How has it been ten years since James Brown passed away? And now George Michael. (I guess no matter how much money you have, or how famous you are…) To keep things in perspective, the yield on the 10-year, 10 years ago, was 4.76%. And 30-year mortgage rates were 6.125%. And yes, people were still buying homes, refinancing, and lenders and their employees were making money and helping borrowers.
Turning to job news in the wholesale channel, Quicken Loans is searching for AEs in Georgia, Texas, and Inside AEs for North Carolina. “We’re the #1 online lender in America, closing loans in all 50 states, and we’ve grown to be one of the largest full-service residential mortgage lenders in the country. Quicken Loans was named a J.D. Power and Associates 2010 – 2015 Customer Service Champion, one of only 40 companies named in the U.S. We were also ranked highest in the nation for customer satisfaction among mortgage servicers the last three years, the first years we were eligible. There’s a simple reason we’ve been so successful: We care about the people we work with. AEs are expected to increase and grow the Company’s wholesale lending business by developing and maintaining mortgage loan broker relationships and agreements with qualified banks, community banks, credit unions and other qualified financial institutions (QFIs) within the Account Executive’s authorized territory.”
On the Ops side, Midwest Equity Mortgage (MEM) is in search for underwriters. “MEM is a growing national mortgage lender, licensed in 14 states, which will fund over $1.5 billion in 2016, exclusively through a direct to consumer/retail channel. Headquartered in Oak Brook, Illinois, MEM was recently named to Crain’s Fast 50 growing companies and is an INC. 5000 Company. Candidates can work remotely, and must possess a minimum of 3 years’ experience with FHA, Agency and Non-Agency underwriting and aware of overlays to guides for purposes of risk-management. Experience with both Calyx and Encompass loan operating systems is a plus.” Interested candidates please email resumes to Chris Freemott.
IT staffs around the country are now focused on HMDA, and the changes to be implemented in terms of an increased data file size – better make sure a) all those fields are correct, and b) they don’t show discriminatory lending practices! Last week the CFPB announced annual adjustments to two asset-size exemption thresholds. First, the CFPB has made no change to the asset-size exemption threshold under HMDA/Regulation C which is currently set at $44 million. What does that mean? Banks, savings associations, and credit unions with assets at or below $44 million as of December 31, 2016, will continue to be exempt from collecting HMDA data in 2017.
Second, the CFPB has increased the asset-size threshold under TILA/Regulation Z for certain small creditors operating primarily in rural or underserved areas to qualify for an exemption to the requirement to establish an escrow account for higher-priced mortgage loans (HPML). The threshold is currently set at $2.052 billion. Loans made by creditors operating primarily in rural or underserved areas with assets of less than $2.069 billion as of December 31 (including assets of certain affiliates) that meet the other Reg. Z exemption requirements will be exempt in 2017 from the escrow account requirement for HPMLs. (Ballard Spahr reports that the adjustment will also increase the asset threshold for small creditor portfolio and balloon-payment qualified mortgages which references the HPML escrow account asset-size threshold.)
My cat Myrtle reminded me that the CFPB “only” has direct jurisdiction over banks with more than $10 billion in assets. What happens when a bank crosses over that asset level? All kinds of things. In terms of lending standards and credit risk, large U.S. banks raised their own risks by pushing down lending standards for a fourth consecutive year in 2016, per the OCC. The banks loosened underwriting standards mostly in direct consumer loans, conventional home equity, commercial real estate loans, and residential mortgages.
“If such trends continue, increasing credit risk could accelerate,” the report warned. Just wait until banks are scrambling for market share even more than they are now. “Looking at 90 percent of the debt in the federal banking system, equal to $5.2 trillion, the OCC found that banks are easing standards because of competition from other banks and nonfinancial firms, their appetite for risk is expanding, and they are seeking to make more loans.”
The “OCC added that banks are relying less on derivatives and loan sales to manage credit risks. The regulator said its biggest worries are aggressive growth in lending, concentration, deterioration in energy-related portfolios, and further underwriting loosening. During times of economic expansion, banks generally ease lending standards, the OCC said. Since 2012, there has been abundant liquidity in the market, making more dollars available to lend and pushing banks to hunt down more borrowers, it added. For commercial loans, the OCC found looser standards in pricing, guarantor requirements, and loan covenants. In retail, easing was mostly in collateral, loan size, and debt-to-income requirements. Approximately 24 percent of banks introduced new loan products this year, and another 23 percent plan on offering new ones next year, the survey found.”
What about residential lenders and credit underwriting? There is a trend to add more and different information to the underwriting process. I have heard plenty of LOs say, “I don’t care what their credit score is, I’d make a loan to that person!” There are other indicators of credit risk beyond FICO such as VantageScore which uses an algorithm to provide lenders additional information. Others, like SoFi, are trying to use online behavior to deduce credit risk. The theory being that socially connected folks with access to networks, geography and education may be a better risk than FICO currently states.
Pacific Union Financial announced two new features now available under its FlexKey – Expanded product. Asset-Based Income and Multiple Financed Properties. Refer to the Program Guide for detailed eligibility and reserve requirements, as well as the Pacific Union Financial loan exposure restrictions.
There was lots of noise around the Digital Mortgage Conference about technologies that improve the borrower experience, but what about technology that help mortgage companies process and underwrite loans faster with fewer people? FinLocker, which automates many processor and underwriter functions, was introduced last week at the conference. FinLocker accesses consumer financial data electronically and applies configurable business rules and algorithms to analyze employment, income, assets, credit, taxes and other information to validate guideline issues and highlight conditions that require processor/underwriter attention. FinLocker is managed by a veteran team of technology and mortgage leaders, including Bryan Garcia, former CTO of Equifax and Tim Stern and Barry Sandweiss, co-founders of Lenders One Mortgage Cooperative.
Needless to say, there aren’t any conferences, webinars (that I know of), or formal training this week. But that changes in early January and early next year, so what’s coming up?
Register for CAMP’s first webinar of 2017, “Cyber Security Best Practices”. Guest speakers for this January 12th webinar include Theresa Ballard and Ginger Bell.
Start 2017 off on the right foot, visit Essent’s training webpage today to find a webinar or Audiocast that makes you and your team’s knowledge base competitively stronger in the new year. Looking for a suggestion? Try “Analyzing Income for the Self-Employed borrower” or an Audiocast about how ‘Automation is Impacting the Housing Market’.
Register for WMBA’s Income Property Lunch on Wednesday, January 11th in Seattle with Economist John Mitchell. And less than a week later, Tuesday, January 17th, join WMBA for its first Dinner meeting of 2017. J. Lennox Scott Chairman and CEO of John L. Scott, will be the guest speaker.
Colorado’s Peoples National Bank is hosting its 3rd annual sales summit for loan originators and real estate agents: the 2017 Colorado Mortgage & Real Estate Summit. “Understand the issues, changing laws, economic housing and interest rate forecasts affecting the real estate and residential lending industry in Colorado and at the national level. Learn innovative strategies and tactics to increase your business in 2017.” Join speakers Eliot Eisenberg, Sue Woodard, Steve Richman, and myself on Wednesday, January 18th, in Glendale, CO. Admission is free but you must pre-register here.
SIFMA’s 2017 AML & Financial Crimes Conference is in February. “Join us at SIFMA’s Anti-Money Laundering & Financial Crimes Conference on Feb. 8-9 at the Grand Hyatt in New York City. This the only conference in the AML and financial crime space tailored to broker-dealers and other members of the securities industry, and we’d like your feedback. If you are looking to learn more on a particular topic or hear from a certain speaker, submit your request on our website.”
Registration is now open for The Mortgage Collaborative’s Winter Lender Member Conference, set to take place March 1-4, 2017 at the Omni Scottsdale Resort & Spa at Montelucia. The independent cooperative network’s winter event will offer an interactive agenda featuring over 50 different breakout sessions, a heavy emphasis on peer-to-peer networking and exchange of best practices, and a sharp focus on the multitude of new technology and innovation options in the mortgage industry. For more information about The Mortgage Collaborative or their Winter Lender Member Conference, contact Rich Swerbinsky.
For those planning out the second half of 2017, next September in Chicago “MORT is an unprecedented and transformative mortgage industry event that will evolve attendees’ perspective on how they lead their companies. MORT is specifically designed for executives at smaller and mid-tier mortgage companies. Best-of-class speakers from many different disciplines, and customized coaching following MORT will ensure that participants are implementing the vision, systems and tools they experience there. There will be extensive follow-up with interested attendees during the year following MORT. The MORT team will assist them in their business planning, strategy, leadership, differentiation and other topics covered at the event. Mort is signing on the first two of their five planned sponsors.” For more information on attending MORT or on corporate sponsorship opportunities, please contact Gary Baraff.
Does anyone care what rates are doing this week? Sure they do. LOs aren’t letting those precious pre-election rate locks expire when 30-year rates are .5% higher than in October. But on Friday we had an early close, and the markets were closed yesterday for the Christmas holiday. One thing to note: Friday’s slight advance helped the 10-yr note secure its first weekly gain in seven weeks, pressuring its yield to 2.54% from last Friday’s 2.60%. We did have New Home Sales and the University of Michigan Consumer Sentiment Index, the key takeaway from the revision is that the post-election surge in consumer confidence had tapered off by mid-December.
For exciting, titillating news this week we have, if you care about housing values before Halloween, the October Case-Shiller 20-city Index at 6AM PT today, along with December Consumer Confidence and a $26 billion, 2-yr auction. Wednesday we’ll see the MBA Mortgage Index for last week, Pending Home Sales, and a $34 billion 5-yr auction. Thursday brings the usual weekly Initial Jobless Claims, along with International Trade in Goods and a $28 billion 7-yr auction. Friday is the December Chicago PMI.
For anyone wondering where rates are this morning compared to Friday, we closed the 10-year at 2.54%; this morning, on no substantive news, it is yielding 2.55% and current coupon agency MBS prices are worse .125 versus late last week.
(Part 1 of 3 of whatever you call this kind of stuff, with some new ones.)
I changed my iPod name to Titanic. It’s syncing now. I tried to catch some Fog. I mist. When chemists die, they barium. Jokes about German sausage are the wurst. A soldier who survived mustard gas and pepper spray is now a seasoned veteran. I know a guy who’s addicted to brake fluid. He says he can stop any time. How does Moses make his tea? Hebrews it. I stayed up all night to see where the sun went. Than it dawned on me. This girl said she recognized me from the vegetarian club, but I’d never met herbivore. I’m reading a book about anti-gravity. I can’t put it down. I did a theatrical performance about puns. It was a play on words.
(Copyright 2016 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