|
I'd like make $2,000 a day,
rain or shine, weekday or weekend. But then again I am not a song writer. In
a note this week, Marcus Lam with Opes Advisors mentioned that Sting makes
over $700k a year from Puff Daddy/Sean Combs because Puff forgot to ask Sting
permission for using
"Every Breath You Take" in his song "I'll Be Missing
You". (Sting, not The Police, is the songwriter, so his old bandmates
receive zip.) More evidence of the haves versus the have-nots, huh?
On the jobs front, First
National Bank is expanding its operations in Cleveland, Pittsburgh, and
Baltimore and is searching for experienced Mortgage Loan Originators.
First National Bank is an affiliate of F.N.B. Corporation, a diversified
financial services company with over $12 billion in assets and services
including banking, trust, consumer finance, and insurance. "F.N.B. Corporation has
community banking offices are located in several states including
Pennsylvania, Maryland, Ohio, and West Virginia. The Mortgage Originator
is responsible for the generating residential mortgages, which includes
working with existing customers with residential mortgage needs and
developing new business from external sources. This position will also
need to provide the highest quality of customer service to both internal and
external customers. "We offer a competitive commission structure, 401K,
medical, dental, vision, stock purchase program, and much more!"
Please visit FNB's careers website to complete
an online application.
Congrats to
Joe Sprecher, who has joined Mason-McDuffie Mortgage to drive
expansion in Southern California. Mr. Sprecher will be based out of
the Irvine branch. "I am excited to join the management team at Mason-McDuffie and
plan to recruit experienced loan officers to join us here in Southern
California. There is a great family culture here that I am excited to be a
part of. That along with the great programs and concierge support to the Loan
Officers made this an easy decision for me," he said. To contact
him about LO opportunities in So Cal, please email jsprecher@mmcdcorp.com.
And congratulations to Parkside
Lending, LLC, which announced the formation of its REIT (Parkside Mortgage
Trust) as well as the rollout of its first Non-QM portfolio product: Parkside
Collateral ARM. As a residential mortgage banking operation that
lends to 1-4 family properties in 22 states, the company plans to expand its
foot print to aggregate quality assets from all 50 states this coming year. Parkside
Mortgage Trust was formed to aggregate and issue securities of Non-QM whole
loans into the growing private capital market place. "The REIT will
retain 'skin in the game' on every loan it services and originates. The
strategic partnership between the mortgage platform and the REIT will give
the companies the unique ability to offer Fannie, Freddie, Ginnie and Private
Securities in the future thus allowing both institutions to prosper in a
rapidly changing real estate marketplace. And the Parkside Collateral ARM
product was created to provide affordable financing for investment properties
where there is currently a lack of liquidity for loans that do not fit the
current conventional mortgage space. The product focuses on positive cash
flows and 'make-sense' underwriting. This is a non-QM product that is
available exclusively through Parkside Lending, LLC's Wholesale
Channel."
Speaking of Parkside, it is
currently expanding its footprint and is seeking Wholesale Account Executives in
WA, TX, OR, CO, UT, TN, AL, NC, WY, AZ, DC, MN, IL, AK, MT, CT, AR, ID, VT,
MI, and MN. Confidential inquiries can be submitted to Rick@parksidelending.com
or sent to Parkside.
In news somewhat related to
residential lending, Marc Savitt will seek Virginia's 10th District
Congressional Seat. (It is now occupied by retiring 17 term Congressman
Frank Wolf.) Many know Mr. Savitt since he is the current president of the
National Association of Independent Housing Professionals (NAIHP), is the
President of The Mortgage Center, and is a past president of the National
Association of Mortgage Brokers. "Americans are overwhelmed with
problems manufactured in Washington. Taxes are too high; jobs are scarce,
we're over regulated and the dream of a better life for our children and
grandchildren is slipping away." If you have any questions, please
contact him directly at msavitt@savitt4congress.com.
Are you happy? Supposedly 60 percent of happiness is determined by our genetics
and environment, the remaining 40 percent is up to us.And if you want to learn a little more about that obnoxiously
happy person in the work station next to yours, here you go: StopSmiling. There
are a lot of happy people who work for the FHFA, Fannie, and Freddie -
certainly no one would ever accuse them of not doing a thorough job, nor of
not understanding implications before making a move that impacts the
industry. And there were a lot of happy lenders yesterday when they learned
that the FHFA's new director, Mel Watt, announced that he
intends to delay guarantee fee changes that were announced last
month by his predecessor, Ed DeMarco. The FHFA plans to conduct an evaluation
of the proposed changes and will give not less than 120 days' notice after
completing the evaluation before implementing changes. The press release from
FHFA noted that the implications for mortgage credit availability and how
these changes might interact with the new qualified mortgage standards could
be significant. The FHFA wants to fully understand these implications
before deciding whether to move forward with any adjustments to g-fee
pricing.
Huh? Didn't our brethren at
the FHFA do their homework and fully understand the implications of any
adjustments to g-fee pricing when they announced the increase a while back? What
am I missing here? It is good news, and the industry will take it, but...
Regardless, we'll take it! (The 0.25% adverse market fee that was planned to
be eliminated, however, will remain in effect during the examination period.)
Many think that the FHFA's focus on the way fee increases interact with the
new QM rule indicates that the FHFA will be very focused on affordability.
While the GSEs are currently exempt from QM (LP & DU DTI approval levels
have not been tinkered with, for example), this will phase out once the GSEs
are out of conservatorship or after 7 years. The increase in loan level price
adjustments (LLPAs) could result in some loans exceeding the upfront 3%
points and fees cap which would make them non-QM. But hey, if Mr. Watt wants
to focus on affordability for homebuyers, then it will be a positive for
credit availability, which should help the mortgage sector as a whole and
specifically help the mortgage insurers.
In response to Elizabeth
Warren's comments, J.S. writes regarding QM helping buyers, "This does
not help borrowers. More small banks are exiting the business completely. One
of the main beefs that Dodd-Frank tries to address is the role that the mega
servicers played in the foreclosure crisis and their poor practices (see 'robo-signing').
I am not arguing for less regulation - we all know where that got us. Due to
the high cost of complying with this and other regulations, community lenders
will no longer play in this space. Just this week, Bay Cities Bank in
Tampa announced the elimination of its 9 person Home Lending department.
I know we will see more of this very shortly."
Hey, tomorrow is QM!
There is still confusion, not the least of which involves wholesalers asking,
"Many lenders are excluding the affiliate title company fee for a broker
as their position is that it is not an affiliate of the 'lender'. What is the
rule?" I have not seen a "rule" and different companies are
taking different approaches. Mortgage attorneys love this kind of ambiguity.
Lenders and investors are spending millions for compliance and legal, and
some really do not believe anyone has a clear idea about what CFPB is doing.
They liken it to the CFPB's staff redesigning the internal combustion engine
and they want it to have no pistons. I am sure it will all be sorted out, and
of course much of it is needed - but really, the borrower will be
absorbing the cost either through increased lender compliance overhead or in
lack of competition from lenders exiting the business or scaling back
dramatically. The FDIC's Quarterly Banking Profile showed that out of
6,891 banks, 2,117, or 31%, are under $100 million in size - how can they all
possibly keep abreast of all the new regulations? We can expect more M&A
in the banking arena.
How is the current market
downturn impacting the M&A marketplace? STRATMOR's Jeff
Babcock and Jim Cameron write, "After the euphoria of 2012 and early
2013, a sort of hardscrabble reality has definitely set in, pushed along by
the many markets that are experiencing the grips of seasonality (which was
basically masked during the refi boom.) STRATMOR has been in communication
with numerous lenders who closed $1 billion or more in 2012, and the vast
majority of these CEO's are now expressing concern about their financial and
competitive viability under a market outlook which is characterized by
declining origination volume, profit margin compression and enhanced
compliance expense. Lenders who felt invincible during the balmy
days of 2012 are now increasingly receptive to exploratory discussions with
prospective buyers. And we can report that many of these conversations
are productive and encouraging for the players.
"So who
comprises the buy-side of this marketplace equation? While there
are certainly fewer 'committed investors' than we encountered say during the
3rd Quarter of 2013, there are still a handful of qualified
investors who are strategically motivated to expand during 2014 via
selected acquisitions. It's a diverse group of buyers, but there are a
few common descriptors: well-capitalized larger independents who were above
average performers in 2013 and mid-size bank-owned lenders seeking to
leverage their competitive advantages (e.g., compliance expertise, low cost
of funds, licensing exemption and updated technology platforms). These
buyers have a stated preference to acquire origination platforms which are
regionally concentrated (rather than a geographically dispersed network of
smaller branches), limited number of DBA's and 'for profit' branches, highly
compliant LO compensation programs, demonstrated ability to originate over
70% purchase business and imbedded Government lending experience.
"The common ground of
this marketplace is a shared belief that an affiliated franchise (merging
of seller and buyer) will bring economic staying power, pricing and product
advantages and sufficient production scale to better weather the challenges
of 2014's comparatively dismal outlook. You may be asking, 'At this
stage how mortgage companies will be valued under these market conditions?' That
is a relatively complex topic which doesn't lend itself to easy rule-of-thumb
parameters." If you wish to discuss mortgage company valuation
methodology and parameters, feel free to reach out to the STRATMOR Group for
a private, confidential conversation: jeff.babcock@stratmorgroup.com
or jim.cameron@stratmorgroup.com.
Finally, an important
correction to some investor news noted yesterday, and I apologize to Green
Tree and its clients for the confusion. The Green Tree Correspondent
Funding Announcement removed these overlays: "...its
guidelines to state that it will not purchase loans to principal owners or
majority shareholders (25% or greater ownership) of Business Lending
clients. Additional revisions stipulate that investment property
borrowers have a two-year history of rental property management within the
last three years, that the LTV/CLTV/HCLTV be based on the lesser of the sales
price or current appraisal value, that a Lender Full Review be provided for
all primary residence existing Florida condo projects, that seller
contributions to high balance primary residence and second home transactions
are subject to a 3% maximum, that all foreign assets used for down payment
and closing costs be deposited into a US bank account prior to
closing..." Clients of Green Tree should consult recent bulletins for
details.
With all this going on, who
has time to worry about rates? Rates did, however, give back some of their
movement from Monday and Tuesday - in some part due to a
stronger-than-expected ADP Employment. There was little reaction to the
Minutes from the December 18 Fed Meeting, at which Fed officials decided to
taper. The Minutes revealed widespread confidence in sustained labor market
improvement which called for a reduction in bond purchases. Agency MBS prices
worsened about .250. The yammering about tomorrow's unemployment data is less
than in recent months, but the predictions continue, and the consensus on
Nonfarm Payrolls is +196k with the unemployment rate steady at 7 percent.
Today we've learned that
Greece has taken over the EU's rotating presidency. (Prime Minister Antonis
Samaras says he will press for establishment of a banking union for Europe.)
Economic releases include Initial Claims (+335k expected) and the conclusion
of the Treasury's auctions with $13 billion 30-year bonds. Wednesday the
benchmark 10-yr T-note closed at a yield of 2.99%, which is where we are this
morning, and MBS prices are also roughly unchanged.
"Build a man a fire, and
he'll be warm for a day. Set a man on fire, and he'll be warm for the rest of
his life."
If you're interested, visit
my twice-a-month blog at the STRATMOR Group web site located at www.stratmorgroup.com. The current blog is, "What Do
We Know About the Future of the Agencies?" 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://www.mortgagenewsdaily.com/channels/pipelinepress/default.aspx. For archived commentaries, or to subscribe, go to www.robchrisman.com. Copyright 2014 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.) |
What happened yesterday?
Mortgage
backed securities (MBS) lost -35 basis points (BPS) from Tuesday's close
which caused 30 year fixed rates to move slightly higher.We started our day with the much anticipated ADP Private Payroll data. The market was expecting between 199K and 203K and it came in much higher at 238K. Plus, the prior month was revised upward from 215K to 229K. This marks the third straight month with a reading above 200K. Traders use this reading to try to front run Friday's Non-Farm Payroll number. And Friday's Non-Farm Payroll will be used as a signal to traders if the Fed will decrease their monthly bond purchases from $75 billion to $65 billion at their meeting later this month. As a result of this positive ADP reading, MBS have sold off. This pushed our benchmark MBS to break back below our 25 day moving average. As we stated Tuesday, the last two times that we have closed above the 25 day moving average, MBS have sold off immediately afterward...and that was certainly the case once again. The results of a re-auction of 10 year Treasury notes were released at 1:03EST. $21 billion with a yield at 3.009%. The bid-to-cover ratio was 2.68 vs our recent average of 2.70. So, just a slight pull back in demand but not a major move for MBS. The Federal Reserve Open Market Committee (FOMC) released the minutes from their last meeting as well as their economic projections. You can read it for yourself here: http://www.federalreserve.gov/monetarypolicy/fomcminutes20131218.htm It certainly had a mixed bag, here are some take-a-ways: - The Taper announcement was made even thought the budget had not yet passed the Senate. But they expected it to do so. If it were voted down prior to the FOMC meeting..they likely would have put off the taper. - The taper was seen as a "cautious first step". So they can see how the markets (and rate environments) would react. - Some voting members wanted a larger initial taper amount than the $10 billion but compromised. - They debated moving their target Unemployment Rate from 6.50% down to 6.00% before they start to adjust their Fed Fund Rate. But it didn't pass. (a side note: I think that this is due to concern over the Unemployment Rate dropping from a trend in reduced Participation Rate...quite simply if less people are looking for work even though they dont have a job..the Unemployment Rate falls). - They see less fiscal head winds in 2014 - They see very low inflation in 2014 - It is clear that their future decisions to pull back further on Treasury and agency MBS purchases is not on a preset course and is very data dependent. MBS traded in a fairly narrow range after the initial adjustment for the stronger than expected ADP data While the 10YR auction went off at 3.009%, the yield climbed back below 3.000% which provided support for MBS and has kept us from selling off further. Once again the stock market and bond market have moved in the SAME direction as our benchmark MBS has lost -35 BPS and the DOW has lost -68.20.
What is on the agenda for today?
   |
No comments:
Post a Comment