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Everyone wants feedback these days: the CFPB, Burger King (I got a free $3
chicken sandwich after spending 30 minutes filling out a survey!),
servicers, even the MBA.
It has come up with a snazzy new report, and the MBA wants feedback from
users of the product to improve it. The MBA's new report has state-level on
retail/consumer direct applications "near real-time data on how your
applications compare with the totals for your area. Do you wonder whether
you are getting your share of purchase applications or how fast FHA apps are
growing? Do you wonder how aggressive your competition is in pushing
15-year refi's? (It) gives you the ability to benchmark your applications
volumes by purpose, loan size, term, FHA share and other characteristics.
You will be able to quickly see how a particular state is growing relative
to nearby states and the rest of the country." If you're not an originator,
though, don't
bother: this report is being made available only to MBA members who
originate loans.
The prices are tiered based on time and region: write to the MBA to see a
sample report and for more info at MBAResearch@mortgagebankers.org
On the job front, Mission Hills Mortgage Bankers is seeking underwriters for
its Orange County headquarters. MHMB has been around 42 years (!) and is a
retail mortgage originator and is currently in the process of being acquired
by Pacific Trust Bank, and future plans call for aggressive expansion
throughout the western U.S. This position would be responsible for the
regional underwriting of loans from several production offices. Experience
requirements include FHA Direct Endorsement and VA SAR certifications and a
minimum of five years underwriting history. Interested parties may forward
Speaking of California acquisitions, Union Bank, a wholly owned subsidiary
of The Bank of Tokyo-Mitsubishi UFJ, which is a subsidiary of Mitsubishi UFJ
Financial Group, and California's fourth biggest bank by deposits, is buying
the parent of the state's 20th biggest deposit holder, Pacific Capital
Bancorp. Pacific Capital owns Santa Barbara B&T, giving it some
representation on California's Central Coast.
(Got that straight?) Pacific Capital has $5.9 billion in assets and 47
branches, compared with UnionBanCal's $90 billion in assets and 414
branches. (For deposits in California, BofA is #1 with 26%, Wells is #2 with
19%, Chase has about 7%, and Union Bank has 6%.)
I don't know if this acquisition will result in layoffs, especially on the
mortgage side of things, but that seems to be the trend. A close examination
of Friday's jobs numbers from the Bureau of Labor Statistics showed that
mortgage companies cut 3,200 full-time employees from their payrolls in
January. The total went from
265,300 in December to 262,100 positions in January. Overall, the number of
jobs in the mortgage banking and broker sector fell nearly 4% from a year
ago, with some big chunks coming from MetLife and Bank of America.
GMAC's Northeast Correspondent Team told everyone far and wide that GMAC is
back lending in Massachusetts. That is good news for the state's borrowers,
who all know that Fig Newtons were named after one of their towns, and for
GMAC, rumored to be very carefully examining whether or not it wants to be
in the warehouse business.
And if Massachusetts' Barney Frank has his way, the FHFA's Edward DeMarco
would be replaced since he has been "too rigid" in his approach to
foreclosure prevention and should be replaced: IsFrankStillAround?
[http://r20.rs6.net/tn.jsp?et=1109516253173&s=8721&e=001NI9mFmSdtj-k9Ay0M-We
KFyO-WOHGF8FXZJsrILwjdnYN9W7X9KsMORlMDcpgxOCBesYwR-8JVZiE2mTLYcrzI9ychzdW4oA
EE3jmE9oXt_268GIWah9YbGla3vr1C8HajqZqWjVOA5StbIumRHpOLo9uU7YxtzktWidpZ01Pc9d
y93z4UqyTn4LbVdNpeR3uNVHBjcPRKFmcI3xmx3y8Q6MBBkJNGsn6rlR-2NGNrc=]
KB Home has announced that it has entered into an agreement with Nationstar
Mortgage, with Nationstar becoming KB's "preferred mortgage lender." Under
the agreement, Nationstar, headquartered in Texas and owned by Fortress,
will offer a wide array of financing options and mortgage loan products to
the KB's homebuyers. Nationstar has attracted some notice lately since it is
one of the largest non-bank mortgage servicers in the country with a
portfolio of approximately $107 billion: KB
[http://r20.rs6.net/tn.jsp?et=1109516253173&s=8721&e=001NI9mFmSdtj-QD0Mm6UAt
0uujaSq3gPJO24mcz2jnsmL5muBPaRmXppMVgy-y0Fi98hbJSTp7cWwYbyEFh00qImTGFQJpmQBF
lnzTRIuGqqmb6aBr6uegFvCHMe-6HZ7OGpyf0Ja-Bgeebp8oZ_uTtpxc0yiEHqtz].
Yesterday the commentary mentioned the RESPA-related case of Freeman vs.
Quicken Loans, now under consideration by the Supreme Court. Although I do
not have a statement from Freeman, I do have one from Quicken Loans:
"Quicken Loans has never charged unearned fees and never will. The company
won this case on summary judgment in Federal Court on undisputed evidence
that the fees Quicken Loans collected were, in fact, earned. The ruling in
favor of Quicken Loans was upheld on appeal by the U.S. Court of Appeals for
the Fifth Circuit. Quicken Loans, like all lenders, has and continues to
offer clients the option of 'buying down' their interest rate by paying loan
discount points. This practice is a universal standard across the lending
industry and is in accordance with state and federal laws. It was proven
the loan discount points collected were earned and resulted in a lower
interest rate for the borrowers."
Mortgage banking is mired in legal issues everywhere. Barclays Capital notes
that with the Countrywide settlement case now back in New York state court
and with some clarity on its progress, "we look at potential non-agency rep
and warranty related recoveries for other sponsors/originators. We estimate
that the overall non-agency market could see $44 billion of rep and warranty
related payouts. Of that amount,
$10 billion is already included in proposed or completed settlements. We
continue to think that larger originators/sponsors provide the greatest
opportunity for rep and warranty related payouts or repurchases, even
through collectively negotiated settlements. On the other hand, many
smaller originators are already defunct or do not have the resources to
make significant settlement payments to investors...
Bank of America and JPMorgan have by far, the largest exposure to loan-level
rep and warranty related liabilities. While settlement recoveries or court
awards are likely to be lumpy, they can represent a considerable source of
cash flow for non-agency investors. In particular, deals that have
historically exhibited weak collateral performance are likely to benefit
the most from rep and warranty settlements that are similar to the
Countrywide deal. Second-lien securitizations, where many of the losses have
already been realized, could be significant beneficiaries as well."
The Union Bank news points to the fact that banks, and central banks around
the world, have more cash and liquidity than they've ever had before.
Focusing on country's central banks, because of collective quantitative
easing, the balance sheets of the Fed, ECB, BOE, BOJ, Bundesbank, and others
are all at record levels. The total size of the 8 largest balance sheets
have almost tripled in the last 6 years from
$5.4 trillion to more than $15 trillion (and still growing). The result of
this build up in central bank reserves is that it artificially lowers rates
and makes asset classes like fixed income securities, relatively
overvalued. One would hope that the low rate environment also provides
incentives for banks to take on riskier assets in the form of loans. And to
some degree this is taking place, although not as much as many would like,
but if one looks at the recent performance of different bank asset classes
(commercial and industrial loans, credit cards, mortgages, and so on - even
stocks) they're all doing pretty well return-wise - even though they're not
necessarily related! Economists believe that this unprecedented correlation
in returns is due to the availability of cheap money, and it is overriding
most microeconomic aspects of various industries.
For bankers, this presents a huge future risk: "Will this unwind?" At some
point central banks have to pull trillions of dollars out of the economy,
both in terms of physical money and in terms of leverage. Smaller banks'
management needs to understand that until a global exit strategy is
articulated, volatility will remain high because of leverage, which also
means that risk management becomes more important than ever.
To sum things up, some smart folks out there think that credit is being
artificially supported (look at the Fed buying agency MBS's every day,
helping to keep prices high and mortgage rates low) thus if given the
choice between quality assets at low spreads and riskier assets at wider
spreads, the former is preferred but the latter is often chased to support
margin. Many asset classes and geographies are performing at above zero
return levels only because of this liquidity support.
In addition, excess liquidity will keep commodities and equities well
supported
- asset classes that will also act as bellwethers when this reverses.
Yesterday was "much ado about nothing" as there was no real economic news in
the U.S., the 3-yr T-note auction went off, Europe and Asia were pretty
quiet, and the Fed and the usual suspects were in buying agency
mortgage-backed securities.
On the supply side, however, things seemed pretty quiet - perhaps locks are
slowing as the thrill of lower rates wears off and all the easy refi's are
done?
Today we've had some news with Retail Sales +1.1%, with a January revision
higher
- perhaps slightly better than expected (but a good chunk of the number was
due to sales at gasoline stations). This +1.1% was the highest jump since
September, which is of mild interest. Later we'll have a $21 billion 10-yr
T-note auction at 1PM EST and the FOMC's statement release at 2:15PM EST -
don't look for anything from the Fed. In the early going the 10-yr is now up
to 2.06% and MBS prices are worse about .125.
(Parental discretion advised.)
Mick, from Dublin, appeared on 'Who Wants to Be a Millionaire' and towards
the end of the program had already won 500,000 euros.
"You've done very well so far," said Chris Tarrant, the show's presenter,
"but for a million euros you've only got one life-line left, phone a friend.
Everything is riding on this question. Will you go for it?"
"Sure," said Mick. "I'll have a go!"
"Which of the following birds does NOT build its own nest? A. Sparrow B.
Thrush
C. Magpie D. Cuckoo
"I haven't got a clue." said Mick, ''So I'll use last lifeline and phone my
friend Paddy back home in Dublin."
Mick called up his mate, and told him the circumstances and repeated the
question to him.
"Fookin hell, Mick!" cried Paddy. "Dat's simple - it's a cuckoo."
"Are you sure?"
"I'm fookin sure."
Mick hung up the phone and told Chris, "I'll go with cuckoo as my answer."
"Is that your final answer?" asked Chris.
"Dat it is."
There was a long, long pause and then the presenter screamed, "Cuckoo is the
correct answer! Mick, you've won 1 million euros!"
The next night, Mick invited Paddy to their local pub to buy him a Guinness.
"Tell me, Paddy? How in Heaven's name did you know it was da Cuckoo that
doesn't build its own nest?"
"Because he lives in a fookin clock!"
If you're interested, visit my twice-a-month blog at the STRATMOR Group web
site located at www.stratmorgroup.com
[http://r20.rs6.net/tn.jsp?llr=zy6u9cdab&et=1106435366068&s=4179&e=001SVt-lj
bp53436QjxD9vbwURtIPPjV05jEcEKyBN3SjS2forXe0C_foO8RjEV-Uye0N7Z_Sh1il0SRXPx6P
jQauayNXQjni-Hc9Sseu-hhZcR1ujeZyAEpw==]
. The current blog discusses the possible future roll of Freddie Mac and
Fannie Mae as the FHFA might model it. 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
(Check out
[http://r20.rs6.net/tn.jsp?t=v46efkjab.0.epg7qedab.zy6u9cdab.8721&ts=S0744&p
=http%3A%2F%2Fwww.mortgagenewsdaily.com%2Fchannels%2Fpipelinepress%2Fdefault
.aspx]
[http://r20.rs6.net/tn.jsp?t=v46efkjab.0.v7uif6dab.zy6u9cdab.8721&ts=S0744&p
=http%3A%2F%2Fwww.thebasispoint.com%2Fcategory%2Fdaily-basis].
For archived commentaries, go to
[http://r20.rs6.net/tn.jsp?t=v46efkjab.0.fpg7qedab.zy6u9cdab.8721&ts=S0744&p
=http%3A%2F%2Fwww.robchrisman.com%2F].
Copyright 2012 Rob Chrisman. All rights reserved. Occasional paid notices
do appear.
This report or any portion hereof may not be reprinted, sold or
redistributed without the written consent of Rob Chrisman.)
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