer support in STRATMOR Group’s most recent Technology Insights survey report. LendingQB earned an end user effectiveness rating of 93% and exceeded functionality expectations for 22% of its respondents – top marks that surpassed even proprietary systems. Overall, LendingQB achieved a vendor satisfaction score of 96% and the highest marks for user experience among the major LOS providers included in the report. The STRATMOR Group Technology Insights survey findings are based on 266 participants ranging from under $250 million to $10 billion in annual volume. Learn more here.
In lender product news, “194%. That’s how much Impac Mortgage Corp’s non-QM unit volume has increased over the past 2 months. And the dollar volume is up 183%. The secret? Our free crash course on using non-QM as sales tools: iQM LIVE! LOs in Southern California that have taken this course are doing massive business. To originate with confidence, and close more loans, RSVP to one of our upcoming events in Dallas, Los Angeles, and San Diego. Click to reserve your seat.”
In warehouse news, congrats to Kelly Jasper who has joined the team at Santander to “expand and deepen Santander’s traditional national warehouse lending footprint and to strengthen our program’s particular focus on working with lenders who seek to do eClosings and warehouse eNotes.” She’ll be in NYC for the MBA’s Secondary conference and is available for meetings.
And congrats to Cara Krause who Mortgage Capital Trading, Inc. (MCT) announced has joined the company as regional sales director. Ms. Krause will handle business development efforts and client management for new lender clients in the Northeast region of the country.
Perl Mortgage Inc., a Chicago-based mortgage lender licensed in 32 states including Minnesota, is pleased to announce the hiring of Jan Fitzer for the position of Regional VP. Fitzer has more than 25 years of mortgage banking experience, including 15 years as an originator.
Finance of America Mortgage welcomed Jerry Devlin as New England Regional VP. In this role, Devlin’s primarily responsibility will be recruiting branches and mortgage advisors throughout Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island, and Vermont.
And private money lender CIVIC Financial Services announced that William J. Tessar is its new CEO & president.
Servicing trends & considerations
The pace of servicing sales has certainly picked up in the first quarter of 2017 versus the 4th quarter of 2016. Are sellers tired of the regulatory exposure? In need of cash? Enlightened to the fact that servicing is more expensive than many think? Or all the above? Servicers are selling servicing to manage cash flows and because they’re seeing improved market execution.
Originating a loan and retaining servicing is cash flow negative since the price in the secondary market does not include the SRP unless the servicing is sold with the asset. Some banks are selling due to BASEL III (Tier I Capital) concerns.
What else is going on out there? Although there are exceptions, few small or mid-sized servicers hedge their portfolio despite services offered by companies such as UCM Inc., MIAC, and Compass. It is judged as expensive, true or not, and lenders prefer to fill in early payoffs with production. Rates are still great, and in fact are back down to November levels. Obviously, the theoretical value of servicing 30-year loans in the 3% range improves with higher rates – those loans should stay on the books for a long time. Servicing brokers will tell you that banks have sold mortgage servicing rights (MSRs) due to the capital treatment or regulatory requirements. And let’s not forget the tax effect of a sale when the loan is originated versus selling a block later.
Yet there are rumblings that there is less liquidity for premium coupon or “in-the-money” MSRs. Servicing buyers have reportedly raised new capital and need to invest it, and there are some new entrants on the buy side. And companies such as PennyMac are executing some new and more complex structured MSR trades, at least in Ginnie pools. The MBA and others have called for changes in Basel’s punitive treatment of MSRs.
Investors (public and private REITs, regional banks, hedge funds, and some independent mortgage banks that have MSR financing or have issued debt to finance servicing) are purchasing servicing to own a negative duration asset – one that goes up in value when rates move higher. (Remember that bond prices go down in a rising rate environment.) They also like the returns since 8 or 9% is better than synthetic IO yields, fixed income yields, and most other market available returns.
The usual question from a potential seller is, “What factors impact my MSR sale execution?” MountainView lists several factors: portfolio size, a seller’s net worth, potential for repeat trades, the interest rate of the loans versus current coupon, average loan size, origination channel, geography, state prepayment speeds, escrow payment frequency and average escrow payments, and the average escrow balances all pay a roll.
MIAC Capital Markets is offering an MSR package totaling $2.1 billion of government servicing rights. The seller has a nationwide footprint and is a well-capitalized non-bank originator. Key pool characteristics are: $123,290 average loan size, 23% GNI and 77% GN2. WA rate is 3.806%, WA loan age is 53 months. WA FICO is 672. The bid date is May 9. Please contact Dan Thomas, Steve Harris or your MIAC sales representative for more information.
Earlier this month Phoenix Capital offered up a $891M FHLB, and a $1.0B FNMA/FHLMC bulk mortgage servicing rights package, “from an experienced and well capitalized bank seller.” The sale was split into two portfolios, with bids due on each. “FHLB (of Indianapolis) is willing to provide expedited approval to counterparties not already approved.” Portfolio A was $891 million with 91% fixed 30-year product and 9% fixed 15-year. There were no delinquencies, foreclosures, or bankruptcies. 3.67% (F30) note rate; 3.21% (F15) note rate, 0.25% wAvg Net Service Fee, average balance of $306K, 30% CA, 17% MI, 9% VA (by loan count), wAvg orig. FICO 765; wAvg orig. LTV 71%, wAvg Age 8 months, 94% single family properties, 97% owner occupied properties, 50% rate and term originations, and 61% retail originations
Phoenix’s $1 billion Portfolio B was made up of conventional loans. 58% were FNMA A/A, 42% FHLMC ARC, 77% fixed 30, 23% fixed 15. There were no delinquencies, foreclosures, or bankruptcies. 3.98% (F30) note rate; 3.10% (F15) note rate, 0.25% wAvg Net Service Fee, with an average balance of $238k. 23% MI, 21% CA, 9% CO (by loan count), wAvg orig. FICO 745, wAvg orig. LTV 72%, wAvg Age 5 months, 85% single family properties, 85% owner occupied properties, 42% purchase money originations, and 55% correspondent originations.
Two MountainView Financial MSR packages recently. The first, a $78mm GNMA/FNMA/FHLMC portfolio which is 97% fixed rate and 100 percent 1st lien product, with a 716 WaFICO, 85% WaLTV, weighted average interest rate of 3.74 percent (3.79 percent on the 30yr fixed rate product), low delinquencies, $238k average loan size, with top states: Utah (65.0 percent), California (19.1 percent), and Florida (10.5 percent). The second is a $279mm GNMA/FNMA/FHLMC portfolio which is 100% fixed rate 1st lien product, with a 756 WaFICO, 73% WaLTV, weighted average interest rate of 3.64 percent (3.78 percent on the 30yr fixed rate product), low delinquencies, $250k average loan size, with top states: Colorado (48.8 percent), Florida (11.3 percent), Minnesota (9.0 percent) and Ohio (8.8 percent).
Four Incenter Mortgage Advisors Corp. packages came up lately. The first, an $898.6mm “Alt-A” FNMA/FHLMC. The 3,699 file seasoned package has a 4.449% WAC (NR range from <3% to 10%), 0.3139% servicing fee, 255 remaining months, 74.3% WaLTV, vintage range from 2005 to current year, top states California (40%), Georgia (10%), New York (5%), 79% O/O, 79% SFR…..the second, IMAC #104116 $14.9mm Hybrid ARMs, 23 loans, 4.00% WAC, 76.34 CLTV, 95% Full Doc, 759 WaFICO, top states of FL, GA, NC and SC…..number three package, is IMAC #104115 $4mm 2nd Lien HELOCs 49 loans, $3.9 UPB, $4.4 total loan amt, 5.045% WAC, 83.83 Original CLTV, 750 FICO, 90% O/O, 100% Full Doc, FL and GA originations….the fourth is a $326mm FNMA/FHLMC/GNMA package with 4 month’s seasoning. 4.033 WAC, 77% WaLTV, 736 WaFICO, low delinquencies and top states of Michigan (37%), California (7%), New Jersey (7%), Texas (7%).
Here’s something a little different, but points to a trend capital markets folks are seeing. National Mortgage Insurance Corporation (aka, National MI) priced a $211.3 million mortgage insurance credit-risk transfer deal called OMIR 2017-1. The deal involves reinsurance to NMI for primary mortgage-insurance coverage having an effective date on or after Jan 1, 2013 but before Jan 1, 2017.
Rates didn’t do much Wednesday – there just wasn’t any news to drive them one way or another. There was a $15 2-year floating rate note auction, but those regular auctions, unless something unexpected happens, tend to not move the yield curve.
Overnight the Bank of Japan, despite a strengthening economy there, left rates alone. In this country we’ve had some potentially market-moving news this morning: March Durable Goods (low at +.7%), Initial Jobless Claims (+14k to 257k), and March Advance International Trade in Goods ($64.8 billion deficit); March Pending Home Sales is coming up. To start the day rates aren’t much different than Tuesday & Wednesday’s levels, with the 10-year at 2.32% and agency MBS prices roughly unchanged.
(Thanks to CK for this one.)
“How have you managed to buy such a luxurious villa while your income is so low?” asked the IRS agent.
“Well,” the taxpayer answered, “while fishing last summer I have caught a large golden fish. When I took it off the hook, the fish opened his mouth and said, ‘I am a magical fish. Throw me back to the sea and I’ll give you the most luxurious villa you have ever seen’. I threw the fish back to the sea, and got the villa.”
“That’s unbelievable. Prove it!”
“Well, you can see the villa, can’t you?”
(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.)
- Dec. 31: Rates, the Fed, world economies, affordability, and the shutdown – all tied together - December 31, 2018
- Dec. 29: FEMA reverses flood ruling; cybersecurity notes; observations on general housing trends - December 29, 2018
- Dec. 28: Doc automation product; FHA & VA changes around our biz; Agency deals continue to share risk - December 28, 2018