I was checking out at the busy super
market, and the cashier was having problems. The register ran out of paper, the
scanner malfunctioned, and finally the cashier spilled a handful of coins. When
she totaled my order, it came to exactly $22.
Trying to soothe her nerves, I said,
"That's a nice round figure."
Still frazzled, she glared at me and said,
"You're no bean pole yourself."
This is not an ad, or even lending related. But I wish I owned
stock in it as this appears to be a great, cost effective device and app for
finding stolen bikes, missing car keys, etc., etc. Who hasn't wished they'd had
one of those at some point, like when wandering around an airport parking lot
late at night?
In wholesale news, Endeavor America Loan Services has
rolled out their updated rate lock policy to better serve their loyal
brokers. EA has enjoyed record growth and is looking for experienced Account
Executives based on the West Coast. You can explore EA's job openings or reach out directly to Steve Curry, Executive
Vice President of Sales at Endeavor America.
While the industry waits for the ruling on the CFPB versus
PHH case to give more clarity on the MSA question for lenders, the
Colorado Division of Insurance has adopted a ban on marketing services agreements (MSA) for title
industry members, effective Aug. 15. The move, one of a host of new
changes adopted in Reg. 8-1-3, is believed to make Colorado the first state to
institute a ban on MSAs for the industry.
When one is comparing residential mortgage lenders,
whether in the usual statistics or at a conference, unfortunately the usual
metric is volume. But if you think about it, wouldn't a lender rather do one
loan and make three points rather than three loans and make one point on each? Of
course if a lender is going to make a set amount on each loan, size matters.
According to the Mortgage Bankers Association's newly released Quarterly
Mortgage Bankers Performance Report, independent mortgage banks and mortgage
subsidiaries of chartered banks in the U.S. reported a net gain of $1,686 on
each loan they originated in the second quarter of 2016, up from a reported
gain of $825 per loan in the first quarter of 2016.
Whether or not politicians or regulators pay attention
("See? They do lots of loans and make a lot of money doing it!")
remains to be see, but "Production profits more than doubled in the second quarter of 2016, as production
volume rose and expenses dropped to a level not seen since the third quarter of
2015," said Marina Walsh, MBA's renowned VP of Industry Analysis.
"Mortgage lenders also benefited from higher loan balances that reached a
series-high of $245,394 and drove production revenue to a series-high of $8,807
per loan."
"With elevated prepayment activity, we continued to
see hits to servicing profitability resulting from mortgage servicing right
(MSR) markdowns and amortization. Nonetheless, the profitability on the
production side of the business generally outweighed servicing losses.
Including all business lines, 90 percent of mortgage lenders in our study
reported pre-tax net financial profits in the second quarter of 2016, compared
to 73 percent in the first quarter of 2016."
But as everyone knows, however, it is much more expensive
to originate a perfect loan that will be free of potential liability for 30
years, which is one of the reasons lenders are merging. Determining the value
of your company? This is a major stumbling block for many owners, and for
companies of all sizes. This has been especially challenging for
servicers whose margin calls have undermined profits and seriously undercutting
the value of their portfolios. So how should this be argued? "There is
without question value to establish market share and a methodology to help
substantiate this separate from the revenues and/or profits of a company;
the value of something isn't simply are based on the profit and loss, because
it is to substantially expensive for a company to enter the market and attempt
to establish new relationships, drive branding, secure leases and
infrastructure - and higher top," says Dr. Rick Roque, founder of MENLO, a boutique investment and M&A firm for mortgage
banks. "Probably the biggest mistake multichannel platforms make is
underestimating the expenses and the challenges in market adoption. There
are costs in setting up the loan pipeline for fulfillment - it is not just
simply measuring the profits of the pipeline once it is in place: an astute
seller and an empathetic buyer will both very much appreciate this, and this
dynamic will act as the healthiest of foundations moving forward." (If
you'd like to contact Dr.
Rick Roque or 413.297.6895.)
Throughout it all lenders and investors are concerned with
collateral, and changes continue in the way properties are viewed, appraised,
and underwritten.
Flagstar has updated its Condo & Project Review
submission process. A new document type, Condo Documents, is now available in
Paperless File Manager under the Underwriting Single Document Upload option.
When documents are received under the Condo Documents header, through either a
single document upload or multiple document upload, the Project Review
department will be automatically notified and the documents will be reviewed
according to Project Review's posted turn time. The commitment letter will be
updated with any remaining requirements.
Franklin American Mortgage posted that property
inspections may now be dated prior to the incident end date (or even prior to
an end date being established by FEMA), with the exception of certain FHA
transactions. Please refer to the Disaster Counties Requirements chapter
on the website for detailed requirements. Additionally, FAMC is increasing the
funding fee for closed loans purchased from $275 to $325 per loan. There will
continue to be an additional charge of $25 for loan files that are delivered
via hard copy. This change will be effective on loans that are funded on
or after 11/1/2016.
M&T Bank issued a MERS Closing reminder for
Manufactured Homes. At closing, in all cases, mortgage lenders consider a
manufactured home that is permanently affixed, to be real property. But there
are 10 states where manufactured homes are not considered real property and
thus cannot be attached to real property (by state definition). M&T allows
manufactured home financing in 3 of these states: MD, NJ and NY. In these 3
states, manufactured homes may not close in the name of MERS. Each of these
state's DMV will require a lien to be filed on the vehicular title for the unit
(just like a lien filed on an automobile). Thus DMV step is in addition to
lenders recording the first lien mortgage at the County Clerk's office. This is
currently part of the lien perfection process that M&T requires the
engagement of Nations Title to perform. For these loans, M&T expects
delivery of paper recorded Assignment of Mortgage (non-MERS) as well as
evidence that the vehicular lien has been filed on the vehicular title through
the states DMV.
Beginning with Jumbo loans registered on or after September
1 and Doctor loans registered on or after September 12 Flagstar Bank will
require originators to order a Collateral Desktop Analysis (CDA) and a Value
Reconciliation from Clear Capital based on requirements outlined below. When a
Broker Price Opinion (BPO) is required, Flagstar will order the BPO from Clear
Capital.
In capital markets news, Mortgage Capital Trading, Inc. (MCT),
has entered into a strategic collaboration with Fannie Mae to "facilitate
new technology deployment, collaborative planning, and better service to mutual
clients. The initial impact of this collaboration is to enable MCT to connect
to live Fannie Mae pricing for real-time distribution to mutual clients within
the MCTlive! platform. This connectivity allows for timely best-ex analysis and
faster execution for Fannie Mae sellers.
Remember when inflation was a worry? Lower energy prices
kept consumer inflation at bay in July as the Consumer Price Index was
unchanged. Oil prices now trading above $48/barrel. Gasoline prices remain low
with the national average for regular at $2.14 according to AAA. Some people
took the July FOMC meeting and Bill Dudley's comments to mean that there was
going to be a rate hike in September but many believe that this is still a very
divided FOMC. The minutes make clear that there is a significant faction within
the FOMC that will not favor raising the fed funds rate in September.
Bopping over to interest rates, we began the week with a
nice rally for both Treasuries and for agency MBS prices. The 10-year note
retraced Friday's range and then some extending the post-payrolls low yield,
hitting 1.53% after, given a lack of substantive news, another weak ISM report,
this time the ISM Non-Manufacturing Index which missed estimates by a wide
margin. A miss for August's ISM Manufacturing Index last Thursday and the
August jobs report on Friday had already hurt the prospects for a September
rate hike but the Tuesday news of deteriorating sentiment in the service sector
may have been the nail in the coffin. For those quantitatively inclined the
10-year T-Note improved .5 in price while the 5-year and MBS prices rallied
about .250.
Today doesn't include much in the way of market-moving
news. We've already had the MBA's weekly report on mortgage applications for
last week (up about 1% across the board). Coming up are some figures on weekly
chain store sales and the JOLTS job openings number at 10AM ET, some Federal
Reserve President testimonies, and the latest Beige Book. In the early going
the 10-year is at 1.53% and agency MBS prices are unchanged from Tuesday's
close.
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